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Key Economic Data
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $
         
GNI per capita
 US $ 106
Ranking is given out of 208 nations - (data from the World Bank)


Update No: 181 - (26/11/13)

In April of this year, negotiators finally managed to achieve a breakthrough in Serbia-Kosovo relations. The deal instated an agreement that would see Belgrade abolish the parallel systems that have, up until now, been in place for Kosovan Serbs in the country's north in order to secure greater autonomy for them. This was a major step forward, since Belgrade has been famously resolute in refusing to recognise the sovereignty of the Kosovan state and has fiercely tried to protect the ethnic Serbs who live in the country's north. The genesis of this project was pressure for Serbia to reach normalised relations with Kosovo if the country wishes to pursue an EU bid. Regretfully, recent events at local elections suggest that the process of normalisation, even if there may be political will, seems to have been derailed somewhat. On the economic front, Serbia is, like many of its neighbours, struggling with skyrocketing debt.

Although ‘normalisation’ has been approved of, Kosovo remains the major point of contention in Serbia's political sphere along with Belgrade's claims for the territorial integrity of Serbia. A reminder of how contentious this area is came in late October, when Turkish Prime Minister Recep Tayyip Erdogan told a crowd in Pristina that "Turkey is Kosovo and Kosovo is Turkey," doubtless an attempt to draw on solidarity with the Albanian Muslim community. The response was an entirely justified Serbian government statement two days later which said that Erdogan's comments represented "a severe violation of international law and interference in Serbia's internal affairs," which "harm relations between Belgrade and Ankara and disturb efforts deployed by Serbia to normalize the situation in the region, notably in Kosovo."

As part of an EU-brokered deal to normalise relations with Kosovo, it was agreed earlier this year that local elections for counsellors and mayors were to be held in Kosovo. However, the attempts to hold them were derailed in 3 out of 4 of the Northern, Serb-dominated districts, when masked men, ethnic Serbs who oppose Kosovo's independence, disrupted proceedings. They apparently destroyed ballot boxes and harassed election workers. Prior to this observers had noted that there were attempts to deter people from voting in the elections by a variety of intimidation tactics. Roberto Gualtieri, head of the EU's observer mission called the events "an attack on fundamental human rights."

Overall however, optimists were quick to point out that in other parts of the country, the municipal elections were generally peacefully and properly conducted. The Serbian Prime Minster Ivica Dacic re-asserted, however, that voters should go to the re-run in order to legitimise these elections. Dacic emphasised that violence was not a viable response for those who opposed the elections, stating, “Serbia cannot help you today with guns and tanks." Kosovo's prime minister, Hashim Thaçi also called upon Kosovan Serbs to vote in the elections. His tone was not entirely conciliatory, however, stressing that should there be further disruptions to the voting, he would hold Serbia responsible. Disturbingly, some even suspect that Belgrade may have funded those who disrupted the elections, although what funding Serbian nationalists would need to go on the rampage is probably irrelevant. But there is intense feeling on both sides given such a long and unhappy history that they have shared.

Normalisation is proving a difficult feat to manage. Reminders of the recent conflict periodically inflame tensions. In early November, an EU prosecutor indicted 15 former Kosovo Liberation Army (KLA) fighters on charges of torturing and killing civilians during the 1998-99 conflict with Serbia. The perpetrators include Kosovo's ambassador to Albania, Sulejman Selimi, and leading members of Thaçi's governing PDK party, including Sami Lushtaku. The accusation has not effected the latter's popularity - he still received 88% of the vote in the mayoral elections from his prison cell. Thaci has pledged that those who have been convicted of crimes in the past will be expelled from the party in an attempt to create a political tabula rasa for future relations.

Serbia has recently made a deal with its traditional ally Russia. Relations with Russia remain strong, and have recently deepened with the agreement between Serbian Defense Minister Nebojša Rodić and his Russian counterpart Sergei Shoigu on cooperation in the defence sector. Notably during discussions between the pair, Shoigu asserted that Russia will continue to support the Serbian government's policy and territorial integrity of the Republic of Serbia (in other words its stance on Kosovo). The 15-year agreement includes the sharing of strategic information, military exchanges, and taking part in military exercises.

