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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: 073 - (27/05/03)

The after-effects of assassination
The Serb government is doing pretty well in trying times. The assassination of premier Zoran Djindjic was one of those events eclipsed by the drama unfolding in Iraq at the time in March. The murder was clearly motivated as the action of Milosevic cronies, who are in fear of being dispatched to the Hague like their former master.
A key figure still at large is Milorad Lukovic, Legija, the former head of the Red Berets and leader of the Zemun crime gang, who is accused by the government of being behind the affair. Djindjic and Legija had cooperated at the time of the fall of Milosevic, who had become a liability to his own allies. They subsequently fell out, Djindjic clearly deciding to dispatch Legija to the Hague if possible, indeed before the end of March. Another allegedly in the plot was 'the arch-nationalist' Vojislav Seselj, who was actually sent to the Hague just beforehand. 
Others among the war criminals are expected to be sent to the Hague shortly; two are currently in jail, Jorica Stanisic, chief of the Security Service in Milosevic days, and Frenki Simatovic, his henchman who managed paramilitary murder squads at the time.

Cleansing the Augean stables 
They all belong to the swarm of scoundrels that ruled Serbia during the 1990s wars, turning it into a criminal economy; killing Djindjic might have seemed an obvious way to avoid justice. But it is backfiring badly for them, as the new premier Zjoran Zivkovic, former Security Minister, immediately declared a state of emergency and benefited from a revulsion of public feeling against the criminals.
The government has been decisive and has used its emergency power to effect. The thugs in dark glasses, that roamed Belgrade and other cities are largely no more. Zivkovic is proving a worthy successor. He is rooting out the shady figures in the security apparatus complicit with the criminals. Democracy is being greatly strengthened.
Senior figures arrested in connection with the assassination plan include Svezdan Javanovic, the serving deputy head of the elite Security Service Special Operations Unit, the Red Berets, who is suspected of firing the bullets that killed Djindjic. After his arrest, the government formally disbanded the Red Berets, as police action revealed that former and current Security Service personnel were running organised crime. Others arrested include General Aco Tomic, former head of military counter-intelligence, and General Rade Bulatovic, former deputy head of the State Security Service, both on suspicion of involvement in the plot to kill Djindjic.
Difficulties remain. Legija is yet to be apprehended; more thugs and accomplices in the Security network are still at large. But the times have turned against them. Serbia is not going to look back. It will be joining NATO's Partnership for Peace before the end of the Year. The West is keen to help and the outlook is at last rosy. 

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AGRICULTURE

"Catastrophic" drought forces Serbia to start importing wheat

Vukosav Sakovic, the director of the Serbia-Montenegro Wheat Foundation, has said that this year Serbia will have to import wheat because of the damage done to the crops by the catastrophic drought, BETA News Agency has reported. 
"Last year we exported as much as 640,000 tonnes of wheat, but now we are having to buy it from abroad. We have already imported 2,000 tonnes of bread wheat," Sakovic told 'Novi Sad Dnevnik'. 
He said that imports would continue over the next few months due to the drought and the fact that too few fields had been which sown was causing a shortage of wheat on the domestic market. 
Sakovic added that he expected the price of wheat to continue to increase, adding that domestic wheat was considerably more expensive than imported wheat...

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ARMAMENTS

Serbian weapons factory director hopes for return of arms to US market

The director of the Kragujevac-based Zastava special purposes factory, Djordje Nestorovic, has told FoNet News Agency that after receiving permission to export US weapons to Serbia and Montenegro, he expected normalization of trade relations between the two countries also to ensue with "a return of Kragujevac weapons to the US market."
"We hope that this will happen very soon, which will allow us to earn around US$8m per year in the USA. We have contracts to export 16,000 hunting rifles annually with a likelihood of this amount being increased to 20,000. We also expect a secure placement of 10 to 12,000 CZ 999 pistols," Nestorovic said.
Nestorovic said that the Kragujevac military factory exported hunting and sports weapons to 35 countries throughout the world but noted that its main attraction for the US market was quality and favourable price.
"High quality and acceptable prices are our trump cards and we are not afraid of fierce competition in the US market in the least," Nestorovic said. He said that the factory saw its chance in the Partnership for Peace because it already had weapons adjusted to NATO standards.
"We already have a whole range of weapons meeting NATO standards, being good quality and with favourable prices," Nestorovic said...

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BANKING

Slovene bank buys 91 per cent of shares of Montenegrin bank

The agreement on the sale of the Montenegro banka to the Nova Ljubljanska bank has been signed in Podgorica by Finance Minister Miroslav Ivanisevic, and the chairman and a member of the Slovene bank's management board, Marko Voljci and Andrej Hazabent, respectively, Radio Montenegro has announced. 
Biljana Radosavovic reporting for the Radio station said: "The Nova Ljubljanska will pay 11.1m euros for 91.5 per cent of shares of the Montenegro banka. Eight millions will be paid promptly, and the remainder will be paid into a special account from which the funds will be released gradually, depending on the deblockade of the Montenegro banka's deposits." 
The Nova Ljubljanska will provide 6m Euros for additional privatisation, 5m for investments and 1.6m for the development of the Montenegro banka, Branko Vujovic, chairman of the privatisation council, has said.
Finance Minister, Miroslav Ivanisevic, said that the part of the agreement on the investment in the Montenegrin economy was the most important. He said: "In addition to the purchase price, I think that even more important is the fact that we have got such a good bank, that considerable funds will be invested, i.e. that the Montenegrin economy will get a source of long-term loans. At least 10m Euro will be invested in the development of small and medium-sized companies. A considerable amount will also be used for new investments and the additional privatisation of the bank..."
The Nova Ljubljanska is obliged to keep 195 employees of the Montenegro banka, make additional investment in training and keep open the branches in Mojkovac and Cetinje.

