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SERBIA & MONTENEGRO


 

 

In-depth Business Intelligence

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)

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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: 097 - (26/05/05)

Belgrade expects to start EU membership talks in October
Officials from Belgrade and Brussels said recently that they expect the European Union to launch Serbia and Montenegro (SCG) on the path to membership by scheduling the start of stabilisation and association talks for October.
Visiting EU Enlargement Commissioner Olli Rehn said it was his "personal goal to have the talks start on the fifth anniversary since the democratic change in Serbia and the end of Slobodan Milosevic's regime. Rehn arrived in Belgrade and was due to visit Podgorica to discuss the conditions and deadlines required for the talks.
Rehn's visit came a week after the European Commission approved the feasibility study. On April 25th, the EU Council of Ministers discussed SCG, and the study received a green light to start talks in the autumn.
Serbian Prime Minister, Vojislav Kostunica, said his cabinet was preparing a comprehensive "national strategy" in preparation for the association process. EU officials earlier said that the positive feasibility study was a reward for SCG's progress with reforms and cooperation with the Hague war crimes tribunal. Belgrade was, however, warned that it must remain committed to meeting its international obligations to keep the approach to EU alive.
SCG has to deliver several more indicted suspects to the Hague tribunal, most notable fugitive former Yugoslav army and Bosnian Serb generals, Nebojsa Pavkovic and Ratko Mladic.
Rehn said: "All suspects must be delivered… without unnecessary delays." Rehn also met the SCG President Svetozar Marovic and other officials of the union of Serbia and Montenegro, before departing for the Montenegrin capital Podgorica for talks with Prime Minister, Miko Djukanovic.
A step forward was taken on April 12th when the European Commission indicated that the two-state entity, Serbia-Montenegro, including formally Kosovo, was ready to enter into a closer relationship with the EU. But this does not mean full membership.
It is being offered a Stability and Association Agreement - seen as a step towards full membership. The turning in of war crime suspects to the Hague is a precondition of full entry. The Serb prime minister, Vojislav Kostunica, has hitherto insisted on 'voluntary surrender' by the suspects. But, as 10 of them have been handed over in as many weeks as of mid-April, there is a sign of toughening up by the government against the suspects. It is obviously mindful of how much is at stake in its relations with the EU and the US.
There is a particular reason for doing so this summer, with a dread anniversary in the offing. "We would like to close the chapter this summer, ten years after the Sebrenica massacre," said Deputy Prime Minister Miroljub Labus, referring to the murder of at least 7,000 Muslim men and boys by the Bosnian Serb Army in July 1995.

Donor Conference for Kosovo's Cultural Heritage Under Way
The Kosovo problem remains a sore issue, six years after the conclusion of the war. A donor conference aimed at raising money to preserve Kosovo's cultural heritage opened on 13th May in Paris. The meeting was organised by UNESCO, in co-operation with the European Commission, the Council of Europe and UNMIK. Sponsors hope to gather the funds needed for the restoration, preservation and protection of monuments and other sites of significant historical importance. Experts say as many as 75 monuments are considered in need of urgent restoration and repair.
In other news, UNMIK chief Soren Jessen-Petersen discussed recent developments in Kosovo with Macedonian Defence Minister Jovan Manasijevski during their meeting in Pristina on May 12th. Jessen-Petersen said implementation of standards is on track, but much remains to be done.
Kosovo is a ward of the international community, as is Bosnia, with 20,000 NATO and EU soldiers on the ground keeping the peace in the two of them. Kosovo is still formally part of Serbia-Montenegro, but in practice is independent.
The standard of living is abysmal; unemployment is high; crime and lawlessness are rife. But it at least has a good man as its president in Ibrahim Rugova, a pacifist, French-trained intellectual. He has an unenviable difficult task, which he is discharging very well so far. Peace generally prevails. The two-year war between Serb security forces and Albanian resisters at the end of the 1990s has not resumed, although there have been only too many individual instances of violence. Kosovo does, indeed, still fester. Hence the need for the troops.
An interim UN mission still administers the province, along with an elected government, while troops from 30 countries provide security. As Rugova said on April 15th in The International Herald Tribune: " Both the international community, stretched as it is by crises around the globe, and we who live here are anxious for Kosovo to complete its transition from chaos to stability. And, despite continuing difficulties, success is in sight."
Rugova attributes the improvement to the government of Ramush Haradinaj, elected in October last year, "that accomplished more in 100 days than its predecessors in the previous three years." This government and its successor have concentrated on the Standards, an intermeshed set of 61 reforms necessary for stability and incorporation into the European family. Haradinaj made tolerance and the rule of law his watchwords. He showed his respect for the latter by turning himself in when indicted by The Hague. Soren Jessen -Peterson, the head of the Interim UN Mission in Kosovo, praised him for his dignity and courage. 
In March the new Assembly voted in a new government by a large majority, a continuation of the coalition between the Democtatic League of Kosovo and the Alliance for Kosovo's Future, headed by Basjam Kosumi as premier. Kosumi is continuing the policy reform and reconciliation. He is aiming to complete 90-95% of the 61Standards within a year. Slavisha Petkovic, a Serb Kosovar, has been made Minister for Returns and Communities, with the third largest budget among the ministries, $18m. Patriarch Pavle, head of the Serb Orthodox Church, recently agreed to accept $5m to repair damage done to its churches in Kosovo by rioters in 2004.
The UN has yet to decide on the final status of the province. It is likely to opt for its eventual independence, but only when both Serbia-Montenegro and itself join the EU. 