The South Stream pipeline is another source of co-operation with Russia. Construction of the Serbian part of the pipeline will begin on November 24. Unfortunately, the deputy director of the Energy Community Secretariat has just stated that the agreement is not in accordance with EU energy rules. Gas relations with Russia and the EU are notoriously difficult and it seems that Serbia may be the next transit state to enter into the quagmire.

Whilst Serbia clearly does want to proceed with the EU accession process, there are a number of factors which problematize its aspirations. Especially worrying have been the recent events surrounding Serbia's annual ‘gay pride’ march. The last time a ‘gay pride’ march was held in Serbia was in 2010 when right wing nationalists took their opposition to the parade onto the streets in a violent fashion. This year the Serbian government was under pressure from EU ambassadors, who view the treatment of gay rights protests as a barometer for the general position on tolerance and diversity, to ensure that the march could go ahead. Nonetheless, the result of an hour-long meeting between government leaders and security chiefs was a statement from Prime Minister Dacic confirming that the march would not be held. "After a long discussion on whether the march would pass without severe consequences, the security assessments indicated severe threats to public safety," Dacic, commented, adding, "This is not a capitulation to the hooligans." Observers noticed however that the websites of nationalists groups such as Obraz were quick to assert that they had 'won' and viewed the decision as confirmation that the government had heeded their demands that it be cancelled.

Gay Pride organizer and activist Goran Miletic commented "Everyone's a loser here, except the hooligans who for the third consecutive year have proved they can tell that state what it can and cannot do."

In another part of the political sphere, the government has a major domestic concern: the economy. Serbia's economy has been flailing for some time, not unlike many neighbouring states. With unemployment at nearly 25%, and a contraction of 25% in the economy last year, there is plenty to be worried about. At the start of October the government announced austerity measures. These will take the form of a range of "solidarity taxes," ranging from 10% to 25% on salaries in the public sector that are above 60,000 dinars ($712) a month. In addition, sales tax on food will be increased and the retirement age for women increased. Privatisation of 179 state-owned businesses is also part of the plan. The government currently has foreign debt of €19 billion euros and a budget deficit of 6.5% of annual GDP. Whilst these measures will undoubtedly prove unpopular, they are, the government says, unavoidable given that the country is reportedly close to bankruptcy. Lazar Krstic, the 29-year-old finance minister, a former McKinsey consultant, and the youngest Finance Minister in the country's history, has asserted that the measures are designed to reduce the budget deficit, at 7.5% last year, to between 2% and 3% of GDP by 2016 or 2017. Loans will also shore up the economy for the moment, as Belgrade hopes to negotiate a new financial support package from the IMF and may receive a €1 billion loan before the end of this year from the United Arab Emirates. The government is needless to say, bracing itself for popular unrest.

In another ‘controversial’ move, in September Aleksandar Vucic announced that former International Monetary Fund chief Dominique Strauss-Kahn would become an economic adviser to the Serbian state. Strauss-Kahn, it may be remembered was ousted from his IMF position as the result of being implicated in a number of sex scandals and is currently facing charges of aggravated pimping in France, which has little to do with his undoubted finance expertise and which of course is still unproven .

A senior political source in Belgrade defended the decision by saying, “There is no point in pretending that the economy is not in a mess and we need someone with the economic authority and knowledge who can be of assistance and Strauss-Khan fulfills those conditions. We are, of course, aware that there will be some controversy over this because of what has happened in his private life, but we believe that does not have any bearing on the professional role we are seeking from him. Let’s not forget the man used to be the director of IMF.” The one time economics professor will apparently offer his first three months work for free. That seems like a bargain for Serbia who very sensibly can distinguish between a totally irrelevant ‘popular media’ hunt, and their national need for expert advice which S-K is undoubtedly able to offer.

Next year will see a variety of new challenges for Serbia. Whilst Deputy Prime Minister Aleksandar Vucic's Progressive party is apparently enjoying high polarity, the effects of austerity may hit it hard. In the meantime EU prospects will continue to hang in the balance and the situation in Kosovo must be closely observed.

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