Books on Serbia & Montenegro
% of GDP
Update No: 104 - (01/01/06)
Serb enemy is grabbed
Croatian war-crimes fugitive Gen. Ante Gotovina has been arrested after a
four-year manhunt, boosting Croatia's bid to join the European Union and
increasing pressure to track down other former Balkan War leaders still on the
run, notably in Serbia. Gotovina was arrested on the Canary island of Tenerife
on December 7th and flown to The Netherlands aboard a Spanish military aircraft.
Gotovina had been a fugitive since he was indicted by the U.N. International
Criminal Tribunal for the Former Yugoslavia (ICTY) in 2001. One of three top
fugitive suspects from the 1990s Balkan wars, Gotovina, 50, faces charges
relating to the death of about 150 ethnic Serb civilians during a Croatian
offensive in the Serb-held Krajina region in 1995. The indictment said Croatian
forces under Gotovina went on a rampage of persecution, murder, plunder of
property, destruction of towns, deportation and inhumane acts. He faces three
counts of crimes against humanity and three of war crimes.
Now the Serbs' turn
There is no doubt that his capture is a major event, and a positive one for
Croatia. It can now come in from the cold. But it piles on the pressure for the
Serbs to cooperate in delivering their own war criminals up to justice.
The arrest by Spanish authorities also underscores how the EU's policy of
"soft power" -- holding out the carrot of membership in the world's
largest trading bloc -- can prompt countries into moving toward more democratic
North Atlantic Treaty Organization Secretary-General, Jaap de Hoop Scheffer,
hailed the arrest as "good news for the world" and for Croatia. Olli
Rehn, the EU commissioner in charge of enlarging the 25-nation bloc, said he
hoped it would "urge other countries in the region to track down their
suspects" and allow Croatia to "focus on reforms and establishing the
rules of law."
But Carla del Ponte, the chief United Nations war-crimes prosecutor who thanked
Croatian and Spanish authorities while announcing the arrest, immediately turned
up the heat on Serbia and Montenegro to help track down Bosnian Serb wartime
leader Radovan Karadzic and his military chief, Ratko Mladic, the court's top
two remaining fugitives. "I'm still angry because Karadzic and Mladic are
still at large, and that is a real scandal," Ms. del Ponte said before
meeting with Serbian Prime Minister, Vojislav Kostunica.
Serbian President, Boris Tadic, congratulated Croatia and said his government is
doing "everything possible" to bring in the six Serb war criminals
still at large. He also admitted that his government's policy of "voluntary
surrender" -- trying to lure war criminals through negotiation instead of
aggressively hunting them down -- might have to change. "Something has to
happen," he said after meeting with Mr. Rehn in Brussels. "Otherwise,
we can't join the EU."
Tadic backs Montenegro poll despite EU caution
President Tadic has indicated that he would not stand in the way of a referendum
on independence in Montenegro. He said at a conference in Brussels on 8th
December, staged by think-tank Friends of Europe, that he "respects the
right of Montenegro to organise a referendum" on breaking away from Serbia.
While Tadic indicated Belgrade is firmly opposed to independence for Kosovo, he
presented a relaxed view on the referendum on independence which Montenegro is
set to hold in April 2006.
"I support the state union [between Serbia and Montenegro] but I also
respect the right of Montenegro to organise a referendum," Mr Tadic said.
He added that he welcomed EU engagement in setting up international standards
for the poll, which would be acceptable to both Montenegro's pro-independence
government and the pro-Serbian opposition.
The conciliatory message from the Serbian leader came just a day after the
International Crisis Group (IGC), a leading think-tank on conflict prevention,
had urged the EU to give up its "discomfort" with a Montenegrin
referendum. In a highly critical report published on 7th December, the
think-tank said "The EU worked very hard to counter, or at least postpone,
any prospect of Montenegrin independence", attempting to discourage and
delay a referendum.
The ICG researchers said that in particular Javier Solana, the EU's foreign
policy chief, "applied strong and sustained pressure to Montenegro's
politicians to obtain their agreement to remain in an awkward construct with
The prime reasons for the EU's wariness with Montenegrin independence are fear
for a spill-over effect on the talks on the future status of Kosovo and the
concern of a de-stabilisation of Serbia, according to the ICG.
But the think-tank claims Brussels' stance has encouraged the Montenegrin
pro-Belgrade opposition to boycott the referendum, instead of actively taking
part in it. "The EU needs to begin sending a consistent message that it is
prepared to accept whatever decision Montenegro's citizens make about their
future", the report says.
Solana cabinet denies claims
The spokeswoman for Mr Solana slammed the ICG report, saying that the EU
position was clear in stating that "the referendum is absolutely
legitimate" and it made "no sense" to delay it, provided all
parties agreed on the rules beforehand.
