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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: 066 - (22/10/02)

The Serbian elections have been declared null and void, only 45% of the voters turning out in the second round, below the 50% threshold required for validation of the result. This outcome leaves the country without a head of state and in a demoralised political condition.

Electoral failure
The Serbs are disillusioned with politics, inclined to distrust their politicians, after the debacle of popular infatuation with Milosevic. The great loser is the president of the former Federal Yugoslavia, which is being replaced by a new entity, the Union of Serbia and Montenegro. That is Vojislav Kostunica. He is now without a job, unable to lead the new state as president, despite being the clear front runner on 66% of the votes counted against just over 31% for the government candidate, Miroljub Labus. Labus is a pro-Western economist and deputy premier under Kostunica's great rival, Premier Zoran Djindjic, another pro-Westerner. Kostunica is a moderate nationalist.
The low turnout was partly due to bad weather. But a factor in the result must have been the refusal of hard nationalists defeated in the first round to endorse Kostunica in the run-off, notably ultranationalist Vojislav Seselj, who urged his supporters to abstain. The turn-out fell from 55% to 45% between the two rounds, indicating that this had some effect. If so it is another baleful repercussion of Milosevic, whom Kostunica ousted in October 2000 and to whom Seselj still feels loyalty.
New elections are now postponed to 2003, when on January 5th the Serbs will have to relaunch the process.

Montenegro to depart?
The implications of the delay could be profound. For one it leaves nobody as even a ceremonial head of the Union of Serbia and Montenegro. Either republic under the new dispensation is entitled to vote on its secession in three years' time. Without any existing bond being kept up, the cause of the union could be lost by default, with Montenegro wanting out.
It is not as if Montenegro's 660,000 citizens have not got a republic capable of independence. On the Adriatic Sea, with a mountainous geography of great charm, it is now facing an oil boom. Some one billion barrels of oil have been found in an offshore field and is to be exploited with the help of a British firm. The Serbs need oil as much as the Montenegrins.

Backdrop of hardship
The electoral impasse has yet another explanation, however, the grim reality of an economy in ruins. Ten years of war and dislocation have impoverished further an already poor nation. Unemployment is an unimaginable 40%. Shortages abound.
The government is undertaking wide-ranging reforms and cooperating with the West in handing over war criminals. But neither of these things is increasing its popularity. It must be alarmed at Labus's poor performance. Come 2003 Kostunica could be installed as president; and he has vowed to bring down the Djindjic government. There could be stormy times ahead for Serbia (and Montenegro). 

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BANKING 

Two largest Serbian banks to retain domestic ownership 

The Yugoslav National Bank (NBJ) will not permit foreign investors to take over more than 20 per cent of the capital of Komercijalna and Vojvodjanska banks because it believes that they should be kept in domestic ownership as the two strongest domestic banks, FoNet News Agency has reported.
Yugoslav Bank Governor, Mladjan Dinkic gave this news to journalists, revealing that the NBJ had given permission to Hippo Alpe Adria bank to become a majority shareholder in the Depozitno kreditna bank, that the Greek Commercial Bank became a majority shareholder in the Kapital bank, that Nova Ljubljanska bank was interested in becoming a majority shareholder in the Kontinental bank and that a large Dutch bank would be on the market soon.
As the governor announced, the procedure for transforming commercial banks' debts with Paris and London clubs into state bonds would be established within a month, while a total privatisation of the banks would be completed by the end of 2003.
Dinkic said that of around 8,500 employees who had been dismissed from the banks which had closed down, 2,500 got jobs in the banking sector, adding that the following year - when payments operations move from the Payments Clearance and Accountancy House to banks - there would be jobs for 10,000 people, that is, there would be more employees in banking sector than before the reform of this area of the economy.
The governor recalled that the NBJ would soon be renamed the National Bank of Serbia after the adoption of the constitutional charter of Serbia, Montenegro.

