% of GDP
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
Update No: 079 - (01/12/03)
The Serbs are to have new elections on December 28th, one year earlier than the present government's term expires. It cuts short the term of the ruling Democratic Opposition of Serbia, which has been in power for three years. It cannot govern any longer, as its fractious coalition is no longer tenable. The defection of two minor parties finally wiped out its slender majority.
Serbia's governing reform coalition, which came to power three years ago after the toppling of Slobodan Milosevic, called for early elections recently after the defection of two minor parties finally wiped out its parliamentary majority.
The decision, which cuts short the term of the ruling Democratic Opposition of Serbia (DOS) by a year, marks the final break-up of the group after 18 months of bitter infighting.
Zoran Zivkovic, the prime minister, called for elections to be held on December 28th. He said the former Yugoslav republic's reform programme had become "bogged down" by obstruction from rivals.
It was no longer nationalists loyal to Mr Milosevic but a growing number of democratic parties who were blocking his plans, he said.
Mr Zivkovic took on a tough position in March, trying to hold the crippled DOS together immediately after the assassination of his predecessor, Zoran Djindjic. The former prime minister was the DOS's most powerful figure.
Mr Zivkovic won credit early on for maintaining control but he may be forced to shoulder some blame for the dissolution of what was once a cohesive reform movement that enjoyed popular support.
Beset by corruption scandals, the prime minister's Democratic party, the DOS's largest faction, has lately seen internal feuding between two rival groups over how tough to be on the issue of money launderers and war profiteers who amassed great wealth under Mr Milosevic.
Western diplomats in Belgrade said that the struggle for control of the Democratic party may be ultimately as decisive in determining Serbia's future as the forthcoming elections.
"The jury is still out on whether this will be a failed democracy or a successful one. It may fail, but a failed democracy is still better than an authoritarian regime like the one under Milosevic," said a European ambassador.
Serbia held elections on November 16th, trying for a third time to elect a new president, efforts failed because of low voter turnout.
Forthcoming parliamentary elections, however, are seen as far more important than the presidential poll, but the announcement could damage turnout.
Transformation of ownership threatens closure of Montenegrin military factory
The transformation of ownership of special purpose factories in Montenegro is still not clearly defined. It is becoming increasingly more difficult to make use of all capacities and to conclude production deals of high quality with the Serbia-Montenegro [SCG] Army. The biggest special purpose factory, Prva petoljetka in Bijelo Polje, serves as a good example of difficulties experienced by workers and management boards of this type of company, TV Crna Gora has reported.
Reporter Krsto Cabarkapa said that the Bijelo Polje-based Prva petoljetka, the factory for the production of hydraulic and pneumatic equipment for the SCG Army, has recently experienced numerous problems. Some of the biggest ones include the realization of the agreed export deals, arranging new deals for manufacturing equipment for the SCG Army and the lack of clearly defined transformation of ownership.
Slobodan Scekic, director of Petoljetka said: "We were expecting to arrange deals worth up to 500,000-600,000 Euros with the army, of which 100,000 Euros were earmarked for development projects. We submitted a request for the approval of projects to SCG Defence Minister [Vukasin] Maras in March, which he has forwarded to his aides, and we are still waiting for them to be approved. If this does not happen in the next couple of days and if a cash advance is not secured, the factory will certainly not be able to continue working.
He was asked if the company was experiencing this problem due to the transformation of ownership.
Scekic replied: "Not quite, but this will pose additional problems. As the director of the biggest special purpose factory in Montenegro, I have not been briefed on this directly, but rather through newspapers. I am afraid that if the Yugoslav Army does not have the ownership [of the factory], it will not be interested in keeping it running."
The factory's employees say that one of the main problems for Petoljetka is that there is no direct cooperation between the factory and the relevant department in the Defence Ministry, but rather that this is done through the Jugoimport Mont company.
FOREIGN ECONOMIC RELATIONS
USA, Serbia-Montenegro normalize trade relations
Serbian Privatisation Minister, Aleksandar Vlahovic, has confirmed that the USA has signed an agreement on normalization of trade relations with Serbia-Montenegro, SRNA News Agency has reported.