One EU diplomat said the author of the IGC report had advised the Montenegrin
government before, and was far from impartial.
But another diplomat backed the IGC analysis, indicating that "Mr Solana
himself doesn't like the idea of independence," having been the
"architect" of the State Union binding Serbia and Montenegro together
Serbia and Montenegro were the only two republics that remained of Yugoslavia
when the Milosevic regime was toppled in 2000, after which intense EU diplomacy
secured the State Union construction.
But Brussels has now come under increasing pressure to come to terms with the
independence referendum, as the Council of Europe's so-called Venice Commission,
an influential advisory body, will present its recommendations on the standards
for the referendum.
A poll conducted in September showed that 41.6 per cent of Montenegrin voters
back independence, while 34.5 per cent would vote against it.
Tadic tough on Kosovo
Meanwhile, at the Brussels conference Mr Tadic made clear his leniency on
Montenegro did not mean he took the same line on Kosovo independence.
"Montenegro was already a separate republic in Yugoslavia, while Kosovo has
been a province of Serbia," Mr Tadic said explaining his differing views
towards the two breakaway hopefuls.
The talks of the final status on Kosovo, which has been under UN administration
since the end of the Kosovo war in 1999, started in November under the guidance
of UN envoy and former Finnish president Marti Ahtisaari.
Mr Tadic said he would offer the Kosovo Albanian majority "the highest
autonomy in the world," but this autonomy "should not infringe on
Serbia's existing sovereignty," he added. He also noted that Kosovo should
under its future autonomous status comprise a separate entity for the Serb
The Serbian president warned that a "carving up" of his country would
destabilise the young Serbian democracy, stating "Serbian democracy needs
Economic reforms continue with World Bank credit
Serbian Prime Minister, Vojislav Kostunica, said after meeting with the World
Bank Vice-President for Europe and Central Asia, Shigeo Katsu, that a new loan
from the World Bank is very important for the development of the private and
financial sectors in Serbia, stressing that it is the government's priority to
improve the economic atmosphere. Katsu said that the interest-free loan from the
World Bank for the development of the private and financial sectors of Serbia,
worth US$55 million, is a sign given by that world organisation of its support
of the Serbian government for the efforts it is making for implementing
structural reforms. He said that the loan of US$55million is the first in a
series of future development programmes between the World Bank and Serbia.
At the meeting, it was jointly stated that Serbia has made major progress in
implementing reforms, which the World Bank greatly values in its Annual Report,
where Serbia has been ranked first for progress in reforms among 155 competing
The talks included Serbian Minister of Economy, Predrag Bubalo, Minister of
International Economic Relations, Milan Parivodic, and Minister of Finance,
Mladjan Dinkic, and addressed possibilities for future projects in the areas of
infrastructure as well as discussions on issues such as fight against poverty
and regional development.
Serbia-Montenegro leads EU area in reforms
Other promising news is coming in for Serbia's reform process, although it must
be stressed that it is still in early days yet. Senior Economist of the European
Bank for Reconstruction and Development (EBRD), Peter Sanfey said that
Serbia-Montenegro tops the list of 27 countries in transition as a leading
reformer in the period between September 2004 and September 2005, according to
Presenting a report on transition in 2005, Sanfey said the greatest progress has
been achieved in the banking sector, privatisation and market liberalisation,
company management and liberalisation of trade. He said this strong reform
process surprised some in the EBRD because the situation in the country is very
difficult, adding that a lot more needs to be done.
According to Sanfey, Serbia has made significant progress but according to
overall progress it is still behind in the transition process the most among the
countries in the region, including Romania, Bulgaria and Croatia. Sanfey said
that one of the major challenges for Serbia-Montenegro is preservation of macro
economic stability and that special attention should be paid to reducing the
It is necessary to attract more "Greenfield" investments in new
projects, Sanfey said adding that this year Serbia-Montenegro, as well as all of
southeastern Europe, will have the record level of foreign direct investment (FDI).
He added that the expected US$1.6m in FDI will come mostly from privatisation.
Sanfey said that the economic growth of 27 countries in transition, which
includes eight countries of central Europe and the Baltics, seven countries of
southeastern Europe and 12 countries of the Union of Independent States, has
been slowed down to 5.2% this year and said that it is still very good, since
the economic growth in the European Union is 1%. According to the 12th report of
the EBRD on countries in transition, Serbia-Montenegro is expected to have an
economic growth of at least 4%.
Japan signs economic, technological deal
Serbia-Montenegro and the Japanese government signed an agreement for
cooperation in technical fields. Under this agreement Japan will send its
experts from various technical fields to Serbia-Montenegro and open
opportunities for Serbian citizens to participate in seminars and internship
opportunities, New Europe reported.
