CorD Magazine No.11

8 KEY TO KOSOVO’S FUTURE

interviews | opinions | news | comments | events December 2004

Tadic showed vision and preparedness to move forward...

Others in Belgrade strongly favoured a boycott.

Editor in Chief: Dragan Bisenic d.bisenic@cma.co.yu Deputy Editor: Mark Pullen m.pullen@cma.co.yu Editorial: Milan Culibrk, Dragan Bisenic, Nina Nicovic, Nebojsa Kotlajic, Jelena Grujic, Maja Vukadinovic,Vesna Musulin, Zoran Milosavljevic, Slobodan Kostic, Dragan Novakovic, Jelica Putnikovic, Lela Sakovic Translators: Milos Milosavljevic, Dejan Zubac Photo: Danka Ninkovic, Dragan Milosevic, Andy Dall, Stanislav Milojkovic Photo Agencies: FoNet, Tanjug and Beta Art & PrePRESS Director: Branislav Ninkovic b.ninkovic@cma.co.yu Advertising Sales: Milos Maksimovic m.maksimovic@cma.co.yu Project Manager: Nikola Jurisic, n.jurisic@cma.co.yu Dragana Indjic, d.indjic@cma.co.yu Anica Divac, a.divac@cma.co.yu Office Manager: Sonja Rados sonja.rados@cma.co.yu General Manager: Ivan Novcic i.novcic@cma.co.yu Director: Ana Novcic ana.novcic@cma.co.yu Printing: Politika AD CorD is published by CMA (Consulting & Marketing Agency), Kneginje Zorke 11a, 11000 Belgrade, Serbia & Montenegro.

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Soren Jessen Peterson Head of UNMIK

22 POSITIVE EFFECTS We have a strategic interest in SCG being a stable country on the same road. We can be strong and important partners and everybody knows that.

H.E. Tonci Stanicic Croatian Ambassador to SCG

34 QUALITY BREEDS SUCCESS I am not rich because I am in production and I invest a lot. For me, business is a game and that is perhaps why I am successful.

Vojin Djordjevic Owner and President of Si&Si Group

50 GREAT HOPE AND POTENTIAL Local banks should be encouraged to financially support local industries producing goods for local consumption

Cleovoulos Alexandrou Director LAIKI Bank

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contents 14 PRIORITIES CLEAR It is critical that Serbia & Montenegro forge a strong and stable pro-European consensus among all democratic forces.

H.E. Josep M. Lloveras EU Ambassador to SCG

18 A U T O N O M Y , N O T Mohamed Benaissa I N D E P E N D E N C E Moroccan Foreign Minister

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With respect to Kosovo, we hope that a negotiable solution can be found, within the framework of the United Nations, by which SCG can not only maintain the status of Kosovo as part of the nation, but which can also lead to the resolving of other problems in the Balkan area.

SERB POSITION IN KOSOVO TRAGIC It is clear that the Serbs in Kosovo are in a tragic situation. We were, I have to honestly say, deeply disturbed by the March events in Kosovo and with the quantity and nature of the violence against the Serbs.

Jacques Santer former European Commission president

46 BRIDGING THE DIFFERENCES

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Dusko Knezevic Atlas Systems & Atlas Group CEO

54 The fact that the bank is ranked so highly is based on its total assets, share and total capital, developed business network, revenue and management.

Zoran Djurovic General Director - Continental Banka, Novi Sad

DaimlerChrysler management team SCG

When you talk about a risk country, there are a lot of countries in this world that are risk countries and I do not consider Serbia & Montenegro to be one of them.

The markets of Serbia and Montenegro are two separate markets with different currencies, customs, jurisdictions‌

FRESH FOREIGN PERSPECTIVES

DAIMLERCHRYSLER HERE TO STAY

68 NEIGHBOURLY CO-OPERATION

On the fundamental basis of logical shared interests, the basketball associations of Serbia & Montenegro, Croatia, Slovenia and Bosnia & Herzegovina came across the notion of putting aside their myriad differences and jointly applying to host the 2010 World Basketball Championships.

Predrag Bogosavljev Managing Director EURO 2005

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Comment

Issue #1:

responsibility What is the most talked about topic in this part of the world and the most prominent public issue? Is it the question of economics and employment? Is it football or basketball? Is it crime levels? Is it Kosovo? No. It is none of the above.

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text. It is extremely difficult now, if not impossible, to even determine when this mechanism was set in motion, although serious effort has been invested to this end. A political archaeology spanning the period from the Neolithic Age and the Neolithic culture of Vinca right up to the present day is in operation here. Just why some places, some peoples, some cultures are treated this way in history has always been something of a mystery. Jared Diamond discusses this very issue in Guns, Germs and Steel: The Fates of Human Societies, which I have just read. And yet, it is very difficult to imagine that everything is predetermined and that climate, geography and genetic code determine everything in advance. I am more inclined to believe that we can make our own decisions about some things.

Responsibility, however, includes not only the making of decisions but also the failure to make them. This is probably where the key to a proper understanding of our situation lies.

There's a much greater risk involved in making decisions and taking responsibility for them than in waiting and blathering on about the tough decisions which must be made. Even when one of those tough decisions is finally made, it seems it must be packaged in such a way as to indemnify itself by citing Here, a mysterious force majeure has long provided the consequences of previous events and previous erroneous decisions. We, thus, arrive at a point where the answers and interpretations through its own mouth- only decisions ever made are eleventh-hour, do-or-die pieces. It was that way with war, then with poverty, decisions. And no one takes any responsibility for makcorruption, manipulation and incompetence. When ing a particular decision, let alone implementing it. Here conformism is omnipresent not only in the political soldiers die in peacetime, when patients die under arena, but the public arena as well.

This ideal of not displeasing anyone has overflowed the knives of careless surgeons, when mountains of from the family, the neighbourhood, every generation brazen lies and fabrications are published in the and every profession to engulf the whole nation. The press, when companies are ruined because of igno- responsibility of preserving personal peace and the rance and incompetence, all of it is "objectively" necessity of leaving a nice impression on as many memof the public as possible has become the very described as the consequences of some force bers essence of accountability here. majeure. No one even looks for any other cause.

We have yet to face the issue of responsibility in the media. The greatest problem with the media is that fear of a lack of freedom may be transformed into a space so free that When soldiers die in peacetime, when patients die under the rules or restrictions no longer apply. When freedom is perceived knives of careless surgeons, when mountains of brazen lies and in this way, any calls for responsibility to the profession, the fabrications are published in the press, when companies are public and society at large are seen as new forms of pressure and ruined because of ignorance and incompetence, all of it is censorship. It seems, however, that without true responsibility "objectively" described as the consequences of some force there will be no true freedom. And this, somehow, is the beating majeure. No one even looks for any other cause. heart of the problem.

So, in this light, Serbia's "representatives" in The Hague are Confronting the past is part of this process. Those who are entirely innocent. There is no doubt they were only continuing still refusing to face up to the past - their own as well as that of jobs that had been initiated by someone else long before them. their people - are simultaneously rejecting responsibility for the This is a matter of general geopolitical mechanisms and, as such, future and the freedoms that future can offer.• any personal decision or personal act is meaningless in this conhe issue that is most discussed here in the press, in the bar, in the office and in the home, is the issue that has the least impact on everyday life: The Hague Tribunal; facing up to the past, and responsibility.

The past, like responsibility, is an issue that concerns everybody and nobody. You can talk and argue about it for days but, whatever you say and whatever idea you present, you can be sure Veran Matic that there will be both supportive advoEditor-in-Chief, RTV B92 cates and opposing naysayers.

We live in a golden age of rhetoric and oratory. Meanwhile, this cherishing of chatter is indicative of a general mind-set in which moral principles and rules change effortlessly overnight.

And no one has a problem with that.

Here, force majeure has long provided answers and interpretations through its own mouthpieces. It was that way with war, then with poverty, corruption, manipulation and incompetence.

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Kosovo

Summer 2005

Key to Kosovo's future

Soren Jessen Peterson, Head of UNMIK Exclusively for CorD

By Dragan Bisenic

The Kosovo problem is the one Balkan issue that continues to burn more than most. The breakaway province has myriad economic, social and administrational problems but, perhaps more than anything, the issue of maintaining security for ethnic minorities and achieving the standards necessary to move the province towards final status talks are the key issues.

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his month, CorD editor Dragan Bisenic travelled to Kosovo to speak exclusively to the head of the UN Mission in Kosovo, Soren Jessen Peterson, about life in the province, progress being made and obstacles still confronting Kosovo on its road to final status, full stability and prosperity.

If we compare Kosovo and Bosnia, similar territories, similar ethnic conflicts, why does it seem so difficult here?

I think it is more difficult here because, first of all, the history is different and the political background is very different. They may be in the same region, but the origins of the conflicts were different. For those reasons the divisions here between and among the various communities are much deeper than they are and were in Bosnia and that is why, politically, it’s proving all the more difficult to settle this issue here.

I think this place, here in Kosovo, means more to some states in the region than Bosnia does. Therefore, there is a much more direct involvement on how to settle it than there is in Bosnia.

Bosnia is, in many ways, a solution imposed from outside by

Dayton [the 1995 Dayton Peace Agreement]. However, I would say that what they do have in common is that neither Dayton nor Resolution 1244 really settled the problem; nor did they address the real root causes of the problems. But they rather deferred a solution. And that is why Bosnia is still, nine years after Dayton, difficult to manage. The progress that we have seen in Bosnia may not have been as much as one expected because a resolution of the Bosnia issue was, in many ways, deferred. 1244 has also deferred, postponed a solution of the Kosovo problem.

Do you have authority in Kosovo or do NATO forces?

The authority is very clear. The authority to implement big ascertains that need to be taken here is there fully in 1244. But, because of the rather complex political environment, many of those decisions are contested, not least by Belgrade.

How do you feel the issue of final status for Kosovo was, and is being, handled?

Until just a few months ago the issue of status was not really on the agenda in the administration of Kosovo. That was a major problem. The lack of a final goal of status talks made it very difficult for my predecessors to manage this operation because it was a holding operation. I am absolutely convinced that it is not only in the interests of Kosovo, but of Serbia, Montenegro and the region, to move towards certainty. I think that certainty on status will allow Kosovo, and not only Kosovo, to move out of this very difficult economic and social situation. But I think it would also allow Belgrade to focus on its own economic and social priorities.

Of course, there are other issues that have to be resolved before Belgrade can move forward, but removing the uncertainty over Kosovo is in the interests of normalisation and stabilisation here, in Serbia and throughout the region. So it is very important that status talks are now on the agenda, but also that we have a clearly agreed road map to get to the status talks. This means there are a number of priorities in socalled 'standards' that have to be implemented in such a way that the international community, next summer, makes a judgement that there has been sufficient progress and only then will the process leading to status talks commence.

Thus, we know what the way forward is, we know what the timelines are and we have a goal that we are moving towards to resolve the issue of status.

KFOR patrol Pristina are associated with the rule of law, freedom of movement, return of displaced persons, decentralisation. We have criteria and have

It is not only in the interests of Kosovo, but of Serbia, Montenegro and the region, to move towards certainty.

Who will be responsible for deciding if standards have been reached next summer?

That will be the Contact Group, first of all. They are already engaged in regular reviews of progress. Every three months we make, or I make, a technical assessment on the state of implementation. Then, based on that, the Contact Group sort of forms an opinion on how far we are progressing. By mid-2005 the Contact Group will make a judgement on whether or not there has been sufficient progress made on standards and then the Security Council of the UN will come in and provide its opinion on the issue. All of the priority issues are linked to ethnic minorities in Kosovo. They

set up a system where progress can be measured. This is based on very objective, measurable criteria that the Contact Group and the Security Council will base their decisions on.

Who would be involved in the final status talks?

Unfortunately, I cannot tell you that yet because the reflections on status talks have not really started. I think they will start early next year and those reflections will concentrate on what the principals are for status talks, who the participants will be and what sort of format they will take. All this has not really started.

At this stage we are focusing on implementation of standards.

To what extent will Kosovo-Serbs achieve self rule in the province?

Right now we have a process on decentralisation. This started last May. There was a working group here in Pristina with the par-

Road map to status talks Before talks on final status can become a reality in Kosovo, a number of 'standards' must first be reached. These key standards relate almost entirely to security of ethnic minorities in the province and are linked to a general increase in the standard of living.

According to Peterson, essential standards must be reached in terms of the rule of law, freedom of movement, return of displaced persons and decentralisation.

In summer 2005, UNMIK will present a progress report on the achieving of standards in these areas to the international Contact Group. The Contact Group, comprising international representatives, will then make a recommendation on whether or not the province is ready for final status talks, which they will then pass on to the UN Security Council. If the Security Council determines that enough progress has been made, final status talks will be scheduled.

CorD | December 2004

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Interview services directly to citizens and it is very much based on the European Charter governing local self-government. It is a matter of providing financial resources for local government so they can deliver services.

The concept of Belgrade looks a little bit more towards the territorial aspects of that. There's a strong focus on territory and that's where the concepts differ. On the other hand, as I've often said, there are elements of the Belgrade Plan that could clearly improve what has been developed here. Even though the concepts are different there are areas of the Belgrade document - though not the territorial ones - that are interesting. We would welcome that input. One area where I do agree with Belgrade is that we have to improve local security.

Clear authority: Soren Jessen Peterson ticipation of the provisional institutions, the Kosovo Serbs, Council of Europe, USAID and UNMIK, of course. That working group developed a framework document on decentralisation.

Belgrade has also developed a plan on decentralisation for Kosovo and I have had discussions with the government in Belgrade to see how elements of the Belgrade plan can improve on what has been developed here. Now we are continuing those discussions.

I believe there will be a meeting here tomorrow on decentralisation among the working group, that does comprise Kosovo Serbs. Moreover, even the provisional institutions here have expressed an interest in having advisors from Belgrade here to sit in on those meetings and we would certainly welcome that.

When it does come to final status talks it will be a totally different story. It goes without saying that Serbia & Montenegro, based on Security Council Resolution 1244, has legitimate interest and involvement in the status talks.

How would you comment on the Serbian Government's decision to encourage Serbs in Kosovo not to vote at the recent elections?

First of all, I do regret that Belgrade was so divided on this.

President Tadic came out very clearly in favour of participation and I thought that was a good decision that showed vision on the part of Tadic and showed that he is prepared to move forward rather than stay in the past. Others in Belgrade came out strongly in favour of a boycott. I don't think that was the right thing to do, but I fully respect that that was their advice.

The problem is that it is still not clear to me whether the boycott was part of a well thought out strategy or just a spare of the moment decision. I am still waiting with interest to discover what follows next after the boycotts. How does that further the process?

I have made it very clear that we want to bring in the Kosovo Serbs; we want them to be part of all democratic institutions, the central and the local. We want to reach out to the Kosovo Serbs, wherever they are - and let us remember that two-thirds of the Kosovo Serbs are scattered throughout the southern part of Kosovo - we want to work with them to improve their living conditions and focus on the implementing of standards in the interests of the Kosovo Serbs. All that requires an active dialogue and active par-

By mid-2005 the Contact Group will make a judgement on whether or not there has been sufficient progress made on standards and then the Security Council of the UN will come in and provide its opinion on the issue.

Are the concepts of the Belgrade decentralisation plan acceptable and how do the two plans differ?

Well, the concepts are different. The framework document we developed here is about local self-government and the capacities and authority of self-government. It is about a better delivery of

ticipation and it will not be helped by boycotts. We have a clear plan and know how to move and we want to draw them in.

Maybe, all in all, the call to boycott the elections was to express dissatisfaction with the situation in Kosovo, with regard to the March events and the failure of the international missions to protect ethnic minorities.

I certainly do understand that many didn't vote because they are still traumatised by what happened in March. That I fully understand. As to holding elections so soon after March, this is a democratic process here. There were parliamentary elections that had to be held three years after the previous elections because the

Kosovo still a part of Serbia It was recently reported by local media that Terry Davis, Secretary-General of the Council of Europe, told a group of 30 Kosovo-Albanians in Strasbourg that the only way for Kosovars to be represented in the Council of Europe would be as citizens of Serbia.

Davis was quoted as saying: "My opinion and the position of the Council of Europe is that you [Kosovo-Albanians] will never be independent. I believe in the sovereignty of Serbia & Montenegro and you are an inseparable part of that. Even if Montenegro breaks away, I would still say that you are a part of Serbia."

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Interview religious sites. We were getting ready to start repairing when suddenly, in the middle of September, Bishop Artemije decided to withdraw from the implementation commission and since then we have not been able to make any progress.

How are prosecutions going against those involved in the March events?

The prosecutions, officiated by international judges, of the ringleaders saw over 20 arrests made, and I believe local judges have prosecuted up to 200 cases.

So even in the area of prosecution a lot has been done and is ongoing to address the March riots.

There have been recent demonstrations regarding The Hague Tribunal. How would you consider the quality of co-operation with The Hague Tribunal?

In the areas where there have, so far, been Kosovo and Hague Tribunal collaboration, I think, as the prosecutor [Carla Del Ponte] said in a recent statement, the co-operation she is getting from UNMIK is very good and I can only agree. Then, of course, there are some very strong sentiments in Kosovo on the issue of The Hague Tribunal, as there are in Serbia.

Regarding the demonstrations you referred to, I Likes going to Belgrade: Soren Jessen Peterson don't think it was as much against The Hague Tribunal as it was a show of solidarity for those who have been indicted. I happen to know that there are also a lot of people in mandate of the assembly here is three years. We cannot simply Serbia who feel solidarity towards those indicted. So I don't see change the democratic and parliamentary processes. any difference between what's happening there and here.

However, coming back to March, I would say two things: first of all, a lot of effort has been made, particularly - I must say - by Mr. Haradini has been called for questioning by The Hague the international community, KFOR and UNMIK to learn the lesTribunal. Is it a concern that he could be prime minister of Kosovo? sons, improve our performances and preparedness; our responsLet's not speculate here. A lot of people have been interviewed es and our planning; to make sure that this never happens again.

by The Hague Tribunal and that has resolved the issue. They were These efforts are confirmed by the fact that there have been, over not indicted…until an indictment is served the person is not indictthe last eight months, only one single serious ethnic related incied…innocent until proven guilty dent and that was last June when a young Kosovo Serb was murWe had elections here and Mr. Haradini was leader of one of dered and the suspects were arrested straight away. Throughout the political parties. These elections were free, fair, well organised the four-week election campaign and on Election Day itself there and got the stamp of approval from the Council of Europe. The political parties are now working out the democratic process and deciding how to form a coalition. At this stage they are trying to form a coalition between two parties. I am still waiting to see their programme and list of ministers, but that is fully in accordance with the democratic process and that was not one incident. So clearly a lot has been done since March. has been managed how it should. If we then go into a judiciary The other point I would make on this is that it is exactly process linked to The Hague, I'm sure, by then, both justice will because we want to address March and ensure it does not happen prevail and their will be full collaboration with justice at that time. again that we have been able to identify the priorities among the But these are two different issues. standards. As I have said already, they are linked to dramatically improving the living conditions of the minorities. Thus we have Was the demonstration troubling? found a direct link between the regrettable events of March and There was a demonstration of 5,000 war veterans. It was a very progress in standards and the decision next summer. well organised demonstration and they came to express their soliIn terms of actually restoring the things destroyed in March, darity with those indicted by the Tribunal. They used democratic the provisional government, through the Kosovo budget, has means to do it by announcing their demonstration. They used the taken the lead in repairing houses, providing cash grants to those protest to make their point and that is part and parcel of a demowho lost their houses and were trying to return; also on secondcratic society. ary housing and making sure people who work in the fields have their tools and equipment back, etc. And then, in the particular Finally, do you plan to come to Belgrade again soon? are of repairing the religious sites and monuments, we established Yes. I've been to Belgrade a few times already and I like going an independent implementation committee on which you have their. Our discussions are held in a very comfortable environment and UNMIK, the Council of Europe, a representative of the Kosovo when we disagree we do so with full transparency and, I think, with Serbs, a representative of Belgrade, representatives of the PISG mutual respect. I know I respect their position up there and I have very and the Orthodox Church. A little over €5million was made availmuch appreciated the tone of the discussions I have had there.• able from the Kosovo budget and UNMIK's resources to repair the

Re; Kosovo elections: Tadic vision and preparedness to move forward... Others in Belgrade strongly favoured a boycott. I don’t think that was the right thing to do, but i fully respect that that was their advice.

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Interview Despite political infighting and squabbling on Serbia's political scene and within the state union as a whole; despite the continuing problems of Kosovo and the prospect of final status talks commencing in 2005, one strategic goal remains a constant priority of all political options in the land: EU integration.

By Mark Pullen, Photo Stanislav Milojkovic

H.E. Josep M. Lloveras, EU Ambassador to SCG

Priorities clear 2

004 has been a year of ups and downs, progress and setbacks.

With The Hague Tribunal continuing to prove a thorn in the side of SCG and the situation in Kosovo far from settled, we fielded questions to the European Union's Ambassador to Serbia & Montenegro, H.E. Josep M. Lloveras.

What are the priorities of EU activities in SCG next year?

The first priority for the European Commission in 2005 is to have the Feasibility Study on the capacity of the country to enter into a Stability and Association Agreement, what we call an SAA, finalised. This should act as the launch pad for the State Union and its constituent Republics to move firmly forward along the road towards the European integration. We would, therefore, expect negotiations on the SAA to start as soon as possible, provided that the Feasibility Report is positive and the EU Member States give the Commission the necessary mandate. It has to be understood that the outcome of the report depends on SCG. We will assess, in an objective manner, the merits of your case, but it is up to the authorities to prepare that case. We have explained continuously what is required and there should be no surprises.

The objective of the Delegation to SCG is to contribute to this process through a close dialogue with the relevant authorities, political leaders, government officials and civil society. We should also like to strengthen our information and communication activities in 2005. We have to explain even better what the process of European integration means to SCG and the instruments which we use to support this process. There is an awareness of the financial

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and technical aid which we provide through the CARDS programme - primarily implemented through projects managed by the European Agency for Reconstruction - as well as macro financial assistance. However, there is less knowledge about our political support, our reform advice, or the support provided by the trade preferences from which SCG benefits.

What are the main EU programmes and EU-funded projects intended for Serbia?

We have quite a long list of programmes and projects in the pipeline, implemented by the European Agency for Reconstruction. These cover public administration reform in areas such as the Treasury, civil service, municipalities, justice and home affairs, health reform, etc. We also support economic development in the areas of SMEs, privatisation, energy and infrastructure. European integration is another focal area, as well as civil society and the media.

Refugees, returns and internally displaced persons are a further priority. So you can see that the field is broad and the funds committed are substantial: over â‚Ź1billion since 2000. We are currently programming the assistance for the next two years with a greater focus on strengthening institutions which will become increasingly important as our relationship enters a new, more intense phase. The budget for 2005-2006 could approach â‚Ź200million.

How can the programmes be used and are the SCG authorities properly responding to prepare projects?

The authorities are the "owners" of the programmes and projects, so they must ensure that they meet their needs and that they are used to their full benefit. The quality of response varies from sector to sector; in some cases the need for ownership is fully understood, while in other cases it needs to be further developed.

We need to improve in this regard. Also, we have to extract the maximum benefit from the possibilities opened by the twinning approach: that is to say the possibility of bringing experienced civil servants and specialists from Member States - some of them from the 'fresh' Member States which have gone through a recent and, for SCG, similar EU integration processes - so as to work together with their counterparts in SCG in order to transfer knowledge and experience that can be adapted to local needs and the local situation.

The EU Community Programme for Western Balkans was opened today. What does this programme mean?

This is an important event. It is not a single programme, but the possibility for SCG to gain access to more than 20 community programmes, that is to say, programmes currently accessible to Member States, as it was decided in Salonika in 2003, covering a variety of sectors: education, culture, environment, etc. The authorities will have to set priorities and decide which of those programmes are more appropriate for SCG. However, let me give you an example, the Erasmus Mundus programme, for instance, would give access to the exchange of university students, something that has been extremely well received and successful within the EU. How would you assess the achievements of SCG in the intention to come closer to the EU? I am still quite new to this country and I am still learning. I am not, therefore, in a position to be the best of judges. My impression, though, is that SCG has moved forward quite a long way since 2000, but that there is still plenty to be done. I can only invite you to read the Feasibility Study (FS) as soon as it comes out early next year. And I will be pleased to discuss it with you at the time if you want. The purpose of that study is to provide an objective reply to the question you have raised.

That is why the FS is such an important document, apart from the fact that it should hopefully open the door to the negotiation and eventual signing of a Stabilisation and Association Agreement. Let me stress at this point that it is critical that Serbia & Montenegro forge a strong and stable pro-European consensus among all democratic forces. This seems, to me, an essential condition to move forward.

H.E. Joseph M.Lloveras rect interpretation of the "twin track" approach?

The twin track approach responds to the complex constitutional situation in Serbia & Montenegro and the stalemate reached on implementation of the Constitutional Charter. The twin track model, which the EU Council accepted after a proposal formulated by the European Commission, means to work more directly with the two republics, while fully respecting the Constitutional Charter. More specifically, we will not insist anymore on additional harmonisation in trade matters, but work more directly with the

It is critical that Serbia & Montenegro forge a strong and stable pro-European consensus among all democratic forces.

This seems, to me, an essential condition to move forward.

What are the successes and failures in that process?

I think I have given you the answer to this in my previous reply.

I can only add a subject of concern: co-operation with the ICTY. Mrs. Del Ponte [Hague Tribunal Chief Prosecutor] recently presented her report to the UN Security Council. It was very critical, notably concerning Serbia's unwillingness to arrest people indicted for war crimes. Clear progress on this is, therefore, essential.

How else would it be possible to move closer to the EU if one of its key values is not respected, i.e. if war criminals go unpunished?

I still hope that some progress can be seen on this before the FS is finalised. Otherwise, I am afraid that the opportunity created by the twin track wouldn't be taken up by SCG and there will be little progress. It should be well understood that co-operation with ICTY is in your very own interest. It is neither a condition imposed by the EU nor one imposed only on your country. We are convinced that you cannot become a modern European democracy without properly tackling the legacy of the past.

We have different expectations of SCG authorities in the context of what the new EU approach means. What is the cor-

republics on matters within their remit. This means that in a possible future Stabilisation and Association Agreement some issues will be treated at the State Union level, for example international obligations, human rights and regional co-operation, while other issues will be treated at republic level, notably economic and trade matters, but also more technical issues like agriculture and environment. Since this approach has been confirmed to us by both the State Union and the two republics, the European Commission could re-launch the Feasibility Study on this basis. We are now actively working on it. This approach can obviously work only if all parties show the necessary political will and if co-operation between the three parties is ensured.

