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The Kingdom of Serbs, Croats, and Slovenes was formed in 1918; its name was changed to Yugoslavia in 1929. Occupation by Nazi Germany in 1941 was resisted by
various partisan bands that fought themselves as well as the invaders. The group headed by Marshal TITO took full control upon German expulsion in 1945.
Although communist in name, his new government successfully steered its own path between the Warsaw Pact nations and the West for the next four and a half
decades. In the early 1990s, post-TITO Yugoslavia began to unravel along ethnic lines: Slovenia, Croatia, and The Former Yugoslav Republic of Macedonia all
declared their independence in 1991; Bosnia and Herzegovina in 1992. The remaining republics of Serbia and Montenegro declared a new "Federal Republic of
Yugoslavia" in 1992 and, under President Slobodan MILOSEVIC, Serbia led various military intervention efforts to unite Serbs in neighboring republics into a
"Greater Serbia." All of these efforts were ultimately unsuccessful. In 1999, massive expulsions by Serbs of ethnic Albanians living in the autonomous
republic of Kosovo provoked an international response, including the NATO bombing of Serbia and the stationing of NATO and Russian peacekeepers in Kosovo.
Blatant attempts to manipulate presidential balloting in October of 2000 were followed by massive nationwide demonstrations and strikes that saw the election
winner, Vojislav KOSTUNICA, replace MILOSEVIC.
Update No: 059
A very important development has occurred. Javier Solana, the EU foreign policy chief, has pulled off a spectacular coup. He has persuaded the two remaining
Yugoslav republics, Serbia and Montenegro on the edge of breaking apart, to stay united. Montenegro is to be given more de facto independence for abjuring
from taking de jure independence. It is to remain together in a new confederation with Serbia.
The agreement, reached after 12 hours of intense negotiations in Belgrade, strengthens the EU's role in "preventive" diplomacy, as it takes on more
responsibility for sustaining stability and security in the Balkans. The Yugoslav authorities have agreed on a looser federal structure.
A new constitution is to be put in place before the end of the year. Serbia and Montenegro, the new name, will be organised under one parliament, one
president, one council of ministers and court.
The council will be responsible for foreign affairs, defence, international economic relations and protection of human and minority rights. The economic
systems of both republics will eventually be harmonised within EU rules.
But all is not yet won. The deal has to be endorsed by the Montenegrins themselves in a referendum.
The problem is that they now have the opportunity of becoming an oil-rich state. Montenegro's ruling party, the Democratic Party of Socialists, had aimed to
drive for full independence, which would have broken the federation apart. Although ethnically close to the Serbs, the Montenegrins have a different Orthodox
church and different traditions.
Oil has been discovered in their sector of the Aegean. If the 660,000 Montenegrins have to share it with the Serbs then there will be less for them. Even
local Serbs can see the power of this argument. A compromise is likely whereby the bulk of the proceeds will be spent locally.
As regards the spectacle in the Hague, people are opposed. Some Serbs are pleased at the turn events are taking. Milosevic has been on trial there since
February12th. They look forward to putting his henchmen and the whole previous regime on trial with him. This camp includes the Serbian government.
Others feel deeply offended. They regard a prosecution of Milosevic as a trial of the entire Serbian nation. Some of this kidney are in addition afraid of
their complicity in the regime's misdemeanours being exposed. President Kostunica is above suspicion in this respect, having an unusually austere life-style
for a leading Serb politician. But he opposed surrendering Milosevic to the Hague. Milosevic meanwhile, conducting his own defence is taking the line, playing
the Serbian TV audience, that in effect Serbia is on trial at the Hague
The ruling coalition are cooperating with the West up to a point. They did after all hand over Milosevic, but by no means all possible war criminals. General
Ratco Mladic, who is wanted by the Hague tribunal for crimes perpetrated in Bosnia in 1992-95, has been seen openly flaunting his presence in Belgrade.
Clearly he has high-up protection among the security forces - after all he is one of them. Also, the military and security establishment are showing signs of
being fundamentally split over the Milosevic trial with covert assistance apparently being given to him by some elements, whilst other are assisting the
The authorities are collecting evidence that huge sums were secreted abroad in Cyprus, where some 400 'Yugoslav' companies were registered, as well as
Switzerland, London and Dublin. A key figure is Bogoljub Karic, a billionaire banker and sidekick of the Milosevics, having published the memoirs of Mira,
Milosevic' wife. He played a key role in laundering around $20bn, the`theft of the century.' Other figures are being investigated too.
"Milosevic organised this baroque state," says Alexander Radovic, the director of Serbia`s Public Revenue Agency, which is presiding over an investigation,
concerted with the Ministry of Finance and the national bank, into the commercial crimes of the old regime. "We want to prosecute them, and we want them all
A key figure in the process is the governor of the national bank, Mladjan Dinkic, who says: "Over the years millions of dollars flowed through the Astra
Bank." The Astra bank was owned by Karic. The investigation is expected to play an important part in the case against Milosevic in the Hague. What the new
reforming government is determined to avoid is the pattern of so many other countries in transition, which have sold off state assets to people of the old
regime who are little more than crooks. There can be an advantage in being a late-comer if one learns from others' mistakes.