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ENERGY

More than half shares of Montenegrin oil company sold to Greek company

The Montenegrin Tender Committee for the sale of Jugopetrol company of Kotor has finished considering offers. After 40 hours, the tender committee for the privatisation of Jugopetrol Kotor briefed journalists on the list of companies who offered to buy 54.33 per cent of the company's shares, Radio Montenegro has reported. The Greek Hellenic Petroleum company has submitted the best offer. 
The following report was made by Dubravka Pesic for the radio station: The Montenegrin Privatisation Council Tender Committee has decided that the Greek Hellenic Petroleum company, which bid 65m Euro for taking over the company, has submitted the best offer. The company plans to invest 35m Euro in the Kotor company, a further 4m Euro for its social package, along with 1.5m Euro for local management. The Slovene Petrol company was second-highest bidder, offering over 31m Euros for 54.33 per cent of the shares, the same amount for investment and 2.5m Euros for the social package...
The Austrian OMW company, the Croatian INA company and the Landrus Invest company did not observe the tender procedure.
Negotiations between tender committee representatives and Hellenic Petroleum are to begin very soon. Should the negotiations fail, there will be negotiations with the Slovene Petrol company, which submitted the second highest offer, said privatisation committee chairman, Veselin Vukotic, adding that the procedure, preparations and current stages of the tender procedures were entirely within the Privatisation Law and the forecasts for the current year...

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FOREIGN ECONOMIC RELATIONS

Yugoslav foreign minister hopes US will drop conditions for trade ties

Yugoslav Foreign Minister, Goran Svilanovic, has said that he hopes that, following his talks with US officials, the United States will no longer make the normalization of trade relations with the FRY conditional on a demand for lasting respect for the Dayton Agreement and the territorial integrity of Bosnia-Herzegovina, BETA News Agency has reported. 
Svilanovic told BETA by telephone from Washington that he rejected as completely unfounded the statement by Serbian Deputy Prime Minister Nebojsa Covic that his remarks on the possibility of the United States setting conditions for the normalization of trade relations with the FRY were part of the election campaign for Serbian president. 
"I do not want to participate in any way in anybody's campaign, nor was this the idea. On the contrary, I think that statements such as his are election campaigning," Svilanovic said after talks with a group of senators, and Steven Headley, assistant to the US President's national security adviser. 
"I have spent two days here, and I hope that I will solve it in the next couple of days, and that is that our country will get normal trade relations with the United States without any conditions," Svilanovic said prior to his meeting with Assistant Secretary of State, Richard Armitage. 

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FOREIGN INVESTMENT

Novi Popovac operations secured with US$85m investment

Serbia Minister for Privatisation, Alexandra Vlahovic, on a visit to the factory, declared, "None of the workers of the cement plant in Novi Popovac are going to be sacked in the next five years. A new foreign owner has invested US$85m, which will make it possible for production to increase twofold and new jobs to be created." The Blic Daily reported that his visit was realised within the framework of the government's' Proud of Serbia' campaign. 

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FOREIGN LOANS & AID

Foreign bodies endorse US$1.1bn in loans since 2000

Since October 2000, Yugoslavia has received approval for loans from international financial organisations to the tune of some US$1.1bn, while just US$629m has arrived in the country. Acting Yugoslav Finance Minister, Veroljub Dugalic, speaking about the country's foreign debt at a news conference recently, said that all but the World Bank's Structural adjustment loans had a development component and would be used for investing rehabilitation and not for increasing salaries and financing social problems, which will be financed from realistic sources of income, according to Tanjug News Agency.

European Bank donates 5m Euros for development of Yugoslav businesses

Yugoslav National Bank Governor (NBJ) Mladjan Dinkic, European Agency for Reconstruction (EAR) Belgrade Office Director, Nicholas Marcus, and Assistant Serbian Foreign Trade Minister, Gordana Lazarevic, on 26th September signed a contract on an EAR donation worth five million Euros for the development of small and medium-sized [SME] companies in Serbia, Tanjug News Agency has reported.
After the signing ceremony at the central bank headquarters, Dinkic said this was the third payment of EAR donations for the reconstruction of small and medium-sized companies. He pointed out that the grants total 10 million Euros, including the previous two donations. 
The funds will be deposited with the NBJ, as turnover credit capital for further credits granted through the banks Eksim Bank, Novosadska banka, Zepter Bank, and Cacanska banka. 
Credits will be offered to small and medium-sized companies with a five-year repayment period in amounts from 20,000 to 200,000 Euros, a grace period of one year, and an interest rate of about 10 per cent annually, Dinkic said.