How do you see the capacities of Serbia and Montenegro to reach the EU criteria and what institutional measures are required to fulfil these?

Our experience with the recent EU enlargement tells us that one thing is to adopt laws and another, more difficult thing, is to correctly and fully implement them. The latter requires strong institutions functioning in a proper manner. I cannot give you a global assessment of where you stand on this. Achievements to date vary across sectors, but much remains to be done. Again, the FS will provide detailed answers to this question. I am, however, convinced that SCG has the required human resources to move fast, provided there is political will to remove the stumbling blocks and to push forward in a decisive manner.

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Interview we should respect the presumption of innocence until justice proves otherwise.

Equally, we have to acknowledge that under these circumstances proposing this person for high office at this time sends an unfortunate message.

We can see new efforts of Montenegrin authorities to gain independence. What is the standpoint of EU towards the continuance of the State Union?

The standpoint of the European Commission is clear: there is a Constitutional Charter agreed on by all the parties and ratified. The Commission will need to assess the way in which it is being implemented. The EU has, of course, taken note of the provisions of the Constitutional Charter regarding the opt-out of the State Union. But this does not apply earlier than 2006 as provided for in the Constitutional Charter. Let me also stress that the twin track applies to economic, trade and sector matters only, but not to the State Union's prerogatives foreseen by the Charter.

Any such decision under the Constitutional Charter should be made in a democratic and transparent manner and following serious debate and reflection on its pros and cons.

This seems to me particularly important, given the fact the ultimate objective is, in both republics, to go towards Europe as a common destination.

The Belgrade Agreement contains paragraphs about direct elections for State Union (SU) institutions. Would the EU promote that, considering the disunity of political subjects in SCG? When Javier Solana and Commissioner Chris Patten were last in Belgrade in October they made it clear that the EU strongly supports the SU, as foreseen in the Constitutional Charter, but that they would be receptive to listen to duly justified proposals that would be agreed upon by all parties involved. My reading of this is that there is concern within the EU that stability and the well-functioning of the SU are of utmost importance at this stage. Of course, it goes without saying that any consensus arrived at by the parties must respect the rule of law. And we will look into respect for constitutional rules in our Feasibility Report.

Fragmentation of the Balkans cannot go on forever, as this would both damage stability in the region and hinder the well-being of its population. Your common goal is European integration and, therefore, I do not see the immediate advantage of further fragmentation.

How do you consider the overall situation in Kosovo and the position of Serbs?

The international community is following the Kosovo situation closely. Our goal is to ensure stability in the region and that includes Kosovo. We do, of course, pay close attention to the situation of the Serbian minority there. But the best way to protect this minority and others is to have them take an active part in the work of Kosovo institutions and in the working groups where their key problems will be discussed: security, decentralisation, returns and free movement of people. The solution of the Kosovo issue seems to me a daunting task for all parties involved and I feel that such a solution cannot be found by simply looking at the past. Creative and forward-looking thinking seems essential to me.

It seems cynical that political subjects in Kosovo and Metohija propose a person deemed at least "controversial" in the eyes of The Hague Tribunal for the position of the Chair of temporary authorities?

I was not here for the last Serbian parliamentary elections, but I am aware of the controversy that was caused by the inclusion of ICTY indictees on party lists. There is a fine line to be drawn. Yes,

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CorD | December 2004

Elections which were held in Kosovo and Metohija happened after the March Pogrom of the Serbs. Following the pressure exerted by the International Community, that Pogrom was legalised, but it seems that some countries played an active role in helping them. What was the motivation of the EU to support elections after the March events and not, for instance, to postpone them?

I do not agree with your assessment that the International Community, through its actions, legalised or legitimised the events of March. We have clearly condemned them and are making efforts to help remedy the damages, both through exerting political pressure and providing financial aid. As to the Kosovo Serbs participation in the elections, the European Commission and indeed the European Union felt that the best way for Kosovo Serbs to defend their interests was through participation in the elections, as I said before. How could they otherwise make their own voice effectively heard?

Unfortunately this advice was not followed, but it is never too late for Kosovo Serbs to get actively involved.

How would you comment on the activities of self-proclaimed pro-European and reformist political parties that actively destroy the policy of the Belgrade Agreement? Why do they continue to have the support of the EU? I do not think the EU is supporting particular parties, but rather specific reforms. Indeed, we expect support for EU Integration from all political parties: not only in words, but also by deeds. Across central and eastern Europe we have seen how the objective of accession to the EU has the potential to mobilise parties having very different origins and political philosophies. Such a consensus, based around a common understanding that the European Union's values - which are at the heart of the European ideal and now clearly identified in our constitutional text - be shared and respected, is the indispensable foundation upon which the process of European integration has to be built.

Demands for independence from Kosovo and Montenegro can bring new instability to the Balkans. What is your opinion about the permanent splitting of the Balkan region?

It is up to the population to decide how far they want to go and up to the International Community to have its say to the extent to which it has a role to play, as is the case in Kosovo. My personal feeling is that the fragmentation of the Balkans cannot go on forever, as this would both damage stability in the region and hinder the well-being of its population. Your common goal is European integration and, therefore, I do not see the immediate advantage of further fragmentation. •

Interview Mohamed Benaissa, Moroccan Foreign Minister The SCG Government announced that it was to withdraw its recognition of the so-called southern Moroccan "Sahara Republic" during the recent visit to Belgrade of Moroccan Foreign Minister Mohamed Benaissa. Speaking at a joint press conference alongside Mr. Benaissa, SCG Foreign Minister Vuk Draskovic said that the decision to support the Algerian-separatist backed breakaway republic, which was taken in 1984 by the government of the then Yugoslavia, contradicts the United Nations principles and charter. Draskovic voiced Serbia & Montenegro's "total support" to the Moroccan Government and, perhaps with Kosovo on his mind, insisted: "we are against the establishment of a so-called state on the territory of another sovereign and independent state."

Autonomy,

not independence

By Dragan Bisenic

C

orD took the opportunity provided by minister Benaissa's visit to talk exclusively to the Moroccan peer about the potential for co-operation between Morocco and SCG, Moroccan relations with the EU and its North African neighbours; and parallels between the Sahara Republic and the Kosovo situation.

What's your view about the reason for, and possible results of, this visit to Belgrade?

Well, I think this visit is meaningful in the sense that, first of all, we have come to normalise our relations. Serbia &

this matter with all the parties concerned. The Security Council is attempting to bring the parties to agree on a political solution for this issue. We in Morocco have adhered to and supported this direction towards a political settlement of this conflict within the framework of Moroccan sovereignty and we have clearly expressed the will of Morocco to provide autonomy for these provinces in the south of the country.

Naturally, this is a basic geo-political issue between our neighbours and us and we have to sort it out together. There is no other way to solve this issue except by negotiation and by good political will and determination. Now, we are very grateful to the government of SCG for having taken a decision that will facilitate the return to our glorious past relationship. There is a glorious and glamorous past between the former Yugoslavia and Morocco. Morocco was the third economic partner of the former Yugoslavia, and, in the past, we also shared strong human and cultural ties. So I believe my visit here has the result of going back to our relations with a fresh and updated perspective. The past is past. We have now to look to the future. We are living, of course, in a new world: 1984, when the then Yugoslavia recognised the Sahara Republic and our relations were severed, was another time; it was the Cold War. It's all over now and I think today we are facing a new world and we are undergoing similar changes and following perhaps the same path towards the future.

‌problems arise when a group of people, for whatever reasons - ethnicity, politics, religion, et cetera - decide to break out of this regionalisation status‌it becomes a major conflict because it not only threatens the sovereignty and territorial integrity of the country, it also threatens the entire economic structure of the country‌ Montenegro - Morocco relations were a little bit cloudy, now they're clear. Secondly, we are very happy that SCG has decided to withdraw recognition of the so-called Sahara Republic and adjust to legality because the United Nations is still dealing with

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CorD | December 2004

Mohamed Benaissa with SCG President Svetozar Marovic You have spoke of the importance of a common past as a solid base for future co-operation. Do you have any concrete plans for co-operation between SCG and Morocco; or have you received any such ideas from your hosts here?

As you know, I delivered a written message from his majesty the king to the president of the republic. I also delivered a number of messages from the ministers of morocco to their counterparts here, especially the minister of foreign economic relations, with whom I met this morning. With all the encounters I have had, I have found clear determination on the part of the authorities in SCG to make a new start with Morocco; to strengthen the basic fundamental economic and trade relations. This is also the determination and vision of Morocco. As proof of this will, we are sending a delegation of entrepreneurs to Belgrade on 23rd November to meet with counterparts and officials. Maybe the Moroccan minister of foreign trade will be leading this delegation. Similarly, we are also receiving a delegation from SCG in Morocco and, hopefully, that will be led by your minister of foreign economic trade. We have also spoke of reviewing some of our treaties rd and agreements on agriculture and trade because they are outdated and also because they were done with a state that has disintegrated.

I agreed yesterday with my counterpart the foreign minister to constitute a joint commission between SCG and Morocco, which will be dealing with all aspects of development, including political consultations and political co-ordination between our two countries in various aspects of all the issues, in particular within the Mediterranean and the Euro-Mediterranean zone.

human rights and a number of issues relating to women's rights.

Morocco has also undertaken fundamental reforms in its economy, which has helped us to be more adaptable to the values we share. Morocco and Europe share fundamental values of justice, democracy, freedom and liberties. This has enabled us to come to what his majesty the King once termed as having a status "less than being a fully fledged member and more than being a mere associate", which is what we are receiving right now. We are getting an advanced status and Morocco will be the first country to obtain an advanced status with the European Union.

We are partners with France, Spain and Portugal, but also with others. We are very active in promoting Mediterranean cooperation as part of the Barcelona Process. We consider the Barcelona Process an important base for the Euro-Mediterranean partnership. His Majesty King Mohamed VI has also been around the states of the southern Mediterranean promoting what might become a crucial instrument in strengthening relations between countries of the northern and southern Mediterranean.

We are sending a delegation of entrepreneurs to Belgrade on 23 November to meet with counterparts and officials. Maybe the Moroccan minister of foreign trade will be leading this delegation. Similarly, we are also receiving a delegation from SCG in Morocco and, hopefully, that will be led by your minister of foreign economic trade.

It's very encouraging to hear that relations between SCG and Morocco will be re-established on a positive platform.

How do you see the perspective of Morocco in the framework of relations with the EU, considering that the EU has a special concept for relations with Mediterranean countries?

Morocco has always enjoyed excellent relations with the EU and has also held privileged positions in a number of spheres, mainly because Morocco has undertaken major reforms in its political structures and institutions, in terms of democracy,

That is the Agadir Agreement and our King travelled to the countries with which we share a free trade agreement - Tunisia, Egypt and Jordan - to sign a treaty enlarging the free trade space between the four of us. We also look forward to Algeria, to Syria - which just two days ago signed the association agreement with the European Union - and to the Lebanon to join us. This would also facilitate the task for the European Union. Of course, now there's the EU neighbourhood policy that helps both Morocco and SCG. So, I think Morocco is doing its best and you in the Balkan area and the greater Mediterranean can also play that role and the ultimate aim is to consolidate the Euro-Mediterranean process and consolidate our instruments for security, better living standards and greater exchanges of goods and people; and to let us make this part of the world a little heaven in the globe.

CorD | December 2004

19

Interview

Benaissa with SCG Foreign Minister Vuk Draskovic I have the impression that the position of Libya is important for the regional framework of North Africa, or the southern Mediterranean and, now that it is no longer subject to U.S. sanctions, relations could be relaxed among the countries of the region. Is that so?

Most certainly. We enjoy very close relations, Morocco and Libya, and therefore the decision taken by Libya lately, with respect to a number of issues that were supposedly hampering it reaching out to the world, have certainly contributed to consolidating our partnership at the level of the Madrid Union with other countries in Europe and elsewhere. Libya is a very important country in the region and a very instrumental North African country. We all know the potential of Libya in promoting econom-

oriented government is somehow diminishing. In place of that system of governance we see more and more decentralisation taking place. There are many cases worldwide. Some call it autonomy, some call it regionalisation, but the essential thing is that peoples in the regions are given the opportunity to run a number of sectors of concern to the population, such as education, transport, health, etc.

However, problems arise when a group of people, for whatever reasons - ethnicity, politics, religion, et cetera - decide to break out of this regionalisation status. Then it becomes a major conflict because it not only threatens the sovereignty and territorial integrity of the country, it also threatens the entire economic structure of the country and diminishes the opportunities to develop further because you are left with smaller markets, less production and fewer consumers. So, the case of Morocco is clear. We have never had, ever in history, any sovereign identity in our southern provinces other than Moroccan. We were occupied by Spain in the north and in the south. We had France in the middle, Tangiers and the enclaves. When we regained our independence we did so in the same way. We first gained independence from France in March 1956. A few months later we negotiated with Spain and got only the North, without the enclaves.

And a few years later, in 1958, we got one province from the south. In 1959 we got back Tangiers and we continued to negotiate with Spain within the United Nations because Morocco had the matter of the Sahara issue… Morocco brought this matter before the United Nations' Committee 24 - decolonisation and fought alone throughout. There was nobody else asking for this territory and the United Nations, one resolution after another, asked both Morocco and Spain to enter into negotiations to find a solution by which Morocco could get back its territory and the Spanish could leave. In 1969 we got back another Saharan province from Spain. However, in the early '70s things began to get complicated. There was the conflict between Algeria and Morocco and other issues. Then Franco [Spanish dictator General Francisco Franco] changed Spain's policy. So we took the whole matter to the international court, which bore witness to the fact that there were always linkages of fundamental sovereignty between the Sultans of Morocco and the population of this region. In 1975 we reached agreement with Spain, signed in Madrid, and Spain left peacefully and we regained our territory peacefully - there was no army and no fighting until we were surprised by the uprising coming from Algeria…they formed the Sahara Republic and went worldwide marketing this state…following referendum after referendum and plan after plan, we are now at the stage where the Security Council is asking the parties to sit and negotiate a political settlement.

Unfortunately, we haven't really sat down to negotiate a political settlement yet, which is the only way. Morocco is willing to offer regional autonomy for that part of Morocco, within the framework maintaining the territorial integrity of Morocco. We believe that this could be a solution for many issues of this nature because, as I said, the nature of governance is changing worldwide. In the U.S., real power is in the states, not Washington.

With respect to Kosovo, we hope that a negotiable solution can be found, within the framework of the United Nations, by which SCG can not only maintain the status of Kosovo as part of the nation, but which can also lead to the resolving other problems in the Balkan area. ic welfare in the region and also in promoting economic co-operation between the south and north of the Mediterranean zone.

Regarding southern Moroccan autonomy, the situation appears very similar to Serbia's problem of territorial integrity and sovereignty. I am talking, of course, about UN-controlled Kosovo and the necessity of providing autonomy to these territories. How do you think these problems can be resolved, while respecting state sovereignty and providing autonomy; and could Morocco and Serbia co-operate politically on this issue on an international level and in international institutions?

You know, first of all, the whole world nowadays is leading a change of governance. The tendency of maintaining structural

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CorD | December 2004

What do you think should be the final solution for Kosovo?

With respect to Kosovo, we hope that a negotiable solution can be found, within the framework of the United Nations, by which Serbia & Montenegro can not only maintain the status of Kosovo as part of the nation, but which can also lead to the resolving of other problems in the Balkan area. The Balkan states are bound to create a sound economic group and to consolidate a partnership that can benefit not only the countries of the region, but also Europe and the Mediterranean countries. I think that could be the way for the future.•

Interview

Positive

effects

By Aleksandra Sekulic-Stojanovic, Photo S. Milojkovic

Following the recent successful visit of Croatian PM Ivo Sanader and Croatia's decision to formally approve plans for SCG, Croatia, BiH and Slovenia to jointly apply to host the 2010 Basketball World Championships, relations between the two biggest states of the former Yugoslavia appear better than ever.

N

ine years after the signing of the Dayton Peace Agreement, positive relations between Croatia and Serbia & Montenegro are very significant for both countries. This month CorD spoke exclusively to H.E. Tonci Stanicic, ambassador of the Republic of Croatia to SCG, about positive effects after Dayton, historical happenings, The Hague Tribunal, reciprocal visa regimes and other current issues.

Nine years have passed since the historical Dayton Peace Accords agreement was signed. What positive effects has this agreement had on the people in Bosnia, Croatia and Serbia?

Everyone who has any knowledge of the political situation

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CorD | December 2004

H.E. Tonci Stanicic, Croatian Ambassador to SCG over the past decade and a half knows that Dayton brought peace to the region. From today's prespective, I don't think any other political mechanisms could have resulted in a continous peace.

The question is whether the time has come to change something about it. Many think it has. If somebody wants to change it, it has to be done after a very serious political analysis and open discussion between the parties. I think we shouldn't be getting too emotional because that the "emotional period of our relations" during which emotions were badly affecting bilateral relations, as well as the internal political situation in both countries has ended.

Croatian President Stjepan Mesic and Bosnian officials recently said that the Dayton agreement needs to be amended, while Serbian PM Kostunica and politicians from the Republic of Srpska think the agreement should remain the same. Do you think the Dayton agreement needs restructuring and, if so, why?

One can understand both statements, because they do not necessarily contradict one another. Both president Mesic and politicians from Bosnia and Herzegovina said the Dayton agreement needs be implemented first, and then changed or rebuilt. This means that the very content of the Agreement needs to be implemented first, before making any attempts to change it. I believe this formula can be acceptable to all parties. But, I repeat, it must be done after deep political analyses.

The main architect of the Dayton Agreement, Richard Holbrook, is of the opinion that the biggest failing of the agreement is that Radovan Karadzic and General Ratko Mladic have still not been arrested and sent to The Hague Tribunal. What is the failure of Croatia?

The Agreement is not to blame for the fact that Karadzic and Mladic are still at large. But I don't think it's our task here to discuss which party in the Agreement is good or bad. There were a

lot of mistakes made and it is very clear now. If we count these mistakes we could get right back where we started. Having in mind not only Dayton, but the still open political questions and the state of the current bilateral relations between Croatia and SCG, I think the best recipe for each of us is to turn to ourselves first, solve the problems we have and then turn to the others.

This is a sign of maturity and a serious approach to international relations.

The visit of Croatian Prime Minister Ivo Sanader was the first visit of a Croatian premier to SCG since the collapse of Yugoslavia. What are the most important things in the development of positive relations between these two countries?

I would like to underline the word "positive" three times. Put it in very bold letters , please. Everything that preceded the visit of Mr. Sanader, and the things which are already happening after it, made the visit historical and its results excellent. The visit was very important even at a symbolic level, because it called to put aside everything that has happened in the last 15 years to be set aside and for a new era of our relations to begin. It was an opportunity to exchange viewpoints on the recent past, which cannot be forgotten. But it was pointed out that it should not, and will not, burden relations between our two countries anymore, because we cannot remain prisoners of the past. That is the most important message. A big step was made in the direction of asserting minority rights in both countries. The Agreement on the protection of the rights of the Croatian minority in SCG, as well as of the Serbian and Montenegrin minorities in Croatia, was signed. One can say that it does not contain anything spectacular, but it is very important because it applies the highest international and European standards about the protection of minorities. The most important thing about the Agreement is that Croatia and SCG were able to adopt those standards without any problems and that is of utmost importance. What we have to do next is implement the Agreement. I don't expect further problems because of the openness and frank commitment of both sides.

During his official visit to SCG, the Croatian PM said that the Government's priority is to solve the problem of 1,200 missing Croatian citizens, as well as the return of property to Serbian refugees. What are the prospects of resolving these important problems?

We are in a very incouraging phase when we can talk openly about everything, including missing persons. Unfortunately, even missing persons were, in a certain way, used in the political ary-

thmetic so typical of the stagnating period of our bilateral relations. Thank God this period is behind us and there is no obstacle to full cooperation any more, which includes the exchange of information, opening the archives and exchanging protocols about missing and dead. The return of refugees and property is one of the strongest commitments of the Croatian Government, it’s a legal and moral obligation and, after all, a subject of the Coalition Agreement between the ruling Croatian Democratic Union and the Serbian Party in Croatia. Although there are some technical, especially financial problems, the time frame will probably be kept. We hope to see the same result when we talk about the return of refugees (and their property) in Bosnia and Herzegovina, especially in the Republic of Srpska and Vojvodina.

These issues are very important on the road to the European Union, which is the aim of both SCG and Croatia.

Exactly. It is very important for our countries and for the region that, for the first time in the history, every country in the region has turned in the same direction. There isn't any conflict, which could polarize us about this issue. I keep saying this whenever I can.

Take a look at the history of Balkans. There have been conflicts since the first independent states were established in this

Draza Mihailovic is a war criminal and this is supported by facts from World War II. Whatever the perception of Draza Mihailovic is on this side of the border, we must know that in Croatia he is perceived quite differently. region. This is changing now and all of these states are looking to Brussels. It is a very positive development and we should take advantage of it. We benefited from the experience of the states that are a couple of steps ahead of us in this process, such as Hungary, Slovenia and Bulgaria. Curiously enough, maybe we benefited most from Bulgaria, not so much from the old EU member-states, such as Italy, Germany or France. It is because they completed their European journey a long time ago. They can give us valuable advice on how to reform our politics and economies.

The practical receipes of how to negotiate and develop a game plan we got from those countries which had just walked the same road. Sharing the EU integration experience is not a one-way

CorD | December 2004

23

Interview street and it does not mean that we public reactions turned very negative just used the homework which the because basketball player Gurovic was Hungarians, Slovenians or Bulgarianot allowed to enter Croatia. I would ns prepared. We are able to offer like to make something very clear: this something, too. Before Croatia beis not about Gurovic's personal tattoo came a formal EU candidate, we choices. The action was taken by the acquired some "know-how" because Croatian Interior Ministry because he all the Croatian governments up to was "advertising" it in his public then had been keenly aware of the appearances and he kept repeating strict requirements along that road. that he would show the picture of We didn't have to invent things. It is Draza Mihailovic to everybody in widely known what Brussels wants Croatia. Though our relations are very and what the key issues are for every good, we should be aware of the fact state. We worked some things out on that there are still quite a lot of people our own and when we formally in Croatia who are very sensitive became a candidate it was much easabout it and we are very considerate of ier for us because we had already their feelings. Gurovic can draw whatbeen working on some important ever he wants on his body as a private issues. How did we benefit from citizen, but when you are a public perBulgaria? We learned from its negotison you have to be careful which causating technique. But the Bulgarians es you are promoting. I am sure he themselves adopted our public relaand his club leaders know very well tions strategy, the so-called European that such a display is an open insult to PR, which is extremely successful in the Croatian citizens and their feelour case. I am convinced that Croatia ings. We have to put that past aside can help SCG a lot. Using somebody and the situation with Draza else’s "homework" is, unlike in Mihailovic's portraits is exactly that. school, allowed in this case and even H.E. Mr. Tonci Stanicic advisable. There is no need to start How is this issue regulated by the all over again because there are law, which forbids nationalistic already connections between the chanting? international institutions in both There are certain regulations in countries and I think these relations Croatia which forbid the promotion will grow even stronger. Our experiand glorification of totalitarian ence will be of great importance and regimes and ideologies. Of course, it help to SCG. This issue is quite signifis not at all limited to Serbian war icant for Croatia as well, because we have a strategic interest in criminals. Everybody remembers the story about the monument SCG being a stable country on the same road. We can be strong of Mile Budak, when the Croatian government reacted very and important partners and everybody knows that. quickly and the monument was removed. The same attitude was applied in the case with the monument of pro-fascistic criminal Regarding the partnership between Croatia and SCG, what Francetic. Draza Mihailovic is a war criminal and this is supportwill be the situation with the visa regime from 1st January; coned by facts from World War II. Whatever the perception of Draza sidering that we know there is no need for Croatian visa nowaMihailovic from this side of the border, we must know that in days. Will that change again?

Croatia he is perceived quite differently. Unfortunately, It will be the same as it is now. The visa regime is still present Gurovic's case was just the beginning of a kind of a domino on paper, but it has been suspended for some time now because of effect, and that was demonstrated in the case when Serbian stuvery good development of our bilateral relations. It is a question of dents were arrested in Zagreb. I repeat, the political situation is time when the visa regime will be formally abolished. The securimuch better now than it used to be, but it is still a very sensitive ty on the side of SCG, along the Serbian-Croatian border, is still one and we all have to be aware of that. provided by the military and its removal was one of the main conditions for the abolishment of the visa regime. The general percepWho is in charge of solving this problem: sportsmen, policetion, though, is that there is no military threat from the side of SCG men or politicians? and this is very positive. But the fact that military forces are still at It shouldn't become a political issue. When such an occurence the border is still weighing heavily, psychologically, and is somehappens, the justice system is the one to react and implement the thing that has to be solved. We salute the recent political decision laws. But the main problem is that somebody would still show up of the authorities of SCG to remove the army from the border. The with a picture of Draza Mihailovic at the main square in Zagreb suspension of the visa regime will be applied again on January 1st, and will try to send a certain, very insulting message. I suppose it 2005. It will be the last one, I hope. was not a deliberate political provocation, especially when such very young and inexperienced people were involved. Many politiI have to mention recent incidents regarding Serbian bascians in Croatia and Serbia commented on the problem in such a ketball player Milan Gurovic and his tattoo of Draza Mihailovic light. I agree with those who think that it was not meant as a [Serbian pro-royalist WWII leader]. Why was this nationalist planned political provocation and that there was not such a condemonstration forbidden in Croatia, unlike some others? text to it. But many times there are painful consequences and Nationalistic symbols and their public displays are not probably one student's stupid game or an "art performance", as it allowed. The Croatian position is very clear about that. It was very was called, is not something which should have been done at all. sad that every newspaper front page and the leading stories in the Croatian people, especially after the last war, have some very electronic media overflowed with Gurovic's story, only two days painful memories and feelings and that must be respected, both in before the visit of Croatian prime minister Mr. Sanader. Media and political life and public displays.•

I think the best recipe for each of us is to turn to ourselves first, solve the problems we have and than turn to the others.

24

CorD | December 2004

Interview

Serbs on Kosovo

Tragic position Mid-March 1999 is not a time of happy memories for the people of Serbia or the then president of the European Commission, Jacques Santer. With international pressure mounting on Serbia and NATO having already decided a sustained campaign of bombardment was the only way to beat the Milosevic regime into submission, Jacque Santer found himself surplus to requirements and, just a week before the bombs began to reign down on the then Yugoslavia, he was forced to tender his resignation along with his entire commission.

