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SERBIA & MONTENEGRO


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 15,555 10,900 8,100 75
         
GNI per capita
 US $ 1,400 930 122
Ranking is given out of 208 nations - (data from the World Bank)

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: 078 - (27/10/03)

Kosovo starts to go independent
The Kosovo War ended over four years ago in 1999; but it is only today that it is receiving its last rites, as it were. The Serbs and Albanians - 90% of the population of the province - sent leaders to Vienna in mid-October to discuss, under UN auspices, the resolution of the issues between the two sides to the conflict. Only four technical matters were on the agenda; but at lest a start has been made.
Ethnic cleansing of Albanians by Serbs triggered the war in early 1999. There is no doubt that without the presence of the remaining 20,000 NATO troops reverse ethnic cleansing of Serbs would begin immediately.
In a recent tour of the Balkans two most distinguished foreign visitors, Richard Holbrooke, the US negotiator of the Dayton Agreement on Bosnia, and Bernard Kouchner, the founder of Medicins Sans Frontieres, gave the following impressions of the situation; "In Serbia's capital itself, Slobodan Milosevic, has now gone to his well-padded cell in The Hague, is not mourned. But the mess he left behind - a wrecked economy, four lost wars, and what one senior minister referred to as a "pre-political society" - greatly depressed every Serb we met. Still, there is the beginning of realism - and above all, the first stirrings of a willingness by many Serbs to turn away from the mythic past that entrapped them, and toward a future in which Brussels, not Kosovo, is the goal. For it is clear: Serbia cannot have both Kosovo and Europe - and since they cannot get Kosovo back anyway they must start to face reality. Few Serbs dare say this in public, but they know Kosovo is lost. They are, in fact, really waiting for the outside world - the EU, the US, the UN - to finish the job that started with the 1999 war. The bureaucratic and political delays of the last three years are unfortunate, but it is not too late to get this ship headed in the right direction."

EU issues
The speaker of the EU parliament, Pat Cox, visited Serbia and Montenegro recently and affirmed that the EU would only consider EU entry for the pair together. One secession or only one at a time is to be the order of the day. The Brussels authorities well know that Montenegro is a vital variable in the Balkan equation. It gives Serbia access to the sea, has oil reserves in the Adriatic of around one billion barrels and is the conduit for contraband goods, above all arms, drugs and cigarettes, in and out of Serbia itself. If smuggling is to be contained, Montenegro must be subject to its jurisdiction.
Assassination of Djindjic leads to a cleansing of the Augean Stables
Two events have occurred in Serbia this year, which are still having huge reverberations, the assassination of its prime minister in March, the other the appointment of a new central bank chief, affecting its reform course. The former is of course the more traumatic.
Zoran Djindjic certainly had a premonition of his death, knowing his firm espousal of reform had made him deadly enemies, so that he went around with a large bodyguard. But this was his very undoing. Almost certainly one of them was a traitor who alerted the assassins to Djindjic's next movements by walkie-talkie. 
His successor, Zoran Zizkovic, the former interior minister, has been zealous as might be expected, in apprehending the culprits. He has had an enormous support in this from the population. The assassination is looking as if it is backfiring, as have many such in the past. A round up of criminal elements of the old regime is proceeding apace. Others have fled. The Serbian body politic is regenerating itself anew.
In the framework of a wave of arrests without precedent in Serbia, Premier Zivkovic announced on March 25th a warrant for the arrest of the presumed organizer of the murder, Milorad "Legija" Lukovic, head of the Red Berets; the paramilitary special operations unit (JSO) closed down at the same time. 
Lukovic is believed to have masterminded the assassination with the leaders of an organized crime syndicate known as the Zemun Clan. Despite the arrest warrant he is still at large. The actual assassin was captured, Zvezdan Jovanovic, also a member of JSO. But that is less important than getting the 'Moriarty' of the affair, Sherlock Holmes's main adversary.
It is not unreasonable to suppose that the deed was an in-house affair. It needed knowledge of Djindjic's exact movements on the day in question. There was one such event in history that changed everything, also emanating out of Serb assertion, namely the assassination of Archduke Ferdinand and his wife on July 28th 1914. There the deed was expected by those who knew about the Black Hand, a Serb terrorist group with allies in the security services, and yet unexpected by the world at large; it gave a new meaning to the twentieth century, what nobody expected. 
This is a more localized affair, but with repercussions right across the Balkans for all that. There is something equivalent to The Black Hand still around in Serbia. The new premier is determined to root it out. He looks as if he is succeeding, which is good news all round. The Serbs may be finally entering the modern Western world, with its strong condemnation of terrorism, especially when rogue elements in the state apparatus itself are involved. 

