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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: 064 - (27/08/02)

The Serbs are in a fix. They dislike their constant international discredit - that is attendant on Milosevic's performance at The Hague. Either they must defend him are they must despise him. It is a difficult choice.
Generally, the younger people despise and detest him as the author of all that went wrong in the 1990s, a decade in which the Serbs after all lost a series of three (or depending on one's criteria) four wars. He was an outstanding war-loser, one of the most spectacular in history. That is the key as to why he is not so popular.
His daughter naturally still defends him, but few other young people agree. Indeed, she says that the Serbs have "sold him out."

Rapprochement with the West 
This is literally true. Once he was handed over, credit and aid from the West started to flow. 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 possible 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.
The tension between Kostunica and Djindic is likely to increase as the former has announced that he will run for the more powerful job of Serb President in September elections. The presidency of Yugoslavia is slated to disappear in the constitutional changes that accompanied the renaming of this rump of the FYR from Yugoslavia to the Union of Serbia and Montenegro.

The Greeks come in
Greece is the major player in the Balkans, the one country there in NATO and already in the EU, of which it will have the rotating presidency in January-June 2003. Greek business is active trading and investing 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. 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 central Balkan economy.

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BANKING

Serbian director hopeful his bank will get licence to operate in Kosovo

Before the NATO action against the FRY, Komercijalna banka a.d. Beograd [bank] has had its branch offices in Pristina, Pec, Prizren, Gnjilane and Kosovska Mitrovica, while it is now left with only one in the part of Kosovska Mitrovica inhabited largely by the Serbs, the director of this bank, Ljubomir Mihajlovic, has told FoNet News Agency.
He said that the bank sought a licence from UNMIK [UN Interim Administration Mission in Kosovo] to continue work in other branch offices in Kosovo-Metohija but that, according to the international mission's regulations, banks from the FRY in this province had the status of foreign banks and they should invest capital worth 750,000 euros in order to open branch offices.
"However, according to the UN resolution [1244], all institutions which until 1988 had companies registered in Kosovo could continue their work unhindered, so I believe that we will be able to obtain the licence," Mihajlovic explained.
The possibility to open branch offices in Kosovo will be greater when payments operations are transferred from the [Serbian] Accountancy Payments and Clearance House to banks at the beginning of next year, Mihajlovic said, assessing that what was needed most was to establish economic and financial relations between the FRY and Kosovo and this can be done through banks only, first of all domestic ones.

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ENERGY

Serbia puts up 15,000 tonnes of crude oil of Iraqi origin for sale

The Serbian Directorate for Commodity Reserves [Direkcija za robne rezerve] has announced a sale of 15,000 tonnes of crude oil of Iraqi origin, while the company which offers the best price for the whole amount will be given priority, FoNet News Agency has reported.
The deadline for submitting offers to the directorate was 30th July, while the buyer would only be able to take over the oil if it had signed a contract with Pancevo Oil Refinery for storage and processing beforehand.

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FOREIGN ECONOMIC RELATIONS

Serbian, Bulgarian delegation discuss free trade accord, regional highway

Ministers of Serbia and Bulgaria agreed at a meeting in the southern Serbian town of Nis on 27th July to present the construction of the Nis-Sofia highway to the international community as the most important regional project of the two countries, it was announced at a press conference, Tanjug News Agency has reported. 
Serbian Finance Minister Bozidar Djelic said a joint study of the two governments would be completed by October and ready for the upcoming donor conference announced for November this year. 
Representatives of the two delegations underscored the importance of the imminent signing of a free-trade agreement between the two countries on their way towards establishing a free-trade zone in southeast Europe and the Balkans. 
Serbian Trade Minister, Slobodan Milosavljevic, said expert groups would work on the agreement in the coming weeks to coordinate lists of so-called sensitive products, after which the agreement will practically be ready for signing. 
Serbian Minister of Power and Mining, Kori Udovicki, and Bulgarian Power Minister, Milko Kovachev, conferred on inter-departmental cooperation and expressed mutual interest in the construction of a gas pipeline and defining general conditions for trade in power and raw materials.

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FOREIGN LOANS 

World Bank donates US$15m to Kosovo

The World Bank granted a US$15 loan to Kosovo earmarked for the support to the reform strategy, HINA News Agency has reported.
According to a statement issued in Washington, the funds will help relieve the pressure of the limited budgetary funds of local authorities. This is a non-repayable interest-free loan and will be used by the end of 2003.
The World Bank has so far invested US$65m in 12 projects in Kosovo.

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PRIVATISATION

Serbia's largest tobacco producer to begin talks on privatisation

Director-General of Nis Tobacco Industry [DIN], Slavoljub Dragicevic, announced to FoNet News Agency that the company leadership, as well as representatives of all trade unions, will begin talks with the Serbian government's Agency for Privatisation on the sale of this factory.
"We have an obligation within the next three months to devise a complete programme of privatisation with the aid of advisers," Dragicevic said, saying that an assessment of the value of the factory needed to be made first followed by social, ecological and investment programmes.
Those four areas should create a real picture of the factory based on which the Agency would or would not give consent for privatisation. If consent is given, the Agency will publish a tender and the process of selling the factory will officially begin, Dragicevic said.
He emphasized that the Serbian government should say at the beginning of August who would be interested in buying DIN, adding that there is speculation about such international names as Phillip Morris, British American Tobacco and a Japanese company. "I do not see anything bad in privatisation; it is inevitable and this is why our factory wants to be among the first to join this process in the tobacco industry," Dragicevic said...
DIN's director said that DIN's value had been estimated at 20bn dinars at the end of last year but noted that 10m euros had to be added to this value, which was the amount invested in the past several months to purchase the latest equipment.
He emphasized that the factory's leadership has reached an agreement with the Serbian government that first DIN should be privatised and only then a construction of some other factory in the republic of Serbia would be allowed.

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TRANSPORT

Yugoslav deputy premier welcomes deal for reconstruction of Novi Sad bridge

Yugoslav Deputy Prime Minister, Miroljub Labus, said in Novi Sad on 23rd July that the signing of a contract between the Novi Sad city hall, the European Agency for Reconstruction and Germany's Dilinger construction company on the reconstruction of Novi Sad's Freedom Bridge, which was destroyed during the 1999 NATO bombing of Yugoslavia, was the conclusion of a major deal, Tanjug News Agency has reported. 
This deal is worth 34 million euros, Labus said and added that this was a result of a year of serious efforts on the part of the city and provincial authorities as well as the republican and federal government in negotiations with international financial and other organisations and institutions. 
Labus said he was proud to announce the participation of local companies - Gosa of Smederevska Palanka and Ivan Milutinovic of Belgrade - which had confirmed their readiness for bidding alongside their European competitors.

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