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SERBIA & MONTENEGRO


 

 

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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 19,176 15,555 10,900 70
         
GNI per capita
 US $ 1,910 1,400 930 112
Ranking is given out of 208 nations - (data from the World Bank)

Books on Serbia & Montenegro

REPUBLICAN REFERENCE

Area (sq.km) 
102,350

Population 
10,825,900

Capital 
Belgrade 

Currency 
New Dinar

President 
Boris Tadic

Private sector 
% of GDP 
40% 


  

Update No: 093 - (28/01/05)

What is Serbia?
In March 2002 the only two republics left in the old, formerly six strong, Yugoslav federation-Serbia and Montenegro-agreed to create a looser union. They share a presidency, parliament and a handful of ministries. But each controls its own economic system and are semi-independent. Legally, Kosovo is part of Serbia; effectively, it has been a United Nations protectorate since 1999. Tension is rising in the province ahead of talks on its future scheduled to begin in the summer of 2005.
Zoran Djindjic, Serbia's reforming, pro-Western prime minister was assassinated in March 2003, allegedly by organised criminals. His successor is Vojislav Kostunica, a lawyer and nationalist who believes in the establishment of separate regions for Albanians and Serbs in Kosovo. After three previous elections which were declared invalid due to low turnout, Boris Tadic became Serbia's president in June 2004. A former defence minister, he is pro-Europe and pro-reform. Ex-president Slobodan Milosevic, whose troublemaking in the 1990s ignited the Yugoslav wars, is meanwhile on trial for war crimes in The Hague. 

Montenegro looking bleak
Relations soured between Montenegro and its then-federal parent, Yugoslavia, after the pro-Western Milo Djukanovic was elected its president in 1997. Montenegro's restiveness raised the spectre of a new Balkan war, especially with Mr Djukanovic threatening to call a referendum on independence. The assassination of Yugoslavia's defense minister in February 2000 raised tensions even higher. 
In mid-2000, Yugoslavia's then president, Slobodan Milosevic, changed Yugoslavia's constitution to undercut Montenegro's vote in the federal parliament. Many Montenegrins then boycotted Yugoslavia's federal elections in September 2000. The surprise fall of Mr Milosevic did not heal the rift. But after his successor, Vojislav Kostunica, paid an ice-breaking visit to Montenegro in October 2000, Serbia and Montenegro eventually agreed to create a looser union in February 2002. They now share a presidency, parliament and handful of ministries. But each controls its own economic system and are semi-independent states. Despite this, Montenegro's future looks bleak.

Tadic ready for a new job - perhaps the premiership
The president of Serbia, Boris Tadic, has again urged the calling of elections for a constituent parliament and the forming of a new Serbian government. The Serbian president said he was seeking a public debate on the issue rather than discussing it with Prime Minister Vojislav Kostunica.
He said that there was no doubt that the government had enough support in the parliament at the moment, but added that this support comes from parties who would have problems in an election and so would prefer to avoid them at any cost. "I won't rule out the possibility that we might bring someone around to our idea. Most of them are for change," Tadic told Belgrade daily Blic.
The president conceded that there was little likelihood of extraordinary elections being called, but said that elections for a constituent parliament are a real possibility and should be held as soon as possible.
Tadic said he was ready to stand again for the Serbian presidency but would have to think about accepting a nomination for a president with little authority. Asked whether he would accept the job of prime minister, he replied that he was prepared to accept any solution sought by the majority of citizens.