By Dragan Bisenic

Jacques Santer, former European Commission president

Exclusively for CorD

A

t the time, the reason Santer and co. were pushed out of the EC presidency was insufficiently explained through a number of unclear accounts provided by several European commissioners. However, nowadays it has become certain that the change of presidency was directly connected to the former Luxembourg PM's deep reservations regarding NATO's intentions.

Speaking exclusively to CorD magazine, Mr. Santer explained that 1999 was "the most horrible time we experienced". However,

Santer maintained an interest in the unfolding Yugoslav crisis from day one. When hostilities reached boiling point in 1991, Santer and then EU President Jacques Delor visited Yugoslavia.

Delor admitted at the time that "the Union should be ten years more mature to deal with events in Yugoslavia and not at the age of adolescence".

Immediately after the signing of the 1995 Dayton Peace Agreement, Santer again visited Yugoslavia, this time alongside Italian Foreign Minister Lamberto Dini. The visit was aimed at helping to ensure the revival of the Balkans, but the plan was doomed to failure as a result of the fresh intensifying of the situation on the ground in Kosovo and the continued imposing of sanctions on Belgrade.

Santer's notion of creating a Marshal Plan - style solution for the entire region was shelved as the conflict raged on, and it was only after the bombing, in June 1999, that the idea was implemented in the form of the Stability Pact for South-East Europe.

He explained: "My idea was, firstly, to politically and economically stabilise the region and than to include them in the Union.

The Stability Pact, which was designed right in the middle of the bombing of Serbia, has produced good results so far, but the countries of this region must take over the biggest part of the responsibility for their own destiny by themselves".

"…we realised we could no longer save the former Yugoslavia as a united country. Then it happened, sadly, that horrible clashes forced, and I repeat forced, the European Union to recognise Slovenia and Croatia. That later created great problems with Kosovo, Macedonia and Albania, but we could not foretell what was to happen later." with the past behind us, he said: "I am very happy today that we have overcome that time and that all the Balkan countries are in the process of democratisation and stabilisation. Even more important is that they all, including Serbia & Montenegro, want to join the European Union. We are very interested in the establishment of stability in the Balkans and with that, slowly but surely, those countries will become members of the European Union".

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CorD | December 2004

How do you see the EU's decision to recognise the Yugoslav republics that wanted to separate?

That was a very hard time for the European Union.

With an observation from the diplomatic side, many mistakes were made. The European Union reacted very late to the events in the former Yugoslavia when the fire had already started burning. What we did was to recognise Slovenia and Croatia, but in that conflict even that was done too late. The estimation of the state heads was very wrong. When the breakdown of Yugoslavia could not be prevented many thought that Yugoslavia should have been preserved as a union and a united state. The delay had already gone on too long. It was necessary to react much earlier, not when the scope of solutions was drastically decreased.

Already at that time, I had visited the former Yugoslavia as a minister with then European Union President Jacques Delor. There we

realised we could no longer save the former Yugoslavia as a united country. Then it happened, sadly, that horrible clashes forced, and I repeat forced, the European Union to recognise Slovenia and Croatia. That later created great problems with Kosovo, Macedonia and Albania, but we could not foretell what was to happen later.

Therefore we should leave history and what happened to the historians. Today I am satisfied with what has been achieved.

There is a certain, but insufficient, stability in those countries.

Slovenia is already a European Union member and Croatia will be soon. Serbia is, I think, on the right path. Newly elected President Tadic has very clearly expressed the European orientation. We will help you in that. We are already doing it through our special coordinator for the Stability Pact, Erhard Busek, and the Pact has achieved magnificent results in the last several years in the reconstruction of the Balkan states. In the forthcoming period I expect that a good solution will be found in which SCG will join the European Union. The European Union has said it will support the survival of those two units in the form of a union which will join the Union. In this way it was expressed in the clearest way which political concept the European Union supports. That is the concept of SCG as a State Union.

Will the EU participate more actively in the events in the Balkans by taking over some security functions from NATO in Kosovo?

We all have a big interest in carefully observing events in Kosovo. Kosovo must achieve stability and the respect of all European standards. We are talking about countries which are in front of our door. Those are not countries which are far from us.

You are indeed Europe.

We have a moral obligation to help you and the whole of the Balkans, if our help is desired. Our duty is to widen the areas of stability in the area as much as possible, in order for the process of expansion of the Union to be carried out without obstacles.

That is our obligation and our task.

Detrimental events, such as those in March in Kosovo, shocked us all. They warned us of the exceptionally difficult position of the Serb citizens in Kosovo, but repeatedly proved that the respect for European standards and freedom for everybody are the bases without which it is not possible to talk about the European perspective, nor to count on European support for policies that are not based on the respect for other peoples' lives and property.

This, of course, applies to the Albanian majority and their behaviour towards the Serbs in Kosovo.

What is your opinion regarding plans that the European Union take over direct responsibility for security on the ground in Kosovo?

It should be considered how to take over our duties. I know that we have different plans, but we have the moral obligation to take over that duty. We need to take certain measures in that sense. We cannot simply separate ourselves from the Kosovo issue because it is in front of our door.

graphical position of Serbia & Montenegro. The Balkans are in Europe. Between northern Italy, Slovenia and Greece there is a part which is missing. That is the Balkans. All those countries, after they achieve stability of the political development and economy, when they start co-operating between themselves, when it is shown that co-operation among them is possible, then everything will be done in order for those countries to join the European Union as soon as possible. Serbia & Montenegro belongs to Europe. They are placed in a vital position between the Alps and the Aegean Sea and without extension in this area the European Union would be without full support. At this moment, it should be realised that the preparation and qualification of institutions for

Jacques Santer entering the Union, i.e. legal activity, is one of the key activities which leads to the European Union, The relationship between Turkey and the Union is important for the future development of the Balkans, but there are already big differences regarding Turkey, are there not?

At the beginning of December it will be decided how negotiations with Turkey will continue. On the basis of the Rocar

It is clear that the Serbs in Kosovo are in a tragic situation. We were, I have to honestly say, deeply disturbed by the March events in Kosovo and with the quantity and nature of the violence against the Serbs. If we want stability in the Balkans, the conditions and criteria should be equalised.

How do you estimate the position of the Serbian population in Kosovo?

It is clear that the Serbs in Kosovo are in a tragic situation. We were, I have to honestly say, deeply disturbed by the March events in Kosovo and with the quantity and nature of the violence against the Serbs. If we want stability in the Balkans, the conditions and criteria should be equalised. If people want to be together, the action with which will build trust should be taken. The outpouring of hatred which we saw in March cannot be justified…particularly if we consider what the international community did to protect the Albanians from persecution.

Where do SCG fit into plans for EU expansion?

Many people before me have already said that without the Balkans the European Union is not complete. That is very true, even if we look only at the geographical map and see the geo-

Commission report, I believe that negotiations with Turkey will last for a long time. We cannot, however, estimate how long.

There are many who worry that the Christian roots of Europe will be jeopardised?

I do not believe that this is about the jeopardising of Christian values. The second religion in Europe is Islam and I do not believe that there are any problems. The problem I see is to what extent the Union is capable of taking over the role in the case of expansion to include such a big country. Even when the criteria required

by Turkey are fulfilled, we must place the question as to whether the Union fulfils the criteria to accept such a big country. The Union’s borders would then be in Asia. That is another question we should have the answer to. Where are the borders of Europe?

And what will we do with the Ukraine and Russia? • CorD | December 2004

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Interview

DaimlerChrysler

here to stay

DaimlerChrysler management team SCG: Johannes Heidecker (left), Rudolf Weinmann and Dragoljub Petrovic

By Mark Pullen, Photo Andy Dall

Mercedes-Benz originally opened up shop in Serbia in 1997. Despite myriad problems and setbacks, the company never pulled out - even during the NATO bombing. Nowadays Mercedes-Benz, under the auspices of DaimlerChrysler, is solidly positioned on the state union market. As well as having a nationwide network of dealerships and showrooms, the company is sponsoring cultural events and making its mark on SCG. 28

CorD | December 2004

T

his month we travelled to New Belgrade's impressive Mercedes-Benz facility to speak exclusively to the men tasked with ensuring DaimlerChrysler's future in SCG is assured for years to come: Rudolf Weinmann, CEO of DaimlerChrysler SCG, sales and marketing director Dragoljub Petrovic and financial director Johannes Heidecker.

Mr. Weinmann, you've been here a few months now. You've settled in and brought your family across and familiarised yourself with the operation and the state of affairs here. So, how do you find the country in general?

Mr. Weinmann: I have quite a lot of experience working abroad and I must say I find this country very interesting. When I first got the offer to come to Serbia & Montenegro I came here to visit a couple of times, a few years ago, and I have to say that I found it very nice. From my point of view at least, I have adjusted very well and I have noticed, mostly, the people are very friendly and open and you are made to feel completely at home. For me, there's little difference between being here and in Germany. I brought my family

here two months ago and they are also well adapted already.

Everything is working very nicely.

Bearing in mind your event earlier this month - the cultural promotion of the S-Class - we were wondering why you chose to promote Serbian art and culture alongside Mercedes cars?

At the start of the year we had a very special event with the Museum in Belgrade, together with the S-Class and other product ranges, and it was something where we helped to bring back certain things to the people in Belgrade by presenting these pictures in the museum; to bring them out of storage and display them nicely together with our product range because the cultural thing and Mercedes-Benz passenger cars somehow go well together and compliment each other. The other reason was to have something for the people, to enable them to go and see. Of course, part of it was the promotion of the products, but fifty per cent of it was giving a feeling to people that something is moving and times are getting better.

You also sponsored the Cinemania event and a number of other projects. Do you feel it's important for the image of the company to promote local culture?

Most definitely. You cannot come to a country and just sell your products. You have to, as we always do, take a certain responsibility for the society. And cultural responsibility is always on our agenda, which is why we sponsor the cinema events. It's a great happening and a lot of people go. Regardless of the obvious marketing effects, it's something positive and we want to be in there.

Mr. Petrovic: We at DaimlerChrysler are one of the sponsors of the new film 'We're Not Angels' (Mi nismo Andjeli) the second part. All our Jeep range vehicles will be on display as part of that and at the Premiere on 7th January. The first part became a real cult movie here and so we expect a lot of interest. We like to have the Chrysler brand associated with the culture of this country.

Mercedes has always been considered an elite or executive brand, with regard to passenger vehicles. Considering the current standard of living here, do you really think you can sell in a big way and make a real impact on the market?

Mr. Weinmann: If you go back twenty years in the history of Mercedes-Benz - of course before DaimlerChrysler - we only had two product ranges: the S-Class and the E-Class. At that time you didn't sell the vehicles, you distributed the vehicles. You had twenty customers, but only one Mercedes available. Those times have drastically changed because of the decision at the headquarters in Stuttgart twenty years ago to become a global player. It was necessary to widen the product range and to make it available for all kinds of classes, so everybody could afford to enjoy it.

This started with the introduction of the Baby Benz. When it was first introduced to the market nobody liked it and it took a whole year for people to start changing their minds and coming around to the idea. After that it became our best selling car. Today it's called the C-Class and the story goes on.

We also have the smaller one, the A-Class, which was actually meant for young people and women and has a lower entry level into the Mercedes range family. That was the basic idea.

Nowadays we have 14 different models on the Mercedes-Benz passenger side and we'll be introducing two new models next year: the B-Class and the R-Class. You may have seen recently the release of the CLS, which is a crossover vehicle. It's a combination of a family car, a van and an SUV. The Chrysler integration in 1998 was a very important step on a global level and we are truly a world player.

Moreover, Mercedes and Chrysler have shared innovations and technology. One model in particular, the Crossfire, which was produced in Germany at Karman, contains sixty per cent Mercedes-Benz components. The rest is produced in America.

We also have a complete commercial vehicle range and this,

Rudolf Weinmann really, is where we see our support at the moment. When we look at what is happening now in SCG, in terms of the economy, we see two things: construction and, in my opinion much more importantly, the establishing of small family businesses. For instance, if a farmer producing cucumbers or tomatoes in the countryside, and bringing them to Belgrade to sell, has solid, reliable transportation it would help him re-establish his business; regardless of the fact that all our vehicles meet European standards and will enable him to keep up with the competition.

We have an advantage over our competitors because our running prices are low with so many spare parts available.

I've noticed in a lot of countries that Mercedes cars tend to be used as taxies in Greece and Spain, for instance. Is that a possible market here?

Mr. Weinmann: Well, that's a difficult question. There are already A-Class taxies on the street and we initiated a contract especially for that. We looked into this segment to see if we could really offer something because, you're right, in certain European countries Mercedes-Benz vehicles are used for taxies, though typically the E-Class range and not so much the A-Class. Here, for Serbia, I would say there is a small market out there but it all depends on the Government regulations coming up.

There's a lot to be done in this country just for it to become a normal country to do business as you would do in, say for example, Spain. The previous governments knew this and the current government here knows this, but they also know that there's still a long way to go.

There are discussions within the City Government as to whether they will continue to issue the single license for individual taxi drivers or allow the establishing of real taxi companies who can buy fleets. We have taxi vehicles produced specifically at our production plant in Rasta so it is possible to order vehicles produced under the taxi programme. You know, it's always nice to arrive at the airport and see that there's a Mercedes waiting.

DaimlerChrysler has a big showroom in Beogradjanka, you've just opened another facility in Nis and you have this big facility here. You've obviously invested in SCG for the long haul. Yet Serbia & Montenegro is still considered a risk country by the international community. Does that mean that CorD | December 2004

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Interview have also opened in Subotica and already have a long-term partner in Novi Sad. And in the pipeline, so to speak, we have three more new partners that will start operating next year. This all shows our optimism for development here.

The popular new A-Class DaimlerChrysler is in fact a trailblazer company prepared to take a gamble or do you think the unstable tag is unjustified?

We definitely believe the country is moving towards stability.

There might be a setback or two again, but this country is now on the move. When you talk about a risk country, there are a lot of countries in this world that are risk countries and I do not consider Serbia & Montenegro to be one of them. They're not a "real" risk country because there is so much support now coming from the outside. Whether that comes from the European Union or the Americans I don't care.

The fact it that there are so many people coming to help rebuild this country. Moreover, Serbia itself is a very, very important piece of the whole puzzle when it comes to the EU. Just six weeks ago, when Mr. Schoebler was here, I participated in discussions about Serbia & Montenegro's integration into the European Union.

Europe, in the long run, cannot live without Serbia.

The question is when will you come in? Of course, we all wish that could be in two or three years, but that might be too soon because a lot of other things need to be done to help Serbia & Montenegro recover. I think a reasonable estimate, which I think

How have you found the Government in terms of your investments here; have you been well facilitated and have you received incentives?

Mr. Heidecker: The government, per say, is always trying to promote international investment and we cannot say that we have bad relations with them. On the other hand, there's a lot to be done in this country just for it to become a normal country to do business as you would do in, say for example, Spain. The previous governments knew this and the current government here knows this, but they also know that there's still a long way to go.

This goes from very basic things. For example, we would like to know how many vehicle registrations we have in this country.

This is important to decide on opening filling stations and building roads. This is a non-political issue, purely statistical, that would make the situation a lot clearer. There are many such issues.

DaimlerChrysler works in the necessary organisations. We are all split up. Mr. Petrovic works in the American Chamber of Commerce, Mr. Wienmann works in the German Chamber of Commerce and I'm working in the Foreign Investors' Council.

There are others working in the Serbian Chamber of Commerce and the Import Association. We all have our responsibilities to bring this country forward and establish these things. But, yes, there's still a long way to go.

When you start working on one area, movement is triggered in other areas. This has been seen in many other countries around and within the European Union. If everybody starts to move, things go faster and in the right direction. If everyone waits for someone else to start moving, nothing happens.

Inaction doesn't help the people, provide employment or encourage foreign investors. The guidelines are there. Provide statistics, fix the roads, be more fluent in currency transactions, et cetera. The direction is clear for everyone.

You said that you're training and educating here. What does that entail?

Mr. Weinmann: We have just established a Balkan training centre where we have special facilities and trainers from Germany to train local employees of our partners in the network. This brings them up to such a high skill level that when the training is completed after a year they could move to Germany or Italy, or wherever, to work in a workshop there.

As part of our educational programme we are also providing scholarships for students and paying for their education here or outside the country to learn and experience and then come back here to bring those skills to Serbian industry and the society.

Mr. Heidecker: this is also a kind of export business because our locally trained staff go to Kazakhstan, Azerbaijan, or other countries to provide training. We also just had an international seminar when around 50 people came from all those countries to be trained here and discuss issues. This is a very small side activity, but it makes a difference.

Mr. Weinmann: I am often asked here if production will come back to the country but, I must say, over the past ten years production levels have been significantly lowered and there is no need for such production at this time. I think there is a big chance here for the supply industry and all the local companies who are producing parts. Once they reach the required quality standards they perhaps could be supplied to production plants across Europe. That's something I'm looking into now, but I'm not making promises.•

"We definitely believe the country is moving towards stability. There might be a setback or two again, but this country is now on the move. When you talk about a risk country, there are a lot of countries in this world that are risk countries and I do not consider SCG to be one of them." the experts agree with, would be around 2010 or 2012.

When you look at that development, I do not consider this to be actually a risk country. We have been here since 1997 and we didn't even leave the country when the times were really tough; when the bombing started we didn't shut down or pull out like some others did. We stayed here with a minimum workforce and continued believing in this country. Ten years ago, Yugoslavia was a Mercedes-Benz country and, in my opinion, it still is. I still see 15 or 16 year-old Mercedes coaches that are still being maintained and used, because of the quality of course.

All in all, I would say: "Yes, there are certain risks out there, but not risks that should make us wonder about investing here further".

We have invested around â‚Ź10million here since 1997 in facilities, equipment, employment and education.

The centre in Nis is only one example. We are currently setting up a complete network all over the country. We opened our first Mercedes dealership in Podgorica three months ago and we

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CorD | December 2004

Interview Speaking exclusively to CorD this month, EU Commissioner Danuta Hubner admitted that "some fear the EU will cease to expand following its next round of integrations. I recently spoke to Serbian people who voiced their concerns that the EU may have concluded its expansion plans by the time your country reaches the front of the queue to join. Such fears are far from the truth and the plans of the Union. Every country that meets the criteria for accession will become a candidate and there is no final number of countries. Hence, it's wrong to slowdown efforts towards European integration because of an alleged EU policy to refuse new members, namely countries of the Western Balkans, including your own".

By Jovan Panic

Criteria non-negotiable Danuta Hubner,

European Union Commissioner

D

anuta Hubner, who hails from Poland, is an EU Commission member who's no stranger to the transition process, having exerted years of effort in an attempt to see her own country integrated into the European Union. As such, she is an extremely knowledgeable interlocutor when it comes to the topic of EU integration and is able to provide useful recommendations to potential candidate countries regarding requirements and criteria.

Explaining her personal efforts to enlighten and encourage those here in the state union, she said: "I have worked a lot with counterparts from Serbia and I am aware of how much effort they are putting into the project for European integration.

"Work and dedication are necessary to achieve this goal, but the essential thing is to maintain the continuity of these changes, regardless of the political label of the Government implementing this policy. We did this for 15 years in Poland and joining the EU was a priority for us. We have to keep in mind that certain criteria are non-negotiable. They simply have to be met. First of all, these are political criteria. You can discuss with the commissioners about your inability to cover the expenses of improving the environment or reaching European standards, but issues related to democracy and human rights, peace and stability are essential and are not open to negotiations."

What is the role of the Government in this process?

My advice is that it is impossible to meet these requirements without able state authorities. The contribution of the state administration and ministries to integration is essential. All who are employed in the activities of the government have to support accession to the EU and must be professionally qualified to take part in this endeavour. It is not enough to have a single ministry or office for this purpose. Rather, every ministry has to be a ministry for European integration, albeit within its own jurisdiction.

In short, a lot of work has to be done and the administration capacities for dealing with the issue of integration have to be increased to an appropriate level.

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CorD | December 2004

Is that enough?

One more thing is very important and that is to attract investors. In order to do this you must have a stable legal framework and political environment that will not be derailed by a sudden change of government. There is no growth without investments, which in turn makes accession to the EU very difficult to achieve. When you enter transition the leading notion must be preparations for entering the EU. Otherwise all efforts lack creativity. These two processes, transition and EU integration, have to be compatible and drive the country along one path.

Serbia and Montenegro are joining the EU within the framework of a Western Balkan entity. What is the justification behind creating this regional network?

It is important for the Western Balkan region to develop awareness of the need for regional co-operation and bilateral relations. In our case, neighbouring countries sometimes lacked understanding of our problems, especially those related to access to the labour market in the respective country. We were aware of the social and economic consequences and, since Western Balkan countries are in a similar situation to ours back then, there is no reason why they should refrain from co-operating and helping each other out. If they come to realise this, they would see that they have done themselves a big favour with comparably little effort.

What is behind the general belief that the EU will stop expanding once the Balkan states fully join the queue for accession?

Returning to the issue of our relations with Eastern Europe, certain misguided conceptions have to be clarified at this point.

Neither the Commission nor any member-country for that matter has suggested that EU expansion should end after Bulgaria and Romania join the European Union. All the agreements clearly state that any country that meets the required criteria is welcome to join. We are already in negotiations with Romania and Bulgaria, which could join the Union as early as 2007. Other countries of the

Western Balkans that have signed the Memorandum on Accession and Stabilisation are expected to join after meeting the criteria stated in the Amsterdam Agreement (Protocol).

I have to emphasise that EU expansion is part of the greatest triumph in European history, after the end of the Cold War and the unification of the continent.

What is the situation in Poland and what can we learn form the Polish experience?

Poland has a living standard that equates to just 40% of the average European standard, while according to the current exchange rate it is not more than 20%. An arithmetic calculation tells us that if Poland continues to have an annual growth rate of 5%, compared to 2.5% growth rate of the rest of the Union, the country will need 35 years to reach the average EU standard. If our annual rate is 6%, we'll need 27 years. This shows how important economic growth is in the process of European integration. It is also important because the influence of a member over EU matters is directly linked to economic strength.

How does a country achieve the required growth rate?

Economists still know relatively little about the causes of growth, although some elements are relatively clear. Most growth appears to come from increases in factor inputs - labour and capital. This means higher levels of investment, both domestic and foreign, consistently over many years. A higher input of labour is perfectly possible to achieve. Today we in Poland have high levels of unemployment, we will have large cohorts of young people entering the labour market for some years to come and the over-

All who are employed in the activities of the government have to support accession to the EU and must be professionally qualified to take part in this endeavour. It is not enough to have a single ministry or office for this purpose. Rather, every ministry has to be a ministry for European integration, albeit within its own jurisdiction. all activity rate - the percentage of the population of working age in the labour market - can be raised over time considerably to levels reached in the UK or Denmark.

What has happened to productivity in Poland?

Another source of growth is better utilization of factors employed in the production process. This can come from a better education of the workforce, for instance, or from new and better technology being employed. Major progress can be made here. In Poland, labour productivity doubled between 1990 and 2000, though admittedly this was related to the transition from the planned economy to the market. Foreign direct investment is a crucial factor in improving capital productivity. Foreign investment is responsible for bringing newer and better technologies, which will help your country to achieve the transition from a country characterized by relatively low value-added exports to one more like the leading economies of Western Europe.

How can EU accession directly contribute to growth?

Accession to the European Union is important in this growth story for several reasons. Firstly, it will increase the credibility of the country in the eyes of domestic and international investors in other words, perceived country risk will decline, as I have already mentioned. This should increase the propensity of foreign investors to come to your market and for domestic investors to put their money to work at home rather than abroad.•

Interview

Quality breeds success It could be said that Vojin Djordjevic has achieved the capitalist dream. The owner of Si & Si Group began his career as a young lad struggling to market world famous brands in the then Yugoslavia. Today he is one of the most successful businessmen in Serbia and owner and president of a company that enjoys worldwide respect.

Vojin Djordjevic, Owner and President of Si&Si Group

By Jelica Putnikovic, Photo S. Milojkovic time we started to position Sinalco on our market and created completely new products and new trade marks such as the 'OR' liquors, V vodka, Fruto Mio jams, Nase Voce marmalades ‌ Now we have Dom Vode (Home of Water) in Vrujci and the Podrum (Cellar) in Palic. Voda Voda, Gorki List and our wines are export-quality products. Those three will be our leading brands.

S

ubotica-based Si & Si is the leading drinks manufacturer in SCG and produces such household brands as the Sinalco soft drinks and sports drinks range, 'OR' brand spirits and liquors including Dry Gin, V Vodka, Gorki List and Voda Voda. Djordjevic insists that his success over the last twenty years is due to the fact that he has not swayed from his principle belief that the quality of the products and the quality of his partnerships are the keys to success.

"When you have quality and a good price, that must lead to success. I was the co-owner of the trade company. We had good connections in the world and when the sanctions came we bought Suboticanka. Suboticanka had good quality products, but poor design and the organisation was not good enough. Si&Si was established in 1997 when we signed the contract with Sinalco. At that

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CorD | December 2004

You are considered to be one of the richest men in the country. How does that make you feel?

My wealth is my way of thinking, my approach to life and reality. Materialistically, I am not rich because I am in production and I invest a lot. For me, business is a game and that is perhaps why I am successful. I am rich because I have good brands and I know what to do with them. From the first day I understood that, apart from a quality product, I also have to have good design. The way of working is also important. I had a clear vision of how to work if I want a product for the European market. It should be done according to very high standards. Sinalco helped us very much in that. They enforced their way of working, following clear procedures and we implemented that in our company's work.

To what extent has co-operation with foreign partners influenced your development and successful operating?

We have been lucky. Our nation is more inventive and more flexible; it has more imagination, more enthusiasm.

Through the combination of German standards and our

enthusiasm much can be achieved. However, I would like to emphasise that we created all of our new products by ourselves: the redesign of Gorki List, and our bottle for water and the 'OR' liquor. All this was done by our design team with designer Bane Lukic, who lives and works in the U.S. We took the initiative for the changes and innovations. That is the output of what lives in our nation, the talent and the willingness to achieve success.

However, that does not work without solid financial investment.

We invested a lot in development. When we started the production of the Sinalco refreshing and energetic drinks we worked a lot on marketing. This resulted in high demand because we had good quality. The purchase of new equipment was next. In '97 and '98 it was very difficult to invest. We did not

Voda Voda is your biggest investment so far. Will that be one of the fastest returned investments?

Investment in the water factory totalled €10million and the projected capacity is 33 thousand litres of water per hour. We were expecting a good disposal, but we achieved more.

