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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: 184 - (26/01/13)

Serbia, which was made an official candidate for the EU last year, still struggles with some of the issues that made saw it mired in a period of intensive bloodletting in the wars of the 1990s. Whilst the state has made considerable process in terms of reforming its institutions, developing its economy and establishing democratic directives in order to reach the baseline of European standards, it still faces numerous challenges. One particular issue stands out: Kosovo. The majority Albanian state which gained independence in 2008 has been typically defined as the cradle of Serbian nationhood, and Belgrade has been intransigent in its refusal to recognise any sovereignty, attempting to retain de facto control over the northern enclaves which are dominated by Serbs. This has proved the major stumbling block in its attempts to move further forward in its bid to join the EU. There have, however, been some signs of progress in the past few months.

Back in December, Serbia and Kosovo began the joint control of two border crossings for the first time since the 1998-99 war. On January 12, Serbia's parliament voted overwhelmingly in favour of a resolution which would support the EU monitored talks between Pristina and Belgrade, and whilst this did not signify an acceptance of its independence and insists on protection for the Serbs living in the region, it does grant more autonomy to the state. Most notable was perhaps the rhetorical shift, with Serbia's Prime Minister Ivica Dačić telling parliament that Serbian sovereignty over Kosovo was "practically non-existent" and Belgrade could no longer afford to "keep its head in the sand". He also cautioned against "myths and fairytales" over Kosovo and said, "We have to create a strong basis to save something."

Talks between Dačić and his Kosovan counterpart, former guerrilla commander Hashim Thaci, resumed on January 16 in Brussels, chaired by EU foreign policy chief Catherine Ashton, indicating, it would seem, some progress. The EU has made it perfectly clear that some sort of settlement of the Kosovo question (stopping short of recognising its independence) is a precondition for Serbian entry. "A visible and sustainable improvement in relations between Serbia and Kosovo is needed so that both can continue on their respective European paths," European affairs ministers from the EU's 27 members, most of which recognise Kosovo, said in a recent statement. The talks, as they stand now, are mainly technical. However, the fact that Belgrade was looking for a 'comprehensive settlement' indicated to some that Kosovo may be allowed to join the UN. Serb ally Russia has consistently used its veto power within the U.N. Security Council to block Europe's newest nation from accessing a seat. In reality, talks taking place on January 16 saw the Serbian PM resile from any indications of the sort. He told the press that any such discussion would 'illusory' without a consideration of status and a comprehensive solution.

Meanwhile a platform, also unanimously agreed upon by the Serb leadership on January 12, has proved somewhat more contentious and is subject, some say, to political infighting between Socialist party leader Dačić and his more nationalistic-leaning counterpart President Nikolic, the founder of the Serbian progressive party. Whilst both served in the Milosevic regime, the former as his spokesman and the latter as a deputy PM, and have clear nationalist roots Dačić has taken pains to shake off concerns about a possible resurgence of nationalism in Serbian foreign policy, and insisted on cultivating an EU-leaning, progressive image. Nikolic's platform suggests that Serbian municipalities in Kosovo have jurisdiction in the fields of education, healthcare, judiciary, police, mining, energy, telecommunications, trade and finance. A number of analysts have suggested that this is an attempt to stymie any deal-making with Pristina. Certainly the Kosovan authorities have been mordant in their criticism of it, describing it as a 'provocation and an obstruction to the dialogue between the two countries'. Arber Vllahiu, Kosovo President Atifete Jahjaga's spokesperson, described it, quite simply as 'illegal'.

Dačić himself also rejected the legal and political authority of the platform and agreed to vote only on its general principles, in effect challenging Nikolic and other leading Progressive Party figures. Dačić appeared to be attempting to move the focus away from territorial guardianship of the Serb enclaves, to ensuring that that the rights of Serbs who live in Kosovo are protected as a whole. It is unclear whether any real consensus has formed across the board on this matter. An improvement in relations does not however depend solely on Serbian volition - Pristina's cooperation is equally crucial. It appears that the regime remains relatively ill-disposed towards Serb overtures. Other issues continue to indicate frosty relations. In an apparent response to a refusal from Belgrade to allow Kosovo officials to visit Serbia, the Kosovan authorities rejected a request from Serbia's president to visit Kosovo to mark Orthodox Christmas. Other potential obstacles are looming on the horizon. Former Kosovo Albanian guerrilla commander, and sworn Serb foe Ramush Haradinaj, who was acquitted of war crimes at the end of November last year, apparently hopes to become Kosovo's next Prime Minister. As current Prime Minister Hashim Thaci's coalition is somewhat precarious, it has been suggested that he might exchange his role for that of President which would reduce his clout but offer him greater security. If Haradinaj were to take the PM's place, it certainly bodes ill for future negations. Of his acquittal, Tomislav Nikolic, stated that it was further evidence the U.N. tribunal for the ex-Yugoslavia was "formed to try the Serbian people".

