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SERBIA & MONTENEGRO

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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)

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REPUBLICAN REFERENCE

Area (sq.km) 
102,350

Population 
10,655,774

Capital 
Belgrade 

Currency 
New Dinar

President 
Boris Tadic

Private sector 
% of GDP 
40% 

  

Update No: 091 - (26/11/04)

In Belgrade, unity is gone
Four years ago in October, 2,000 over one million people filled the streets and squares of central Belgrade. In the capital of Serbia, they released an extraordinary force of energy and unity against the regime of Slobodan Milosevic, the man held chiefly responsible for plunging the former Yugoslavia into four wars, now on trial in The Hague on charges of war crimes.
The previous month, Milosevic had refused to accept or even release the complete results of an election after the opposition leader, Vojislav Kostunica, had claimed victory. The incensed opposition called a general strike. Tens of thousands of people started converging on Belgrade; the swelling crowds kept watch until opposition leaders had also won over key police units, and Milosevic resigned.
Kostunica, a constitutional lawyer with more than a tinge of Serbian nationalism in his political blood, was catapulted into power by an opposition that united after a decade of bickering that had allowed Milosevic to exploit those divisions.
Today, the unity of those heady days of October 2000 has vanished, whether at home in Serbia-Montenegro, which still includes Kosovo, or in the Balkan region at large. 

The Kosovo conundrum
The major problem is Kosovo - the southern province that is part of Serbia but has been a United Nations protectorate since 1999, after NATO intervened to stop the ethnic cleansing of Kosovo's Albanians by Milosevic's security forces. The Balkans have seen resolution of almost all the war and peace issues that plagued the region in the 1990s. There is still one serious threat to stability in the Balkans today, however: the unsettled status of Kosovo. This is the issue that must be settled if the Balkans as a whole are to proceed successfully towards their European destination. 
Post-Milosevic Serbia appears to have given up the threat of force to regain control over Kosovo, but the majority Albanian population there still fears Serb intentions. Discontent is growing. Uncertainty over status, an unsuccessful UN administration (UNMIK), concern about Belgrade's efforts to partition Kosovo, determination on the part of Albanian extremists to ethnically cleanse the minority population and economic crisis are combining to generate a predictable rebellion, which previewed with the March ethnic riots. The June election of Boris Tadic as Serbia's president (over an extreme nationalist opponent) reduced the risk of an early crisis, but the handwriting is on the wall. 
This presents the international community with a quandary. A crisis in Kosovo is predictable, but that does not mean the political will to prevent it can be generated in advance. The war on terror and post-war Iraq are distracting the U.S. Europe has been preoccupied with writing a constitution and expanding its membership. Mistreatment of Serbs in Kosovo after the NATO/Yugoslavia war has greatly reduced international sympathy for Albanian aspirations. The international community has imposed on the Kosovars a policy of "standards before status," which requires them to show progress towards democratization before the internationals will embark on deciding status. 
Thus here we sit, waiting for a crisis we know is coming but unable to move on deciding Kosovo's status because of its failure to make progress in treatment of Serbs and other minorities. Should we move ahead anyway, possibly undermining further any hope of progress on the standards? Or should we stand pat, insisting on progress and risking radicalization of the Albanian population, and possibly even UNMIK's withdrawal? 
Kosovo's status will not be decided in a vacuum. Three "Yugoslav" factors are relevant: progress of reform in Belgrade, the political situation in Pristina, and Serbia's relations with Montenegro. Broader Balkan and global issues also need to be taken into account. 

Progress of Reform in Belgrade 
While the election of Tadic pulled Serbia back from the brink, it will not in itself put Serbia on a clear path. The Radicals, whose leader is in The Hague awaiting trial for war crimes, are still the largest party in the Serbian parliament, and Prime Minister Kostunica governs only with the support of Slobodan Milosevic's Socialists. Security and judicial sector reforms have stalled (and even in some instances reversed), and Serbia's much-needed new constitution is hostage to the political situation. Cooperation with The Hague Tribunal is blocked, at least for the moment. As a result, the U.S. has suspended bilateral aid and the EU is withholding a "feasibility study" for Serbia and Montenegro's Stability and Association Agreement. 
Tadic must tread carefully. His formal powers are limited. He needs to manoeuvre the Socialists out of the majority and his own Democratic Party into it, without however causing a break-up of the existing governing coalition. He would like to avoid early parliamentary elections, fearing the Radicals might gain. But even if Tadic is successful in reconstructing a majority that includes all the major democratic parties but not the Socialists, he will still have only a fragile base from which to deal with Kosovo, where nationalists both inside and outside the majority will exploit any concessions to Albanian aspirations. 
That said, a democratic regime in Belgrade aiming for entry into Partnership for Peace, the Schengen area and eventually NATO and the EU has to consider Kosovo more a burden than an asset. Belgrade has elaborate plans for governing the Kosovo Serbs and the territory they inhabit, but across the entire political spectrum there is no stomach for governing 1.8 million Kosovo Albanians. Tacitly even extreme nationalists in Belgrade have given up Milosevic's hope of either repressing the Albanians or chasing them from Kosovo. 