Parliamentary commission
The Serbian parliament, which is dominated by the Democratic Party of the deceased premier, has set up a commission of enquiry. Its head, Bosko Ristic, has said of more than a dozen dismissed judges and the president of the Supreme Court, no less, also forced out, that: "many of the criminals are still at liberty because of the behaviour of these persons."
Moreover, the chief of military intelligence, Aca Tomic, a figure close to Vojislav Kostunica, the former president of Yugoslavia, has been relieved of his functions. With big names falling the Augean Stables are being truly cleansed.

New bank governor
The Serbian Central Bank's a new governor is Kori Udovicki, a former IMF economist, who was also minister of energy and mining. Her appointment by the government has caused a serious rumpus at the bank, eight of its senior officials resigning at the breach of the bank's independence, as they see the matter.
Her predecessor, Mladjan Dinkic, was a hard-line monetarist who did much to curb inflation. The top bankers fear that policy will now be relaxed.
Ms Udovicki totally denies this. She is widely respected for her brains and expertise, but she is a political appointee.
Mr Dinkic has hit back hard at the government for his removal and Zivkovic has weakened his hand as regards reform. So fear the international community, which has backed him fully up until now.
The new governor may allay their apprehensions by continuing her predecessor's policies as firmly as he initiated them, after years of profligacy under the old regime. Time will tell.
The first signs are not good that the removal of the two main reformers in a matter of months is irrelevant.

Stalled reforms
In the latter half of this year, Serbia's reformists have turned on each other, spending more energy on mutual allegations of corruption than on economic issues. Over the previous two years, the clear reformist course was backed by Western aid, leading to a better standard of living, more spending and to an overall annual gross domestic product growth of five per cent.
The Serbian government has defended the sale of state-controlled companies as a step toward better productivity and transparency. But critics - including the opposition and most labour unions - insist that the country, along with the country's poor, will face serious trouble when the inflow of money from the large privatisation stops.
Despite good privatisation figures, local economists have warned that with the exception of major deals guaranteeing profits - such as DIN, DIV and Beopetrol - underlying problems threatening stability were keeping foreign investors at bay.
"Investments are dropping in real terms," independent economist, Stojan Stamenkovic said, specifying economic stagnation as the major factor that may hamper the servicing of the country's already huge foreign debt.
Belgrade economist, Jurij Bajec agreed, saying Serbia was facing dangerous stagnation amid apparent loss of its reformist course. 

Serb troops for Iraq?
Zivkovic has a bold plan to send 1,000 Serb troops to Iraq or Afghanistan under US auspices. He discussed the idea with the Secretary of State, Colin Powell, and Condeleeza Rice in Washington in early August. The Administration is lukewarm about the plan, which is bound to startle the US military, considering that they were at war with Serbia four years ago.
More time will have to pass before the Serbs will become close allies of the US. The Djindjic case is still open after all.

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AVIATION

Serbia, Montenegro to set up single air traffic control system

The Transport Ministries of Montenegro and Serbia have agreed on setting up a joint aviation authority within the state union, which will be run by a directorate for civil aviation and an air traffic control agency, Montenegrin [Transport] Minister Andrija Lompar has confirmed for Montenegrin TV.
Lompar said: "After lengthy and intense talks today, [Serbian Transport Minister Marija] Raseta [Vukosavljevic] and myself agreed to forward an agreement on the formation of a directorate for civil aviation and an air traffic control agency to the respective governments this week. As we said at the beginning and based on our interests, we agreed that forming a joint directorate was the best and most efficient way for controlling air traffic in Montenegro and Serbia and this [solution] also meets all the security and safety measures and all the other requirements set out by other international aviation organisations.
"I will submit to the government a draft of the agreement on [setting up] the directorate and the air traffic control agency and Raseta will do the same. There are, so to speak, certain minor points of dissatisfaction on both sides. But we have made great efforts to identify our interests and find solutions which would meet the interests of Montenegro and Serbia."