The spectre of ethnic conflict seems to haunt progress in the region. The war crimes tribunal, designed to help the region come to terms with its past, continues to inflame Serb anger and fuel accusations of political prejudice. The fact that, back in November, Croatian generals Ante Gotovina and Mladen Markač, were acquitted of crimes against Serbian civilians during the military operation “Storm”, when 200,000 Serb civilians were driven out of Croatia has angered Serb citizens, particularly nationalists who feel that Serbs are consistently persecuted in the war crimes tribunal. Following the verdict, 2000 Serbian students marched through Belgrade in protest. "With the acquittal, the tribunal has lost all its credibility," Rasim Ljajic, who heads the National Council for Cooperation with the Hague Tribunal, apparently told the press. "What happened today is a testimony to the selective justice which is worse than any injustice". Relating to the history of conflict, there has, however, been a positive development in a different domain. Serbia has always had high gun ownership rates, the second highest in the world after the US. The number of weapons that have remained in circulation since the conflict, in a country with a recent history of violence, has been a persistent security concern. Apparently around 15% of Serbia's citizens legally own firearms, 1,700 of whom have a permit to carry concealed weapons. It was with some relief then, when on December 20, 17,000 rifles and handguns seized or collected most recently under a joint programme with the United Nations and European Union to ‘de-weaponise’ the country were ceremonially destroyed.

Another development welcomed by liberals at home and abroad, was the introduction of changes in the Serbian penal code which introduced hate crime, including its recognition on the basis of sexual orientation and gender identity. On January 10, a court in the northern city of Novi Sad set a legal precedent in Serbia when it fined a man for discriminating against his 25-year-old work colleague on the grounds of the latter’s sexual orientation. The court ordered the man, known only by the initials D.K., to pay the plaintiff around €1,700 for provoking mental pain and for violating his personal rights, reputation and honour. D.K. will also have to pay the Gay Straight Alliance, GSA, the body that represented the plaintiff around €850 in court costs. Serbia has had a deplorable record on gay rights, with the Dačić government ushering in a whole new chapter of discrimination. Homophobia is, on a cultural level, relatively widespread. A recent survey found that only 26% of the population believes that the state should protect the rights of gays and lesbians, while 62% do not share this opinion. This attitude is institutionalized by the political authorities who have refused to sanction recent gay rights demonstrations. Having said this, these latest development would indicate considerable progress in this field.

If attention to the matter of minority rights is one part of the gamut of reforms necessary to continue on the path to EU accession, reform in economic areas is equally pressing, particularly relating to corruption. In New Nations World Democracy Audit, published in January 2013, Serbia was placed 61st out of 150 countries in terms of corruption. For points of comparison, fellow Balkan state Croatia ranks 46, and Bosnia (which shows by other indices a lesser degree of democratisation) ranks 56. Transparency International's Corruption Perceptions Index, published on December 5, found that Serbia has the third highest rate of corruption in the Balkans. There are some signs however that the government is starting to take the issue of graft seriously. A recent event that caused shock waves across the economic and political elite was the arrest of Miroslav Mišković, the owner of the largest private company in Serbia, “Delta Holding,” who is on the Forbes‘ list of the wealthiest people in the world with an estimated wealth of around €1.5 billion. On December 12, Mišković, who is Serbia's largest private employer, was arrested, along with his son Marko and eight other people, on charges of abusing several privatisation deals relating to road construction and maintenance. Serbian prosecutors suggest he is suspected of illegally obtaining more than €30 million. The case has generated a number of questions. Does it represent a landmark attempt to reduce corruption? Or is it a case of politically motivated persecution, a la Khordokovsky? Mišković was closely allied with the former Serbian President Boris Tadic and it is suggested that a number of politicians are on the tycoon's payroll. The affair could, observers say, reveal to what extent the political elite are mired in corruption, fused together with Serbia's oligarchy through a system of inveterate cronyism.

In a sign of how important the fight against corruption is for Serbia's citizens, as well as the EU, a recent survey by Faktor Plus found that the country’s most popular politician was Aleksandar Vucic, the deputy prime minister who is now in charge of the anti-corruption campaign. The former hard-line nationalist is considered by some to be the most powerful man in Serbia. Material inequality in the state, which has long-standing economic problems, is a serious concern. There is currently 25% unemployment and the government must observe strict budgetary control and austerity measures in order to meet IMF requirements. In the third quarter of last year GDP took a beating as farming output fell more than 17%, partly due to severe weather at the start of 2012 and construction activity declined 9.9%. In December, the World Bank reduced its growth estimate for Serbia for 2012, predicting GDP contraction of 2%, making it the weakest performer in the Western Balkans. The state will need $5.9 billion this year to service all its debt, 25% more than in 2012. Belgrade has recently secured a number of loans in order to support its economy. It reached a deal with Moscow on an $800 million loan, a large part of which will be used to upgrade the outdated railway network. Abu Dhabi has pledged to invest more than $1 billion in the Balkan country which will be funnelled to two crisis-hit sectors, construction and agriculture. In addition, the World Bank will approve a total $800 million to Serbia over the next two years for budget support, investments and reforms.

In good news, however, Serbia was ranked 94 out of 177 countries in the Heritage Foundation Index of Economic Freedom for 2013, improving its result by 0.6 points on previous year. “Over the past decade, Serbia has implemented significant structural reforms in some parts of its economy. The economy's competitiveness is supported by low flat tax rates, relative openness to global trade, and ongoing regulatory reforms,” the report stated. What it did assert was that corruption must be tackled head-on and the rule of law strengthened. It seems that for the many steps forward, in terms of rights, corruption and relations with Kosovo, at every step threaten to derail its progress. Serbia's path forward is strewn with obstacles. The political elite have, however, shown a desire to implement change.

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