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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: 067 - (19/11/02)

Serbia and Montenegro are in efforts to resume a stalled EU - brokered agreement whereby the two Yugoslav republics would operate a joint entity, the Union of Serbia and Montenegro. The idea is that the two would become nearly independent state with a minimal joint administration.
An initial deal was signed in March, but it has not yet been implemented. Leaders met in October to settle matters in dispute. 

Wrangle over Parliament
According to the agreement the two sides would share a UN seat, while after three years each could hold a referendum on whether to go independent. But it has not been decided how to set up a federal parliament. The key issue is whether each republic should directly elect its parliamentarians or whether the MPs should be seconded by each republic.
Federal President Vojislav Kostunica wants a popular vote to give the assembly an authority. But the Montenegrin President and pre-independence leader Milo Djukanovic is against that, citing fears that then the federal parliament would have too much authority and overshadow each republic's existing parliaments. The Montenegrin clearly wants as loose a confederation as possible. "We must be pragmatists and adopt what we have agreed on so far," he says, leaving the issue until later. This is rather an obvious ploy to bury it.

The stakes
At stake is the very nature of the confederation and whether the two sides are likely to remain together in three years time. Djukanovic is angling to win a referendum on independence for Montenegro then; at least that is the likeliest meaning of his actions. Anything that weakens federal structures ahead of that is, therefore, to be welcomed.
Kostunica has the advantage of the EU being right behind his idea of a popular mandate. The issue cannot be settled by a referendum itself since the Serbs with a much larger population, would clearly win it.
Kostunica's own job is on the line as well. He failed to win elections for the Serbian presidency, which will have to be rerun in January. The Serb president is not just a figurehead, whereas the Federal President largely is, as Kostunica has discovered. He is at loggerheads with Serb Premier Zoran Djindjic, but always loses the dispute. Djindjic's candidate for the Serbian president trailed badly behind Kostunica, who looks set to win next time.

Big arms scandal
Serbia has been generally welcomed back into the international fold. It is now receiving aid, credit and attention in large measure, while reforms are under way, being pushed forcefully by Djindjic.
But in October a big scandal blew up that threatens relations with the West. It transpired that a Bosnian Serb firm, Orao (Eagle), and a Yugoslav one, have been selling parts and equipment to Iraq to refurbish its military aircraft. This is in total contravention of the UN embargo of arms sales to Iraq.
The Federal Government has fired the deputy defence minister, Ivan Djovic, and the head of Yugoimport, Jovan Cekovic. Further heads may have to roll. It turns out that Dusan Mihajlovik, the interior minister of Serbia, is also the chairman of Yugoimport's board. He claims to be unaware of any deals with Iraq, even while ordering the organised crime squad to investigate.
The scandal has become a major embarrassment for officials in Belgrade. Serbian Justice Minister, Vladan Batic, has also demanded the resignation of Federal Prime Minister, Dragisa Pesic and Defence Minister, Velimir Radojevic. Batic made the demand as leaders in Belgrade clashed over who was responsible for the scandal that could result in renewed sanctions against the country. The Chairman of the international war crimes tribunal in The Hague, Claude Jorda, has told the UN Security Council that Belgrade is still not cooperating with investigators.
In neighbouring Croatia, meanwhile, police raided a ship in the port of Rijeka recently, on suspicion of weapon smuggling. Interior Ministry spokesperson Zinka Bardic said the ship Boka Star, registered in the Kingdom of Tonga but owned by a Montenegrin citizen, was under surveillance as suspicious since it entered Croatian waters. Unsurprising, one might think, with such a provenance.

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AGRICULTURE 

Privatisation of agricultural complexes in Serbia next year 

Privatisation in the area of agriculture should begin next year, and US companies are to be informed prior to the event about possibilities for participating in the process, Serbian Minister of Agriculture and Water Management, Dragan Veselinov said, Tanjug News Agency has reported. 
Presenting the home agriculture to US agricultural and food industry representatives, Veselinov told a conference on business possibilities in this area that 63 major agricultural companies should be privatised by the end of 2004, which cover from 2,000 to 15,000 hectares. The agricultural attaché of the US Embassy in Belgrade said US companies consider health food production to be the most promising agricultural branch for investments. 