Serbia even less Kosovo still a mess 
Serbian politics have quickly degenerated into infighting that Serb analysts say has delayed plans to reform the economy and break the damaging links, left over from communism and the Milosevic era, between the police and the military and between organised crime and the security services.
As prime minister of Serbia, Kostunica now heads a fragile minority government that includes his own nationalist Democratic Party of Serbia and radical extremists instead of a united coalition of liberal parties.
Such fragility and Western scepticism notwithstanding, Kostunica exuded confidence in an interview in his office that Serbia was on the right track and could pursue reforms to move closer toward the European Union. "We need a legal framework for reforms, and we need to struggle against corruption," Kostunica said. "People want to live better. The problem is that making legislative changes means you can't make the people better off overnight."
The last decade of war and sanctions against Serbia has devastated the economy. The average monthly salary is €194, or US$246; official unemployment is over 25 per cent. Milos Macura, the Belgrade manager of Deloitte & Touche, the consultants, said last year's gross domestic product had reached half the level of 1990.
In addition, Serbia must look after at least 400,000 Serb refugees from the wars in Bosnia, Croatia and Kosovo.
Kostunica was even optimistic that the complex union between Serbia and the republic of Montenegro, which replaced what remained of the former Yugoslavia's six republics, would succeed. He was hopeful too, that a new constitution designed to break with the Milosevic era would be passed in coming months, despite the fact that it requires a two-thirds majority in the fractious Parliament and a referendum.

The Hague is Kostunica's bugbear 
His tone, however, changed when asked about Serbia's relationship with the International Criminal Tribunal on the Former Yugoslavia. Over a year ago, the tribunal, set up in 1993 to bring to justice people accused of serious violations of international humanitarian law, had asked Serbia to hand over four army generals. Kostunica said he had no intention of arresting them.
"We are in favour of collaborating with the tribunal," he said. "But we are in favour, too, that the tribunal does something for us. Those who voluntarily surrender should be allowed to return to their country and remain there until the trial begins."
Kostunica's stance has struck a raw nerve in a country trying to come to terms with the Milosevic era. "The Milosevic legacy is still here," said Milan Pajevic, advisor to Miroljub Labus, deputy prime minister and minister for European integration. "That legacy is to disunite, to divide and rule."
Aleksandar Simic, one of Kostunica's main legal advisors, said the tribunal had allowed Croat indictees to return home until their trial began, implying - in a refrain nearly universal here - that the tribunal was biased against Serbia.
Further, he warned in tones reminiscent of Serb nationalists of the 1990s, that if the generals were arrested, "there would be problems of stability and security. The generals did their jobs." Simic added: "They are popular. Any attempt by the government to arrest them would affect the stability of the country."
"And we have examples of that in our recent past," he added, in a reference to the assassination in March 2003 of Prime Minister Zoran Djindjic of the liberal Democratic Party.
Djindjic, Kostunica's arch-rival (the two leaders would not even communicate by telephone) was shot in a narrow side street behind his office, allegedly by criminal gangs with support of extreme nationalists and the security services, after he announced plans to fully cooperate with the tribunal at The Hague.
Kostunica's coalition partners insist that the generals should be arrested. "There should be complete and full cooperation with The Hague," said the foreign minister, VUK Draskovic, head of the nationalist Serbian Renewal Movement.
Pajevic said: "We have a law. It simply says what every government should do. It is so simple. We have to get the Justice and Interior ministries to move faster. Whatever we think about the tribunal."
Despite these differences, almost all of Serbia's political leaders said Carla Del Ponte, the tribunal's chief prosecutor, had played a political game with Serbia. "The view by 76 per cent of those polled is that the tribunal is political," said Rasim Ljajic, minister of human and minority rights for Serbia and Montenegro and head of the Council for Cooperation with the tribunal. "We asked the tribunal not to issue the indictments against the generals before last December's elections. But they were served. The Radical Party won the most votes."

