Books on Serbia & Montenegro
% of GDP
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
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
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
"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
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.
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.
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.
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
· 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
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
The EU is following a so-called "twin track" approach in its bilateral
relations with the State Union of Serbia and Montenegro.