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yugoslavia

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  SERBIA & MONTENEGRO

REPUBLICAN REFERENCE

Area (sq.km)
102,136

Population
10,677,290

Capital
Belgrade

Currency
New Dinar

President
Vojislav Kostunica

Private sector
% of GDP

40%

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Background:
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: 063 - (23/07/02)

St. Vitus' dance
The Serbs have a penchant for celebrating their defeats, none more so than the Battle of Kosovo in 1389 when the Turks won and started half a millennium of rule. On 28th June, St. Vitus's Day, demonstrators took to the streets to protest the way their hero, Slobodan Milosovic, was supinely handed over to The Hague for international criminal prosecution.
They were protesting against the policies of their government under the reformers, led by Premier Zoran Djindjic. He was the leader of the reformist alliance that toppled Milosevic and decided to hand him over to the UN war crimes tribunal a year ago.
For them Serbia is itself on trial and most unfairly so. Their view of history is very different from that held outside the country by their neighbours in the West. Their cause is another lost one for the Serbs. The younger generation have lost their enthusiasm for nostalgic struggle against the rest of the world. 

The Greeks come in
Greece is a major player in the Balkans, the one country there already in the EU, of which it will have the rotating presidency in January-June 2003. Greek business is active throughout the region, especially in Macedonia, the origin of so much of Greek history. But now the Greeks are coming to town in Serbia.
The Athens Stock Exchange and the Belgrade Stock Exchange are cooperating to establish a capital market in Serbia, a project to be completed by the end of the year. Cooperation actually began at the end of 2000, but it accelerated after the signing of an agreement in December 2001. The operation is being financed by 1.8m Euros. There will be cooperation with other bourses in the region.
Greek businessmen know the ropes in former Yugoslavia. Back in Tito's time they were already active, but more as traders than investors. Now investment, both portfolio and direct, should be coming in droves. The Greeks well understand that Serbia is the centrepiece of the Balkan region's economy. 

Stability Pact Involvement
With the same idea, Serbia has become central to the operation of the Stability Pact, the body set up by Germany in 1999 when it had the EU presidency to stabilise the Balkan region. The pact involves more than 40 partners, including the EU, the US and Japan, who have put up the 2.4bn Euros, to be expended upon 244 "Quick Start Projects."
With Milosevic out of the way, a larger number of these are likely to go to Serbia. The international community is well aware of the need to do everything to make life easier for the new government of Serbia under Premier Djindjic.
It has won good points recently by putting various war criminals on trial at home, without waiting for a foreign spur to do so. President Vojislav Kostunica is not keen on this, but the Serbian government is pressing ahead all the same, just as they cooperated with The Hague tribunal over the former president. There is no doubt that a new political mood prevails in Belgrade, which never again wants to be a pariah capital.

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ENERGY

Russia to offer "biggest possible" support to Yugoslav power industry 


Yugoslav Deputy Premier Miroljub Labus said on 17th June that Russia, as a traditional Yugoslav political and economic partner, was ready to help the rehabilitation and development of the Yugoslav economy by means of loans, taking part in the privatisation process and encouraging the country's exports, Tanjug News Agency has reported. 
After a meeting with Russian Minister of Economic Development and Trade, German Gref, Labus said at a press conference that the good economic and political bilateral relations would help the development of all kinds of economic, financial and trade cooperation. 
The Russian government will shortly offer the biggest possible support to Yugoslavia in the reconstruction of its infrastructure, especially in power supply, since major Russian power supply and engineering companies are traditionally present on the Yugoslav market, Gref said. 
Russia will regulate its debts towards Yugoslavia as soon as their parliaments ratify an agreement on succession, Gref pointed out.