"This will provide an impetus for the Serbian economy, especially the agriculture and food processing sector and a section of the metal industry," Vlahovic told a news conference.
He added that this was also true of the special purposes industry [arms industry], especially the Kragujevac-based Zastava [cars and arms manufacturer].
Vlahovic recalled that customs duties on Serbian products were higher than 30 per cent, which meant that goods were additionally burdened and were uncompetitive.
Ukraine calls for free-trade zone with Serbia-Montenegro
Ukrainian President Leonid Kuchma has said at a joint news conference with the president of Serbia-Montenegro, Svetozar Marovic, that the improvement of the economic situation in Ukraine and Serbia-Montenegro requires the soonest possible signing and ratification of a free-trade zone agreement, UNIAN News Agency has reported.
A UNIAN correspondent reported that Kuchma said the two countries "can and must be of help one to another" and noted the similarity of problems that face Ukraine and Serbia-Montenegro at present.
The president of Ukraine also said that the two countries have great positive experience in this respect and that it ought not to be cast aside.
Kuchma said that we ought to use our common sense and count on our own strengths - then investments will come to us and we will be respected.
The president said that he and Marovic agreed that it was essential to deepen cooperation between the two countries, especially in the economic field.
Kuchma said the prime minister and foreign minister of Ukraine would visit Serbia-Montenegro next year. "We will need to take forward what we have begun," he said.
The president also expressed the expectation that the business forum between the two countries, planned for tomorrow in Kiev, would help to develop economic cooperation.
Kuchma also said that he and Marovic had discussed humanitarian issues and the Ukrainian minority in Serbia-Montenegro during their talks today. Kuchma said they would reach an understanding on all questions. "We are reaching understandings on all points, and are looking for ways of solving all problems."
FOREIGN LOANS & AID
European bank grants Serbia 72m Euro loan for power industry, health care
Representatives of the Serbian government in Venice on 30th October signed an agreement with the European Investment Bank (EIB) on two loans totalling 72 million Euros, Beta News Agency has reported.
"This involves extremely favourable loans with a 20-year repayment period, a 5-year grace period, and the annual interest rate of 2.5 per cent," Serbian Finance Minister Bozidar Djelic told Beta. Djelic was attending a Venice meeting of the representatives of the biggest international financial organizations with the finance ministers of Balkan nations.
"A 22m Euro loan was approved for EPS [Serbian Power Industry]. It will be used to put in place resource management systems. This will ensure export of electricity from Serbia and security in supplying electricity to the entire region," Djelic said.
He further said that the other loan of 50m Euros was earmarked for health care. The work will commence next year.
MINERALS & METALS
Sale of plant to US Steel was political decision by Serbian government
Serbian Privatisation Minister Aleksandar Vlahovic has said that he discussed cooperation and German investments with German Chancellor Gerhard Schroeder and the entrepreneurs who set up the Council for Economic Cooperation between Serbia-Montenegro and Germany, B92 TV has reported.
The minister denied that the loss of US$100m, which German and Austrian entrepreneurs suffered after Sartid's sale to US Steel, had been discussed.
According to Minister Aleksandar Vlahovic, the bankrupt company, Sartid, was sold to US Steel since there were no other parties interested in buying it.
Dusan Pavlovic of the G17 Institute claims that the company was deliberately declared bankrupt because it was a good way to avoid other bidders, and also creditors.
Vlahovic said: "One should not forget that Sartid was left with no funds in February 2002 because a consortium of banks had decided to withdraw from the business, and that US Steel had only appeared on the scene after that; at the time, Thyssen-Krupp nor any other big firm wanted Sartid."
Pavlovic replied: "That is not true. Five letters were sent not only to [late] Prime Minister Djindjic, but also to Minister Vlahovic, the Privatization Agency director, Mr Cupic, as well as to the Sartid bankruptcy manager, and no-one ever sent any answer to the LNM Holding."
Pavlovic said that the government had made a political decision to sell Sartid to US Steel for only US$23m. Creditors asked the public prosecutor on three occasions to reinvestigate the bankruptcy procedure, and November is the deadline for a Serbian Superior Court decision. Pavlovic said that the next step, in case the decision is negative, is to seek international arbitration.
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