To what extent did marketing contribute to the positioning of Voda Voda?

Good marketing certainly helps quality products but without the quality, regardless of marketing, every product will soon fail.

Voda Voda quickly found its way to the consumers because of its super design, but the crucial thing was that it is water of high quality. Voda Voda is our least advertised product.

The Serbian economy can use its chance only if it adopts the fight for quality as its main priority of national importance. This is because without the establishment of the criteria of quality and excellence in business the Serbian economy can miss all trains for the leading position in the region. receive any help from the banks or the state. At that time the foreign partner helped me a lot. The company and I, personally, had a very good reputation and I received the equipment from Krones, KHS and French company, Sidel, on my personal guarantees. We were one of the rare companies in Serbia that received credit of several million euros.

How did you manage this?

Our partners believed in our project. When we signed the first contracts I thanked them for giving us the equipment without guarantees. They replied: "We are not giving it to you without any guarantees. We are giving it to you on your personal guarantee". They simply believed in me, believed in the company and in my personal reputation. They checked that we had dealt with major world companies in the past, that we were always very correct. They do look at the pedigree and the history. Quality of relations with regard to the partners is exceptionally important, not only the concrete product. Somebody there takes note that everything was paid for and that we are fair players…We worked in that way last year too and we received equipment from Sidel worth €5million for Dom Vode in Vrujci, everything without guarantees.

It seems that foreigners helped Si & Si Company more than our Government and banks?

That is true. When the German Ambassador visited Subotica I told him that we would not be anywhere near as successful a company if there was no trust, firstly, but also concrete support from European companies. Those are big companies with billion-dollar turnovers and they helped us more than our Government. In terms of domestic support, we received only one credit of €500,000 from the Development Fund. That helped us a lot, but we had tens of millions in investments and German and French companies helped us much more.

During last summer your company had problems regarding tax. How did you resolve that issue?

We managed to solve the tax problem through the debt reprogramming system that the state allowed us. The state understood our problem and helped us in the way that offers us the possibility to re-programme the company tax liability to a period of five years. I am grateful for all the help which was offered to us regarding this matter.

Voda Voda is also the cheapest. Now it has penetrated and established itself on the market do you intend to increase the price?

We were only one dinar cheaper then our competitors on the market. We wanted to prove, and we managed, that the best quality ones do not have to be the most expensive. Now, thanks to its good image, Voda Voda could be more expensive, but we will not change the price. We do not play with our consumers.

Did you obtain certificates for quality and long lasting reserves for the export of Voda Voda to foreign markets?

This is table, low mineralised water with optimal characteristics, a perfect balance of minerals and salts, therefore, in contrast to some other waters, it can be used every day and unlimitedly. It is completely aseptic, without colour, taste and smell and in terms of minerals, its structure is very close to blood plasma. The analysis of this water from the spring in Vrujci was carried out by the Institute for Health Protection in Serbia by Dr Milan Jovanovic Batut and German laboratory expert Labor

Vojin Djordjevic Riter. This spring is one of the biggest in Serbia in terms of quantity and quality and we bottle the water directly from the spring without any additional processing. That is the biggest asset of this water. Our associates in Germany were astounded by the fact that we do not have to process our water.

What are the chances of Voda becoming a key export brand?

It is already being sold in Macedonia and the Republic of Srpska. I have just returned from Singapore. We will certainly CorD | December 2004

35

Interview conquer Asia. They do not have quality water, thus they are processing sea water.

Voda Voda will soon, apart from Singapore, be on sale in the United Arab Emirates and Dubai. Our aim is to launch Voda Voda worldwide; to have a world brand in order for it to become known abroad that Serbia has good natural waters because there are very few natural quality waters in the world.

Everybody today can make televisions, cars and sparkling drinks, they can process water in order to make a drinking one, but natural water, which does not have to be processed, is very rare in the world.

You are building a hotel in Vrujci.

Are you turning towards tourism?

We do have understanding and support in Vrujci Spa. People are expecting us to support the development of this area. They have already banned the building of houses and other objects in order to protect the source. It is important that wherever there is a natural resource it is protected. Apart from the building of the Water Home in cooperation with German company Sinalco International, we are also planning to invest around €20million in building the tourist infrastructure, swimming pools, tennis courts and similar objects because we see an incredible tourist potential here.

The final aim is that Vrujci receives the image of a clean, ecological and world famous spa.

There is a great deal of talk in Serbia that domestic companies need foreign partners which would bring fresh investments.

Would you accept such an arrangement in order to secure the money?

I would not sell the company. I did not search for partners even in the most difficult times. I will not say that I do not need investments, but I would consider a strategic partner only with regard to exports. We have signed a €55million contract of longterm co-operation with Slovenian company BLUES d.o.o, from Sostanje, which is the holder of the LTH refrigerating devices brand. Through the BLUES company we will export our products to Slovenia and the European Union. Also, my partner from Singapore is waiting for the establishment of our joint company. Our liquors are already selling well in London, which means that we have already conquered some world markets.

My wealth is my way of thinking, my approach to life and reality. Materialistically, I am not rich because I am in production and I invest a lot. For me, business is a game and that is perhaps why I am successful.

After two troublesome, you managed to become the major owner of Podrum Palic. What kind of treatment do you receive in Subotica?

I am not treated as well as I am in Vrujci. I invested much less in the Vrujci Spa than in Subotica, and there I have already been accepted as an honorary citizen. Even though I contributed to the development of Subotica I have faced obstructions and problems. When we were buying the Podrum Palic there were those who did everything to prevent us from getting it. However, we bought it two years later, even though it had been destroyed in the mean time. Now we have around 200 hectares of vineyards and I will do everything to return the viticulture. Subotica's territoy used to have 5,000 hectares of vineyards. On every vine map, a good part of Vojvodina, particularly Subotica's sands, is marked as excellent ground for wine growing of special quality. In that I see an excellent opportunity to expand the production of wines by the planting of new vineyards. However, in order to have 500 hectares of vineyards we have to invest €10million, and that is the minimum.

An additional five million is needed for equipment. KHS has already promised equipment under very favourable conditions and we will receive bank guarantees on long term crediting.

How much of Subotica's economic potential is held by Si & Si Group and your brother's Fresh&Co? Our two companies are employing over 2,000 people and that is important, considering that many factories do not work these days. We do not have any privileged positions. However I am not some local company.

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CorD | December 2004

For the appearance on the world market, apart from quality, the price is also important. Are you competitive with prices?

We fit into the world prices. The company ambition is to prove that it is possible to make a trade mark in Serbia, a good product, which could compete with world brands in terms of quality, design and price.

What advice would you offer someone who is starting up a business; I assume you would recommend production?

It is easier to trade, but only production can bring development. It is difficult to give advice, but I am prepared to help. Once I was talking to students, openly, about my dreams and my experiences and they listened carefully. I have a clear vision that we can be the best on both the domestic and foreign markets, firstly with the Voda Voda and Gorki List. Our intention is to make world brands out of them.

How much can you do to improve overall quality levels in Serbia in your capacity as president of the Managing Board of the Fund for the Culture of Quality and Excellence - FQCE, which operates as part of the Serbian Chamber of Commerce?

The Serbian economy can use its chance only if it adopts the fight for quality as its main priority of national importance. This is because without the establishment of the criteria of quality and excellence in business the Serbian economy can miss all trains for the leading position in the region. It is good that every year the criteria which bring us increasingly closer to European standards are being implemented here. In two or three years we will award someone whose production fully meets European standards.

What do you expect from the introduction of VAT? That will bring more order to the market. It will free us from disloyal competition. In the first wave it will be difficult for sure, but if we all share the same destiny that will be good for the country and for the economy in the long term.•

Trade

Attendees of the Serbian-German Trade Relations Conference in the Sava Centre

Image problem Speaking recently at a conference dedicated to the topic of Serbian-German trade relations, deputy Serbian International Economic Affairs Minister, Ljubisa Jovanovic, said that Serbia had already granted a number of tax exemptions for foreign investors. He also emphasised that the legal framework required to ensure the complete security of foreign investments would be in place by year's end.

By Rajka Sinik, By S. Milojkovic

A

ddressing the audience in detail at the Sava Centre conference, Jovanovic spoke of the implementation of a tenyear tax exemption on all investments in excess of $10million, the creation of 100 new jobs and co-operation profit of ten per cent. He noted that the Serbian Government recog-

age exports. This, he said, would include the completion of internationally-recognised domestic certificates within the next few months.

Torsten Klette, South-East Europe coordinator of the German Associated Chamber of Commerce (DIHK), said that a German bilateral chamber of commerce could be established in Serbia in the next two or three years, which would undoubtedly hasten Serbia's approach to the European Union.

Klette spoke of the possibility of achieving equilibrium of balanced foreign trade between Serbia and Germany in the mid term, though this, he noted, would require an increase of Serbian exports to Germany because it would prove unacceptable in the long term for Serbia to continue importing three times as much as it exports to Germany.

Klette emphasised: "The biggest problem here is image because the television pictures from the nineties are still fresh in the memory. We are doing everything we can to present an unbiased picture of Serbia".

According to the trade representative, legal frameworks in Serbia are increasingly corresponding with the standards achieved by other transitional countries. "Tax rates are attractive," he noted,

Torsten Klette, South-East Europe coordinator of the German Associated Chamber of Commerce (DIHK), said that a German bilateral chamber of commerce could be established in Serbia in the next two or three years, which would undoubtedly hasten Serbia's approach to the European Union. nised that new investments were a key means to reconstructing the Serbian economy.

The deputy minister insisted: "this is about determining the most important Serbian products", before adding that one advantage for investors in Serbia was the country's free trade agreement with Russia.

He went on to announce that the fields of standardisation and certification would be put in order to facilitate and encour-

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CorD | December 2004

"but when talking about the right to buy land, the restitution of old ownership rights and legal security in Serbia, there is still lots to be done. For Germany, Serbia is one of the smaller markets for sales and purchasing and, statistically, they are ranked 60th in German foreign trade".

He continued by explaining: "Many German trade delegations from the chamber of commerce network are widespread in countries smaller than Serbia. Moreover, the concepts of sale and purchasing are of equal importance to German partners and Serbia has great potential as a market for purchasing. Branches such as the textile industry, IT or the auto spare parts industry, have good prospects." He also noted that Germany had financed the compiling of catalogues that present the production capacities of the most eminent Serbian companies in these areas.

Nikolas Palffy, from HVB bank, emphasised that support from the banking sector is necessary in order to improve Serbian exports to other countries. He thinks that banks should support the improvement of the infrastructure in the country, which would balance the ratio between the exports and imports.

Palffy emphasised that there are still certain obstacles in the way of financing Serbian exports, such as a lack of appropriate institutions and regulations. However, he expressed his expectations that the Serbian Government will solve those problems as soon as possible. "After the liberalisation of the crucial laws we will have more possibilities to encourage exports", said Palffy.

Martin Knapp, director of the Association of German Industrial and Commercial Chambers' mission to SCG, reminded us that this mission was established as early as 2001. To date the mission has participated in the organisation of a considerable number of meetings between Serbian and German enterprises and is dealing, on a daily basis, with connecting those interested from both sides. At this conference Knapp presented the Senior Expert Service programme (SES) and commented on the difficulties involved in the trade business.

The SES programme is based on the fact that there are a large number of older, experienced people who have been premature-

Martin Knapp: "The attempt to protect domestic production by the introduction of bureaucratic obstacles appears very attractive. In the long term, however, those measures have an opposite effect. Domestic production feels protected, thus there is no motivation to make its products more competitive on the market."

ly for a long time, Knapp said that, for countries, "the attempt to protect domestic production by the introduction of bureaucratic obstacles appears very attractive. In the long term, however, those measures have an opposite effect. Domestic production feels protected, thus there is no motivation to make its products more competitive on the market. The individual importer or exporter feels helpless in front of such trade obstacles. This refers, above all, to those countries which are not members of international organisations, such as the European Union and the World Trade Organisation, which they could approach in such circumstances".

According to Knapp, it is up to governments to encourage this area, to expose companies to market competition and thus prepare them for the global economy. He added that Germany helps the Serbian economy in several ways because, apart from exports to the Serbian market, it is also interested in imports from this area. Apart from that, there is the strong support of German development co-operation, such as the example of GTZ - Projects. "The major part of these resources contributes to the economy directly or indirectly", concluded Knapp. •

Imports three times higher According to Serbian Chamber of Commerce (PKS) figures, in the first six months of 2004 exports from Serbia to Germany were worth $214.8million, while imports stood at $793.4million. This equates to a deficit of $578.5. ly retired but still want to work. Those people gained experience in their work for years and are now placing themselves at the disposal of companies in the country and abroad which have a need for expertise. Those experts are not receiving payment, as such, but the company provides them with accommodation and food.

Concluding that non-rate obstacles in trade have existed globalCorD | December 2004

39

Commerce Latest research predicts that inflated spending trends in Serbia are to drop significantly. According to the poll, carried out by TNS Medium Gallup within the framework of a project entitled "Consumer Panel of Households in Serbia", spending in the period between July and August was around 2.9% lower than the previous two-month period.

Spending

down

By Rajka Sinik & Stevan Petrovic, Photo S. Milojkovic

Marijana Agic-Molnar

T

he Gallup survey - which involved some 3,000 respondents, 40 categories of products and a thousand brands was also used to develop an index of household expenditure detailing the buying trends of a thousand families from across the social spectrum in Serbia. The study helped to identify who buys what, where, how regularly and for how much.

Family spending on consumables was divided into three categories by Gallup: basic food stuffs (milk, bread, cooking oil,

was a result of seasonal effects such as summer holidays, altered eating habits, etc. However, a general increase in the price of basic food products was also evident and a significant factor. The greatest drop was in the category of non-essential consumables (luxuries), which is considered logical because of the general drop in spare cash among households.

Marijana Agic-Molnar, of organisation Growth from Knowledge, has also presented the interesting results of a survey gauging ownership of high-tech items in Serbia. According to Agic-Molnar's study, almost 75% of people in Serbia have at least one mobile phone, while 25% of respondents have a computer. A staggering 91% have a deep freezer, which is exceptionally high compared to both Eastern and Western European countries.

However, the majority of household machines are quite old. For instance, the average Serbian household has a 14-year-old washing machine and a 15-year-old oven. Moreover, the average age of cars in Serbia is 14-years, as is the age of most furniture.

The research also showed that 31% of the population has bought a new television in the past four years, while only four per cent has purchased a new car. According to Agic-Molnar, 45% of those questioned said they would purchase a new car if they had enough money.

Yet more interesting research has been carried out by Growth from Knowledge to identify internet usage and the banking habits of Serbian citizens.

According to Agic-Molnar, some 23% of Serbian citizens use the internet regularly - mainly for business purposes. This is much higher than the regional average. However, only 1.3% of worldwide web users purchase goods online. This could be attributed to the fact that only 3.4% of the population uses credit cards. Trust in banks

Between March-April and July-August, spending on hygiene products dropped by 2.66% and buying of non-essential consumables fell by 7.1%; meanwhile, spending on basic food stuffs increased by 1.19%. etc.); hygiene products (washing detergent, soap, furniture polish, etc.) and non-essential luxury consumables (freeze-dried coffee, deodorants, etc.).

The research drew specific comparisons between the initial starting period of March-April (selected as the starting point because it coincided with the appointment of the new government), May-June and July-August. Between March-April and JulyAugust, spending on hygienic products dropped by 2.66% and buying of non-essential consumables fell by 7.1%; meanwhile, spending on basic food stuffs increased by 1.19%. This decrease was inevitably linked to quantity and not merely price: in terms of individual units, hygienic products sold were less by 3.44%, nonessential consumables - 9.35% and basic food stuffs - 2.7%.

Researchers insisted that the summer drop in purchasing

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CorD | December 2004

Just under half your salary on food and drink Statistics show that the average monthly salary in Serbia is â‚Ź189. However, Growth from Knowledge said it was only â‚Ź105. In the last year, citizens of Serbia spent an average 43% of their monthly income on food and drink and 5% on cigarettes.

Faces & Places Guests mingle at the American Embassy's Election Night reception on 2nd November. The reception, hosted by U.S. Ambassador to SCG, H.E. Michael Polt, was attended by members of the political and diplomatic spheres, local media representatives and friends of the embassy.

Algerian Ambassador, H.E. Mouloud Hamai, pictured at the 1st November reception held to mark Algerian National Day, which took place at New Belgrade's Inter Continental Hotel.

Belgian Ambassador to SCG, H.E. Luc Liebaut, greets Argentine Ambassador, H.E. Carlos Abel Martese, at the Belgian Embassy's 15th November reception held to mark the Western European nation's National Day. Czech Ambassador to SCG, H.E. Ivan Jestrzab, greets former countryman and Ambassador of Slovakia to SCG, H.E. Miroslav Lajcak, at the embassy of the Czech Republic's National Day reception on 28th October.

Indian Tourism Minister, Renuka Chaudri, and Predrag Ivanovic, SCG International Economic Relations Minister, lead attendants through Belgrade's Hyatt Regency Hotel during the opening of the Days of India programme.

The month-long event saw presentations of the culture, traditions, cuisine, customs, films and different aspects of Indian heritage to Serbia.

Ambassador of India to SCG, H.E. Lavinia Prasad (pictured behind Minister Chaudri), said that it was a pleasure to see how the people of Serbia had welcomed the traditions and culture of India.

Faces & Places

Turkish Ambassador to SCG, H.E. Hassan Servet Ă–ktem, greeting Japanese Ambassador to SCG, H.E. Ryuichi Tanabe, at the 29th October Villa Jelena reception held to mark Turkish National Day.

Serbian-speaking Austrian Ambassador to SCG, H.E. Dr Hannes Porias, addresses the Sava Centre audience at a humanitarian concert 'Evening of operetta'. The concert, which was performed by the Belgrade Opera Orchestra and included solo vocalists from Austria and SCG, was held on 26th October to mark the National Day of Austria. Austrian companies and banks in Belgrade donated a total of â‚Ź70.000 for a children's neurology and psychiatric clinic in Belgrade. The concert was held under the patronage of Serbian President Boris Tadic.

Serbian President Boris Tadic (centre) chats with DaimlerChrysler's Sanja Uzelac and Rudolf Weinmann (left) during Daimler Chrysler's presentation of "The Precious Collection", Dragan Sutanovac (right) at the auto company's New Belgrade showroom on 12th November. The event, organised in conjunction with Belgrade's National Museum, saw the presentation of traditional Serbian frescoes and fare, as well as the Mercedes-Benz S-Class.

Ambassador of Israel to SCG, H.E. Yaffa BenAri, addresses the audience on 9th November at the sixth Festival of Israeli Film, entitled "Dreams and Reality". The week-long festival was held at the Museum of Yugoslav Cinematography.

Norwegian Ambassador to SCG, H.E. Hans Ola Urstad, alongside the Chamber Orchestra of the University of Nis, who performed at the ambassadorial residence's "Concertante" concert on 17th November. The concert included renditions of the works of Grieg, Mozart, Verdi et al. and was followed by a reception.

Faces & Places The French Ambassadorial residence provided the venue for a reception marking the arrival of Beaujolais Nouveau on 18th November. At one minute past midnight on the third Thursday of November each year, the new wine crop, just weeks from the vine, begins its journey to be enjoyed by wine connoisseurs worldwide.

British Ambassador to SCG, H.E. David Gowan, and British Military AttachĂŠ Colonel Witek Nowosielski pay their respects to those fallen in battle during the Remembrance Day service held at Belgrade New Cemetery's Commonwealth Cenotaph. The remembrance service was attended by representatives of Commonwealth and NATO countries.

Ambassador of Switzerland to SCG, H.E. Wilhelm Meier (right) and project author Bruno Glaus pictured at the promotion of Mr. Glaus's literary project "Balkan forbidden love", which marks the 200th anniversary of the establishing of Switzerland's St. Gallen canton.

The literary project includes 12 stories about Switzerland and the problems of integration.

Mrs Kalie Polt, Mrs Sharon Smith and Mrs Jelica Vujacic, pictured amongst staff of the U.S. senate, U.S. Embassy in Belgrade & SCG Embassy in Washington, during a visit to Belgrade's Mosa Pijade orphanage on 10th November.

The U.S. embassy in Belgrade and the U.S. European Command have donated renovation funds, books and other gifts to the children of the orphanage.

British expatriates enjoys the 5th November Bonfire Night party held at the British Ambassadorial residence. The 5th November marks the 'gun powder plot' attempt of Catholic fundamentalist Guy Fawkes to blow-up London's Houses of Parliament in 1603.

CORRECTION In CorD 10's Faces & Places section, we mistakenly identified the Ambassador of Guinea to SCG as Dr. Fara Milimon, when the ambassador is in fact El Hadj Mohamed Issiaga Kourouma. We apologise for any confusion caused.

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CorD | December 2004

We would like to amend the statement of Una Stajcic, deputy director of the Foreign Investors' Council, which was published in the November issue of CorD, in the article INVESTORS AGAINST AMENDMENTS (Paragraph 7). Rather than stating that the procedure for changing the Labour Law was unclear, she actually said that the reason for changing the law was unclear.

CorD apologises for any confusion caused.

Faces & Places Serbia - the brand

S

erbian Economy Minister Predrag Bubalo (left), alongside Milan Ristic, director of agency Profile, and famous branding expert Wally Olins at an international conference relating to national image "Branding Serbia - a journey from product, through trade mark to brand", which was organised by the Profile agency.

The conference, held between 3rd and 4th November at New Belgrade's Sava Centre, was attended by representatives of the most successful companies from Serbia, leading marketing agencies and the media. According to Profile, the event achieved magnificent results and a general step forward regarding the knowledge of branding amongst the domestic expert public.

Experts from leading British agencies presented their knowledge and experience at the conference. Amongst them were Future-Brand

Serbian President Boris Tadic addresses guests after receiving the award for the "most European" in the political field for 2004. The award ceremony was held on 19th November at Belgrade City Hall, under the organisation of the European Movement in Serbia.

The "Most European" in the economic field was won by Stojan Stankovic, director of company MAT, while "most European" for trade was Enver Muhovic, founder of the firm IDEA. The award for the "most European" project was received by Zivojin Djordjevic on behalf of Fresh & Co.

French ambassador, H.E. Huges Pernet, Zoran Loncar, Serbian Minister for Public Administration and Local Government and Dejan Mihajlov, Secretary-General of the Serbian Government, pictured at the 8th November French Embassy reception marking the establishing of a high-level educational course for institutional and state practitioners, which has been organised in conjunction with the French Ecole Nationale d'Administration [School of National Administration].

agency's Ian Louden, who explained how branding, PR and advertising contributes to the consistence of the brand message; Hailey Roe, of Coley Porter Bell agency, who spoke about the connection between brands and emotions; while Marcello Mario Minale, managing director of Minale Tattersfield agency, spoke about strategies for presenting a trade mark to the market. However, greatest interest and attention was drawn by two excellent lectures given by conference keynote speaker Wally Olins - one of the most famous experts in this field who spoke about the branding of nations and the future of branding.

The second day of the Conference was opened by minister Bubalo with a lecture on Launching and Managing the Trademark - the Supposition of Active Participation of the Serbian Economy on the International Market, in which he emphasized that the creation of

recognisable, successful brands is in Serbia's national interest. Bubalo also reminded everyone that the brand product is the result of continuing production and the carefully managed process of positioning on the market, which demands understanding and knowledge of marketing and the implementation of marketing in business. •

CorD | December 2004

45

Interview

Bridging The Differences

Dusko Knezevic, Atlas Systems & Atlas Group CEO

By Jelica Putnikovic

It took Atlas Systems and Atlas Group less than fifteen years of operating in SCG to establish themselves as the epitome of quality and success in the fields of banking, insurance, production, trade, culture and sports in the state union.

This success has been based on a well formed strategy, wise selections of business partners and a management vision that envisages the long-term profitable objectives of Atlas in all its forms.

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CorD | December 2004

I

n Greek mythology, Atlas is the Titan tasked with holding up the pillars of the universe. Perhaps it is apt then that Atlas business systems have proved a pillar of strength and success in all spheres of commercial life in Serbia & Montenegro. Speaking exclusively to CorD this month, Atlas Systems and Atlas Group CEO, Dusko Knezevic, insisted that success in every section of operations is the result of operating "always with the best business policy", which was unreservedly carried out by each member of the system.

Atlas Group consists of companies based in both Serbia and Montenegro. Do the certain essential differences between the economies and the markets of the members of the State Union have a negative affect on business operations?

Actually, those differences provide us with an abundance of business opportunities. In principle, economy - and trade in particular - knows no borders. Therefore, even if political or other kinds of differences are present, economy can be the bridge or the generator of collaboration, and possibly of the development

of the entire society. The fact is that the markets of Serbia and Montenegro are two separate markets with different currencies, customs, jurisdictions‌ All members of Atlas group recognise and respect that fact. In order to be successful we must know in detail how both markets are functioning. That is our advantage over our competitors. On the other hand, by operating on both markets Atlas group is overcoming those difficulties and, in my opinion, effectively connects SCG into one entirety.

How can the members of Atlas Group, principally Atlas and Atlasmont Banks, maintain competitiveness on both markets?

It appears to me that we at Atlas Group were among the first to realise the need to group together and unite our business activities in order to gain an advantage over the competition.

The significance of grouping is clear to anyone who is acquainted with the transition processes in Eastern Europe. Hence, Atlas

We invested in the Valjevska Brewery, in Milan Toplica Mineral Water Plant in Prokuplje - as part of the consortium which also included Ekoprodukt and C Market in Pancevo Tannery and in Rad, a metal processing factory based in Belgrade.

Group is always open for fair co-operation with potential strategic partners. Besides, Atlas Group has something to offer whether the potential partner is a domestic or foreign company.

When banks are in question, we guarantee the security of savings, quality and quick service, reliable investments and minimal risks. Success achieved by other members of Atlas Group is also the base of competitiveness, as well as expansion in SCG and abroad.

Considering that Atlasmont Bank in Podgorica has been operating for just two years and, according to last year's figures, we invested between â‚Ź20 and 25 million in the economy with the return period ranging from three months to three years, I believe that we have considerably contributed to the quality of the banking sector in Montenegro.

It is no secret that foreign banks are interested in Belgradebased Atlas Bank and that the area of their interest includes both partnership and ownership. We have received more than ten offers from banks based in Europe, Israel and Turkey, which are interested in strategic partnership. This is a consequence of the fact that we achieved some of the best results in Eastern Europe last year. For example, our capital asset profit amounted to 4.86%.

Through Kopaonik Insurance Company you have expanded the range of offers in the business operations of Atlas Bank. How does this benefit lenders and your bank?