Serbian industry to export cooking oil to Middle East 

The Zrenjanin-based Dijamant cooking oil industry output in the first ten months of this year reached a record 27.5 million litres, General Manager Savo Knezevic said, Tanjug News Agency has reported. 
At a press conference describing the performance of his company, Knezevic said that Dijamant exports 70 of its products to Europe and is planning to reach other markets too. A contract was signed recently with the Dubai-based Khamas International Group on exports to the United Arab Emirates, the Middle and the Far East, from which earnings between US$4 -6m are expected annually, Knezevic said.

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AUTOMOBILES

Serbian car factory boss says production below plan despite doubling output

The director of Zastava Car Factory, Miljko Kokic, has told FoNet News Agency that the factory "doubled production" during the first ten months of this year as compared to the same period last year but noted that, despite that, this year's plan was not realized.
"We produced over 9,000 cars so far, which is twice as much as compared with the same period last year but this was not enough to fully realize this year's ten-month production plan," Kokic said.
Zastava planned to produce 18,000 cars this year, that is, 1,500 per month, but this plan had not been realized due to irregular deliveries of motors from the Belgrade-based Motor Factory.
They plan at the Kragujevac factory to produce an additional 5,000 cars by the end of the year, but the realization of this plan would depend on deliveries of domestic motors. Six hundred cars with French Peugeot-Citroen motors would be assembled during that period.

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FINANCIAL NEWS

Serbian government outlines draft budget for 2003

Serbian Finance and Economy Ministe,r Bozidar Djelic, has said that on 31st October the Serbian government passed the Serbian budget for 2003, which will amount to 261.5 billion dinars, Beta News Agency has reported. 
"The Serbian government passed a draft budget for 2003 and the entire package of accompanying budget bills," Djelic told a news conference, which was in addition to Djelic also attended by 10 other Serbian government ministers. 
The budget revenue will account for 214.6 billion dinars. The deficit will be 46.9 billion dinars, or 3.8 per cent of the GDP. 
The government passed the memorandum on the budget, and the economic and fiscal policy in the fiscal year 2003 and in the subsequent two years, the financial plans of social security funds, the final account of the budget 2002, and the report of the budget audit for the period 1996 to 2000, Djelic said. 
As he said, the economic policy achievements must be preserved and the growth of salaries could not exceed production, because there will be no investments. 
"The salaries will, on average, be allowed to grow by 5 per cent in the coming year. We plan the average salary to be 11,200 dinars in 2003, and 12,800 dinars in 2004," Djelic said. 
The salaries in health care and education will not grow more than 10 per cent in the coming year, Djelic announced, adding that these salaries had increased considerably this year. 
As he said, the Serbian Assembly has a deadline of six weeks to review the proposed draft budget. The final deadline for its adoption is 15th December. Djelic said the planned inflation for 2003 is 9 per cent. He exposed a major payment deficit, created by the 25 per cent increase in imports in the first nine months of this year, as one of the problems in the Serbian economy. 
Djelic said the main source of the budget revenue will be the sales tax which will account for roughly 90 billion dinars, citizens' income tax of 50.6 billion dinars, excise duties 47.9 billion dinars, the tax on companies' profit, and other revenue. 
The main budget expenditure will be salaries, which will account for 62.2 billion dinars, subsidies to security bodies [organizacije osiguranja] 61.6 billion dinars, debts 21.3 billion dinars, welfare, and other expenditure, Djelic said. 
Public expenditure must be reduced from 48.4 per cent to 47.6 per cent in 2003, Djelic said. 
He said that the social product per capita will amount to US$1,830 in 2002, and to US$2,160 in 2003. He also said that this year's budget projection had been coordinated with the IMF. 

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FOREIGN ECONOMIC RELATIONS

President says Romania to renew cooperation with Serbian chemical firm

Romanian President Ion Iliescu, in Yugoslavia on a two-day official visit to this country, met on 5th November in Pancevo with representatives of the Romanian community in Yugoslavia and afterwards with businessmen of the Southern Banat Region, Tanjug News Agency has reported. 
During the visit, the Romanian president announced that Petrohemija of Pancevo and Solventula of Timosoara would shortly renew cooperation, primarily owing to the completion of the oil pipeline from Constanta to Pancevo. 
"After all, there is the good tradition in economic relations between Romania and Yugoslavia, as well as good political relations," Iliescu said in the Regional Chamber of Commerce of Pancevo, the venue of a meeting of economic delegations of Romania and the Southern Banat Region. 
The Romanian state delegation, headed by Iliescu, previously met with the representatives of the Romanian community in Yugoslavia in the Pancevo commune building.