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FOREIGN INVESTMENT

British businessmen examine opportunities for direct investments in Serbia bbc

Organised by the British embassy, a group of British businessmen stayed in Belgrade recently with view to examining possibilities of direct investments in future business projects in Serbia, Tanjug News Agency has reported. 
Nigel Peters, who headed the group, told Tanjug that they used the three-day stay in Belgrade to get information about the process of privatisation and to what point it has reached; they also held talks with representatives of the World Bank and the European Bank for Reconstruction and Development in Serbia. 
Peters said that in the opinion of leading experts of British consultancy firms, the success of development projects in Serbia will depend on the support of some international financing funds and institutions. 
He underlined that the delegation of British businessmen had the opportunity to get a realistic overview of the government's business priorities, the quality of cooperation of the state sector with foreign donors, and to hold talks with local bodies of power and businessmen about the possibility of investing capital in agriculture, ecological protection, health and infrastructure. 
British businessmen are primarily interested in cooperation with small, efficient and flexible people and firms who can adapt easily to new circumstances, instead of the old, bulky and closed state enterprises, said Peters who is heading a group of 16 British businessmen.

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FOREIGN LOANS

European Commission approves 1.15m euros for 45 projects 

The European Commission (EC) delegation to Yugoslavia approved donations worth 1.15m Euros for 45 projects within a micro programme of the European Initiative for Democracy and Human Rights (EIDHR), EC delegation head Ambassador Geoffrey Barrett, said on 26th June, Tanjug News Agency has reported. 
This is the biggest sum approved this year to a single country, Barrett said, pointing out that 4.7m Euros had been earmarked for EIDHR macro and micro programmes in Yugoslavia this year and the last, bringing donations so far since 1998 to 7.4m Euros. 
The donations have gone to 44 NGOs, media companies and groups for the protection of human rights, who took part in an invitation for projects posted in October 2001. A total of 232 projects were submitted at the time, EC delegation nongovernmental sector adviser, Marija Jancic, specified.

EBRD increases support to city in Yugoslavia

The European Bank for Reconstruction and Development has signed two new loan agreements worth €5m each with the cities of Novi Sad and Kragujevac in the Federal
Republic of Yugoslavia. The loans will fund urgently needed improvements to the cities' water supply and sanitation, as well as encourage the provision of public services to regional towns and cities. Such decentralisation is one of several key objectives outlined in the EBRD's first Country Strategy for Yugoslavia, published on its website: www.ebrd.com.
The Country Strategy replaces the short-term Action Plan, adopted in January 2001, when Yugoslavia officially joined the Bank. The purpose of the Action Plan was to help kick-start the country's economy. To date, the EBRD has signed ten projects totalling €259m. Investments have been made in energy, transport, municipal infrastructure, the financial sector and local private enterprise. EBRD projects have helped the government focus on urgently needed reforms such as, privatisation and secured transaction laws.
The signings in Novi Sad and Kragujevac are part of €50m programmes established by the EBRD to improve urban transport, water supply, sanitation and district heating services for Yugoslav municipalities. The projects follow a similar agreement, signed earlier this year with Nis. The programme supports not only physical upgrades to infrastructure but also boosts the credit-worthiness of local utilities by helping them improve financial and operational management. The bank expects to sign further deals later in the year with other municipalities.
The EBRD strategy paper acknowledges the remarkable progress Yugoslavia has made. It points to key achievements including macroeconomic stability, extensive price and trade liberalisation and re-integration into the international community. Moreover, both in Serbia and Montenegro, the investment climate has improved substantially.
There are many challenges that remain, cautions the strategy paper. Yugoslavia must sustain macro-economic stability. The banking system remains in deep difficulties, with a low level of deposits relative to the economy and very limited access to loans. Most large enterprises lack a clear ownership structure and urgently need fresh capital and improved corporate governance. Much of the country's infrastructure is obsolete, holding back economy growth and investment.
Tackling these challenges will be a formidable task. Vigorous reforms, to which the authorities have already shown their strong commitment, will over the short-term lead to higher costs of living from tariff and other price increases, as well as lower job security as loss-making firms are closed or restructured. There will be an urgent need to show the benefits of reform, including better access to capital for enterprises and hence job creation, a greater volume of foreign direct investment and improved reliability of public services.
Continuing to focus its attention towards Yugoslavia's financial and enterprises sectors, the EBRD will build on its strong assistance to small and medium-sized businesses, help build public confidence in local banks and support the forthcoming foreign direct investor-led privatisation. The energy, municipal, agribusiness and transport sectors are also expected to benefit significantly in the Bank's forthcoming operations.
For further information contact Ben Atkins, EBRD, tel: +44 207 3387236.

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