Co-operation between banks and insurance companies is a well-established practice worldwide. In that way, the investment of a bank's capital is insured while the assets of the insurance company are invested relatively safely. This is also beneficial to lenders. It is common global practice for mortgages to be a combination of bank loans and life insurance, with a clause that in the case of the policy owner's death, the bank can collect its debt from the insurance. Furthermore, these arrangements are beneficial to the entire economy of a country because it is well known that at least ten production and service industries are connected to the construction industry.

Atlas Bank and Atlasmont Bank are active participants in the process of privatisation in SCG. What was the contribution of the brokerage firm to the privatisation?

Dusko Knezevic It was a major contribution, especially at the stock exchange, since both banks have special departments that deal in stock trade. However, the process of privatisation in Serbia differed from the process in Montenegro. One part of the privatisation process in Montenegro was based on the voucher principle.

Atlasmont Fund, controlled by Atlasmont Management Company, was the first among various funds that actively participated in the collection of vouchers.

A hundred-million-Euros worth of shares have been collected.

Of the companies that participated in the process, the most significant were: Jugopetrol-Kotor, Montenegro Telecom, HTP Budvanska rivijera, Bar Harbor, Ulcinj Riviera, HTP Boka - Herceg Novi, HTP Albatros - Ulcinj, Agroprodukt - Niksic‌ and fifteen or so others. By this, we have brought about the improvement of business policy and the stimulation of production in all of those companies because their shareholders are only interested in profit. Naturally, there is no profit without strategically oriented business activities in each company and economy in general.

Among the first to join Atlasmont in Montenegro were Budva-based Adriatic Fair and Montenegro Express. Are you

Atlas Group Atlas Group members include Atlas Bank, Atlasmont Bank, Atlasmont Management Company, Jugobroker Brokerage Firm, Kopaonik Insurance, Adriatic Fair, Montenegro Express, Valjevska Brewery, Milan Toplica Mineral Water Plant, Rad Metal Processing Plant, Pancevo Tannery and Yugoslav Gallery.

CorD | December 2004

47

Interview already invested more than â‚Ź1million in new equipment. In the years to come we are planning to invest an additional four to five million in new production lines and technologies. We are sure that the plant, when it has been modernised, will prove interesting to some foreign strategic partner, which is our ultimate goal.

As one of the oldest and, in our opinion, the best located in Serbia, this brewery will, in the near future, be known for its traditional brand 'Valjevsko Beer' and our new brand 'Atlas Pils'.

Are you going to further expand the mineral water business?

Water is the healthiest drink and a strategic product at the same time. As in the case of Valjevska Brewery, we decided to choose one of the oldest and probably one of the best quality waters in Serbia. Before the Second World War, "Milan Toplica Mineral Water" had won prizes for quality in Paris, having competed with the best French manufacturers. Our goal is to reaffirm the quality of "Milan Toplica", both at home and abroad. Atlas Group guarantees the disposal of goods and we are thinking about the possibility of export since the demand for drinking water is continuously rising worldwide.

We have invested substantial resources in addition to the plant for the exploitation of Ropusnica mountain spring water in Kolasin. We have secured all licenses and concessions, but we have run into a problem with local authorities‌

Sponsoring basketball: Dusko Knezevic planning joint venutres with any other Montenegrin or foreign companies?

We are co-operating with numerous companies. An example of our co-operation with a foreign company is the joint organisation of the Nautical Exhibition in Budva with a company from Croatia, as well as the joint appearance with Montenegro Express, through Belgrade-based Montenegro Travel, a travel agency that plans to offer its own tourist arrangements for Montenegro summer resorts and ski centres. Tourism is a rather underdeveloped branch of industry in Serbia & Montenegro and we are planning to develop it by promoting its potential abroad.

Which Serbian companies have you invested in?

We invested in the Valjevska Brewery, in Milan Toplica Mineral Water Plant in Prokuplje - as part of the consortium which also included Ekoprodukt and C Market - in Pancevo Tannery and in Rad, a metal processing factory based in Belgrade. All these companies had had excellent production programmes but, because of the political situation in Serbia during

How did Atlas Group decide to embark on the pioneering project of establishing the first private faculty in Montenegro?

In collaboration with companies Fin invest DOO, Edu mont DOO, publishing house CID and professor doctor Stevan Popovic, our Atlasmont Bank is the chief founder of the Faculty of Tourism, Hotel Management and Trade, within which the first students enrolled this autumn in Bar. The curriculum has been created in accordance with the Bologna Declaration. This is the embryonic stage of private universities in Montenegro. The creation of the Faculty was our contribution to the reform of education, and our intention is, by means of personnel renovation - not only in Bar but across Montenegro - to play a part in the development of tourism, hotel management and trade.

Hotel management, tourism and trade are three sectors that are crucial for the economic and social progress of Montenegro, but also for its reintegration into the European community.

You were a professional basketball player, then a basketball referee, and today you are at the top of Atlas Group, which owns a basketball club and sponsors many sporting events.

How important is this connection between sport and business to the better image of your company?

Basketball is a great love of mine, but those who are better acquainted with Atlas Group know that our business philosophy is that the bond between sport and business is the healthiest and the most profitable. We have always been eager to sponsor top sports events and ensure the participation of our clubs in competitions.

It was usually national water polo, volleyball or basketball teams.

Basketball is the strongest sports brand in this part of the World and when these true values had been recognised, the project "Basketball Club Atlas" was the next obvious step. That is why the promotion of "Atlas Pils" was associated with basketball. We have engaged our biggest legends of the game: the latest member of the Hall of Fame, Praja Dalipagic, and NBA star Vlade Divac. Thus, beer for legends has become the trademark of the First basketball league. The project ATLAS PILS YUBA LIGA is the product of the businesslike attitude of Atlas Group. We are also planning to build our own basketball hall in Novi Beograd.•

Basketball is the strongest sports brand in this part of the World and when these true values had been recognised, the project "Basketball Club Atlas" was the next obvious step. That is why the promotion of "Atlas Pils" was associated with basketball. the nineties, they were in a very bad situation. Our idea is to restore production, modernise them and make them competitive so that they would be a profitable part of Serbia's economy.

Why was Atlas Bank interested in Valjevska Brewery, the only brewery purchased by a domestic firm?

We are always closely monitoring the market and we were completely aware of all the problems that we would face in Valjevska Brewery. We think it is a good investment and we have

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CorD | December 2004

Interview

Approaching the States D

irector of the Centre, Professor Dragan Simic, PhD, speaks exclusively to CorD this month about the advantages of the centre as a means of achieving Euro-Atlantic integration and enhancing the ability to lobby for Serbian interests in the most powerful country on the planet.

What is the main reason for opening this Centre for the study of the United States of America?

The main purpose of opening this centre is to develop knowledge about the U.S. among young people here in Serbia & PhD - director of Montenegro. We have opened the Centre such a centre because of the for U.S. studies large void that has existed here for many years, particularly the lack of knowledge regarding the politics, society, history and foreign affairs of this great nation.

Dragan Simic,

The establishing of the first centre in the Balkans aimed at revealing the intricacies of the U.S. political system is considered to be a positive step in the further development of Serbo-American relations.

By Aleksandra Sekulic-Stojanovic, Photo Andy Dall ues, culture and history. It is ludicrous that we haven't studied these areas before.

Why has it taken so long to establish something of this nature?

In many ways, the conditions necessary to develop such relations were not available before. I think we paid a heavy price for not being serious in our approach to the U.S. We are accustomed to improvisation in so many things here, but today's interconnected and global world requires full involvement. We are aware how necessary it is to be part of the process.

If one stays on the sidelines, one lacks key knowledge and becomes isolated. That is very bad for the society. The develop-

What subjects are postgraduates studying here?

They learn the history of the U.S., liberal political philosophy, American foreign and security politics, the history of American foreign affairs, American values and popular culture, law, economic systems and Serbian-American relations. I have examined different examples of American studies in other European countries and have travelled a lot to see how it looks in reality. As such, I have seen some solutions that I think we can apply here.

Are students and graduates really interested in studying U.S. politics?

There are dozens and dozens of students who want to know what it is going to look like, though this course will start in February 2005. Interest has far exceeded my expectations. The large void in relations with the U.S. has existed here for years and students' interest in this area of studies shows how important it is considered by young people living here.

Do you think this will prove to be a way of erasing the negative attitude towards the United States, which is widespread among young people in SCG? If young people are more educated there will be less negative attitude. I think that large numbers of students are aware of the

ment of this centre represents a valuable political signal from the United States of America that they want to build good relations with us. That is very encouraging.

How valuable is your educational programme to students and the country as a whole?

It is very important in helping institutions that are currently required to communicate with the U.S. Therefore, it is valuable to educate people who are going to work in our ministries and to make them able to apply the knowledge in a competent and responsible way. Importantly, it is also in our national interest.

At present, our diplomacy is in a bad state and includes individuals who are unable to speak required foreign languages and don't even have a basic knowledge of history, politics and cultural elements.

When it comes to dealing with the U.S., if one doesn't know how the system works and how political and foreign affairs decisions are being made, one will find it impossible to properly present the attitudes of one's country among the relevant decisionmaking bodies or to successfully fight for national interests in a society as powerful as America.•

The large void in relations with the U.S. has existed here for years and students' interest in this area of studies shows how important it is considered by young people living here. need for American studies which enable them to learn about the U.S. Moreover, it is one of the best ways of achieving Euro-Atlantic integrations.

The most important objective is for us to become a member of the democratic, developed world, which is lead by the United States of America. To this end, we need to acquire knowledge about this world, the processes involved, the political system, val-

CorD | December 2004

49

Interview Cleovoulos Alexandrou, Director LAIKI Bank

Great hope and potential

By Stevan Petrovic, Photo S. Milojkovic

Laiki Bank has proven to be one of Belgrade's investment success stories. The bank has operated in Belgrade since 1997 and is coping well with the stresses of transition. This month CorD spoke exclusively to Cleovoluos Alexandrou, director of the Regional Office of Cyprus' LAIKI Bank.

A

ccording to Mr. Alexandrou, "The Laiki Group is a robust, modern, dynamic financial institution, offering a wide range of contemporary services and products both in Cyprus and abroad. In the context of a new global financial world, the group has adapted and developed new strategies in order to meet the challenges of the new century".

One of the Group's major strategies is the growth and development of its overseas operations, through the expansion of the branch network and penetration of new markets worldwide. The Group operates successfully in eight countries through subsidiaries and its network of branches and representative offices.

What has Laiki Bank achieved in Serbia, in terms of activities?

Laiki Group's status in SCG is of Representative capacity and, as such, we do not yet fund investment outleton in the local market. For the time being, our investment concentrates on the funding of the Representative Office's operational expenses. As a Representative Office our objectives are, in short: to perform market research in the field of banking and follow up developments in the economic, political and financial fields; to consider the possibility of upgrading our Representative Office's status into a fully fledged banking operation and thus take advantage of tremendous business opportunities that now exist in Serbia; to regularly update our Head Office in Cyprus of the investment opportunities in Serbia; to assist potential Greek and Cypriot investors who visit Belgrade by providing them with details of contact persons in the government, law offices, estate agents etc; to actively participate in seminars, social functions, and business gatherings at which local and foreign investors meet to discuss possibilities in business co-operation.

The Manager of the Representative Office, in his capacity as a Professor of the Chartered Institute of Bankers, London, voluntarily provides lectures periodically on the human aspects of management to business operators and students. Such institutions include the Chamber of Commerce, local universities and PIK agricultural establishment in Vojvodina.

We also grant financial support to philanthropic institutions such as hospitals and handicapped children groups and, of course, preserve the high image and reputation of Laiki Group on the local market.

"‌it is appreciated by all Serbian people that one of the few countries which helped Serbia in the years of economic isolation was Cyprus and this not for any political interest or motive but simply to help the Serbian people with whom we have been religiously and culturally tied since our existence. In fact, we feel as one nation."

Laiki Group's operations in Belgrade commenced in November 1997 under the status of a Representative Office. Since then the Office's operations were interrupted twice - firstly in March 1999, as a result of the NATO bombardment against Yugoslavia, and then again in June 2000 when the Group decided to suspend its operations in Belgrade.

"Following the globally welcomed political changes that began in Yugoslaiva on 5th October 2000, Laiki Group decided to re-establish its Representative office in Belgrade. Our intention is to deepen the presence of the Group in the Region," explains Mr. Alexandrou.

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CorD | December 2004

Who are your partners?

As mentioned earlier, our status on the local market is currently that of a representative office. Therefore our functions in the local market are restricted to those aforementioned. However, we maintain excellent relations with the National Bank of Serbia, Agency for Bank Privatisation, Ministerial departments, accountants, lawyers and, of course, local banks. So far the assistance received from all local authorities and institutions is highly commendable and, as such, very much appreciated.

What are your capacities?

Laiki Group has a strong capital base that can support its future development plans both in Cyprus and abroad. Cyprus

services: personal financial services; consumer finance; commercial banking, corporate, investment banking and markets; and private banking.

The Group's Capital Adequacy Ratio at year's end 2003 was 13.8%, whereas the minimum percentage required by the Central Bank of Cyprus is 10% and the European Union's directions set 8%.

The Group's capital resources have grown from CYP 446million in 2002 to CYP 524.9million in 2003. On 29th December 2003 the Group announced the establishment of a Euro Medium Term Note Programme (EMTN Program). Through this programme, the Bank will be able to issue Senior debt and/or Subordinated debt up to â‚Ź750million, according to its needs.

Laiki Group expansion plans in the works Popular Bank Ltd, which was commercially renamed Laiki Bank Ltd, is more than a century old. Over this period the Bank evolved from a commercial bank into a financial services Group which, in addition to traditional banking products, offers diverse financial products and services such as life and general insurance, treasury products, custodian services, instalment finance and leasing, factoring, investment banking and consulting, brokerage services etc. Growth was achieved both organically and through acquisitions; the most notable examples being the acquisitions of the operations of Grindlay's Bank in Cyprus in 1982 and the Pan-European Group in the field of insurance services.

Today Laiki Bank operates 114 branches in Cyprus, with six more in the UK, eight in Australia (Laiki Bank "Australia" Ltd) and 45 branches in Greece (Laiki Bank "Hellas" SA) and six representative offices: two in Canada, one in New York, one in South Africa, one in Moscow and one in Belgrade. The main shareholder of the Laiki Group is Hong Kong and Shanghai Banking Corporation (HSBC) Group. Laiki Bank is listed on the Cyprus Stock exchange and has 27,000 shareholders.

The HSBC Group is one of the largest banking and financial service organisations in the world. HSBC's international network comprises over 9,500 offices in 79 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. HSBC provides a comprehensive range of financial

Do you have plans to expand your business in Serbia and, if so, in which areas?

Yes! As I said earlier, Laiki Group has strong and meaningful interest to expand its activities in Serbia. I cannot, however, be more specific at this point in time.

How do current trade figures look between Serbia and Cyprus?

For the time being, unfortunately, trade links between Serbia and Cyprus are at a very low ebb. There are some Cypriot origin establishments in Belgrade like Pepsi Cola, Pizza Hutt, and also

"Since it took office in January 2001, the new Serbian Government has shown a strong commitment to establishing a modern market economy and re-entering European and global markets. Substantial reforms have been made to that end, particularly in creating a business-friendly environment." some interest has been expressed by Cypriots in the hotel industry.

I believe the Serbian Chamber of Commerce, in co-operation with the Cyprus Chamber of Commerce, have a major role to play in bringing together Cypriot and Serbian business people to discuss possibilities of trade relationships. In this respect, I would add that it would be very beneficial if the Serbian Chamber of Commerce would consider the possibility of establishing a Representative office in Cyprus. This would undoubtCorD | December 2004

51

Interview edly augment the desire for more active trade relationships between our two countries. Another suggestion that comes to my mind is for Serbia to exhibit its products to the Cyprus annual international exhibition and, vice versa, Cyprus to exhibit its products to the Belgrade International trade. We, as Laiki Group, would welcome such ideas and wholeheartedly support them within the ambit of our banking profession.

Where do you see opportunities to promote co-operation between SCG and Cyprus?

Cyprus has an open, free market economy with a record of strong economic performance reflected by periods of rapid economic growth, full employment and external and internal stability.

The Cypriot economy has transformed from an exporter of primary products in the period between 1961-73 and an exporter of manufactured goods, mainly clothing and footwear, in the early 1980s, to an international business and services centre.

On the other hand, Serbia has important energy and raw material resources as well as production facility potentials, especially for the production of electric energy which has been one of its important export items for decades. As far as agriculture is concerned, most of the land in Serbia is privately owned. Some 1,700,000 farmers own 81% of the arable land. Wheat, maize, edible oil, sugar, fruit, wine and meat are the main exports.

In light of the above, the opportunities for business co-operation between Serbia and Cyprus are well diversified, covering agricultural products, manufacturing products and, last but not least, there exists business potentials in tourism and construction activities. Being also mindful that the Serbian economy is heavily dependent on its relations with foreign businesses and investors, the area of privatisation in Serbia offers itself for consideration by Cypriot investors on the basis of an informative marketing campaign in Cyprus.

duties, this department works closely with all Controlling Authorities as well as with international bodies who are responsible for tracking money laundering.

Hence, I do not see any hurdle in our would-be business expansion in Serbia as a result of the said adverse publications.

On the contrary, the Serbian people highly appreciate Cyprus' support during the difficult years and they would be very pleased to see a Cypriot Bank entering the local market to combat banking competition.

What can Laiki offer the Serbian market that differs from other banks?

Nowadays all banks offer more or less the same services and products. What is of importance in our banking business is competitiveness in the sense of quality customer service, human approach, and bank fees. Therefore, when we finally enter the local market, our drive would be to be, as far as possible, competitive in the said areas.

Our desire is to be one of the leading banks on the local market.

"Local banks should be encouraged to financially support local industries producing goods for local consumption on the basis of certain lending criteria with due regard to the particular industry's viability and source of repayment."

Cyprus and Cypriot banks here were very often blamed as instruments for hiding the ill-gotten gains of the former government. Do you feel that this is an obstacle to your business in Serbia?

I do not feel that I am the right person to answer this question, but now it has been offered to me I would like to give my personal view on this issue.

First, it is appreciated by all Serbian people that one of the few countries which helped Serbia in the years of economic isolation was Cyprus and this not for any political interest or motive but simply to help the Serbian people with whom we have been religiously and culturally tied since our existence. In fact, we feel as one nation. Secondly, it is the policy of Laiki Group not to be involved in politics but to always concentrate within the parameters of its legitimate banking profession and this practice has been followed all along. Needless to say, Laiki Group was the first Cypriot financial institution which created a separate department of compliance in 1999. Within the ambit of its

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CorD | December 2004

Do you have any interest in the process of privatising banks in Serbia?

We are definitely interested in taking part in the privatisations of banks in Serbia, but we have not yet decided in this respect. I need to mention that when buying a bank, it is necessary to establish many facts, for example its market share and the investment return.

What are your impressions of the business culture in Serbia and what would you recommend changing?

Since it took office in January 2001, the new Serbian Government has shown a strong commitment to establishing a modern market economy and re-entering European and global markets. Substantial reforms have been made to that end, particularly in creating a businessfriendly environment.

Serbian entrepreneurs are shrewd, active, well educated and business oriented individuals. However, lack of working capital, bureaucracy, long and complicated procedures and an inadequate infrastructure are negative factors impeding progress and development of Serbian business enterprises.

Local banks should be encouraged to financially support local industries producing goods for local consumption on the basis of certain lending criteria with due regard to the particular industry's viability and source of repayment. Concerning other deficiencies of industry, a set of new economic laws should be passed to control enterprises to make them more efficiently manageable. Training of business managers in modern management techniques also needs particular attention.

The agricultural industry has huge potentials to penetrate foreign markets. However, agricultural exporters should undertake a more active marketing campaign for the promotion and sale of their products on foreign markets. This is because they have excellent opportunities to compete with foreign firms. In addition, exporting industries, despite their problems, stand better chances of securing bank credit for foreign trade.•

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New challenges

"

The European perspective of the SouthEast European region is very clear and very important, but there will be serious challenges in solving the status of Kosovo next year", said Erhard Busek, special coordinator of the Stability Pact for SouthEast Europe at a final assembly of working groups in Skopje, Macedonia.

Goran Svilanovic, former SCG minister of foreign affairs, was elected president of the first working group within the Stability Pact for South-East Europe.•

Arafat's demise

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5-year-old Palestinian leader Yasser Arafat died in a French military hospital near Paris on 11th November. Arafat, a

Together to the EU

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roatian Prime Minister Ivo Sanader's visit to Serbia & Montenegro in November was the first official visit of a Croatian premier since the collapse of the former Yugoslavia. The Croatian PM met SCG President Svetozar Marovic and president of the state union parliament, Zoran Sami, as well as holding talks with Serbian PM Vojislav Kostunica.

PM Kostunica and PM Sanader agreed that both Serbia and Croatia have the same strategic aim: to become fully fledged members of the European Union. According to Sanader, "The future of this part of Europe is in the European Union. Our nations deserve to have this chance after fourteen years of war".•

and public economic sectors from the countries of the SEE region. Serbia was represented by Deputy Serbian PM Miroljub Labus and director of the Agency for foreign investments and the promotion of export, Jasna Matic. Montenegrin President Filip Vujanovic also attended the SEE economic forum.•

US voters re-elect Bush

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ollowing his 2nd November re-election, U.S. President George Walker Bush vowed that the American Government

SEE Economic Forum

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he sixth economic forum of South-East European countries was held in Sofia, Bulgaria last month. The event, once

again, proved an important forum to discuss co-operation between private and public economic sectors. Discussion about economic security and further development of this significant topic has brought over a hundred representatives of private

would not waver from his political platform. Condoleesa Rice, formerly presidential advisor on national security, became new Secretary of State following the resignation of moderate Colin Powell, who said that he had only wanted to serve a single term. The U.S. presidential election is perhaps the world's most crucial vote, considering the global ramifications, and state representatives worldwide have reacted to the result.

A few days after the result was announced, a delegation of U.S. senators, lead by Oregon Senator Gordon Smith, arrived in Belgrade to meet Serbian PM Vojsilav Kostunica and SCG Foreign Affairs Minister Vuk Draskovic.•

self-confessed former extremist turned political leader, was returned to his homeland and buried in Ramala on the West Bank.

Arafat's funeral was attended by state and government representatives from across the globe, who came to pay their respects to the late Palestinian leader.

Arafat had represented the Palestinian struggle for an independent state for over 40 years, though many see his death as a chance for a fresh start and the establishing of lasting peace in the Middle East.

However, others remain pessimistic and are concerned that the demise of this inspirational leader will lead to social chaos and fresh massacres in the region.

The exact cause of Arafat's death has yet to be determined, though French doctors have ruled out cancer and also rejected the claims of Palestinian extremist organisation Hamas that the Palestinian leader was poisoned.• CorD | December 2004

53

Interview Majority state-owned Continental Banka is run as a full service bank and is one of the leading banks in Serbia & Montenegro. The fact that the bank is ranked so highly is based on its total assets, share and total capital, developed business network, revenue and management.

Zoran Djurovic, General Director Continental Banka, Novi Sad

Fresh foreign perspectives

By Radovan Balac

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peaking exclusively to CorD this month, Zoran Djurovic, general director of Continental Banka, insisted that the bank has an excellent reputation and the trust of retail and corporate clients alike; state institutions and the state itself. He noted: "…we can say that our position on the financial market is very good and, according to our expectations, it will advance even further in the coming period".

What is the full potential of Continental Banka?

The Bank covers mainly the market of Vojvodina and Belgrade and has 72 business organisational units, nine of which are branch offices. We have around 160 thousand clients, of which 15 thousand are corporate and 145 thousand are retail clients.

The bank has experienced a constant increase in business.

The balance potential in the first nine months of this year increased by over 20 percent and foreign currency and dinars savings are increasing at a considerably higher rate.

Continental Banka was among the first domestic banks to begin the process of modernisation, the development of the electronic banking and reviving the payment card business.

How do you explain that?

We realised in time that our bank had to get modernised and deal on modern principals, thus we started doing business which was of interest to our clients, such as electronic banking. At the moment of the transfer of domestic payment operations from ZOP to the business banks, that job is done exceptionally efficiently in comparison to rival banks. Our bank is very well accustomed to those processes and, thus, electronic banking makes over one quarter of our total domestic payment operations and it is constantly on the rise.

What is new is that retail clients are able to do their banking

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CorD | December 2004

transactions and communicate with the Bank through electronic banking service from their homes. We think that we have managed to meet demands for the modernisation of the services and automation of everything needed in modern banking. The introduction of the modern information system created the basis for the development of the payment card business, which had been neglected for some time. We have achieved a great deal in this area.

Firstly, we introduced the Visa programme and offered a wide range of debit cards - Visa electron, Visa classic, Visa start and Visa business as well as Visa Credo - credit card. We have issued around 60 thousand Visa cards and we intend to increase that number. I can show off a bit - we are the first bank in Serbia & Montenegro that Visa presented in its Visa Electron case study as an example bank of how this Visa programme should be developed. We got into the programme of the domestic card, the Dina Card, which we also support by marketing because we think that we should get out of the grey economy as fast as possible and we should support the attempts made by the Government, the Ministry of Finance and the Serbian National Bank since it is in our mutual interest to break from the grey zone and operate less with cash, like everyone else in the world.

Our wish is that the least possible amount of money is operating in the physical sense, that as many payments as possible are made with cards; that there is a record of all transactions and that we all regularly pay taxes, which is the aim of every organised country. Of course, we will not restrict ourselves to these two card brands only and we intend to introduce the Master Card and American Express programmes next year.

How do you explain the fact that Continental Banka started all this before some supposedly bigger, stronger banks?

We prepared very well and in the sanctions period we maintained contact with Visa. When Visa could not operate here any longer our people were all the time in London, Helsinki, Athens‌at all the gatherings which Visa organised and when the sanctions were lifted we had the approach and we could be operative first. We recognised, of course, the new trends and in the long run, we were 15-20 years ago very active in the card business and had a period when it was very developed and functioned very well.

Thus, good preparations and recognition of the perspective enabled us to be first in the card business. We do have a very skilled team of people who know this business; we do have people who will very soon do their doctorate dissertations in the card business and work in our banks in those jobs.

What is the loan policy of Continental Banka and what are its priorities?

The crediting policy has to be in accordance with the Government, the Ministry of Finance and the National Bank's demands, i.e. with the state's priorities which we, as part of the financial system, have to support. Also, we are paying much attention to meet our clients' demands, needs and expectations.

