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yugoslavia

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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: 070 - (21/02/03)

The news out of Serbia might seem to be bad. The failure to elect a president leaves the country with only a caretaker head of state, pending new elections in a timetable that has not been clarified. The very existence of the country has been put in question. Indeed, formally Yugoslavia is no more; there is now the Union of Serbia and Montenegro, which is highly likely to be dissolved within three years, as its main leader Milo Draskovic, is a secessionist, backed by most of the 660,000 population, whose voters endorsed him in early February elections.

Problems in perspective
But none of this really matters that much. The presidency of Serbia, which Vojislav Kostunica, former President of Yugoslavia, is likely eventually to gain, either in another direct election or otherwise if the rules are changed, is largely an honorific post. The job that matters is the premiership, held by the ardent reformer Zoran Djindjic, who handed Milosevic over to the Hague and is very well thought of abroad. 
As for Montenegro it is no more part of a common state with Serbia than Kosovo now is. The idea of Yugoslavia is dead; it was a bad idea whose time had come when it was thought up by the victorious powers after the First World War. Tito was the one leader to give it some substance; but he would have needed another fifty years to pull it off, which naturally he did not have. The Montenegrins are ethnically Slavs, close to Serbs, with a similar Orthodox religion; but they still want out. For years now Montenegro has had de facto independence. Within a few more it will be de jure.

Undoubted progress on several fronts
What really matters is that Serbia itself is doing remarkably well, given the scale of reconstruction required, which is a massive task. Serbia used to be plagued with hyper-inflation and financial instability, an economy in the clutches of crooks, cronies of the one president who did matter because he had the security forces behind him, and smuggling and banditry rife through the land.
That is no longer so. The significance of sending Milosevic and his closest cronies to the Hague, (the outgoing president of Serbia, Mutilinovic, has just surrendered himself there), is not just to bring them to justice for war crimes, but to rid the country of its chief plunderers. Investigations into their financial machinations are made that much easier. They are establishing a new sense of public probity. A whole regime, with its corrupt network, not just one man, is being put on trial.
In early February the police followed this up by launching 35 police raids in four cities, including Belgrade, that smashed a drugs ring that they say had made 50m Euro in supplying the EU in the last two years. The police are responding to the charge that Serbia is a haven of organised crime. It is cooperating with other police forces across Europe to combat the menace, despite being chronically underfunded.
There has been a thorough cleansing of the banking system, totally under the control of Milosevic's cronies formerly. To underpin the progress a dramatic return to currency stability has taken place, with the IMF, the World Bank and others singling out Serbia's performance here as exemplary. Djindjic is doing a good job in difficult circumstances.

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AVIATION

US agency gives aid to Serbian-Montenegrin air traffic control administration

The United States Trade and Development Agency (USTDA) on 10th February presented a US$190,985 donation for technical assistance to the Federal Air Traffic Control Administration (SUKL), Tanjug News Agency has reported. 
The USTDA aid will be used for the training of experts for project and engineering management and acquisition management in SUKL, which this will enable SUKL to prepare for the planned realization of a modern system which will include all aspects of air traffic control and integration into the United European Sky project. 
The donation agreement, signed by US Ambassador to Belgrade, William Montgomery, and SUKL Director, Nikola Stankov, represents the continuation of the USTDA obligation to help the Yugoslav government in the development of civilian aviation.

