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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% 

  

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: 075 - (28/07/03)

The Serbs are continuing the difficult task of re-establishing the country after the dramatic assassination of Premier Zoran Djindjic in March. There are hopeful signs that the culprits have overreached themselves, provoking a massive reaction against everything they stand for - the old Milosevic regime of corruption, crony capitalism and free-wheeling gangsterism in league with rogue elements of the security forces. 
The new premier Zoran Zivkovic, is a strong man, the former minister of the interior, formally responsible for his predecessor's security. But he has not been blamed for his death. Indeed, his vigorous measures to hunt down the assassins have won widespread approval. One million marched through Belgrade at Djindijic's funeral. He may not have died in vain, if the aftermath is a state and civil society being purged of the rotten residues from the previous regime.

Popular central bank governor under attack by opposition
Djindjic was a reformer who was moving the economy in the right direction targeting the crooks and wooing the West, while sending the war criminals to the Hague. Hence why he was slain. An adjunct to his reform programme was the popular central banker, Mladjan Dinkic, popular for bringing down inflation from the chaotic rates of the 1990s. Dinkic took over at the central bank in late 2000 just when Djindjic became premier. He re-established faith in the national currency. But not everybody in government appreciated his methods, involving sharp curbs on public expenditures.
The ruling Democratic Opposition of Serbia (DOS) has launched a new offensive on Dinkic. According to the media, party heads in the broad DOS coalition began preparing a new law on the central bank which would eliminate Dinkic, the crucial figure in the return of faith in the national currency following decades of monetary chaos and abuse. The draft, however, was being produced in secret, without the participation of experts from the National Bank and even the finance ministry, apparently with Dinkic's removal as the only clear goal.
Dinkic, heading the central bank since late 2000, continued to insist that if he should go, he should do it following a vote in the parliament, not a law "hastily put together" to evade that debate. Though the law was reportedly planned for emergency adoption, no details - including who is writing it - were available.
Deputy Premier Zarko Korac only confirmed that it was discussed. In the eyes of the DOS Dinkic abused the central bank to promote his G17 Plus, a former think-tank which became an ambitious political party last year. Both groups tend to monopolise the term "reformist" and target the same voters. Dinkic, who has constantly been ranked among Serbia's most popular figures, also grew as a threat following the initiative for Serbia's separation from Montenegro which G17 Plus launched recently. DOS leaders said his initiative was discouraging to foreign investors.
DOS alleged that Dinkic mismanaged funds from the International Monetary Fund and other institutions to prop up the dinar instead of using them to spur industry and exports. Officials from international financial institutions, who traditionally refuse to get involved in internal political fighting indicated that the criticism does not stand.
"If that was the case, the IMF would not have released its tranches," one expert said, refusing to be named. "Each time a tranche is released, it means that a very serious check was passed." Another economist described the DOS "ideas of funnelling money into the economy" as "populist." At the same time, most observers see Dinkic's independent Serbia initiative as his own run for cheap points.
Ognjen Pribicevic, an analyst with the Belgrade-based Institute of Social Sciences, said that struggle for power was at the bottom of the conflict much more than real policy differences. "The current position of DOS regarding Dinkic is a consequence of the final stage in the conflict of DOS and G17 Plus, which is just a struggle for power," Pribicevic stated. According to him, regarding Serbia's independence, DOS "played" on rewards from the European Union, which explicitly wanted it to remain in a union with Montenegro until at least 2006, with both republics using the time to focus on crucial reforms.
On the other hand, Dinkic and G17 Plus have apparently placed their bet on widespread disappointment instead of public euphoria regarding relations with and approach to the EU. "We will see in a few months who has pulled the better card in this game," Pribicevic said, warning that the DOS-G17 Plus "game" was "certainly counterproductive from the standpoint of the EU." It may take less than months to see who played the right card in the populist game. 

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AGRICULTURE

No need for wheat imports to Serbia despite low harvest yield - minister

Serbian Agriculture Minister, Stojan Jeftic, said in Novi Sad on 8th July that the import of wheat would not be necessary, that the harvest of 1.25 million tonnes, including last year's stocks, would be enough to satisfy domestic needs, and that the "size of commodity reserves will remain a state secret," Tanjug News Agency has reported 
Speaking at a joint news conference with his host, Vojvodina executive council president Djordje Djukic, Jeftic said that the yield was somewhat less than the planned 1.4 million tonnes and 29 per cent lower than the three-year average in the republic. This primarily results from a major drought and the government is reviewing possibilities for helping the neediest regions, he said.

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BANKING

First Serbian bank applies for operating licence in Kosovo

The Central Bank of Serbia gave the green light to its commercial banks to apply at the Banking and Payment Authority of Kosova [Kosovo] [BPK] for a licence to establish their branches in Kosova, the BPK director, Donat Brangner, announced on 4th July, KosovaLive web site has reported. 
Before submitting application to other states, the banks must have the consent of their state central bank. This is a general banking regulation and the BPK is applying it, too. The People's Bank of Serbia has not issued such a licence so far for political reasons and because the BPK refused to recognize this bank as its state central bank. 
"The Bank of Belgrade has applied for a licence to open a branch in Kosova and it was given a green light by the Central Bank of Serbia," Brangner told journalists. 
In addition, he confirmed that the Savings Bank of Albania has applied for a licence, too. 
The former BPK director, Kim Rhee, recently visited the banks in the region including Belgrade and Podgorica. According to the new director, no concrete agreement was reached with these two states, but progress has been made. "Functioning of the central bank depends on cooperation with the regional states," he said. 
Brangner said with pride that the institution he runs has more locals in the main positions than any other bank. The BPK director is usually proposed by the International Monetary Fund [IMF] and nominated by UNMIK [UN Interim Administration Mission in Kosovo]. 

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INTERREGIONAL RELATIONS

Kosovo and Albania sign free-trade agreement

A free trade agreement was signed on 7th July by UNMIK officials, the Kosovo-Albanian leadership and the Albanian government, Radio B92 text web site has reported. 
The agreement was signed by outgoing UNMIK governor, Michael Steiner, who is scheduled to make his departure from the province shortly, Kosovo Trade Minister Ali Jakupi and Albanian Economy Minister, Arben Malaj. The Albanian delegation, succeeded in securing the first free trade agreement signed by Kosovo's authorities.

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