A new generation of Yugoslav leaders, committed to the rule of law And democracy, wants the investigation to help rebuild Yugoslavia's shattered credibility
abroad. "Tycoons who enriched themselves on privileges during the Milosevic period are now trying to use their dirty money to set up regular businesses here,"
says Mr Dinkic. "I think it is very important to avoid the scenario that most of Eastern Europe had after communism. We don't want dirty capital here because
with dirty capital come dirty people and they create other social problems. We don't want them."
The new course is already leading to large aid and credit flows. A key partner here for Serbia is of course the IMF. The latest tranche, US$63m, of a stand-by
credit facility of US$252m was extended in January, US$126m of which has already been disbursed.
Serbia guarantees German loan for power company
The Serbian parliament passed a law by emergency procedure on 18th February, giving state guarantees to a German credit agency for a 51m Ruro loan to the
Serbian electric power company EPS for the overhaul of electric power plants and coal mines, Tanjug News Agency has reported.
The law was passed by 140 votes in favour, 57 against, and five abstained of the 202 present MPs. It was backed by MPs of the Democratic Opposition of Serbia
(DOS) bloc and the Democratic Party of Serbia (DSS), and opposition parties were against it - the Socialist Party of Serbia (SPS), Serbian Radical Party
(SRS) and the Party of Serbian Unity (SSJ).
The essence of the law is that Serbia will guarantee the loan in the event that the EPS is unable to repay it.
Under the law, guarantees are provided if the loan is to be returned within a period of 11 years and eight months (including a grace period of three years and
two months) in 18 equal instalments.
Concluding the debate, Finance Minister Bozidar Djelic said this credit arrangement had been secured under very favourable conditions and that multiple
control mechanisms on the spending of these funds had been set up in the EPS and the Serbian government.
He said the credit contract had been signed on 26th October 2001, but that the bill had not been placed on the agenda earlier because of other more pressing
Yugoslav bank governor says currency to become convertible in April
Yugoslav Naitonal Bank governor, Mladjan Dinkic, confirmed on 27th February that German marks could be exchanged for dinars, and vice versa, till May, and not
1st March, as previously announced, Tanjug News Agency has reported.
Dinkic also said that the dinar would become a convertible currency in April 2002, i.e. that the International Monetary Fund (IMF) would accept that it be
included in world rate of exchange lists.
"It will be a great encouragement for our country's rating. The dinar will be specified in the rate of exchange lists throughout the world, so that we have
succeeded in what no one had expected would become true - to set up a strong national convertible currency," Dinkic said.
FOREIGN ECONOMIC RELATIONS
Yugoslav premier to visit Libya for talks on bilateral, economic ties
The Yugoslav federal government adopted the basis for talks of Yugoslav Premier Dragisa Pesic during his working visit to Libya from 27th February-2nd March,
where he will discuss the state and prospects of bilateral relations and the most important issues of international relations of mutual interest, Tanjug News
Agency has reported.
As it was stated at the government session, special attention will be devoted to talks with top Libyan officials on the promotion of economic cooperation, on
the adoption of appropriate regulations and the efficient resolution of the problem of operation of Yugoslav firms in Libya.
Also in the delegation will be Yugoslav businessmen, who have important businesses in the country, which has been for many years an important economic partner
of Yugoslavia, particularly through investment works.
It is expected that this visit will mark the continuation of construction works of Yugoslav firms on large projects in Libya.
Serbia to push for second donor conference as EU assistance dries up
Serbian Minister for International Economic Cooperation, Goran Pitic, on 28th February voiced concern with the reduction of the EU assistance to the Serbian
reform process, and announced a Serbian government campaign aimed at holding another donor conference this year, Tanjug News Agency has reported.
"There is reason for concern is probably because of the European Union's reorientation to some other topics, and that's why we have stepped up pressure for
the holding of a 2nd donor conference (for Yugoslavia) between July and September," Pitic said in Belgrade at the ceremony dedicated to the signing of an
agreement on Austrian government's assistance to the development of SMEs in Yugoslavia.
Asked by reporters to quote the amount of donations and loans expected by the Serbian government and the effects of the reduction of EU assistance, Pitic
pledged he would soon publicly state the precise data.
EBRD to finance Yugoslav projects worth 240m euros over next two years
The European Bank for Reconstruction and Development (EBRD) will finance Yugoslav projects worth about 240 million euros in the next two years, EBRD general
manager for Belgium, Luxembourg and Slovenia, Bernard Snoy has said, Tanjug News Agency has reported.
EBRD will be financing private and financial sectors, and will help the infrastructure reconstruction.
Snoy told a press conference on 5th March that he had informed Serbian Prime Minister Zoran Djindjic that EBRD's stand was that it was primarily interested
in investing into the Serbian private sector.
The investment will be carried out through the Microfinance Bank (MFB) in Belgrade, Snoy said, and added that an additional US$8m would be granted for the
Snoy pointed out that the EBRD's credit would also be used for the Serbian Electric Power Industry (EPS), railway network and export companies.
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