Goodbye to Montenegro
Actually, Montenegro also wants out; it is to hold a referendum on independence next year. Montenegrin Foreign Minister Miodrag Vlahovic said in Prague on 10 February that Montenegro wants to join the EU and NATO as an independent country and not remain "hostage" to Serbia's reluctance to cooperate with the Hague-based war crimes tribunal. He argued that Montenegro is "patient" and willing to discuss any number of possible political formulas regarding its statehood, providing that such options do not compromise its "right to international recognition." He said he believes that Serbia and Montenegro can find a better basis for understanding in a union of independent states than in the current "non-functioning" joint state.
Rejecting arguments that Montenegrin independence would have a destabilizing effect on the western Balkans, Vlahovic stressed that such a development would defuse long-standing tensions in both regional affairs and Montenegrin internal politics.
Vlahovic's remarks come at a time when the future of Montenegrin statehood continues to be the top political issue in that republic. With a population of about 650,000, Montenegro has more inhabitants than Luxembourg (480,000), which currently holds the rotating EU Presidency. 
At the heart of what historians call "the Montenegrin question" is the fact that there has never been a consensus among Montenegrins in modern times as to whether they are a separate, distinct people or a special branch of the Serbian nation. In 1918, led by the young and educated urban classes, Montenegro opted for union with Serbia. Today, those same social groups tend to favor scrapping the joint state with Serbia, which was set up in 2002-03 under EU pressure. The government of Prime Minister Milo Djukanovic is committed to independence, particularly through a referendum. A recent poll suggests that about 44 percent of the population would vote for independence, while 40 percent is opposed. 

The Union 'Does Not Function' 
Speaking at RFE/RL, Vlahovic addressed a number of issues relating to Montenegro's role in the Balkans and its future as an independent state. He stressed that independence "will not change anything" in practical terms for ordinary people, noting that the union "does not function" at present and would be best done away with for everyone's sake. Asked about Serbian arguments that Serbian voters should also participate in the referendum on the grounds that an independent Montenegro would deprive Serbia of its access to the sea, Vlahovic said that only Montenegrin citizens can determine Montenegro's political course, as is the case in virtually every democracy. He argued that Serbia does not use the Montenegrin port of Bar, anyway, but does most of its shipping through Thessaloniki in Greece. The minister stressed that Montenegro's future is as part of the "European family" as an independent country "and not as somebody's access to the sea." 
Vlahovic added, however, that some form of a "union of independent states on the model of the EU" could be set up between Belgrade and Podgorica in which everyone would benefit. He warned against a "Balkan zero-sum game" approach in which there would be only winners and losers, stressing instead that "we could stay together with Serbia while being independent" in a way that would help bridge the divisions within Montenegrin society as well as between the two republics. Vlahovic nonetheless said that Serbia must treat Montenegro seriously as a partner and agree to its international recognition, otherwise Podgorica will have no choice but to go its own way. 

Impact On Kosovo 
Asked about any impact of Montenegrin independence on Kosova's future, Vlahovic argued that the two issues are unrelated. He said that relations between Belgrade and Podgorica have "different dynamics" from those between Belgrade and Prishtina, adding that Kosova "is not Montenegro's problem" and that his country is not involved in resolving the Kosova dispute. 
That having been said, Vlahovic noted that it is important for internationally recommended standards to be enforced in Kosova, especially "individual and collective rights" for the non-Albanian minorities. He pointed out that Montenegro itself is determined to remain a "functioning multiethnic and multicultural state...to which we are very dedicated." The minister said that Montenegro's Albanian minority enjoys some benefits, such as "positive electoral discrimination." As proof that the Albanians are integrated into Montenegrin society, he noted that two of the Albanian deputies in the parliament come from ethnic Albanian parties while two others belong to "civic parties" that embrace all ethnic groups. 

EU And NATO Membership 
While arguing that Montenegro must become an "independent European state...with the political and cultural capacities to solve all our problems in a peaceful and democratic way," Vlahovic also stressed the importance of his country's joining the EU and NATO, starting with the U.S.-sponsored Adriatic Charter that includes Croatia, Macedonia, and Albania. He feels Montenegro can achieve these goals more quickly without being tied to Serbia. He argued for what in Croatia is known as the "regatta principle," in which each EU applicant proceeds at its own pace irrespective of what others do or do not achieve. 
Montenegro has a proud military tradition, and no discussion of Montenegro's future would be complete without a reference to its fighting capacities. Vlahovic referred to the current military of Serbia and Montenegro as a bloated, "old-fashioned, and costly army without any reforms or civilian control." He noted that the current "ineffective" navy includes 2,500 men, while that of Croatia, which has a much longer coastline, consists of 700 men in what is essentially a modern coast guard operation. 
Stressing that Montenegro is a peaceful country that does not plan to use its military, Vlahovic called for a "small, democratically controlled, multipurpose army not exceeding 3,000 men," fully integrated into the Adriatic Charter and NATO and advised by experts from Europe and the United States. He said that it might be possible to form a joint military with Serbia, but only if each state controls the forces on its own territory and if the joint force is integrated into NATO.