Continental Bank's priority determination was granting loans for export programmes and we think that this should also be the

"We are the first bank in SCG that Visa presented in its Visa Electron case study as an example bank of how this visa programme should be developed. We got into the programme of the domestic card, the Dina Card‌because we think that we should get out of the grey economy as fast as possible‌" state's priority, in order to improve the balance of payments in our country. It is up to us to enable export companies to realise their business even though those are the most difficult jobs and are carried out under strong competition. We have financed small and mid-sized companies, which is a priority of our country and other transitional countries, in order to increase production and employ more people, to get favourable credit and urge private initiatives.

For years much more was invested here in properties, such as houses, flats and summer weekend cottages, in enormous useless space, and we were not ready to invest in small programmes where families would find jobs and security. That reoccurred in the last few months during the sale of some company shares. The bank is attempting, through the loan policy, to stimulate people who are in business.

Since we belong to an agricultural region, we also had to support the crediting of agricultural production. Through various types of loans, we have financed the production, purchasing and renewal of mechanisation. Of course, loans and other credits are more and more developed. There is a real hunger for them, but the potential for getting good and favourable mortgages is still low. Still, that is the direction in which we will all go.

Continental Banka has also supported other projects, such as the republic and provincial development funds and similar things. Why is that?

We have participated in actions led by the authorised state organs - the Serbian Fund for Development, and from its establishment the Fund for the Development of Vojvodina, and we have issued hundreds of millions of dinars worth of letters of credit and guarantees for our clients. That is functioning well and it is a great help to our agriculturists because those are favourable credits.

Through those two projects we have also supported export programmes. A few days ago we received the trust to manage the busi-

Interview ness regarding the Guarantee Fund for the South Banat district. Italian banks, the city of Modena and the Italian Government have provided the establishing fund of 500.000 euros, which will be increased in order to secure favourable foreign loans to small and mid-sized companies in this area of Backa so as to encourage its development.

This is part of the UN programme for servicing the development programmes in local areas. We have been given the task of managing and helping our people to make the first step, to secure the initial capital and set up businesses. We recognised the interest of the city and the district because the Guarantee Fund will be very interested in new business and new employment in our province.

and when you expect this to be finalised?

Continental banka's directors and management were, from day one, aware and determined that we have to go for privatisation because that is in the interest of the bank itself, the citizens and our country. Three years ago, as the first bank in Serbia & Montenegro, we formed a strategic partnership with the Nova Ljubljanska Bank and initiated a programme of fresh capital influx.

However, the state decided not to go for fresh capital influx with regard to banks, but rather the sale model. We are one of the first three domestic banks that the state will sell through tenders to some foreign banks. We are exceptionally well prepared for privatisation: we Zoran Djurovic knew what we were supposed to do in internal organisation, profiling, in support of the infor"We think that we have mation technology and in strategic plans for How are Continental Banka's relationthe future. Therefore, we are completely ready. managed to meet ships with banks and financial institutions know that this process must be done and demands for the mod- We abroad? we are looking forward to getting a foreign Since the bank's founding we have ernisation of the servic- owner. worked mostly with banks abroad and we It is not usual for the management to talk in es and automation of have a very well developed network of corresuch a way, but I will be the first to be happy everything needed in when we get a recognisable foreign owner. sponding banks. We have worked with all the larger European banks - Commerce Bank and modern banking. The Four foreign banks have applied for the tender LHB from Frankfurt, The New Ljubljana to purchase Continental Banka's state-owned introduction of the Bank, with which we signed the contract of shares: Nova Ljubljanska Bank, Piraes Bank, modern information strategic partnership three years ago, EuroEFG Bank from Athens and London-based access Bank from Moscow, which supports General Electric Capital. According to the tensystem created the our clients, Hermes, Berliner Bank and othconditions, those banks have to have over basis for the develop- der ers. Through this co-operation we have prothree billion euros in funds and a developed ment of the credit card network in a European country outside their vided our market and our citizens with access to new credit lines and to realise their busicountry of origin. Their statements have system, which had nesses, but at the same time we have trained arrived and now audits, in accordance with been neglected for our people for new jobs which we did not do international standards, are being carried out. some time." until then. Therefore we have learned a great There will be the Data room in December and deal and our people can now equally compete

by February, or the beginning of March, the with foreign bank managers. sales contract should be signed.

The bank’s management is ready for such an event and I think The penetration of foreign banks on our market has the employees are too. This is because we see the prospects and encouraged competition and "shaken" our banks, forcing possibilities for those who desire to work and be paid well. Apart them to modernise and develop new services? from that, we join the process of privatisation of those companies That was the right thing, even though I would have to admit which are our clients. Together with the Ministries of Economics that it did not suit us because it was easier to operate when the and Finance, we have participated in the creation of the models for competition was weaker. That forced us to utilise our new potenthe privatisation of the Livnica (Foundry) from Kikinda, where tial. We had to make an effort to overcome new things we were Cimos from Kopar (Slovenia) purchased 67% of shares. As a major not familiar with in order to present ourselves in the right way. We creditor of Sever from Subotica, we made the decision at Managing had to learn to work on the market. We determined three things Board level to write off 46% of their debt and an Austrian compato invest in people, to train our staff abroad so that they could ny subsequently bought this factory. The process of privatisation learn what the West does and to invest in modern technology - we of Hipol from Odzaci should be brought to a close by the end of changed the whole information system and invested a large this year and the partner was again from Austria. In Livnica we amount in modern technologies. Thirdly, since competition is wrote off 72%, Sever 46% and Hipol 50% of debts. high and we had to be recognisable on the market, we invested a Wishing CorD readers a very merry Christmas and a prosperlot in advertising, marketing and acts of donation. Only those who ous New year, Mr. Djurovic concluded: "We recognise our interest invest in those three things can survive on this highly demanding in new development, new investments, new employment and new market. We have to fight for every client, this is a merciless, bruexport projects‌ We are proof that the process of privatisation of tal fight in which only knowledge, professionalism and organised banks and companies can by carried out on a parallel. For examwork can be fully expressed. I think that in those three things we ple, there is no dilemma as to whether the privatisation of banks will manage to compete with foreign banks. They are in a should have been done before the privatisation of the economy. favourable position because they do have their headquarters from Co-operation is required and even the World Bank praised the where they can receive financial support. model implemented in the Livnica case. Therefore, the bank is going into privatisation, our expectations are high, we are fully preThe tender for the sale of the state's stock package in pared and expect the new owner to bring capital into the country, Continental banka was recently opened. Could you tell us as well as new knowledge which is essential; new jobs and everywhich foreign banks are interested in purchasing those shares thing in the interest of our economy."•

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CorD | February 2004

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Invest in Belgrade

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elgrade is a very attractive city for foreign investments, according to new city manager Bojan Stanojevic. The procedure for investments is already easier because those who want to invest in the means of production in the capital city are well

motivated to do so. Belgrade will be the centre for sport and cultural happenings in 2005, when many foreigners will have a chance to see the city's potential.

Moreover, ten million euros from the Spanish government will be used to finance small businesses in Serbia, after Spanish ambassador to SCG, H.E. Mariano Garcia Munoz, and director of Pro Credit Bank, Dorte Waidig, signed a contract for credit given by the Spanish government to this bank. They agreed that this amount would be of great importance to the development of the small business sector, as the core of Serbian economy.•

The best European

S

erbian president Boris Tadic arranged a reception in honour of basketball club Real Madrid, who came to Belgrade to play rivals Partizan in the third round of the Euro league. Director of Real Madrid bas-

ketball club, Manuel Sainz, presented President Tadic with a special jersey of the "royal" club, which displayed the president's name.

President Tadic was also declared the best European in the sector of politics for the year 2004, according to the European movement in Serbia & Montenegro.•

Mira Markovic biography published abroad

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he first biography of Mira Markovic, Serbia's former first lady and wife of Hague defendant Slobodan Milosevic, is to be published next month in Frankfurt.

The book has been written by Journalist of Italian Daily Pepe Zaccaria - a long time correspondent from the Balkans.

Zaccaria's book is based on numerous talks held with Mira Markovic in Belgrade and other places. The book will be published simultaneously in both Italian and German.

According to an associated reported, Markovic is now residing in Moscow. She left Belgrade in 2003, following the assas-

offer was the best bid and that it included an investment and social welfare programme, while FPP had merely wanted to buy a limited parcel of shares.•

Murder commission waiting on expert report sination of PM Zoran Djindjic, and Serbian authorities issued an Interpol request for her arrest.•

Labus defends Knjaz Milos sale

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eputy Serbian PM Miroljub Labus has defended the privatisation process of beverage manufacturer Knjaz Milos, saying that it has been carried out in accordance with the law.

The G17-Plus leader told Serbian state television that everyone involved should be happy with the sale, denying the claim of losing bidder FPP Balkan Ltd that special treatment had been given to the Apurna consortium of French food giant Danone and basketballer Vlada Divac.

Labus admitted that he had not been surprised by FPP's allegations because losers had the right to be angry, but added that he had not interceded with the Securities Commission for the Apurna bid to be accepted.

He described the sale of Knjaz Milos as good news for foreign investors, saying that the state had acquired a strong strategic partner who could strengthen production and exports, and that job security of company employees had been assured.

Finance Minister Mladjan Dinkic also expressed satisfaction with the sale of the majority share of Knjaz Milos equity to Apurna. Dinkic told state media that Privatisation Minister Predrag Bubalo had convinced the cabinet that the Apurna

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he independent commission of enquiry into the deaths of two soldiers in an unexplained shooting incident last month is waiting on one more expert opinion before publishing its report.

Commission chairman, Bozo Prelevic, has said that he expects the report to be finalised in the near future. The commission was established by the Supreme Defence Council after conflicting reports emerged over the deaths of Dragan Jakovljevic and Drazen Milovanovic on 5th October while on sentry duty in a military installation in the Belgrade suburb of Topcider.

A separate military commission found that the deaths were a murder-suicide resulting from a quarrel and said there were no indications that a third person was involved, despite a number of inconsistencies.•

Annan rules out early Kosovo resolution

I

t is still too early to discuss the long-term status of Kosovo, UN Secretary-General Kofi Annan said yesterday in a report to the Security Council.

Annan told the Council that there had been tangible and encouraging progress in meeting the standards set for Kosovo by the international community, but that this progress had been sporadic and limited and standards had still not been reached.• CorD | December 2004

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Finance

VAT ASAP

By Voja Stevanovic

The process of reforming the Serbian tax system should leap closer to finalisation on 1st January 2005, when new Value Added Tax legislation is due to be implemented and enforced. According to some Serbian ministers, Serbia already has one of the most favourable tax climates in Europe - with a company profit tax rate of just 14% (among the lowest in Europe) and numerous incentives and stimuli to attract potential investors. However, only the long overdue introduction of VAT will allow those ministers to say that Serbia has, at least in part, caught up with the world’s developed economies and brought its market conditions closer to the needs of international investors.

S

erbia's new VAT system is expected to have two rates: 18 per cent and eight per cent. Amendments to individual products will be made, for instance, products currently subject to 20% tax will see tax lowered by two per cent; while goods that are currently free from excise taxation will be taxed at a rate of eight per cent from 1st January 2005.

Provided implementation is not postponed for a third time and the law is fully enforced and respected by retailers, the new taxation system will make a substantial difference to the internal market. Due to its all-encompassing nature and vast contribution to tax revenue, VAT would become the axle upon which the Serbian tax and budget system turns. Moreover, the success of the law will be an effective counter to the "grey economy".

After thirty years of existence in the EU and other countries, VAT has undoubtedly justified its existence and proved its advantages. As a result, it has received wholesale support from

The introduction of VAT is likely to have a marked effect on the real estate market because excise tax is not currently paid on property, though a five per cent tax on the transfer of absolute rights is paid by all. From 1st January next year, VAT of 18% will be paid on the first sales of all new real estate‌ financial experts and the political sphere in Serbia, not only today, on the verge of its implementation, but even ten years ago when tax reforms were first envisaged.

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Sadly, the public are unlikely to share the enthusiasm of the financial and political communities because, as a rule of fiscal norms, taxpayers consider every new tax to be a bad move. As such, they are extremely sceptical of the notion of VAT. It is vitally important that implementation of the new tax is carried out with consideration of the collective reluctance of tax payers, the eccentricities of the domestic tax administration and an acceptance of the troubled functioning of Serbia's social and economic system.

With 1st January fast approaching, no more time can be lost by the Serbian Government and, particularly, the Finance Ministry, which must approve and implement all subsidiary and supporting laws in plenty of time and not at the last moment,

which appears to be the norm here. The VAT legislation plan obliges the government to take three measures and the ministry of finance to pass 16 pre-law acts that will closely determine the details of the overall legislation.

In accordance with the VAT legislation, those subject to the tax are required to compile an inventory of all stock on the last day of this year, noting the sales tax on said goods calculated during purchase and paid at the time of import, distribution or retail. That in itself is a massive undertaking that will require nationwide assistance from the tax department. The clock is ticking.

Serbian company owners and retailers are struggling to prepare for the inevitability of VAT. Those who have already paid for stock that they are to receive next year, and those who are intending to order such goods but have not calculated the added expense to price, are now worrying. They are aware that they will be able to apply for VAT rebates from the state at a later date, but are concerned that the planned procedure for doing so is too complicated. As a simpler alternative, they are calling for newly imported equipment to be VAT free.

One such businessman is Branislav Bogicevic, general director and co-owner of Novi Sad's Minakva Company. Bogicevic's company recently purchased factory line equipment for filling bottles with mineral water to a capacity of 16,000 units per hour.

The equipment, valued at â‚Ź3million, has been paid for and is due to arrive early next year. He insisted: "The adopted solution is destimulating and contradictory to the common story about the need for the technological renewal of the domestic economy.

With such expensive credit, we hardly manage to collect the money for purchasing new equipment when the state, instead of, for instance, letting us paying the import taxes in instalments, introduces an additional expenditure".

The Inland Revenue has responded by noting that although the suggestion may appear sensible, it has essential gaps and shortfalls. Principally, only the Serbian Parliament is able to authorise any release from VAT payments and this would require additional amendments to the law through complicated and lengthy parliamentary procedures, thus further delaying implementation of the VAT law. Coupled with that is the notion that the essence of VAT is to provide equal conditions for all under clear and simple regulations.

Furthermore, tax administrators say that company owners are worrying unduly because introduction of VAT will not make the purchasing of equipment as complicated as it currently seems.

The facts are simply that, from 1st January 2005, the ability to use tax statements as a way of bypassing payments will be revoked and, upon purchase of new, second-hand, foreign or domestic items, VAT will have to be paid at the common rate of 18%.

The finance ministry has compiled a book of regulations to aid inspections of equipment and premises and determine proportional tax deductions and required rebates. If a taxpayer is dealing with imported goods, they will pay the initial VAT and then be given the opportunity, in the same tax year, to apply for a rebate on the VAT paid. If a taxpayer is purchasing domestic equipment, they will be required to produce an official invoice

After thirty years of existence in the EU and other countries, VAT has undoubtedly justified its existence and proved its advantages. As a result, it has received wholesale support from financial experts and the political sphere in Serbia‌ detailing the VAT paid. Such payment will be considered as previously paid tax and provide a liability deduction.

Those who have purchased goods from either a foreign or domestic supplier and have confirmation that the equipment is not for further resale will be subject to VAT regulations if said goods do not arrive prior to the end of 2004. That will be considered as a previously paid tax which will be deducted from the total tax sum in the first settlement period. If the amount paid at the end of the settlement period is higher than required, the difference will be refunded or carried over to the next period. In the case that less is paid than required, the balance will have to be settled.

The implementation of VAT will probably push some prices up. For instance, if cooking oil is not currently subject to excise tax, the introduction of VAT, at a rate of eight per cent, is likely to influence the retail price. However, economists consider it illogical for the price of oil to go up by 8 percent. VAT will not be to blame for any eventual inflation since the list of products to which the tax rate will be dropped from 20 to 18 percent is much longer than the number of products that will become taxable by the introduction of the new system. However, indirectly, VAT can be used as an excuse for price hikes.

The introduction of VAT is likely to have a marked effect on the real estate market because excise tax is not currently paid on property, though a five per cent tax on the transfer of absolute rights is paid by all. From 1st January next year, VAT of 18% will be paid on the first sales of all new real estate, whilst subsequent sales will only be subject to the existing five per cent tax on absolute rights. It is almost certain that this will lead to an increase in the price of newly constructed properties. However, the increase should not be as much as 13% (the difference between current tax and the VAT level) as construction companies will be able to save on investment costs under the new taxation system.•

Economics

By Milan Culibrk

Though year's end is still a month away, this November saw the finalising of the outline for Serbia's economic policy in the months to come when PM Vojislav Kostunica's Government finalised the State Budget Bill and the Memorandum on Economic and Fiscal Policy for 2005. According to the Government, it wasn't an easy task to include IMF "recommendations" and squeeze all budgetary users into a very limited GDP framework and the administration have yet to weather the proverbial storm.

Prime Minister Vojislav Kostunica

T

he Government will have to secure a majority in the Serbian Parliament to put their projected economic policy into action. Although the voting procedure for the budget does not differ technically from any other issue, it will, nevertheless, be tantamount to a vote of confidence for Prime Minister Kostunica and his ministers.

Finance Minister Mladjan Dinkic has made assurances that the Government will not topple over the budget. Dinkic insists that the rebuilding of Kostunica's Cabinet was a far greater chal-

"The Socialists have reason enough to support the budget, which increases public welfare spending, while the Democrats should vote in favour because it is reform oriented. Boris Tadic said in the run-up to presidential elections that DS would vote for all pro-reform bills", said Dinkic.

It remains to be seen how MPs will vote once the budget is on the parliamentary agenda because some parties might make political calculations in their vote, while the political scene in Serbia does not have a clear line of division between the ruling block and the opposition. The situation is further complicated by relations within the ruling coalition: Serbian Renewal Movement leader and SCG Foreign Minister, Vuk Draskovic, has voiced displeasure with government policy on several occasions, namely over political issues such as a lack of co-operation with The Hague Tribunal.

In any case, the proposal predicts a budgetary income of 396.1 billion dinars (5.1 billion euros at the present exchange rate) and budgetary expenditure of 416.6 billion dinars (5.36 billion euros) in 2005. The projected deficit is, therefore, 20.5 billion dinars, which is a third of this year's deficit and more than 50% less than last year.

Last year the deficit was 43 billion dinars and, after rebalancing the budget this year, the Government reduced the deficit from 45 billion to 32.7 billion dinars. Dinkic is confident that the deficit will fall short of the limit this year and grounds his optimism on the fact that the deficit for the past 10 months was 21 billion dinars with government plans to keep it at a monthly level of 1.7 billion dinars (equivalent to the deficit in October). Next year's budget is a tight suit to wear, with the requirement of being only 1.4% of the national GDP, as opposed to 3.9% last year and between 2.3 and 2.5 percent at the end of this year.

Elaborating on the budget proposal, the Finance Minister said the Government plans to use 8 billion dinars from privatisation gains, 5.7 billion in loans and donations from international financial institutions, and to borrow the remaining 6.8 billion dinars on the domestic financial market to round off the deficit. If the annual instalment for repaying the principal of foreign debt is excluded from the expenditure (in line with international classification), as well as the payment of old currency savings, the balance of the budget in 2005 would even be in mild surplus at 3.6 billion dinars.

According to Deputy Serbian Prime Minister, Miroljub Labus, the budget has been structured to secure anti-inflationary economic growth with a plan to reduce this year's 11.8% inflation rate to 9.1%, while increasing the GDP by 4.5%. Labus cited inflation as a major challenge on the road to economic growth, adding that a key government responsibility was to maintain macroeconomic stability. "All policy measures will be directed towards achieving

A tight fit lenge, since the appointment of new ministers requires an absolute majority in Parliament, while the budget needs only a relative majority. "Besides," says the G17 Plus deputy leader, "the 2005 budget is a big step forward in the economic policy that started with rebalancing this year's budget, which received Parliamentary support." He added that, in addition to the parties of the ruling coalition, he also expects MPs of the Socialist Party of Serbia (SPS) and the Democratic Party (DS) to vote in favour.

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this goal, including those dealing with the exchange rate, the balance of payments and fiscal issues. The Government intends to maintain stability the hard way and not by spending foreign currency reserves," said Labus.

A significant addition to budgetary income will come with the introduction of value added tax (VAT), which is to replace the obsolete sales tax. General VAT will be calculated at 18% of the product's value (lower than the 20% sales tax) and Dinkic expects a 14% increase in budgetary income as a result. However, some economists, such as Professor Jurij Bajec of the Belgrade Faculty of Economics, are more concerned about the initial effects of the new VAT than with the budgetary deficit, since some countries experienced a weaker influx of cash after putting VAT into effect.

Dinkic explained that Budgetary expenditure will also face considerable changes. The Government will have to splash out 13.6 billion dinars more than this year just to service the external and internal debt, while 27.4 billion dinars has been allocated for foreign savings payments and 18.7 billion for paying foreign lenders, which all amounts to 11% of total budgetary assets.

Simultaneously, contributions to social insurance will be reduced by 2 billion dinars, since the September increase in citizens' social security contributions will maintain a balance.

The Government has also proposed a reduction of budgetary subsidies by 3 billion dinars, a measure that was strongly recommended by the IMF. Subsidies to the public railroad company (ZTP) will be reduced from 8.8 to 8.5 billion dinars, the industry will get 5 billion, compared to 6.6 billion dinars this year; Radio Television Serbia (RTS) subsidies will slide from 3.2 to 2.5 billion dinars, while other recipients will get 300 million dinars in total. Subsidies to the energy sector and agriculture will nominally remain at the same level.

According to Dinkic, these measures are a clear sign that the Government will not compensate public company irrationalities with taxpayers' money. On the other hand, investment capital is expected to increase by 50% to 27.4 billion dinars. The Transition Fund will receive 7 billion dinars (2.5-fold increase) with the aim to speed up public enterprise restructuring.

Slobodan Lalovic, Serbian Minister of Labour, Employment and Social Policy, has claimed that sufficient assets have been allocated within the budget to cover pensions, child supplements and other social welfare expenditures. However, Lalovic said, the Government will exclude able-bodied citizens from the welfare programme. He added that more funds will be allocated for active employment policies and old-age citizens would receive half a pension in addition to the 12 monthly payments on account of settling the debt from Milosevic's era. The 7 billion dinars that the Government is to spend on this will come from the 24 billion dinars that has come from privatisation, Dinkic explained.

"Economic policy will hinge on a restrictive monetary policy, a strict fiscal policy and on cutting down the budgetary deficit to

1.4% and public expenditure to 45.5% of the gross domestic product", Dinkic said. "The Government will also limit wage increases in the public sector to 7%, speed up restructuring and privatisation and include the banking sector and public enterprises in this process".

Dinkic is of the opinion that the wage policy will mount the greatest challenge to the Government, as it has never been used as an instrument of economic policy since the process of transition began in Serbia. The finance minister pointed to the fact that wage increases were based on rising prices in the service sector and not on higher productivity. Therefore, he noted, they had a major impact on the increase of prices and the foreign trade deficit, which could reach 6 billion dollars at the end of this year.

The finance minister also announced that public companies would be privatised after being downsized by separating sideline operations from their main activity. He said, however, that there was little chance that key public sector enterprises such EPS, NIS, ZTP and JAT would be privatised in 2005, since they all have to be downsized and prepared for the change in ownership structure.

Dinkic stated, somewhat categorically, that "Serbia needs a high rate of economic growth during the next 2 decades and the economic policy has to be devised so as to preserve a balance. Therefore, our biggest problem is not inflation but the foreign trade deficit, which has to be serviced in the long term by higher export revenues and not remittances and loans from abroad. For this to happen our companies need to sharpen their competitive edge, which means that wage policies will be a key component of the entire economic policy."

He continued: "Serbia cannot afford the luxury of allowing wages to increase at a faster rate than productivity, as was the case in the public sector up to this point. Otherwise, the national currency would devalue with serious consequences for the economy.

This is why the economic policy is strict and there is no alternative. If the staggering Serbian economy is to gain momentum, the whole economic policy will have to be implemented harmoniously in all of its points because a 5% annual growth rate cannot rely on subsidies, but rather a solid foundation that calls for structural changes".

Dinkic also said the Serbian economy could not muster an annual inflation rate lower than 7-9% at this point, which is why he is more concerned with the foreign trade deficit. This has urged the Government to launch a major fiscal adjustment programme that will continue into next year with the aim of reducing public expenditure to a reasonable level.

The Government is also looking to boost the privatisation of big loss-running companies following the model implemented in the case of Livnica Kikinda, which was purchased by Cimos from Slovenia after creditors wrote off a large portion of the company's debt.•

Finance Minister Mladjan Dinkic has made assurances that the Government will not topple over the budget. Dinkic insists that the rebuilding of Kostunica's Cabinet was a far greater challenge, since the appointment of new ministers requires an absolute majority in Parliament, while the budget just needs only a relative majority.

CorD | December 2004

61

Visa regulations

Complicated procedures

The ruling of the Serbian Interior Ministry (MUP) that foreigners with temporary residence status in SCG can only obtain exit visas from the police station at which they first declared their residence upon arrival has caused much confusion amongst the international community in the state union because MUP has also said that exit visas can be issued at border crossings, but not to foreigners who have temporary residence status.

By Jasmina Colak, Photo S. Milojkovic

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t is true that the organs responsible for controlling the state's borders do issue visas at border crossings. However, this does not apply in every case, as shown by a recent example which saw a Beta news agency journalist carrying a Bosnian passport turned away from the border and told he could not leave Serbia. When later queried, local police officially stated that the border officer had acted in accordance with regulations contained within the Agreement of Travelling Conditions for citizens of SCG and BiH. According to MUP, under those conditions the journalist in question, who had a residence permit, had to first obtain an exit visa from his district police station and not at the border itself.

If a foreigner has a temporary residence visa granted on the basis of marriage to a citizen of SCG, the cost of a two-way exit visa is around 700 dinars. A 6-multi two-way exit visa is around 1,250 dinars and an unlimited usage two-way one year visa costs just over 2,000 dinars. According to the MUP website, a single

expired. This regulation, she noted, has been valid since 1996.

For those brandishing other travel documents, tourists permits, travelling lists and visas for foreign citizens and persons without citizenship, the cost of the exit visa at the border crossing is 6,500 dinars, the aforementioned exit visa at the border crossing costs 3,600 dinars, a transit visa is 1,800 dinars, a tourist pass at the border crossing costs 3,000 dinars, an exit visa for one entry-exit costs 1,100 dinars, for several entries 2,100, for an unlimited number of entries it costs 4,500 dinars, temporary residence of up to three months costs 6,300 dinars, an extension of the travel list will set you back 850 dinars and a business visa up to one year is priced at 12,600 dinars.