Kostunica just as recalcitrant on Kosovo's elections in October
Kostunica's views on Kosovo are just as strong and unswerving. He had recommended that Serbs boycott Kosovo's parliamentary elections in October that Tadic had urged them to participate in. "It is not appropriate to speak of free and fair elections in Kosovo," he said. "It is not safe for Serb children to go to school or farmers to go to the fields. Whole towns have been cleansed of Serbs."
Last April, Kostunica won parliamentary approval for his plan to devolve more political powers to the Serb minority in Kosovo. Kostunica warned the international community against what he termed rewarding such violence, pledging that Serbia would never accept an independent Kosovo.
Some of Kostunica's advisers suspect a "hidden agenda" that links cooperation at The Hague, resolving the Kosovo problem and ironing out issues over the union with Montenegro to moving Belgrade closer to the European Union.
However, Simic, Kostunica's legal adviser, said "any hidden agenda" would be rejected and that "Kosovo is a part of Serbia and will remain part of Serbia."

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CONSTRUCTION

Lafarge opens revamped plant


Lafarge SA officially opened a modernised 1.5m tonne cement plant in Serbia-Montenegro, SE Europe reported recently, the company said in a statement by SE Europe on October 20th. A new dry process clinker production line has been added to the plant, at a cost of over 50m Euro, marking the largest foreign investment in the country for five years, Lafarge said. "The investment will enable the Beocin plant to keep pace with the construction market's strong growth potential in Serbia and Montenegro," the company said. Lafarge acquired Beocin-ska Fabrika Cementa, which owns the Beocin, plant is the top player in the country's cement market, in a round of privatisations in April 2002.

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FOREIGN INVESTMENT

European Agency for Reconstruction invests 370m euros in Kosovo's energy

The representatives of the European Agency for Reconstruction (EAR) said at a press conference in Prishtina that they have invested some 374m [euros] in the energy sector, KosovoLive web site reported.
EAR has provided 174m euros only for reparation of Kosovo B Power Plant.
Balduing Zimmer, Reparation Project Manager, said that Alstom, which won the tender for reparation of the B2 Unit, would guarantee reparation only for a one-year period. He added that KEK [Kosovo Energy Corporation] should enter into an additional contract for maintenance of equipment.
EAR project manager, Ioan Brow, said that they would now focus on providing assistance for reforms in the institutions. EAR will also help development of the Office of Energy.

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FOREIGN RELATIONS

Serbian finance minister, British MPs discuss reforms, EU entry

Finance Minister, Mladjan Dinkic, said recently in a discussion with a British parliamentary delegation that the European Union decision regarding a "twin-track" solution would significantly ease Serbia-Montenegro's approach to the EU and speed up the drafting of the feasibility study, FoNet News Agency reported.
Dinkic acquainted the British MPs, headed by the chairman of the House of Commons Foreign Affairs Committee, Donald Anderson, with innovations in Serbian tax regulations, a statement from Dinkic's cabinet said.
Dinkic also said that Serbian fiscal institutions were ready to start implementing value added tax. He added that a total stability of the banking system had been achieved in Serbia, and that the level of the grey economy had been significantly reduced.
Dinkic conveyed to British MPs the readiness on the part of the Serbian government to reform the state administration, restructure public companies, speed up privatisation and attract direct foreign investments. He noted that at 10 per cent, Serbia had the lowest taxes on company profits.
The statement said that mutual satisfaction with the levels of cooperation between Britain and Serbia so far had been noted during the discussion, and that readiness for a further improvement had been expressed.

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TELECOMMUNICATIONS

Kosovo Telecom Company to invest 30m euros in improving telephone network

The Kosovo Post Telecom [PTK] has announced two tenders to do with supply of telecommunication equipment for extension of network and increasing capacities of land telephony, KosovoLive web site reported.
The PTK has allocated 30m euros for the two tenders, which will remain open until 23rd December.
The first tender is related to modernization and expansion of the landline telephony network all over Kosovo; the second with microwave equipment, necessary for increasing the capacity of transmitting network. 
Director of landline telephony at the PTK, Besnik Shatri, said that those projects are part of the efforts to extend network of landline telephony all over Kosovo and improve thus the quality of PTK services.


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