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Area ( 



New Dinar

Vojislav Kostunica

Private sector 
% 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 MILOSEVIC. 

Update No: 074 - (19/06/03)

Regional cooperation
At the end of May the new premier of Serbia, Zoran Zivkovic, wrote an article, along with Fatos Nano, premier of Albania, Stipe Mesic, president of Croatia and Boris Trajkovski, president of Bosnia, in the International Herald Tribune, outlining the main idea of its title, "The EU and Southeastern Europe need each other."
This is certainly very much the case. The Balkans, as the region is commonly known, is a potentially vital bridge to the Middle East and the Caucasus for the rest of Europe. It is becoming a key energy corridor and will be eventually a valuable regional market and a much prized tourist location. For all these reasons it should soon be attracting FDI from further afield than just Greece, the foremost investor there yet and its natural leader.
The latter drew attention to the really traumatic event of late in the Balkans, the tragic assassination of Zivkovic's predecessor, Premier Zoran Djindjic, in March. This was the work of organised crime, the scourge of the region. It is only likely to be tackled successfully by concerted action across borders. The crooks themselves are highly internationalised, smuggling arms, drugs and other contraband, notably cigarettes and spirits in the Balkans, across frontiers and across the Adriatic to Italy or elsewhere. Smuggling, it must be said, has been endemic in the Balkans for centuries. Given the nature of governance there, the rule of law has historically been held in contempt by the citizens, as by their rulers.

Domestic outrage helps the government
In Serbia's case the murder of Djindjic is having a boomerang effect. One million turned up for his funeral in Belgrade, absolutely outraged at the affair. There is a new public determination to root out the residues of the old regime, that include certain security and military personnel.
Serbia under Milosevic was a gangster state run by utterly unscrupulous charlatans, masquerading as patriots and enriching themselves at public expense. The chief rogue is in the Hague, along with several henchmen. Others are hiding abroad. But too many remain in Serbia.
Zivkovic as former interior minister is proving to be the right man for the job. Serbia really is turning over a new leaf.

In fighting among the coalition
Nevertheless the normal strains of running a coalition government are showing up. Zivkovic is constantly at loggerheads with his own partners, a problem he inherited from Djindjic, who also faced a bogy in President Kostunica of the former Yugoslavia, since transmuted into the Union of Serbia and Montenegro. Kostunica had the merit of seeing off Milosevic back in October 2000; but he became a thorn in the flesh of Djindjic, playing the nationalist card to thwart reform.
Zivkovic's main opponents are much the same. Kostunica remains a big figure, largely hostile to Zivkovic, even after relinquishing the presidency, heading a major party, the Democratic Party of Serbia (DSS), an ally of the ruling Democratic Party (DS) until one year ago.
Kostunica adamantly opposes reforms necessary for IMF support just as he opposed turning over Milosevic and others to The Hague. He is basically anti-Western, or at the least perceives this as a suitable political platform in present-day Serbia.
Kostunica, Djindjic and now Zivkovic, have long reduced their relations to mutual mud-slinging. Moreover, the strain between DS and the reformist G17 Plus-which has become a competitive political force since late last year - has erupted into a head-on clash between Zivkovic and the think-tank's leaders, the central bank chief, Mladjan Dinkic, and the former federal deputy premier, Miroljub Labus.
The clash led to the sacking of Labus from an agency in charge of rehabilitating the banking sector, and pressure on Djindjic, to which he responded with an aggressive counter-campaign in the media. The collateral damage is hurting personalities with a clean reformist image, even if they are non-partisan, such as Finance Minister, Bozidar Djelic.
"I'm friends with all of them. and it's possible that I'll end up as a scapegoat, but I'll not become compromised," he told radio B92 in an interview recently. Early elections are not an option, though DS hugely gained in popularity following Djindjic's death. "DS opposed early elections before and changing that now would create an impression that it is trying to profit from the slaying of their leader," one commentator, Bogosavljevic said.

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Serbian foreign currency reserves increase by US$100m in past month

National Bank of Serbia (NBS) Governor, Mladjan Dinkic, said on 13th June that on 31st May the overall foreign currency reserves of NBS and commercial banks amounted to US$3.3bn, and that in May they were increased by US$100m compared to April. Dinkic told a press conference that the NBS foreign currency reserves reached US$2.525bn, and the reserves of commercial banks US$767m, Tanjug News Agency has reported. 
He added that the overall foreign currency reserves cover six months of imports without services. In May, compared to April, the money mass swelled by 0.6 per cent, reaching 112bn dinars, Dinkic set out, adding that in the first six months, the inflation was three per cent. 
He pointed out that annual inflation would be on the level of the projected nine per cent, if the price of electricity rises by nine per cent.

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World Bank approves loans worth US$100m for reforms in Serbia

Serbia-Montenegro Minister of International Economic Relations, Branko Lukovac, and head of the World Bank office in Belgrade, Rory O'Sullivan, on 13th June signed two agreements on interest-free loans with a total value of US$100m, granted by the World Bank under IDA [International Development Association] conditions, Tanjug News Agency has reported. 
The Serbia-Montenegro Council of Ministers said in a statement that the first agreement with the value of US$80m was to be used for the structural adjustment of the private and financial sectors of Serbia (PFSAC II) and the second, totalling US$20m, for the financing of health care reforms in Serbia. 
The loans are part of the World Bank three-year package at the total value of US$540m, granted under the IDA treatment, which means that the 20-year loans are granted interest-free, with a 10-year grace period. A package of five World Bank loans under IDA conditions, which includes the latest two, is presently in the parliamentary procedure and their total value is US$193.75m, the statement said.

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