By Matt Robinson

JAGODINA, Serbia (Reuters) - There's a fluffy toy tiger in the office of Jagodina's mayor, another cast in gold on his desk, and at least one more in his trophy cabinet.

When Dragan Markovic, known by his nickname Palma (palm tree), opened a zoo five years ago in the central Serbian town he runs, he called it Tiger Zoo, a bit like his kick-boxing club, Palma's Tigers.

In the Balkans, the name is most commonly associated with the murderous Tigers paramilitary unit led during the Yugoslav wars of the 1990s by Palma's friend, patron and party colleague Zeljko 'Arkan' Raznatovic, a notorious Serb underworld boss assassinated in 2000. But Palma, 52, insists there's no link.

"As a child I liked tigers," he said. "It's got nothing to do with Arkan. You can't call a zoo Chicken, can you?"

With three real tigers, the zoo is the crowning glory of Jagodina, south of the capital Belgrade just off Serbia's north-south highway where some 85,000 people have lived in accordance with Palma's every whim for a decade.

Bald and bull-necked, Palma is described in a leaked 2009 U.S. embassy cable as a "populist tyrant" who made his fortune in the illicit oil trade under Serb strongman Slobodan Milosevic and who exercises "thinly disguised authoritarian rule".

He "literally buys support," it said, through cash handouts to graduates, pensioners and newly-weds, and through a business empire that includes his own television channel, Palma TV.

Feudal lord to some, Robin Hood to others, Palma is an anti-gay, small-town don and unlikely power-broker in post-Milosevic Serbia, where voters choose a new president on Sunday.

It's no coincidence that two days after parliamentary and first-round presidential elections this month, Jagodina was the first stop for liberal, pro-Western President Boris Tadic as he bids for another five-year term.

He won Palma's endorsement for Sunday's run-off, and sealed a deal for the mayor's nationalist United Serbia to continue a 4-year-old ruling coalition with Tadic's Democrats that will steer Serbia into talks next year on joining the European Union.

"Much has been done in this town, above all because of Palma," Tadic was quoted as saying. "Without a European Jagodina, there's no European Serbia."

PRAGMATIC

Palma's rise and rise can be read as an unlikely tale of redemption, or a lesson in the fickle interests and uneasy alliances in Serbia a little over a decade since Milosevic was ousted by liberal reformers who find themselves in bed with remnants of the motley crew spawned by his regime.

"Palma's reinvention of himself from militant nationalist to a selectively pro-Western politician reflects a pragmatic calculation that sees Serbia's political and economic future with Europe," the U.S. embassy cable read.

Or as folksy Palma puts it: "You can't pour patriotism into a tractor."

"In politics, at certain moments, a person must be pragmatic," he told Reuters this week, when asked about his decision back in 2008 to embrace EU integration and enter government with the Democrats.

"I advocate economic patriotism and national pragmatism," he said. In 2010, Sweden's then ambassador to Belgrade was reported as describing Palma as "the key figure in the formation of Serbia's pro-European government".

Tadic is expected to win the run-off against rightist opposition leader Tomislav Nikolic, and will put the finishing touches to a new governing coalition led by his Democrats, the main reformist party that came to power with Milosevic's overthrow in 2000.

But with only 67 seats in the 250-seat parliament, the Democrats will again rely on the support of the Socialist Party, once run by Milosevic but now led by his wartime spokesman and interior minister in the last government, Ivica Dacic.

Dacic and Palma are allied and ran in the election together. Both men have coalesced around the common goal of taking Serbia into the EU, the country's primary source of investment and trade, but are unapologetic for the past.

Critics question whether such a government can meet EU calls for Serbia to root out the organized crime and corruption that flourished during the thuggish 1990s.

In the May 6 election, Dacic, Palma and Serbia's Pensioners Party doubled their joint presence in parliament to 44 seats.

Photographs captured Dacic celebrating with trumpets and fireworks, and behind him Aleksandar Vavic, leader of the notorious Alcatraz fan group of Belgrade's Partizan FC.

Media reports say Vavic has been charged by police 12 times, including for grievous bodily harm and illegal weapons possession. He was given a jail sentence in February for stabbing a fellow fan, but remains free. Dacic said he was unaware Vavic was there, and blamed security at his party HQ.

TURBO-FOLK

Palma and Dacic go back a long way, to the war years of the 1990s when over 125,000 people died in Bosnia, Croatia and Kosovo, while Palma TV spewed out the kitsch, plastic mix of Balkan folk and modern pop beats known as turbo-folk.

It was the music of a new class of war-profiteers, and Arkan's wife, Svetlana 'Ceca' Raznatovic, was its rising star.

Arkan was gunned down in the lobby of a Belgrade hotel in 2000 and Palma went his own way, becoming mayor of Jagodina in 2004. His reign has been nothing if not colorful.

Besides the zoo, he has opened a giant aqua park and a wax museum featuring, among others, Milosevic, Yugoslav dictator Josip Broz Tito, and the pride of Serbia, tennis world No. 1 Novak Djokovic. A museum guide said Tadic was in the works.

Father of two, Palma is a family man who offers handouts of 1,200 euros for every newborn baby in Jagodina, sending bachelors and unmarried women on matchmaking holidays to Greece.

Palma says the holidays yielded 10 marriages and that his initiatives helped Jagodina buck the national trend of a declining, ageing population.

He is known for anti-gay outbursts, but even better for a YouTube video of him listing the pop stars who have performed for him and lamenting that "only Beethoven and Chopin haven't played or sung for me because I was too young". The gaffe went viral in Serbia.

In an interview with Reuters, he denied demanding a giraffe for his zoo as a condition for joining the last government in 2008, a story the Serbian press fed off for months.

The reports also said he secured $400,000 from the national budget for Jagodina. Palma says he finances his largesse by rigorous savings, including foregoing his mayoral salary and those for councilors, and limiting their mobile phone bills.

The U.S. embassy cable, however, said it was "widely suspected that Palma's business interests and suspect financial sources fill gaps in the city budget".

And it works. Palma's party holds a huge majority in the municipal assembly, and the mayor himself says that in five successive elections he has won over 90 percent of votes in his native village of Koncarevo. This year he won 95 percent.

"These are the people who know me best, who know what I was like when I was small, when I was growing up, what my family is like," he told Reuters, or as he put it to the U.S. embassy, such figures represent "an even better result than that achieved by Saddam Hussein".

(Editing by Maria Golovnina)