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FOREIGN INVESTMENT

Austrian company takes over largest Serbian manufacturer of detergents

The Vienna-based Henkel CEE company took over on 31st October the majority of shares of the largest Serbian manufacturer of detergents, Krusevac-based Merima, having bought shares to the value of 14.4m euros and thus obtaining the right to ownership of 70 per cent of the company which employs about 1,150 workers, Tanjug News Agency has reported. 
In the next five years, Henkel will invest about 43.3m euros in the modernization of the industry, which will operate under the name Henkel-Merima, the Henkel office for central and eastern Europe said. 
Serbia, with its 10 million consumers, is an important market for Henkel, and is central in a region with about 55 million consumers. The company consequently expects a great potential for exports to neighbouring countries, the office said.

Serbian finance minister says Yugoslavia expects US$1bn in US investments

Next year Yugoslavia expects foreign investments equalling US$1bn and businessmen from the United States are showing special interest in taxes and subsidies, Serbian Finance Minister Bozidar Djelic on 4th November told the conference dubbed "How to Succeed in Serbia" on business opportunities, Tanjug News Agency has reported. 
The International Monetary Fund (IMF), well-known for its conservative estimates, has also upped its predictions to a possible US$700m. 
"As long as we maintain macro-economic stability and a clearcut concept of reforms, foreign investors will be interested in our economy," Djelic stated, adding that a French business delegation made up of 50 general managers of major companies would visit Belgrade on 21st-22nd November.

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FOREIGN LOANS & AID

Kosovo premier takes shopping list to donors conference in Brussels

A Kosovo delegation headed by the leader of the UN mission to Kosovo, Michael Steiner, departed for Brussels on 3rd November to attend a donor conference the World Bank is organizing for Kosovo starting 5th November, HINA News Agency has reported.
Prime Minister Bajram Rexhepi told reporters before leaving that Kosovo's priorities were "both economic and political" and that he would try to "establish direct contact with the European Commission." He said he would ask for the establishment of a Kosovo airline and that Kosovo be given its telecommunications code.
"We expect to be given full support for further donations. This isn't a classic donor conference where we will get the money right away, but after outlining our priorities we expect that various donor countries will continue making donations for Kosovo," said the prime minister.
Steiner pointed to the need of outlining a strategy for the return of displaced persons to Kosovo.
Kosovo television said that donors had promised to earmark about 500m euros for Kosovo over the next three years.

Yugoslavia gets loans amounting to US$23.5bn for reforms 

Deputy Prime Minister, Miroljub Labus, on 31st October signed four bilateral agreements with the World Bank and the Italian and Japanese governments on a loan and donations to Yugoslavia at the total amount of about US$23.5bn, which would be spent to reform the banking and private sectors and to stimulate Yugoslavia's exports, Tanjug News Agency has reported. 
After the signing ceremony, Labus told a news conference that two donation agreements had been signed with the Japanese government. The first, at the amount of US$1.45m is to be used to prepare the project of reform of the private and financial sectors. 
The second agreement to the amount of US$500,000 is to be used to prepare the project of health care reforms, Labus said. Japanese Ambassador to Yugoslavia Yoshiki Mine signed the agreements on behalf of his government. 
The agreement with the Italian government refers to a 10-million-euro donation for the project of capitalisation of the Fund for Insurance and Financing of Foreign Trade Deals, Labus said. Italian Ambassador to Yugoslavia Giovanni Caracciolo Di Vietri signed the agreement on behalf of his government. 
An agreement was also signed with the World Bank on a US$11.5m loan for the realisation of the project of founding and capitalisation of the Fund for Insurance and Financing of Foreign Trade Deals, Labus said. 
He said that the loan had been granted in keeping with IDA conditions - for a 20-year period, with a 10-year grace period, interest-free and with 0.75 per cent annual loan costs. 
After the signing, head of the World Bank's Belgrade office Rory O'Sullivan said that the Japanese and Italian governments had given a very important financial support, which would be additionally supported by the World Bank.

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