World Bank expected to grant Serbia US$11m loan

World Bank's supervisory departments should send to the Board of Directors documents for granting Serbia an US$11m loan as technical assistance for the reform of the banking system and privatisation of 40 large enterprises in Serbia, senior adviser of the World Bank's executive director and Yugoslav representative at this institution Dusan Vujovic told Tanjug News Agency on 4th October. 
The Board of Directors will make its decision within 30 days and if it is positive, a relevant agreement will be signed and ratified and the funds will be granted. 
Funds are granted under very favourable IDA [International Development Agency] conditions, interest rate-free, with annual costs amounting to just 0.75 per cent and a 20-year repayment deadline, including a 10-year grace period. 
"The loan will be used to finance the preparatory stage of the privatisation of large systems, that is teams will be set up made up of domestic and foreign experts who will screen the situation in each company and do their best to ensure that the companies get the largest possible price on the world market, since there are no buyers for such large systems in the country," Vujovic said. 
The amount of US$11m represents part of the three-year US$540m package, defined under the World Bank strategy aimed at supporting transition in the country.

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INFORMATION TECHNOLOGY

Belgrade, Ljubljana collaborate on new Serbian software firm

The Belgrade-based IT business incubator, ICTT, and the Slovenia-based, DataLab, have reached agreement on setting up a new company that will service the markets in Serbia and Montenegro with proprietary ERP solutions for small- and medium-sized enterprises (SMEs).
The new company will function under the DataLab.yu name and will operate out of the ICTT incubator, Europemedia.net reported. DataLab.yu has the goal of assisting firms in Serbia and Montenegro to streamline their operations by implementing Pantheon 5, a collection of tried and tested business software packages developed by DataLab and used by more than 2,500 users throughout the region.
At the end of September, DataLab.yu launched its localised Yugoslav version of Pantheon 5.0 integrated ERP suite at Infofest 2002 in Budva. Beyond that, the English, Slovenian and German versions of the user interface will be ready for servicing foreign-owned or managed companies in their respective native languages.
DataLab.yu in consideration of relatively small amounts of investment currently available in Yugoslavia, as well as the fact that among the things that transitional economies need most are tools and practice in productivity gains, has taken the decision to apply special prices for the licences. One licence will sell for around 200 Euro, while there will be a special free-of-charge offer to all accounts servicing 10 or more clients in one county.

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PRIVATISATION

Serbian privatisation minister says sale of 54 companies earned 251m Euro

The Serbian budget this year received 251m Euros earned through the privatisation of 54 socially-owned companies, Serbian Minister of Economy and Privatisation, Aleksandar Vlahovic, said in Novi Popovac, Tanjug News Agency, has reported. 
He said that five enterprises had been sold through tenders for 170 million Euro, 28 enterprises in public auctions for 13.1 million Euro and the minority share packages of 21 enterprises had been sold from the stock fund for 67.8 million Euro. 
The privatisation of between 400 and 600 enterprises is expected by the end of the year, Vlahovic said at the Novi Popovac cement works, which he visited within the 'Proud of Serbia' campaign. 
In addition to this, the contracts on the purchase of 54 enterprises secured 254.8-million-Euro investments, to be realised in three to five years. A consortium of seven domestic and foreign banks with a 60-million-Euro fund was set up and will grant loans to entrepreneurs and workers who wish to purchase their enterprise's shares.

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TOURISM

Montenegrin PM says tourism way out of territorial dispute with Croatia

The future of Prevlaka [a disputed promontory] lies in the construction of a tourist complex and a harbour, Montenegrin Prime Minister Filip Vujanovic said, HINA News Agency has reported.
"This has been confirmed by Croatian President Stjepan Mesic on two occasions, in Crans Montana and Johannesburg," Vujanovic said in an interview with Herceg Novi's Busola Radio. He stressed that Prevlaka peninsula should be an area where Croatia and Montenegro meet.
"This conceptual project should become a reality, and Montenegrin President Milo Djukanovic and his Croatian counterpart Mesic have requested donations and favourable loans from the UN, which would enable construction of an attractive tourist complex," Vujanovic said.
He pointed out that the Montenegrin, Croatian citizens and foreigners would have a free access to the complex.
"This is the future of Prevlaka, and disputes should not be initiated. We have a good understanding with Croatia, and discussions on the issue are under way between the two [Croatian and Yugoslav] federal foreign ministries, but the issue cannot be resolved without Montenegro," Vujanovic said.
He went on to say that a construction of a new border crossing at Debeli Brijeg is expected to be completed by the next tourist season.
"Donations for the joint project by the two countries are expected from the Stability Pact," Vujanovic said...

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