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FINANCIAL NEWS

Serbian finance minister says privatisation income intended for development

The Serbian government has not spent a single dinar earned through the privatisation of the Nis Tobacco Industry [DIN], the Vranje Tobacco Industry [DIV] and the Beopetrol company, Finance Minister Bozidar Djelic said, FoNet News Agency has reported.
"We will begin to spend those funds by mid-November and I expect them to be between 14 and 15bn dinars, so that most of the funds will be transferred to the next year," Djelic told journalists, adding that only the income from the privatisation of Beopetrol has not been paid yet.
Djelic also added that the income from privatisation had to be paid into the budget according to the law.
There will be no significant income from tender privatisation next year, except for the cases of Mobtel [biggest mobile operator] and a part of the Oil Industry of Serbia (NIS), and the whole income is intended for infrastructure and development, Djelic said.
"By introducing VAT, bar-coding equipment and stimulating measures for registering employees, the finalisation of which is under way, I believe that we will have a much better and more realistic economic situation in the country next year," Djelic concluded.

Serbian firm distances itself from privatisation of mineral water concern

The ABS Holding company has said that it was not involved in the privatisation of the [largest Serbian mineral water factory] "Knjaz Milos" company and that it did not support [former NBA player] Vlade Divac as its future majority owner, FoNet News Agency has reported.
A statement by the company said that the chairman of ABS Holding, Nenad Popovic, had only undertaken a commitment to serve as a private financial consultant for Mr Divac.

Serbian premier says government to create million new jobs by 2008

Serbian Premier Zoran Zivkovic said on 6th October that the government by 2008 plans to increase the number of small and medium scale enterprises from the current 270,000 to some 400,000, and to create a million jobs, Tanjug News Agency has reported. 
The development of small and medium scale entrepreneurship should help the overall development of the economy in Serbia, Zivkovic emphasised while opening a two-day conference "Small and medium scale firms - new possibilities for Serbia." Zivkovic reminded that in January this year the government adopted a strategy of development of small and medium scale firms, according to which is planned an increase in their number and in the number of those employed in them. He emphasised that there are no differences in the government about the directions of development of private entrepreneurship. 
Today small and medium scale firms realise about 45 per cent of the annual GDP, 27 per cent of annual exports and 44 per cent of the profit in Serbia, the Serbian premier specified. 
Serbian Minister of Economy and Privatisation, Aleksandar Vlahovic, said that small and medium scale firms in Serbia employ about 50 per cent of the work force. Vlahovic pointed out that one of the priorities of the government was the institutionalisation of entrepreneurship and that it has set up a network of regional agencies for the development of small and medium scale firms. 
The two-day conference in Belgrade was organised by the Serbian Ministry of Economy and Privatisation and the project with non-financial assistance to small and medium scale firms in Serbia is financed by the European Union. 

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FOOD & DRINK

Interbrew to purchase shares in Apatin

The Brussels-based brewery, Interbrew SA, recently announced it will be taking a 50% stake in Apatin, Serbia's top brewing company, The Daily Deal reported. The agreement will be worth about US$294m, the Belgian company said. 
Apatin is the largest brewer in south-eastern Europe. Among its leading brands are Jelen Pivo and Pils Light. "Apatin will play a key role with Interbrew's central European network of now 14 breweries and enhance our geographic footprint, brand portfolio and market share in the region," Jaak De Witte, Interbrew's regional vice president for Central Europe said. In the countries where Interbrew is present , it holds first or second position in them. In places that beer consumption is expanding, brewers in the region are opening up. Heineken NV, which is based in The Netherlands is central Europe's number one brewer. Recently, Interbrew announced that it would be purchasing half of the Chinese operations of Malaysia's Lion Diversified Holdings Bhd for US$131.5m. A spokesman for Interbrew stated that there is a planned capital increase of about 64.9m in Apatin to help finance the deal.

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INDUSTRY

Plant for newspapers and magazines in Serbia opens

Serbia's first privately owned printing plant for newspapers and magazines began operation on September 25th in Belgrade, RFE/RL reported. The plant cost US$4.6m, most of which came from donations from abroad. Throughout former Yugoslavia, most periodicals are still printed in plants that once belonged to communist-era monopolies.

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