The Japanese government had given Serbia-Montenegro donations worth some US$82
million, while this agreement aims to help further economic cooperation between
the two nations. Japan has also written off a debt of US$104 million owed by
Serbia-Montenegro within the framework of the financial deal made with the Paris
Serbia receives 25m Euro loan for education reforms
The Serbian government received a 25 million Euro loan for the continuation of
reforms in secondary-school education and the building of nine new secondary
schools from the European Investment Bank according to the representative of the
European Agency for Reconstruction (EAR) Dejan Suvakov. He said that the first
phase of a two-year programme initiated by the Serbian Ministry of Education and
Sport, was supported by the EU and funded by the European Agency for
Reconstruction, New Europe reported.
Iran, Serbia-Montenegro have solid trade potential
Serbia and Montenegro Minister of Economy Federation, Amir Norkovic, said that
though Iran and Serbia and Montenegro have a rich trade potential, economic
exchanges were not on a par with their cordial political relations, IRNA News
Agency reported on November 23rd.
The Serbian official met with Iranian Ambassador, Mohammad Mirhaydari, and
discussed increasing efforts by both countries to raise their current level of
bilateral trade. IRNA reported that they discussed the conditions necessary for
closer cooperation in the field of textiles, chemicals and in the wood industry
as well as in vehicle, machinery and farm equipment production. Both the
countries can put in place better customs facilities to increase their bilateral
trade. The Iranian Ambassador praised an initiative by Serbia and Montenegro's
Chamber of Commerce to open a special section to encourage economic cooperation
He said, "In addition, banking is another area potentially rich in
cooperation." Mirhaydari asked the Serbian minister to provide the
necessary facilities for increasing economic and mutual trade ties. The
agreements call for Iranian and Serbian manufacturing, commercial, technical and
engineering companies to strengthen cooperation and implement various projects.
In December 2004 Iran and Serbia-Montenegro signed agreements on five trade and
investment cooperations during the 12th joint Iran-Serbian and Montenegro
Economic Cooperation Commission session. Double taxation on trade and investment
activities should be removed to attract foreign investments and to support trade
and economic cooperation. Moreover, an agreement for mutual insurance coverage
by the Export Guarantee Fund of Iran and the Serbian Guarantee Institute and
another on cooperation at the provincial level were inked. The protocols will
facilitate closer ties between the states' private sectors.
INTERNATIONAL ECONOMIC RELATIONS
EU extends preferences to Serbia until 2010
The Serbian Ministry of International Economic Relations welcomed the decision
of the EU Council to prolong the period from January 1, 2006 to December 31,
2010 for applying the so-called EU exceptional trade measures for the import of
goods from the Western Balkan countries. These measures allow Serbia to export
most of its goods into the EU without custom fees and without limitations on
volume, New Europe reported.
As of January 2006, the preferential treatment will apply to Serbia and
Montenegro as customs territories. Since Stabilisation and Association
Agreements (SAA) have not yet been concluded with all the Western Balkan
countries, the EU Council decided that it is appropriate to prolong the period
of validity of Regulation No 2007/2000 and that it remains in effect until
Serbia-Montenegro signs the SAA with the EU.
Nine companies auctioned off for over 506m dinars
At the 157th public auction on November 24 the Serbian Privatisation Agency sold
nine companies for the total of 506.948m dinars. The companies sold were:
Stoteks, Kraljevo; Jugoprevoz Krusevac, Krusevac; Prvi Partizan-Gama, Uzice;
Niskogradnja, Nis; Zajecar, Zajecar; Beograd, Belgrade; Mostprojekt, Belgrade;
Proing, Belgrade and Signalservis, Leskovac. The auction sales of six companies:
Elektromedicina from NIS, Fabrika Mernih Transformatora from Zajecar, Inex
Security International Business and Rekord from Belgrade, Zoreks Fhp from Sabac,
Hup Balkan from Leskovac, were declared unsuccessful, New Europe reported.
Slovenian largest retailer Mercator invests in Serbia
Mercator opened a shopping mall, its fourth in Bosnia and Herzegovina, in the
capital Sarajevo. Mercator said it expects its 2005 sales in Bosnia to rise by
31% on the year to 48.4 million Euro. It has a 2% share of the Bosnian retail
market, New Europe reported.
Mercator will open a mall in western Serbia, and another one in Central Serbia.
Currently, the Slovenian retailer has only one mall in Serbia, in the capital
Belgrade. Mercator's competitors in the Serbian market are German Metro, French
Cora, Greek Veropoulos and Serbia's three largest retail chains: Maxi, C-Market
and Pekabeta. Mercator consolidated 9-month net profit went up 135.3 per cent.