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FOREIGN LOANS

World Bank approves US$80m loan for Serbian welfare sector reforms

The World Bank has approved an US$80m credit [loan] for the structural adaptation of Serbia's social sector. An agreement on the credit was signed on 8th May by Serbia and Montenegro Foreign Trade Minister, Branko Lukovac, and World Bank Belgrade office chief, Rory O'Sullivan, Tanjug News Agency has reported. 
The credit is approved under IDA conditions, which means that it is extended over 20 years, with a 10-year interest-free grace period. 
The credit will be used as budget support to the Serbian government in the field of the pension system, social benefits, management of extra-budgetary funds, social and child protection, employment, health and for monitoring the standard of living.
The World Bank has also approved a US$2.75m credit for employment promotion in Serbia, this financial it announced on 6th May, Tanjug News Agency has reported. 
The credit is for 20 years (10-year grace period and 10-year payment), without interest, with administrative expenses amounting to 0.75 per cent annually. 
With the British development fund DIFID co-financing of US$1.75m, the overall investment into employment policy reform in Serbia will reach US$4.5m. 
The project is the second stage of the World Bank support in Serbia on labour issues. The first stage involved helping to revise the legal framework. In particular, the approval of a new Labour Law in December 2001 and the preparation of the new Serbian Law on Employment and Insurance in Case of Unemployment was aiming to bring the labour regulations into line with the requirements of a market economy, and to harmonize employment protection with European Union and International Labour Organization regulations. 
The second stage builds on that framework and focuses on improving inefficient and costly employment programmes. In particular, the project aims at improving the cost effectiveness and efficiency of labour programmes by piloting and testing new approaches and innovative labour re-employment programmes and employment services for the unemployed.

IMF approves US$137m to Serbia and Montenegro

The IMF is pleased with Serbia and Montenegro's efforts towards progress in stabilisation and reform. The first review of Serbia and Montenegro's economic performance under the Extended Arrangement was completed recently, IJNET reported. This will immediately allow Serbia and Montenegro to draw SDR 100m (about US$137m) under the arrangement. On May 14th, 2002 the Extended Arrangement was approved for a total of SDR 650m (about US$889m) to support Serbia and Montenegro's economic programme in 2002-2005. So far, Serbia and Montenegro has drawn SDR 100m from the IMF.
Anne Krueger, who is the First Deputy Managing Director and Acting Chair, stated, "the IMF commends the authorities of Serbia and Montenegro for the impressive further progress in stabilisation and reform achieved in 2002. Firm macroeconomic policy implementation contributed to rapid disinflation, a strengthening of foreign reserves, and a continued recovery in output and exports."
She later made comments that, "looking ahead, continued prudence and vigilance in policy implementation will remain essential to safeguard the authorities' inflation and external objectives, especially in light of macroeconomic uncertainties and the challenges remaining in the area of structural reform."
The authorities' demonstrated commitment to reform augurs well for achieving these objectives and laying the basis for durable growth, and merits continued support from the international community. Fiscal policy in 2003 will aim not only at containing the external imbalance, but will also continue to support restructuring and an appropriate social safety net. The formation of the state union of Serbia and Montenegro in early 2003 will enhance political stability and provide a unique window of opportunity for carrying forward the reform process.

EU budget earmarks some 242m Euros in aid to Serbia-Montenegro in 2003

Richard Zink, director of the European Agency for Reconstruction (EAR), said that the European Union budget for 2003 has earmarked about 242m Euros in aid to Serbia and Montenegro, of which Serbia will get 229m, Tanjug News Agency has reported. 
Of this sum, 220m will be spent on the EAR projects in Serbia, while 9m will go to the projects of the European Commission, also in Serbia. 
"We are here to help Serbia on its way to Europe," Zink said at a news conference in Belgrade. 
He explained that EAR will spend 141.5m euros on economic reforms and on reviving Serbia's economy, of which 69m will be earmarked for the energy sector. EAR will set aside about 35m euros for the development of local economies, and about 13.5m to stimulate private enterprise; 18m euros will go to the judiciary, and about 24m euros will be for social development and promoting a civilian society...

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PRIVATISATION

Privatisation of Serbian firms in Montenegro to follow Serbian model

Serbian Minister of Economy and Privatisation Aleksandar Vlahovic said that Serbian companies in Montenegro will be privatised according to the model in effect in Serbia, Tanjug News Agency has reported. 
Branches of Serbian companies in Montenegro are considered part of the mother companies and will be privatised along with them, Vlahovic told the 4th May issue of the Podgorica daily 'Vijesti.' 
The same rules will apply to subsidiaries of the Serbian companies in Montenegro, he said, noting that Montenegrin government has no jurisdiction over their privatisation. Montenegro can hardly expect to sell its large companies unless it coordinates its tariff rates with Serbia, Vlahovic noted. 
If Serbia-Montenegro does not become a customs union, Montenegrin companies hoping for privatisation cannot count on advantages offered by the large Serbian market, and this will reduce the interest of potential buyers, he explained.

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