Panic to Challenge Milosevic for Serbian Presidency : Yugoslavia: Residency requirement could thwart former Southern California businessman.

Yugoslav Prime Minister Milan Panic announced Tuesday that he will challenge Slobodan Milosevic for the Serbian presidency in Dec. 20 elections, and he launched his campaign with a scathing attack on the republic’s strongman.

“Under Milosevic, we have become isolated internationally and have become the victim of crippling sanctions,” Panic told reporters. “War rages out of control, and yet Milosevic has done nothing.”

Serbian law requires a president to have been a resident in the country for at least a year, which may render Panic ineligible. A naturalized American citizen, Panic left his Southern California pharmaceuticals empire only in July to take on the job of federal prime minister in his native country. The electoral committee of the Serbian republic will rule Saturday on whether the Belgrade-born Panic can stand in the elections.

Belgrade Radio--controlled by the Milosevic regime--observed in reporting Panic’s candidacy that he would have to submit proof of at least one year’s residence in Serbia.

Panic dismissed that interpretation, saying: “I was born a Serb, I am a Serb, I live in Belgrade. I am the Yugoslav prime minister, and of course I’m eligible.”

Serbia and Montenegro comprise the rump state of Yugoslavia.

The latest attempt by the Serbian leadership to thwart Panic reflects nervousness among the ruling Socialists that the transplanted American tycoon could beat Milosevic in the vote, less than three weeks away.

“In the past four months, we have made progress, but my efforts have been undermined by the obstructionist policies of Slobodan Milosevic,” Panic said in announcing his candidacy.

“Two years ago, Slobodan Milosevic promised the people of Serbia that if he was elected president Serbia would be secure,” Panic said. “Two years later, it is clear he has not kept his promise. Our economy is in shambles. Unemployment is skyrocketing. Inflation is out of control. Our children have no future.”

The latest opinion polls show that Panic ranks No. 2 in popularity among the people of Serbia after Yugoslav President Dobrica Cosic, an aging writer and Serbian nationalist who helped draft the blueprint for Milosevic’s campaign of expansion. Milosevic is rated only No. 4 in the public opinion surveys, which may be of dubious reliability.

Since assuming control of the federal government five months ago, Panic has gained popularity with promises to get harsh U.N. sanctions lifted from his economically devastated homeland. A Western diplomat said Panic’s decision to seek the Serbian presidency is “courageous,” saying that the outspoken, often outlandish prime minister is the only one of 10 challengers with any chance of winning.

Milosevic, who controls a vast police and paramilitary network, is accused by Western governments and moderate Serbs of driving his country into disaster by instigating Serbian aggression against Croatia and Bosnia-Herzegovina.

Serbian Renewal Movement leader Vuk Draskovic, a charismatic opposition figure who had announced his candidacy, said he will withdraw from the race and throw his support behind Panic.