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FINANCIAL NEWS

Serbian bank governor on financial arrangements in new state union

Under the constitutional law a special commission will be appointed for sharing the joint property [of Serbia and Montenegro], including financial assets. It will comprise representatives of the two central banks and Finance Ministries, according to NBS [National Bank of Serbia] governor Mladjan Djinkic, speaking to 'Glas Javnosti.' After the promulgation of the Constitution Charter, this institution yesterday devolved to Serbia, as all its correspondents throughout the world have been notified, 'Glas javnosti' has reported. 
In a reaction to the statement by Ljubisa Krgovic of the Central Bank of Montenegro that there should be an equitable division of the hard currency reserves, Dinkic said that the two sides should share all the net hard currency reserves of the now defunct FRY [Federal Republic of Yugoslavia] accrued up to 3rd November 1999, when Montenegro introduced the German mark as its currency and left the country's joint monetary system. The criterion for the division would be their individual contributions to the domestic product, which in the case of Montenegro means between 5 and 6 per cent. 
Dinkic explained that Montenegro is also entitled to a share of the hard currency reserves inherited from the SFRY [Socialist Federative Republic of Yugoslavia] in the succession process, which means part of the Basel gold [awarded in an arbitration by the Basel-based Bank for International Settlements] - again 5.66 per cent. Applying the same criterion - contribution to the domestic product - Montenegro can also expect to get part of the hard currency of the NBJ [National Bank of Yugoslavia] from the former SFRY, which is frozen abroad and which it will receive when the blockade is lifted...
One of the unavoidable questions is the status of the NBJ's claims regarding the fact that about US$14m was left in the branch office in Podgorica, about 6 per cent of which may remain in Montenegro but the rest should be turned over to the NBS. Furthermore, Dinkic said that the adoption of the Constitutional Charter had created the conditions for establishing clearer relations between the two central banks, which would now make it possible to accept the offer of the Montenegrin Central Bank to sign an agreement on a super audit, which has so far been impeded by obstacles of a formal nature. 
"As of 1 January of this year, Montenegro does not have any banks in Serbia, not because of any political obstacles, but because they (both Ekos and Montenegro banks) were unable to meet the assets requirement, which this year amounts to US$8m. Montenegrin banks are welcome in Serbia and can obtain new operating licences if they meet this requirement and other criteria under the banking law, which is a requirement that Serbian banks also have to meet in order to be issued licences," Dinkic explained. He went on to say that, under the Constitutional Charter, all federal laws that had not been mirrored in Serbia have now become Serbian laws, including the banking law and the law on what is now the National Bank of Serbia...
"The fact is that we have two separate monetary and banking systems, two central banks and currencies, and different laws, so that this new arrangement allows for clearer and better cooperation between the central banks of Serbia and Montenegro. But this is the kind of cooperation like that we have with, say, the central bank of Greece. Whether or not there will be any kind of harmonization, which not even the Charter provides for in this area, remains to be seen. For the time being, payment operations with Montenegro will remain as they have been so far, made in foreign currency, just as with any other country," Dinkic explained.

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FOREIGN LOANS & AID

Greece grants 232m Euro in financial aid for Serbia 

A total of 232m Euro will be given by the Greek government to support the economic reconstruction of Serbia.
In a two-day conference in Greece on the rebuilding of the Balkan region, the news was announced that out of the total amount, 45m Euro would be allocated for investment projects in the private sector.

USAID earmarks US$100m for Serbia over next five years

US international development agency, USAID Yugoslavia mission director, James Stephenson, on 28th January announced the organization would grant Serbia about US$100 million in donations over the next five years to assist in the development of democracy and continuation of its reforms, Tanjug News Agency has reported. 
The USAID programme for Serbia is to be approved by the Congress, Stephenson said, adding that he was optimistic regarding the outcome. 
Addressing a press conference at the Micrifinance Bank, through which USAID will distribute the aid, Stephenson explained the organization plans to finance about 1,000 programmes in local communities and state institutions. 
The programme covers aid for the development of the local infrastructure and local government, a civil society, NGOs, independent media, as well as support to reforms of the banking sector, efforts to join the World Trade Organization, develop the judiciary and fight corruption, Stephenson said. 
It is the practice of USAID to earmark about US$30m for the development of a democratic society in countries in transition, but Serbia has received about US$45m annually in the past two years.

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SCIENCE & TECHNOLOGY

Investment in science is investment in Serbia

Serbian Minister of Science, Technology and Development Dragan Domazet said recently that internal investments in science projects must be increased at least three-fold so that Serbia can reach the level of the EU candidate countries, the government web site has reported.
Opening the 29th Conference on IT Development, held at the University of Belgrade's School of Mechanical Engineering, Domzet said that Serbia is far behind other countries in transition in terms of funds it sets aside for scientific research projects.
In 2000, Serbia set aside 1.5 Euro per capita for scientific projects, 2.6 Euro in 2001, and 5.7 Euro in 2002, which is far less than in neighbouring countries, said Domazet. "This year we plan to increase the sum to 8.3 Euro per capita, or 0.32 per cent of GDP, so that we can reach at least 20 Euro per capita in the next few years."
Although the funds invested in scientific projects have been increased, the total sum is still small and unsatisfactory. In highly developed countries, these investments range from €140 to €300 per capita, and in developed countries that figure stands between €66 and €80, said Domazet.

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