Regulating foreign citizens stay in Serbia & Montenegro The law relating to the movement and stay of foreigners differentiates between exit visas and the way of regulating the temporary stay of foreigners in our country. Granting entry-exit visas, if they are required for certain foreign citizens, represent the possibility of crossing the border into our country in accordance with general and special conditions. Our law, in contrast to that of the Schengen countries, does not predict the "working visa".

All foreign citizens who come to our country for the purpose of employment and certain professional work are obliged to submit a request for temporary residence to the Police Department where their residence has been registered within three days. If they do not do so, they are committing a violation of article 107, paragraph 1, point 2 of the Law of Movement and Residence for Foreigners.

There are several bases upon which foreign citizens can obtain a business/working temporary stay in our country, for instance on the basis of employment, setting up an independent trade or shop, journalistic work, humanitarian work etc.

The MUP website states that those foreign citizens who are investing capital in our country in accordance with the foreign investment regulations, contracts of production co-operation or export-trade business, are able, upon opening these foreign branches and companies (the founder and the director), to obtain a business visa which is issued by the authorised Police

The Law of the Movement and Residence of Foreigners states that any foreigner who comes into our country is obliged to declare residence (temporary address) at the police station closest to their place of residence within 12 hours of entering the country. exit visa costs 3,600 dinars and can be obtained at the border crossing. However, this does not apply to foreigners who have been granted temporary residence.

Dragana Kajganic, spokeswoman for the Belgrade Police Department, explained that the cost of the exit visa is 3,600 dinars, but that it applies to those foreigners who are leaving our country and have a visa that was granted upon arrival and has

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Departments in our country and at Serbia & Montenegro consular and diplomatic missions abroad. A business visa sometimes includes the right to temporary residence in our country.

Granting temporary residence to foreigners is a rather complicated procedure. Thus, for a stay on the basis of employment, the foreigner is obliged to provide a passport, two photographs, a completed number 8 application form with a money order, a registration form (issued by the Police department from the place where the foreigner is registered), an agreement from the authorised branch of the Republic's Bureau for the Work Market and Employment, the work contract agreed with the company and the flat rental contract which has been notarised in court and by the Public Revenue Administration.

Temporary residence on a specific basis is issued for a period of up to one year, and the tax, depending on the length of the temporary stay, is between 610 and 910 dinars. The procedure for approving the temporary stay lasts up to 30 days and temporary residence on the basis of marriage is approved for a period of one year.

The Law of the Movement and Residence of Foreigners states that any foreigner who comes into our country is obliged to declare residence (temporary address) at the police station closest to their place of residence within 12 hours of entering the country. They will then be granted the right to a three-month stay from the date of entry. The account numbers on which payment should be paid also differ depending on the borough.

MUP's website also states that the corresponding tax has to be paid for every new visa. The tax for the new visa and permit for temporary residence does not apply to those foreign citizens who are in Serbia for studying or advanced training purposes such as Serbian Government scholarships as well as the citizens of those countries which have an agreement regarding the abolishment of visas and taxes for temporary stay. The tax for the

All foreign citizens who come to our country for the purpose of employment and certain professional work are obliged to submit a request for temporary residence to the Police Department where their residence has been registered within three days. exit visa does not apply to those foreign citizens who are under the protection of the United Nations High Commission for refugees and do not have passports.

Those foreign citizens who come to Serbia for the reason of offering humanitarian aid through domestic official humanitarian organisations are exempt from paying the tax on this tariff number, apart from taxes under points 15 and 17.

Apart from the aforementioned points, foreign citizens who are married to citizens of SCG pay only 50% of this tax. The taxes from points 6 and 7 of this tariff number do not apply to those foreign citizens who pass through Serbia or come here in an organised way through tourist organisations and tourist agencies.

Approval of temporary residence for foreign citizens - on the basis of marriage To apply for temporary residence on the basis of marriage to a citizen of SCG, together with applications for temporary stay (application 8), the following documents are also required: a valid passport, registration document, two photographs, a marriage certificate issued from the authorised registrar in SCG (not older than 6 months), proof of ability to support oneself (e.g. proof from a company of a permanent job, the position of the company, shop or similar) and proof of paid tax.•

Credit and Debit cards introduced

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ontinental Banka has always paid a lot of attention to its payment card operations.

The Bank is a member of the Visa International organisation and, so far, has been issuing a wide range of Visa debit cards to its corporate and retail clients. The Visa Electron card has been issued, free of charge, to all existing and new current account holders as a default product.

Moreover, the Bank introduced the Visa Electron Start Card - a standard Visa Electron programme which is branded and marketed to appeal to 15-to-26 year olds. Apart from that, the Bank has been issuing Visa Classic and Visa Business cards since 2002.

The latest Visa card issued by Continental Banka is the Visa Credo card. It is the first credit card that the Bank offers to its retail clients. It is important to point out that both the Bank's clients and the clients of other banks in Serbia can apply for Visa Credo.

The Bank, together with the Visa International organisation, moved up a gear to help educate clients and make them more familiar with cashless payments. They organised a promotional campaign "Visa and Continental Banka are taking you on an unforgettable trip to London" (ending 15.12.2004). All Visa card holders of Continental Banka can enter the promotion solely by paying their bills with any of the Bank's Visa cards. Lucky winners will travel to London on a four day trip in January 2005. The aim of the campaign is to see a steep change in the proportion of POS transactions.•

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Delegation visits the U.S.

O

fficials of U.S. Steel - Serbia's Economic Development Centre (EDC) were joined by representatives of the Serbian Government and industrial

sector on a week-long visit to the U.S. in mid-November. The objective of the visit was to promote foreign investments in Serbia and the delegation performed a series of 'road-show' presentations at investor roundtables held in New York, Cleveland and Chicago.

John P. Surma, president and executive director of U.S. Steel, invited investors from over 200 North American companies to participate in the roundtables and familiarize themselves with the potential for investing in Serbia.

Describing the market of South-East Europe as a "market with magnificent economic development ahead of it", Surma said that Serbia was now a good place to do business. In his letter to potential investors, Surma wrote: "The Government is friendly disposed and cooperative.

People are skilful and hardworking. Our capital investments will enable us to participate in the development of Serbia and in the trade potential of the region".

Thomas Kelly, general director of U.S. Steel - Serbia, said that the 'Road Show' team would maintain "realistic business-tobusiness presentations".

DAIMLERCHRYSLER

Deals for Diplomats Mercedes-Benz is offering "better conditions" for diplomatic missions and individual diplomats who purchase the Mercedes S-Class. According to the company's sales and marketing director, Sanja Uzelac, "Considering diplomats have made a magnificent contribution to sales figures of Daimler-Chrysler vehicles, we are determined to offer them better conditions for purchasing Mercedes - S - class cars in the New Year". Mercedes-Benz currently offers global-standard conditions.

According to Uzelac "‌diplomatic missions can purchase vehicles under the same conditions as in any other country in which our company has a business. Apart from that, the sister company in SCG helps them with regard to bringing cars into the country and customs procedures which, even though they are not subject to custom taxes, they have to go through."

Exact details of the improved conditions have yet to be released.

DaimlerChrylser - SCG has also announced that it has sold a total of 500 Vito and Sprinter vehicles in SCG over the course of 2004..•

ATLAS BANK

Atlas Pils sponsors topflight basketball Atlas Group became the new sponsor of SCG's top basketball league on 9th November. The sponsorship contract was signed by Atlas Group President, Dusko Knezevic, and Direct Media Director, Jadranka Drinic. From that moment this competition received the official name 'the Atlas Pils YUBA Leauge', after the new brand of the Atlas Group, which is now the major owner of the Valjevo Brewery. Secretary General of the Basketball Association of Serbia and Montenegro (KS SCG), Predrag Bojic, and the YUBA first division's commissioner, Slobodan Jelic, were present at the festive signing of the contract; as were numerous representatives of the clubs and the media.

USCE BUSINESS CENTRE

Usce in the heart of Belgrade

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he revamped Usce Business Centre - the most striking building on the Balkan Peninsula - is gradually acquiring its completely new look. From the 'untouchable' edifice of the unpopular Communist Party Central Committee, to the crumbling ruins following NATO's bombing, to a modern iconic structure that dominates the riverside skyline and is set to become one of the centres of Belgrade's new-look business community.

With raised floors and lowered ceilings, top-quality materials, multi-functional halls on the 24th and 25th floors; internal and external parking facilities, round-the-clock security, closed-circuit video supervision and other technical innovations, Usce is about to become the first 'A' category building in Belgrade. With an excellent location and towering at a height of 105 metres, Usce stands out from other new buildings in the city. Surrounded by parkland and with spectacular views of the entire city, Usce is just two minutes from the city centre and ten minutes from Belgrade's Surcin Airport. The building also boasts quick, direct links to motorways linking Belgrade to Vienna and Budapest, which ensures it is easily accessible even at peak time rush hours.

From the lobby upwards, Usce Business Centre creates an impression of uniqueness and accessibility. The glass façade is made of 'Stopray' glass, which was awarded in its category for its excellent characteristics of light reflection without glare and because it

The business philosophy of connecting Atlas Group to sport is not only an effective marketing move, but also has a much wider social significance. The company interest is to preserve basketball as one of the best national brands. Therefore, Atlas is invest-

According to Dusko Knezevic, "We wish to affirm our league, which is jeopardised by regional and other interests. We hope that this business move, made by the Atlas Group, will meet the concrete support of other domestic companies, which will -

ing considerable resources in sport and the Atlas Pils YUBA league project, which gathers 14 clubs, is only part of that policy.

through sponsoring basketball - contribute to our having, once again, one of the strongest leagues in Europe". •

is highly soundproof and insulated.

The open-space concept and the development investor's motto "the business space to suit your company", enables leaseholders to rent exactly as much business space as they need. Under-floor panels with six telecommunication connections and six electricity outlets are located dispersed throughout the entire building, 10m2 apart.

The 24th floor boasts four conference halls with capacities ranging from 25 to 75 persons. The 25th floor includes a specialised, multi-functional hall with a nine-metre-high ceiling. This hall can accommodate large conferences, business receptions, video presentations and even fashion shows and concerts. This space at the top of the Usce will certainly be an important location for cultural and social life in Belgrade.•

Expansion a reality

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ontinuing their business policies, EFG EUROBANK BELGRADE, which is directed towards expansion and development of a comprehensive network of offices within a year, has opened 11 new branches throughout SCG. The latest EUROBANK facility to be opened is within the Polyclinic Clinical Centre of Belgrade and was officially opened on 29th

November. The opening ceremony was attended by important heads of the Clinical Centre, representatives of the Serbian Health Ministry and officials of EFG BANK.The office was officially opened by General director of EFG EUROBANK Dr. George E. Lychnos, and funds to the value of €150,000 were donated to aid completion of the Caesarean-Section room of the Institute for Gynaecology and the Midwifery Clinical Centre. This donation is of great importance to the Clinical centre and babies who will be born in the future in new and modern equipped rooms.•

CorD | December 2004

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Absolute No.1 in SCG

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ccording to official data published by the National Bank of Serbia, Raiffeisen Bank is the absolute number one operator on the Serbian market, in terms of total assets, loan portfolio, volume of deposits and profit among all banks operating in the country.

After only three years operating on the Serbian market, Raiffeisenbank a.d, Belgrade, has outperformed all banks on the local market by its total assets. The total assets of Raiffeisenbank presently amount to €802million, which exceeds the total assets of the second best bank in the list, Delta Banka, by €130million and third-ranked Komercijalna banka by as much as €200million. Compared to other foreign-owned banks, Raiffeisenbank's total assets are €500million greater than those of leading rival Societe Generale Bank.

Raiffeisenbank has granted loans to large and mid-sized companies, small firms, entrepreneurs and private individuals on the amount of more than €521million,

AdBlue expansion plans unveiled

Central Europe's leading oil and gas group, OMV, is accelerating the capability of its 1,784 filling stations in twelve countries to dispense AdBlue, a nitrogen-oxide reduction agent that enables the reduction of particulate emissions of trucks by 80% and nitrous-oxide emissions by a third and fuel consumption by up to 7%.. Following the opening of the world's first AdBlue filling

station in 2003, expansion to 67 stations by the end of 2007 is planned. As the precursor in Europe, OMV is putting the necessary AdBlue infrastructure in place for trucks with SCR (selec-

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CorD | December 2004

which is €180million more than second placed Delta Banka. By the volume of collected deposits, Raiffeisenbank, with €718million, is also far ahead of all other commercial banks in the country.

These leading positions by the criteria of total assets, volume of granted loans, collected deposits and earned profit, make Raiffeisenbank a.d. Belgrade the absolute Number one bank in the local

tive catalytic reduction) technology that will be available on a standard basis from the end of 2004. By so doing, OMV will ensure reliable coverage of the growing demand for AdBlue and make a significant contribution to environmental protection.

In March 2003 OMV opened the world's first AdBlue filling station in the Bavarian town of Dingolfing. This was the catalyst for the adaptation of its filling stations to enable them to dispense urea. The goal is to set up a comprehensive infrastructure and to provide a reliable supply of OMV AdBlue for transit traffic in Central Europe. The very first will be the OMV AdBlue station in Vomp on the A 12 expressway in the Inn Valley in Austria. On 15th October the first German AdBlue Autobahn filling station will be officially opened at the A6 / A7 expressway interchange in Schnelldorf, Bavaria. By 2007 there will be six AdBlue filling stations in southern Germany and 14 in Austria.

Thirteen stations are planned in Hungary and 10 in the Czech Republic.

Along with further stations in Bulgaria, Croatia, Italy, Romania, Slovakia, Slovenia and SCG.•

banking industry. In recognition of its successful business results to date, the Bank has already won a number of local and international awards from wellreputed institutions such as the Association of Serbian Banks and the Ministry of Finance, and also from prestigious international financial magazines Euromoney, The Banker, Finance Central Europe and Global Finance.•

FRESH&CO Next - The World’s best juice!

NEXT has once again been confirmed as the best juice in the world! After receiving many global awards for the quality of NEXT juices and designs of packaging, which included the EUROMARKET 2003 Award for the best agriculture company in the region and the best fruit juice; the award of Swedish magazine 'Magazine Fitness' for the best NEXT Premium juice from peach and strawberry, award FVF (General Inspectorate for Consumer Protection) for NEXT Multivitamin, SHINE AWARD for the best bottle in the world, NEXT Raspberry received the WORLD JUICE AWARD at the World Juice Conference in Amsterdam. NEXT is the absolute leader on the regional fruit juice market and is drunk in 30 countries worldwide.

This year NEXT has been promoted at several leading world food and drink fairs (SIAL-Paris, BARSHOW-London, FANCY FOOD SHOW-New York, EXPO EAST 2004-Washington, CONVENIENCE RETAILING SHOW- Birmingham). The highest qualities of NEXT juices were recognised and acknowledged at all of these fairs.•

Regional affairs

Neighbourly co-operation

Predrag Bogosavljev, Managing Director of EURO 2005

By Zoran Popovic & Mark Pullen

On the fundamental basis of logical shared interests, the basketball associations of Serbia & Montenegro, Croatia, Slovenia and Bosnia & Herzegovina came across the notion of putting aside their myriad differences and jointly applying to host the 2010 World Basketball Championships. According to Predrag Bogosavljev, former Secretary-General of the Serbia & Montenegro Basketball Association (KS SCG) and Managing Director of EURO 2005, "when an idea is good, there are worthy sporting reasons and the business is profitable, it becomes easier for politicians to make the decision and all of that combined is their success".

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CorD | December 2004

P

redrag Bogosavljev, Managing Director of EP 2005 - the company responsible for organising basketball's European Championships to take place in Serbia next year, Said about the notion of a 2010 World Championships that would involve all the states of the former Yugoslavia, with the exception of Macedonia: "This story started recently at a meeting of the presidents and secretary generals of the basketball associations of the four states. We quickly agreed and informed the International Basketball Association about our intentions".

The basketball officials knew that their agreement was only the first step in the realisation of this ambitious project. They knew that they needed the guaranteed approval of the Governments of the four countries, which placed the whole issue in the sphere of politics. Considering the recent past, this was expected to provide a veritable mountain of obstacles.

However, Bogosavljev explains, "we received agreement in principle soon after, but all of the interested sides still did not confirm it. The fastest to react were Serbia & Montenegro and Slovenia. However, everything has to be completed and delivered to FIBA, which is organising the official presentations of all candidates on 5th December. It is well known that rival bids are coming from France and Turkey, which also have their merits".

With the state union and the EU member on board, only BiH and Croatia were yet to decide whether or not they would agree to the bid. According to Bogosavljev "There is no problem with BiH, but Croatia has said they would like at least one semi final game to take place in Zagreb. However, according to FIBA regulations they do not fulfil the conditions because of the incomplete infrastructure, i.e. they do not have an appropriate stadium. For us it is much easier because we have the Belgrade Arena and Spens in Novi Sad. I do understand the people in Croatia, but the mutual interest will, I am convinced, prove decisive.

"In such situations everything becomes political and assessments are often very delicate. You need to think quickly in order to make quick decisions. We did not have any problems from that point of view. Serbian President Boris Tadic gave us his immediate support and became personally involved in making

"Everybody involved in this project recognises their interests. We are all interested in success and all parties will equally participate in the decision-making process and the financing. What we are promoting is mutual activities in sport, business and politics, which is a positive. If we prove successful with this formula, this could provide the foundation upon which we can work on future mutual projects." contacts with our neighbours to present this project in detail.

The Prime minister, Vojislav Kostunica, also supported us, as did other political structures".

The Balkan initiative was embraced globally, though many people - aware of the burden of recent history - were more than a little shocked by the proposal. Yet, with sport again acting as the great weapon of diplomacy, the degree of shock was somewhat lessened. This was, after all, not the first time reconciliations and the bridging of seemingly vast differences had been made in sport: the Germans became a united national squad, as did the Koreans and, in the rugby codes, the Republic of Ireland and Northern Ireland compete as one nation; Japan and Korea have jointly hosted the world's biggest sporting event - the Football World Cup‌However, none of these examples has been quite so ambitious as the notion that four republics of a former joint state that imploded so acrimoniously, and with such blood-

Bora Stankovic IOC member and Predrag Bogosavljev Candidacy confirmed

Since speaking to Mr. Bogosavljev, CorD has learnt that all four countries have given final approval for the project and, as such, the joint candidacy will definitely go ahead.

The prime ministers of Serbia, Montenegro, Croatia, Slovenia and Bosnia & Herzegovina have all given their formal backing to this plan, which represents the first fully joint project since the collapse of the former Yugoslavia.

By being the first to break the barriers constructed over the past 15 years, through the medium of sport and with the promise of business gains, basketball has proved itself to be the ultimate medium of reconciliation.

Regardless of whether or not the bid should prove successful, the very fact that these states of the former Yugoslavia have taken the bold decision to work in unison to plan and carry out an event of this magnitude is a sign to the world that the Balkan neighbours are willing and able to put aside their differences and move forward together to realise joint interests.

CorD | December 2004

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Regional affairs and politics, which is a positive. If we prove successful with this formula, this could provide the foundation upon which we can work on future mutual projects."

Bogosavljev insists that the basketball candidacy project has nothing to do with notions of rekindling the “former Yugoslavia” or terms such as “Yugo-nostalgia” or “brotherhood and unity” among the former joint state republics, which were popular some years ago.

“This is strictly business,” he said. “It’s all about mutual benefits and interest. Anybody who feels they do not have a reason to be involved in this project should pull out and that’s that.

"In such situations everything becomes political and assessments are often very delicate. You need to think quickly in order to make quick decisions. We did not have any problems from that point of view.

Serbian President Boris Tadic gave us his immediate support and became personally involved in making contacts with our neighbours to present this project in detail. The Prime minister, Vojislav Kostunica, also supported us, as did other political structures".

“If we were working that way before, we would never have experienced the wars and all other tragic moments in our recent history.”

He added: “I would be very proud if the sport of basketball proves to be the first to re-unite the whole region with a unique project beneficial to all. But this would not be the first time that sport has broken barriers.”•

Basketball diplomacy: Predrag Bogosavljev shed, could combine forces to stage a global sporting event after such a short space of time.

What represents the mutual interests of the four Balkan countries in this particular case?

"As regards the sport, I suppose it is unnecessary to say anything because it is obvious. To what extent that is the political interest depends on the politicians' skills as to whether and how they will explain to the world that in regional relations these countries can co-operate. Mutual interests can also be found in business and experience shows us that business interests are huge in such events…

"We predict that at least a hundred countries from all around the world will purchase the broadcasting rights. The rest is just pure mathematics. At the European Basketball Championships in Sweden, for instance, there were 110,000 so-called overnightstays, which generated income of around €10million…"

According to Bogosavljev, all four countries would equally share the burden of risk and the division of profits and the entire project would be managed by a joint organising company - probably comprising the expertise of EP 2005, complimented by professionals from Croatia, BiH and Slovenia.

Rejecting any resemblance to the Adriatic League, he said: "The Adriatic League is organised without any political support. It is the fruit of personal initiatives. It is simply not for comparison."

"Everybody involved in this project recognises their interests. We are all interested in success and all parties will equally participate in the decision-making process and the financing.

What we are promoting is mutual activities in sport, business

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Interview

Writing through life

Dragan Velikic, author

Dragan Velikic writes in his latest novel, the as-yetunpublished Ruski Prozor [Russian Window] "I was born in the wrong place. It is not a myth that it is always better somewhere else: that is simply the truth. That can be felt as intuition. I have always felt in the wrong place and because of that I have lived without local colour. I was my own surroundings, I lived like that. I grew up like I was in some other place, thus the short circuit happened".

D

ragan Velikic is the author of eight novels, most of which have been published by publishing house Stubovi Kultura. He is the most translated Serbian author in Germany and his novels are growing increasingly popular in Spain, France, Hungary, Poland and elsewhere. His first novel, the Via Pula, won him the coveted Milos Crnjanski Award and he has since written successful novels including the Astragan, the Hamsin, Severni Zid [North Wall], Danteov Trg [Dante's Square] and Slucaj Bremen [the Bremen Case]. He has also written a series of short stories, including Pogresan pokret [The Wrong Move] and Staklena basta [The Greenhouse], and essays such as Yu-tlantida, Deponija and Stanje stvari.

How are you influenced by the fact that you are the most translated living Serbian writer in Germany?

There is a great interest in Serbian literature in Germany as a consequence of the long standing practice of translating and publishing Serbian writers: from Andric and Bulatovic, through Kis, Tisma and Bora Cosic, to David Albahari, Svetlana Velmar Jankovic and myself. My books have been published and distributed in Germany for the past 15 years.

The fact that I am the "most translated" is inconsequential and relative. Reactions offered in the media reviews of popular German newspapers and by eminent literary critics are much more important. As well as, of course, the interest shown by German publishers to publish everything I write.

What is your view on the use of literature as a political tool; for example, in the case of the recently published Radovan Karadzic novel?

That is a general trend. We are not at all specialist in that regards because the difference between literature and phenomena should be made. There are very few real writers and real readers anywhere. They are a sect. And I do not see the reason why it should be any different in the "fast food" world. Every book fair has its assortment of bound "burgers". Imagine if

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Gogolj were alive and his publisher demanded a new book from him every five years? The books that had to be written were compiled in factories and small workshops.

You described your book Domashevski Dossier as the most autobiographical you have written because you described yourself in the characters. Do you still feel that way?

That was more a reference to the atmosphere than the actual details. In time, you understand that imagination is something like a childhood illness: once you have had it, it does not come back. In the meantime, the quantity of experienced life is distrib-

"‌I am afraid that our social moment is a negative endlessness; that we are a train on a dead end track, and that the "southern track" determines the rhythm of our voyage to the West." uted in a unique way. You become the owner of some cities in which you have lived or merely passed through. Of course, in those cities lived some women who you knew, loved or just saw while passing through. The writer has this advantage of making a reality from the possible life.

What is, then, the Russian Window going to be?

It will be my most personal book because that process of "relaxation" which started in Domashevski Dossier is fully accomplished in this work. I believe that this will remain the case to the end. When I write I only have the smell of the book and some windows. I do not exaggerate when I say that once you establish the tone, the book writes itself.

Do you still write three novels in one by intertwining them simultaneously? Briefly, what is the basic flow of the first,

BELGRADE what of the second and what of the third part?

In the subtitle there is an entry "the novel omnibus". Those are more like three entities than three novels. While the first part is a monologue, the second is the real adventure novel and the third is, in fact, a cruise on an imagined sea.

Finally, in this novel I will elaborate the subject of trains, since the locomotive carriage is the ideal territory for the main character, and it is not at all accidental that there is also a circus.

In a way those are all spaces which move.

In Domashevski Dossier the main character is defined both by what he built and what he did not. How are the characters defined in The Russian Window?

There are no historic characters in The Russian Window, which is not to say that they are purely figments of my imagination. On

"There are very few real writers and real readers anywhere. They are a sect. And I do not see the reason why it should be any different in the "fast food" world. Every book fair has its assortment of bound "burgers". the contrary, for the first time I have real people as my characters.

Some characters differ from their realities doubles in name only.

If it were possible, would you change some of the passages in your earlier novels?

In my first and second novels, the Via Pula and the Astragan, I would not change a single word. However, I would make some changes in the North Wall and one day, when the new edition of that novel comes, it will be a final version of that book. I do not have any intention of changing the others.

SMOKE FROM THE WHITE CITY

By Hana Gadomski I have been asked by many people where I went on holiday this summer, to which I replied "Belgrade, in Serbia". With obvious shock they queried: "you passed your holidays there; in the 'bombed city'?"

I must say that this nickname sounded good to me, at least a while ago before I decided to visit Belgrade; when I saw the burning Usce tower on the television and scenes depicting U.S. jets flying above the city in displays of their mastery of the sky.

That skyscraper was one of the first things I saw upon leaving the airport. Its flanks still blackened as if smouldering with the rage of a wounded giant, this dreadful edifice that the media and information services had made the symbol of the city. Even street stalls and souvenir shops are adorned with postcards depicting this awful cement monster burning in all its splendour in the midday sun or under the lights of a darkened sky.

Nowadays it burns no more, yet still it stands: dead and useless but to those selling postcards or as a landmark to stand in the background of visitors' photographs as proof that they were there.

"The Americans weren't able to knock it down completely. That, at least, would have been a favour", says Tanja sarcastically.