Economic challenges in 2005
Analysts are predicting continued economic challenges for Serbia during 2005. Standards of living are half what they were in 1989, the public is increasingly preoccupied with economic issues, and many say that the level of discontent is high enough to trigger a political crisis if problems are not addressed. 
Some economists predict that the already high unemployment rate could jump by as much as 21 per cent this year, in part due to the planned restructuring of eight public companies, which together account for about 130,000 jobs. As of December 2004, the official unemployment rate stood at 25.79 per cent. 
Last fall, a survey conducted by the Factor Plus Agency found that poverty and unemployment were the top concerns among Serbs. A total of 40.6 per cent said they were worried about poverty, while 31.5 said unemployment was their most serious concern. Another 16.5 per cent listed crime. By contrast, only a small percentage -- 2.6 per cent -- said they worried about war. 
Research by the Centre for Alternative Studies, meanwhile, has found that social dissatisfaction continues to grow -- not only because Serbs are concerned about the economic situation, but also because they feel the problem is not being addressed. 
"The Serbian government lacks any strategy or concept in waging economic and social policy," analyst Milan Nikolic says. As an example, he cites the decision to halt postponed payment cheques. 
"Cheques were used by citizens as an instrument of the bicycle economy -- they transferred their expenses to the next month, and spent more than they earned. In this way, the standard of living was higher than true income. By discontinuing postponed payment checks, the standard of living of citizens is being reduced to their actual income," Nikolic says. 
According to Vladimir Vuletic of Belgrade University, Serbia has become "the Third World of Europe". Even if it achieves EU membership one day, he says, many will be continue to be excluded from the benefits, unless Serbia is prepared to fully modernise its society and economy. 
"The majority of the population of Serbia is excluded from European and world financial trends, industries and information technologies," Vuletic says. 
Moreover, the lack of a political outlet for expressing frustrations about hardship and lack of opportunity could endanger stability, analysts say. 
At the same time, the majority believe it is not too late for Serbia to move in the right direction, towards development and further reforms. That step must be taken, they say, before Euro-Atlantic integration can even be considered.

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FOOD & DRINK

Danone still looking to invest in Serbia

Groupe Danone SA of France said it has withdrawn its bid for a majority stake in Serbian bottled water company Knjaz Milos, although it added it is still interested in investing in the company or others in Serbia, SE Europe reported recently. Danone said it "did not feel the necessary consensus and adequate conditions were met at this stage to proceed with an offer," after its bid was annulled by market regulators. It will still invest in Knjaz Milos "if the opportunity to become a strategic partner still exists."
Serbia's Securities Commission recently approved the purchase by Apurna, a joint venture between Danone and Serbian NBA basketball star Vlade Divac, to buy Knjaz Milos. The commission then said it was annulling the sale on the basis of evidence that a friend of Divac had illegally offered a cash bonus to small shareholders to sell their shares to Apurna.

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FOREIGN ECONOMIC COOPERATION

SCG minister, Egyptian official discuss cooperation

Serbia-Montenegro Minister for Foreign Economic Relations, Predrag Ivanovic, and an aide to the Egyptian foreign minister, Ashraf Rashid, assessed in a discussion recently that Serbia-Montenegro and Egypt were strategic economic partners with a good tradition of mutual relations. They noted that the two countries had significant potential for improving economic cooperation, as well as joint ventures in third countries, FoNet News Agency reported.
As a statement from the Serbia-Montenegro Council of Minister Directorate for Information said, the talking parties pointed at concrete forms of cooperation in many areas, especially in the sector of exchange of goods, investments, banking, finances, telecommunications, agriculture and tourism.
It was agreed that activities regarding the finalization of cooperation agreement be continued, especially regarding the agreement due to be signed between chambers of commerce of Serbia-Montenegro and Egypt. 
It was also agreed that work of an intergovernmental committee be renewed, and its session be held this year in Egypt, the statement said.

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TEXTILES

EU and Serbia ink textiles agreement

The European Union and Serbia have initialled a bilateral agreement on trade in textiles, New Europe reported recently. Under this agreement the EU will lift all textile quotas applied to Serbia. In return, Serbia will dismantle tariffs applied to EU textile imports. In addition, both parties will refrain from applying any non-tariff barriers to each other's textile and clothing exports. EU Trade Commissioner Peter Mandelson said: "This agreement is a tangible example of the increasing closeness of the EU's relations with Serbia through the Stabilisation and Association Process. It shows how both our economies can benefit from deeper cooperation."
The main elements of the agreement are:
· Serbia commits to dismantle its tariffs for EU textile imports over a period of three years: they will be completely dismantled from January 2008 onwards.
· The EU will suspend quotas applied on eleven product categories on a reciprocal basis.
· Both parties agree to refrain from adopting any non-tariff measures which could hinder trade in textile and clothing products.
· Both parties will closely cooperate to ensure authenticity of origin of exports to the other. Administrative cooperation will be reinforced.
The agreement contains a clause of suspension of benefits in case of non-respect of commitments.
Serbia and Montenegro's textile and clothing exports to the EU in 2003 amounted to €137m, EU exports to Serbia amounted to €207m. Of the €137m in exports from Serbia and Montenegro, €128m was clothing and made-up goods and €9m were textiles.
The EU is following a so-called "twin track" approach in its bilateral relations with the State Union of Serbia and Montenegro.

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