Update No: 118 - (29/03/07)
Stalemate continues in coalition talks in Serbia
With the possibility of repeat parliamentary elections looming in Serbia,
discussions on March 20th for reaching a coalition deal between the chief
parties of Serbia's 'democratic bloc' failed to yield results.
President Boris Tadic's pro-Western Democratic Party (DS), Prime Minister
Vojislav Kostunica's moderate nationalist Democratic Party of Serbia (DSS) and
the technocratic G17 Plus have been haggling over the formation of a working
coalition since January.
Who to be premier; and who president?
The main stumbling block in the talks has been reaching an agreement on
naming a premier designate.
While DS pushes for French-educated former finance minister Bozidar Djelic, DSS
insists on Kostunica retaining the position of prime minister, relying on a
'sixth principle' it presented in the discussions, which states that DS cannot
hold both the offices of president and prime minister.
DSS and G17 Plus officials promised to support Tadic's re-election in the next
presidential polls if DS backed off on nominating Djelic, but Tadic baulked at
the 'principle,' which experts say has no legal basis.
Of the 250 assembly seats, DS has 64, DSS 47 and G17 19, enough for a majority
even without involving other democratically-oriented parties.
The West looks on anxiously
The West had hoped that the three parties would produce a cabinet to deal
with Serbia's many weighty diplomatic issues, including the endgame in the
Kosovo status process and its frozen European Union association talks caused by
Serbia's failure to arrest fugitive war criminals.
Even though it received the most votes in the parliamentary elections held on
January 21, the ultra-nationalist Serbian Radical Party was not invited to any
If a ruling coalition is not formed by late May, new parliamentary polls would
automatically be scheduled, most likely producing yet another indecisive
outcome, with little chance of forming a new government before autumn.
EU still engaged with Serbia
The EU Commissioner for Enlargement, Ollie Rehn, said recently he hoped the
EU would soon resume talks with Serbia, broken off last year, and that the new
Serbian government would apprehend and hand over to the UN Yugoslav war crimes
tribunal (ICTY) at the Hague, the remaining fugitive war crimes indictees,
including former Bosnian Serb leader Radovan Karadzic and his general Ratko
Mladic. Serbia's cooperation with the ICTY remains a key precondition for
resuming pre-entry talks with the EU.
Serbia's president Boris Tadic, whose centre-left Democratic Party is trying to
forge a coalition with premier Vojislav Kostunica's centre-right Democratic
Party of Serbia and G-17 Plus of the so called 'democratic bloc', has stated
that cooperation with the UN's Hague tribunal will be a priority for the new
government. But two months after the elections on 21 January, a coalition
government had not been formed.
The following article by a Serb economist shows that not everything is bleak
there and not all news bad:-
Serbs catch share trading bug as economy takes off
By Gordana Filipovic
A few years ago, Serbs who had any spare cash would simply put it in euros to
protect their savings from runaway inflation, in an economy crippled by a decade
of ethnic conflicts and economic sanctions.
Now with inflation in single digits for the first time since the break-up of
Yugoslavia in 1991, the dinar currency firm and stable and the economy growing
strongly, more and more are discovering the nascent stock market as a tempting
Dragan Antic, an electronics engineer, enrolled in a course on stock market
basics after having invested his life savings in Serbian shares.
"If banks can do it, I can do it," said the 52-year-old who quit his
day job to trade shares. "If I put my money in a bank, I will only get
Antic is a member of a fast-growing group who caught the stock market bug and
see share trading as a fast track to prosperity in the Balkan nation of 7.5
million people, where average pay is just US$300 (154 pounds) per month.
While nearby Slovenia has already joined the European Union and Croatia is on
track for membership, Serbia is further behind, only beginning to recover from
political and economic turmoil after the fall of its strongman, Slobodan
Milosevic, in 2000.
The Belgrade bourse started share trading in 2001 and like many other markets in
their infancy was initially the domain of just a handful of financial
But as efforts to stabilise the economy began bearing fruit, bringing down
inflation and pushing the dinar to two-year highs, more and more domestic and
foreign banks and funds flocked to Belgrade.
Bourse trading volume doubled to 1.2 billion euros (820
million pounds) last year and the market value of the 15 most actively traded
shares more than doubled to 2.8 billion euros with some stock prices rising by
three times or more.
With bank time deposits earning no more than 8 per cent a year, for a growing
number of Serbs the stock market's allure is too strong to resist.
"Small investors look at what big players do. They see risk, but they also
see massive profits," says Dragoslav Velickovic, head of the securities
department at Societe Generale Yugoslav Bank.
Brokers estimate the number of individual investors grew by some 50 per cent
over the past six months and now number in the thousands. Most invest between
500 and 1,000 euros, says Sasa Aleksic, head broker at Sinteza Invest Group.
Betting on a new horse
Zorica Jevtic, 47, an accountant at a private trading company, says the
bourse replaced gambling as a favourite office pastime.
"Until a few months ago, my colleagues were glued to bookmakers' Web sites.
Nowadays, it's stock market reports."
Serbia's good growth prospects, the presence of foreign investors such as
Austria Creditanstalt and limited supply make the market look like a safe bet
for now, according to some brokers.
Even protracted talks on forming a government after the January 21 general
election and resulting political uncertainty failed to dent bourse sentiment and
the index of the top 15 most actively traded shares climbed almost 40 percent in
the first two months of this year.
But analysts say small investors like Antic are taking a big gamble by betting
their savings on companies they have no way of knowing well.
The bourse has yet to grant its first full listing, which involves publishing
quarterly audited balance sheets, detailed cash-flow plans and data on debt
levels and mortgages.
For now all shares trade on an unregulated market and out of 1,195 stocks that
appeared there last year, only about 50 trade daily.
"There are problems with company reports that may be untrue, or the stock
is not liquid," says Sandra Jankovic, analyst at the Senzal brokerage.
Brokers say the emergence of private pension funds may prompt top Serb companies
to seek a full listing, making it easier for funds and small players to make
Right now the central bank, which supervises the funds, considers only 10 stocks
safe enough for pension funds to invest in.
Brokers say hefty 2006 gains made some stocks already look expensive, but like
elsewhere in the Balkans the sentiment is driven by a steady stream of fresh
cash and expectations that the economy will keep growing by more than 5 per cent
"Some shares may be pricey, but investors are buying the growth prospect
for 2007 and 2008," said Rade Rakocevic, head of the Senzal brokerage.
Telekom Srbija bids for mobile operator
Telekom Srbija and Amsterdam-based Ogalar Company (owned by powerful Serbian
businessman Miroslav Miskovic) are the only bidder for a third mobile telephony
operator in Montenegro, Italian News Agency ANSA reported on February 20.
They are offering US$16 million for the licence, although the reserve price is
set at US$ Six million, it was reported. Telekom officials have confirmed that
Ogalar is part of Miskovic's Delta Holding and that the company has been working
on promoting Telekom. The consortium plans to invest about US$90 million, and is
ready to become operational in the summer, it was reported.