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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: 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 systems.
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 Serbia". 
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 in 2002. 
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 minority. 
The Serbian president warned that a "carving up" of his country would destabilise the young Serbian democracy, stating "Serbian democracy needs your help".

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 countries. 
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 Reporter.gr
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 inflation rate.
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%.

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ECONOMIC COOPERATION

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 Creditors' Club.

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FOREIGN LOANS

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.

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FOREIGN TRADE

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 with Iran.
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.

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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.

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PRIVATISATION

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.

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RETAIL

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.

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