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EU ENTRY

Serbia welcomes positive report from European Union


Serbia's foreign minister said recently he welcomed a European Union report indicating the bloc was ready to start formal negotiations aimed at Serbia eventually joining the Union, New Europe reported. 
"With the positive assessment from the European Union expressed in its feasibility study … we do not have the right to delay any further," Vuk Draskovic said following talks with his Greek counterpart Petros Molyviatis during a one-day visit to Athens. 
The European Union released a study recently saying it was ready to negotiate with Serbia-Montenegro on the stabilisation and association agreement, seen as one step toward possible membership in the bloc. On the issue of Kosovo, Draskovic said Serbia would never accept an independent province, but did not rule out the possibility of approving certain forms of autonomy. "Our position is clear, something more than autonomy and something less than independence," he said.
"This means that our existing borders with Albania cannot change. Let these borders become European borders," he added. Kosovo has been under UN control since the 1998-1999 war which left about 10,000 people dead.

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FOOD & DRINK

Coca-Cola buys 100% of Vlasinka

The Coca-Cola Company announced it acquired 100% of Vlasinka shares, a leading producer of mineral water in Serbia, through its Greek subsidiary Coca-Cola Hellenic Bottling Company SA, New Europe reported recently. The acquisition of Vlasinka includes production facilities at Surdulica in southern Serbia and the mineral water brand Rosa. The move is in line with the Greek company's strategy of expanding into the non-carbonated drinks sector. Coca-Cola HBC has operations in 26 countries, including many parts of Europe and Russia. The Coca-Cola Co has an indirect, 24% stake in the Greek bottler. Coca-Cola is one of the leading worldwide producers of soft drinks. Company's revenue in 2004 rose 4% to reach US$21.96bn, net income climbed 12% up to US$4.84bn. Company's brands are Coca-Cola, Diet Coke, Fanta and Sprite.

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FOREIGN COOPERATION

Serbian, Russian Chambers of Commerce sign cooperation agreement

The chairmen of the Serbian and Russian Chambers of Commerce signed an agreement on cooperation in Moscow recently. Slobodan Milosavljevic and Yevgeniy Primakov signed the agreement which is intended to lift the level of commercial and technical cooperation between the two associations, Radio B92 text web site reported. 
Under the agreement, the chambers will encourage stronger links between Russian and Serbian companies, organizations and business representatives and their associations. The chambers of commerce in both countries will secure a wide range of economic and legal information on commercial matters, the condition and prospects of the national markets, possibilities for export and needs for imports. The agreement also covers plans to mount seminars, symposia and conferences and organize exchange of trade delegations.

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FOREIGN INVESTMENT

Premier invites foreign investors to Serbia

The fifth international investment summit in Belgrade is set to begin, with most Serbian officials of the opinion that Serbia has a lot more to offer today to foreign investors than it had in the past several years, Radio B92 text web site reported. 
Still, most international investors feel that if bureaucracy and corruption were further minimized in Serbia, the investment atmosphere would be even better. 
Serbian Prime Minister Vojislav Kostunica has said that Serbia has recovered economically significantly, and that the fact that many new investors have surfaced in Serbia is proof of that. He added that there had been more foreign investments in Serbia in the first three months of this year than in the same period in 2004. 
"I am inviting you, honoured guests, to join the Serbian economy, because Serbia has a good chance of becoming your next big business success. In the period that is ahead of us, we will put in extra efforts in order to strengthen our economy and legal system, and show that we are reaching European standards," Kostunica said. 
Many investors agree with Kostunica, regarding the fact that putting money into Serbia is now an easier and more secure process, but believe that there are several vital obstacles that still need to be taken care of. Michael Ahern, president of the Council of Foreign Investors, has told B92 that Serbia still needs to work on its international image. 
"My business partners ask me many times how it is to be living and working in Belgrade, which clearly shows that they think that there is something strange about this country. That is why the image that Serbia has needs to be changed, because most people who come here are pleasantly surprised," Ahern said. 
According to Joanisa Kostodopulos, member of the Helenik Petroleum Oil Company's chief council, the Serbian government has technical problems it needs to take care of internally first. 
"It is true that there is much bureaucracy. For one licence you need to go through 20 institutions. It is encouraging to hear that ministers are about to adopt new laws, but until that happens, many new workplaces will continue to wait to be opened," Kostodopulos said.

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