Before I came here I asked myself many times, when seeing pictures of the famous old city, 'is this really Belgrade?' and even now I still ask myself the same question, despite having found my answer.

What about in life; would you change anything?

In life, there a lot of things that could be changed but sadly, or luckily, it is impossible to have a second edition of the first marriage, or the third expanded edition of the second one.

Writing is a little bit like a revision of experienced life, thus, in that sense, the writer has the privilege of amending.

It is known that your novels have dedications. To whom will you dedicate the Russian Window?

Not all of my novels have dedication, for example the Via Pula did not. However, since I am superstitious I believe that a novel without a dedication could be, by the symmetry law, the last one.

But, if I have the intention of writing short stories after this novel, and later some sort of genetically modified memoirs, the dedication will not be essential. Of course, none of my dedications are just an accidental gesture, but rather a deeply personal thing. This is because the dedications are also part of the biography.

How do you see the social realities of live here at the moment?

I regularly write a column for NIN magazine on this subject.

We cannot choose the time in which we live nor, quite often, the place. I would prefer to live like the hero of my latest novel in a train carriage, but I don't think, for a writer, living circumstances crucially determine the measure of satisfaction and success in creating his literary world. I believe that with my magazine column I manage to make some of my readers laugh and to make their day nicer in the same way some texts cheer me up when I read them. That is no negligible thing. Yet I am afraid that our social moment is a negative endlessness; that we are a train on a dead end track, and that the "southern track" determines the rhythm of our voyage to the West.•

I have what I have seen in my mind - through New Belgrade's Gate of human shields and the stupid symbol of the bombed tower that still, as a peculiar common tic, makes people look up as if watching the aeroplanes you can no longer see.

My memory moves forward and I see, up on the hill, the old city; the real Belgrade. When one steps onto Knez Mihajlova - the spine dividing the city and flowing down to the Danube and Sava rivers, which encircle the city from different directions, marry here and together head down to the Black Sea. Perhaps the view is at its best early in the morning, when the thick fog shrouds all in mystery. Or perhaps night is the best time, with the greens, reds and blues of the lights illuminate the riverside barge bars packed with young revellers, who live life to the full in spite of the fact that those who have never been here and have only seen the city on television, or received one of those postcards, imagine them to be desperate.

There is a strong sense of liveliness here. The people stroll the old streets, meet friends for a drink; couples cuddle in the parks, eating ice cream and joking with one another. How strange it is for me to see such normality!

All this life, despite what you can imagine and what the media has shown you; all this of a nation that has been shaped by tragedy. History has been cruel to her for a long time. As wrong as erroneous decisions and as heavy as the will to forget that the nation possesses, these people are able to bounce back, despite the humiliations, and grow stronger and more tenacious every time. This is how I will remember Belgrade, the White City, as the Turks said when they saw her shine at dawn.• CorD | December 2004

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Interview

Marija Karan, Actress

By Zeljko Jovanovic

Responsibility

required The classic 1960s film and play 'The Graduate' was performed daily at the Belgrade Drama Theatre thoughout August and early September this year. With something of a trailblazer-style organisation: a vigorous media campaign followed by ticket sales while the play was still in pre-production, the show proved a hit with a domestic cast of international calibre: Snezana Bogdanovic, fresh off the plane from the U.S. and starring as the pernicious Mrs. Robinson, Goran Kicic as the confused Benjamin Braddock, Svetislav "Bule" Goncic as Papa Braddock and with Marija Karan enlivening the role of innocent victim Elaine Robinson. Supporting roles were performed by Cvijeta Mesic, Tihomir Stanic, Irena Sarovic and Rade Markovic Jr, under the direction of Alisa Stojanovic.

M

arija Karan, an up-and-coming undergraduate of Belgrade's Faculty of Dramatic Arts, spoke exclusively to CorD about her first professional theatre role. "I know this is not what people are used to, but this is how I imagined acting in the theatre whould look. It was peculiar to rehearse every day at a fast pace and then perform 30 nights in a row, but I would like to see our theatre work this way in general. This means that everyone takes the same amount of responsibility, while the date of the premiere and the cast are set well in advance. Moreover,

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CorD | December 2004

the whole point of this production strategy is to see that every one who is taking part in the project feels satisfied, and encouraged to cultivate the play and exert best efforts. In that way we were all inspired to produce our best performances".

Who is Elaine Robinson, the young character you play on the stage?

Elaine Robinson is a clever but fragile young girl with a soft spot for people who have a wealth of life experience. All her the-

ories on life dissolve the instant she meets such a person.

Although she is young and inexperienced, living in an environment that inhibits her, she still has a tendency to react and is not, in my opinion, an inert character. I feel that she is on the same wavelength as Benjamin and, despite what happens between them, I think they are on the road.

The play was announced as a remake of the sixties' classic. From you perspective, what do you know about these distant days?

The play we have put on stage is quite different from the movie that I have naturally seen and like a lot. I have watched other contemporary films, listened to some music and that's about it. You could say that I don't know much about this period, but I can understand it in a way.

Aside from performing in this play, you recently had another feature role in the movie "Jesen stize, dunjo moja" (Autumn is coming, my quince) directed by Ljubisa Samardzic, which was based even further in the past?

The plot of this movie begins in 1914 and lasts until the end of World War I. It was wonderful to be a part of this creation. At the same time I had a part in the movie "Kad porastem bicu kengur" (When I Grow Up I'll Be a Kangaroo) and it was quite interesting and inspiring to travel every day back and forth from one time to another. Perhaps people take up acting precisely because it lets them travel though time and, in an indirect way, experience the past and the future. In this movie - a melodrama about the love of two young people - I played the role of a girl that personifies purity and simplicity, a woman that passes the principle of purity onto her children. The role is pure white, a symbol, which is why it was hard to bring it to life and give her a concrete face.

The present is characterised by fierce competition. What kind of arguments do you have to confront present day reality?

I would like to see this kind of production and positive competition encouraged in the theatre. I have already had my professional debut, despite still being a student at the Academy. There is a lot of work, but I socialize with actors who are without professional engagement. It is hard to describe how awful it feels to be an actor without work. Fortunately or not for our theatre, this

"For the time being I'm trying to turn in my best performance and make the most of the chances I get. I try to focus only on my roles and have hired a manager to negotiate contracts, since I'm not very good at that myself." is something that will become everyday reality. Whatever the case, acting is my destiny and my life.

Do actors who are still at the Academy and your senior colleagues associate to create independent projects?

Personally, I'm not planning something like that in the near future because I already have professional engagement.

However, the idea is not unappealing and some day I might venture into this kind of thing. For the time being I'm trying to turn in my best performance and make the most of the chances I get.

I try to focus only on my roles and have hired a manager to negotiate contracts, since I'm not very good at that myself.•

Karan befitting of her “pure white role�

CorD | December 2004

77

The arts

Usce's world of art The Usce museum. Inset: Dejan Sretenovic

By R. Buncic, Photo Mirjana Kotlaja

T

hroughout its existence, curators of the Usce museum have maintained solid links with other world museums of art and many excellent and groundbreaking exhibitions have been held at the riverside venue. An Ivo Cline exhibition was held in 1972 when the acclaimed painter was still a relative unknown artist in France. Other exhibitions have included the work of Holland's Cobra Group, Bauhaus, Zurich's Dada, the Blue Riders and Robert Smithson.

After the collapse of the former Yugoslavia, the museum began to move away from works of the break-away republics. However, current curator of the museum, Dejan Sretenovic, and director Branislav Andjelkovic have attempted to reinstate the Yugoslav spirit to the museum since their joint appointments in 2001.

Sretenovic and Andjelkovic, who are both former employees of the Centre for Contemporary Art, which operated under the umbrella of the Soros Foundation, had a mountain to climb when they took over the Usce. According to Sretenovic, his pred-

The Museum of Contemporary art on Usce (the confluence of the Danube and Sava rivers) was first founded and began displaying works of art in 1958, though it was not formally opened until 20th October 1965. It began life as a modern gallery, but was later transformed into a museum. Miodrag Protic, founder and first director of the museum, saw the gallery as a national institution of Yugoslavia and, as such, he was keen to display contemporary works of art from all corners of the then Yugoslavia. To this day the Usce museum contains the most comprehensive collection of Yugoslav art of any institution on the territory of the former Yugoslavia. an appropriate staff and devising a new policy programme, replacing artworks and rebuilding links with the European and global network of art museums and galleries. The most important task for Sretenovic and Andjlekovic was enticing the general public to take an interest in the museum again by re-marketing this institution, which had gained a reputation as being unworthy of touring during the '90s. To this end, the management duo organised some 22 exhibitions under the banner of the Usce last year alone. Some were staged in the museum itself, while others were touring exhibitions around Serbia.

Sretenovic explained: "The basic orientation of the programme is to highlight the best of Yugoslav and Serbian art from the 20th century through collections, studies and retrospective exhibitions of prominent artists of the time. We are also planning to organise international exhibitions, which would either be initiated by our museum or in co-operation with other institutions.

"Our idea is to represent the wide field of visual arts. This means not only painting and sculpture, but also all new trends such as video, new media and design. We have opened our space up to alternative artistic forms, performances and theatre projects. We also have excellent co-operation with people who organise concerts of electronic music."

He continued: "In this way we are realising a notion of dual usage of the space: on the one side its museum part, which is used to protect, collect and preserve artistic works; on the other side it is a space open to alternative forms of contemporary artistic expression".

Sretenovic insisted that this approach was encouraging their key target audience - young people - to return to the museum. He

The new management team began the task of rebuilding what had been lost during the war years. They set about hiring an appropriate staff and devising a new policy programme, replacing artworks and rebuilding links with the European and global network of art museums and galleries. ecessor - who ran the museum between 1993 and 2000 - was a classic case of "the wrong man in the wrong place". He neglected the museum and the principles upon which it was founded and the works became of a parochial nature.

The new management team began the task of rebuilding what had been lost during the war years. They set about hiring

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CorD | December 2004

added that the recently established kids' club is also a major contributory factor. Kids' club events are currently being staged bi-annually and include the combining of an art workshop and educational presentations using visual art and pieces from the museum’s collections. Sadly, organisers have had to limit the number of youngsters attending the club, which has proved to be in high demand. Sretenovic said that working with children was extremely difficult, but very rewarding.

The museum curator noted that special emphasis was placed on Serbian and Yugoslav art, but that co-operation with foreign partners - particularly the domestically-based Goethe Institute, Italian Institute and British Council - had been re-established.

Sretenovic said: "a very important event for Belgrade took place this autumn when an exhibition of Amsterdam's Stedelik Musuam was held. The Stedelik is one of the world's most important contemporary art institutions and the exhibition presented works of around sixty artists, which were created between 1950 and 2000. This international exhibition will remain open until 15th December."

Sretanovic stressed that three months was a long time to run such an event, but the decision had been made because it was considered an exhibition of regional character: "many art lovers will come to Belgrade to see this exhibition because it is much cheaper than to go to Amsterdam‌visitors will have the opportunity to see Asger Jorn, Donald Judd, Bruce Nauman, Robert Mapplethorpe, Haim Steinbach, Jan Dibbets, Richard Deacon, Gilbert & George, and many others."

He continued: "I can say that those who are familiar with contemporary art will certainly be able to find important artists and their work at this exhibition. I think that this exhibition is principally educational, especially for the young generations who grew up in those sad nineties and did not have the chance to travel and see world exhibitions, or become familiar with contemporary art."

The exhibition has been in the works for three years because it has taken so long to meet the criteria and conditions required by such a large world museum as the Stedelik. However, Sretenovic said, the work continued despite setbacks because the exhibition is crucial to the institution as it looks to the future.

Plans for next year's comprehensive programme are already well developed. Exhibitions of new local art and Scandinavian works are planned to commence in February; exhibitions of the life works of Ivan Tabakovic and Petar Dobrovic are scheduled for April and numerous events to mark the 40th anniversary of the Usce museum's birth are also planned, culminating in the establishing of a new permanent display to be opened on 20th October next year.

After more than a decade in the cultural wilderness, the Museum of Contemporary art on Usce is beginning to return to its rightful position at the forefront of art in Serbia.•

History

America hails proud Yugoslavs

By Petar Mandi, Photo CorD arhive

The U.S. invested great effort in the Balkans, in conjunction with Great Britain, to win over the states of the region in the buildup to the outbreak of war in 1941. Almost all the Balkan nations had been under the cosh of Nazi Germany and the then Kingdom of Yugoslavia saw no way of turning the tide against Hitler's forces.

Demonstration in Belgrade in 27th March 1941

F

eeling helplessly trapped by Nazi forces and Germany's allies, the Kingdom of Yugoslavia capitulated and joined the Axis Powers by signing the Tripartite Pact on 25th March 1941. By so doing, the Yugoslav Government had aligned itself with Hitler and endangered the positions of British troops in Greece. However, the political elite had not counted on the mood of the people. Two days later, on 27th March, anti-government forces launched a military coup d'ĂŠtat with British support and 18-year-old Prince Petar II of Yugoslavia seized power.

The greatest hope of the U.S. and Britain was that internal anti-German or anti-establishment conflicts throughout Eastern Europe would divert the attention of Nazi Germany from their main targets and buy some time. It is widely considered that the main players in the overthrow of Prince Pavle and his Government after the signing of the Tripartite Pact were the British Intelligence services, who used every available means to encourage political forces in Yugoslavia that would oppose Germany. In that search, all those who were ready and able to fight were considered acceptable - even the communists. However, much less is known about how big a role the U.S. had to play in the events unfolding in the Balkans at that time.

Events from 27th March 1941 had almost sensational echoes in the U.S. At the time, American President Roosevelt, who was cruising the Caribbean Sea, sent a telegram of congratulations to newly crowned King Petar - then still a minor - on his ascent to the throne. Acting U.S. Secretary of State, Sumner Wells, held a press conference on the same day and stated "news from Belgrade has been received in the USA with all-pervasive welcome as an accomplishment on which one should congratulate every freedom-lov-

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ing man and woman". The Yugoslav Mission in Washington and Consulates in New York, Chicago and Pittsburgh were inundated with well-wishers and those expressing their admiration for the courage shown by those opposing the capitulators. Radio New York Colombia reported at 6.30pm in French "once again in the history of the Serbian nation, events have been recorded in golden letters, The whole world is today admiring the Yugoslav people.

The USA has today acknowledged that there are people in the Balkans who will not allow themselves to be led by force and intrigues into a direction unattractive to the people. The cities of the USA have long forgotten such enthusiastic manifestations directed towards the Yugoslav nation. The entire American press has published valuable issues speaking only about Yugoslavia".

The very next day, the New York Times wrote that "the Belgrade news was accepted as a flash of lightning casting light on the gloomy end". In its editorial, the paper reminded readers "the European continent has said "yes" to Hitler for five whole years. It is a huge occurrence when a part of that Europe - not a rich, densely populated, or powerful part, but a part full of proud patriotism and with an impregnable soul - says "no". In the East, as well as in the West, Hitler has come face to face with one so tough a nation that

would more likely say "Yes" to death, than to the tyranny.

Expressing our immense admiration for them, we should not forget that their cause is also our own cause. We have an obligation towards this small Balkan nation; an obligation based on trust and on our given word. We must decide to keep that trust and the given word".

That same day, The New York Sun daily wrote in its Editorial: "No one who remembers the fighting spirit of Serbs in the last war will be shocked to hear that they have refused to accept and to recognise the shameful capitulation their Government effected two days ago in Vienna. One can hardly expect that the Yugoslavs could double the military successes of Greece. They must face a completely different enemy and their country does not possess the natural defences Greece had on the Epyr front. But the fact that they were completely aware of what is awaiting them, aware that the blood, sweat and tears that were the destiny of Great Britain, now would become their own fate, represents an inspiring effort to the whole world. Small nations everywhere will gain new courage".

These many sentiments did not fail to affect the staff of the Yugoslav Mission in Washington. General Consul Stanojlovic noted: "Many respectable Americans, true friends of our country and people, have personally, by mail to this Mission and over the phone, congratulated the positive attitude of the Yugoslav people.

Day after day, from dawn 'til dusk, news reporters and other interested parties have come to the Mission to ask for information and the telephone rang all day long. Yugoslav patriots in this country have felt themselves divinely proud, reading in the American newspapers' Editorials and other articles in which Yugoslavs were praised. For the whole week, in the house and on the street, those patriots have, as though in some kind of trance, sung the verses of the Pan-Slavic anthem: "The spirit of our grandfathers is still living" (Those verses that used to be the SFRY anthem are still the anthem of Serbia & Montenegro, although the new Parliament has adopted the decision on the new Serbian anthem, nota bene).

On 27th March 1941 a huge event was organised in New York, prepared by Hollywood artists as a contribution to Greece. Some 7,000 respected New Yorkers attended the event. According to the New York Times, when the festivities commenced the Board Chairman asked the public to stand up and listen to the anthem of the newest and "the most heroic" allies of Great Britain and Greece - the Yugoslavs. "It is difficult to describe the enthusiasm of the public who greeted the anthem of this heroic nation", wrote the New York Times.

One American citizen included in the accounts of Consul Stanojlovic, Professor Newell, sent his message to the Yugoslav people via Radio London. In a broadcast aired on 5th April, he said: "I recollect my thoughts about you when I had the opportunity to see you in your country. Earlier on I had known you through books. When I spoke to your men, I came to know their value.

Today, your spirit returns to the vital reality. We, the Americans, and you, the Yugoslavs, have many things in common. Your nation cannot be demolished. While waiting for a firm decision, you persistently stand so that the whole world can admire you.

America greets you and stretches its hand out to you".

When Germany began its concentrated attack on Belgrade and deeply invaded Yugoslavia, the New York Times published an editorial under the banner "Nazi balance". The article, published on 9th April 1941, noted: "From the Northern Cape to Sicily, from the Bay of Biscay all the way to their army's front in Yugoslavia, their (Nazi) law spreads, publicly undisputed. They have chosen to add to the number of their enemies, Greeks and Yugoslavs, the small nations of embittered fighters that do not think of surrendering... But the seed of their destruction has been planted. The green sprouts will become ripe for harvest. In Dunkirk, in the hills of Greece and Albania, in Libya and Ethiopia, in sea battles, and now also in Yugoslavia, a fire of freedom has been kindled that will never be extinguished".•

Reportage

Hull of a time Nowadays I call Belgrade my home and am reluctant even to consider leaving this wonderful historic and cultural city. However, my own hometown is itself steeped in history, with a strong identity and something of an independent culture.

By Mark Pullen

Hull’s Maritime Museum

K

ingston upon Hull, or simply Hull, is sprawled across the north bank of the River Humber's wide estuary, some ten miles from the East Yorkshire coast. The city, which has a population of around 350,000 (inclusive of satellite towns and villages), is divided into two distinct parts by the River Hull: the industrial East, with its red and white rugby league team, Hull Kingston Rovers, and the affluent West, with its black and white rugby league team, Hull FC. The first settlement on the site of the city, Wyke upon Hull, was founded in the 12th century by Cistercian monks and the city of Kingston upon Hull was born in 1299 when it received a King's Charter from Edward I. The town quickly become a strategic port used to export wool to the continent and launch

Holy Trinity - England’s largest Parism church Central Hull’s Queen’s gardens 82

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recent years a large influx of refugees, mainly Kosovo Albanians and Kurds, has served to change the face of the city, which is again booming. These newcomers are struggling to integrate into a city that is reluctant to accept them and, worryingly, the British National Party has found support in Hull for the first time.

Incidents of street violence are on the increase and, according to local police, youths of the new refugee community have brought a strong knife-wielding gang culture with them.

The city's recent boom began with the floating of Hull's own communications company, Kingston Communications (British Telecom do not operate in Hull). Shares were bought by Hull residents and sold when the firm's stock market flotation rocketed share prices from their original price of Ł2 to Ł17. Hull's city and county council sold up and briefly became the richest local council in the EU. A new stadium was built to house Hull FC and professional football team Hull City; a major bypass was built to ease traffic congestion on the dock roads; The Deep, Britain's first 'submarium' (a subterranean aquarium), was built on the conmilitary assaults against Scotland.

The Port of Hull grew slowly as a result of the continuing wool trade and fishing industry until the city boomed in the 17th and 18th centuries, thanks largely to the whaling industry. Unlike other Yorkshire towns, Hull's industries have always been well diversified - fishing and sea trade, oil-milling, paint making, engineering and pharmaceuticals being the main branches of industry. This ensured that the collapse of the whaling industry and the subsequent diminishing of the fishing industry did not serve to plunge the city into depression.

The people of Hull tend to consider the city as something of a republic and its relative isolation at the end of the road and some 100km from the nearest major city reinforces that notion. However, Hull's 'Kingstonians' are also proud of their Yorkshire identity and the attempt by Margaret Thatcher to re-brand the area of East Yorkshire and North Lincolnshire as the county of Humberside failed almost purely because the people of Hull refused to recognise the new county.

The city is also largely mono-ethnic, with the Chinese community comprising Hull's largest ethnic minority. However, in

The Humber bridge linking East Youkshere and Nort Lincolnshire

Hulls Marina Famous Hullians • William Wilberforce: political figure of the18th-19th centuries.

Wilberforce is accredited with spearheading the abolition of slavery in the UK. • Andrew Marvel: famous metaphysical poet who spent much of his childhood in Hull and served as M.P. for Hull for nearly 20 years in the 17th century.

• James Reckitt, of Chemical and Pharmaceutical company Reckitt & Sons, (now Reckitt-Benkizer).

• Amy Johnson: pioneer of flight. Amy was the first woman to fly solo from the UK to Australia and holds many other aviation records.

• Roland Gift: lead singer of popular '80s pop band the Fine Young Cannibals.

• The House Martins / The Beautiful South: popular music groups.

• John Prescott: current British Deputy Prime Minister.

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Reportage fluence of the Hull and Humber rivers. gymnasiums; the old town's bankHull's many museums were also ing district has seen its classic revamped with the funds. The city's buildings converted into sickly decrepit bus terminal was replaced by wine bars and style-free restaua modern transport interchange and rants; several of the city's disused the port area, which boasts higher docks have been turned into trade figures than ever (thanks largely American-style retail and leisure to the EU integration of Lithuania, parks, complete with multi-screen Latvia and Estonia) and runs super-fercinemas, bowling alleys, gigantic ries daily to Rotterdam and Zeebrugge, leisure centres and themed burger has been gentrified. Despite this, Hull bars. The new town centre, which still has the 5th highest unemploywas all but destroyed during the ment figures in the UK; though times blitz of World War 2 and is subseare undoubtedly changing. quently awash with grotesque but After years of heavy industrial highly functional edifices, is curactivity, Hull is also becoming a rather rently being revamped and many of green city, most notably by the the city's high-rise blocks are being reduced use of cars. Hull has the lowdemolished, despite being less est levels of car ownership in the than 50-years-old. region and some 20% of the workforce The image of Hull is undoubtedcycle to work. This trend followed the ly ambivalent. Despite regularly introduction of cycle lanes throughbeing voted as one of the worst King William of Orange places in Britain to live (usually by out the city, mainly along disused railway and tram lines, and is aided by those who have never been to Hull the fact that Hull is on a flat plain and is sheltered from the or those who left during the disastrous 1970s), it was recently stormy weather of West Yorkshire. voted as one of the country's top 15 tourist destinations in polls Hull's potential as a tourist destination has never been fully run by both the Independent and Guardian newspapers. Hull's realised, though those who scoff at the notion have generally many parks, most of which are classic Victorian open spaces, never been. The narrow streets of the old town are a wonder to provide excellent destinations during the summer months and tour, as are the many attractions of the museum quarter, includthe city's geographical location ensures it has one of the best cliing a maritime museum, Ferens Art Gallery, Wilberforce House mates in the UK. Most foreigners visiting the UK tend to visit - the family home of famous abolitionist William Wilberforce, London and little else. However, London is not really a reflection the transport museum, the Streetlife Museum, the Arctic Corsair of England - just as Belgrade is not really a reflection of Serbia.

Hull may not be the most cosmopolitan of cities, but it is certainly an interesting place and well worth a visit.•

Hull facts • Hull is the third largest seaport in England.

• Hull is the bingo hall capital of Europe.

• Hull is the only city in the UK to boast two professional rugby

league clubs.

• Hull has more parks and open spaces than any other British

city, except London.

• Hull is the only British city within which British Telecom does

Hull fair and the Hull and East Riding Museum of natural history. Hull Marina, with its many bars and restaurants, the old town pub scene and the Beverley Road student quarter are all excellent destinations for a fun night out. The historic town of Beverley, which has all but been consumed by the Hull sprawl, boasts the majestic Beverley Minster cathedral, the foundations of which date back to around 700AD and the nearby east coast is awash with interesting fishing towns and tourist resorts, including Scarborough - the original Victorian seaside resort, Robin Hood's Bay and Whitby - hometown of explorer Captain Cook and famous author of Dracula, Bram Stoker.

Much has changed since the 1980s, when I grew up in Hull, and the city has been subjected to the all-too-familiar process of Americanisation. At one point every housing estate in Hull had its own cinema. Due to the growth of television ownership in the 1960s, these cinemas were converted into bingo halls and Hull became the bingo hall capital of the world. These venues have now been re-branded once again and are mainly bars or trendy

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not operate: the city has its own communications network Kingston Communications.

• Hull's oldest building is the 14th century Holy Trinity Church.

• Hull boasts one of England's oldest naval academies, Trinity House, established in 1369.

• The first overt act of the English civil war occurred in Hull, which then had the largest arsenal in the country.

• The second siege of Hull proved to be the turning point of the Civil War and the beginning of the end for Royalist forces.

• Hull was one of the worst bombed cities in England during the WWII blitz.

• The city's annual fair 'Hull Fair' is the largest travelling fair in Europe.

• The Cod Wars of the 1970s between Britain and Iceland were a result of Hull Trawlers fishing the waters off the island nation.

• Hull's Humber Bridge is one of the longest single-span suspension bridges in the world.

Techno Talk Acer C302XMi www.acer.com

A peach of a 14-inch TFT adorns the C302. It's a pin-sharp chap and does its display business from all sorts of inconceivably acute angles. It's prone to swivel round if you move it suddenly, though, displaying the Scandinavian, special interest site you're currently viewing to the rest of your train carriage. The C320 also flexes Bluetooth, so you're well on your way to wintery wireless wonderland. Connect phones and printers and all sorts of other tech-filled gadget-o-boxes via the gift of shortrange wireless.• Retail price : tbc

Numark CDX www.numark.com Numark's CDX feels like a 'real' deck, thanks to its ultra-high torque direct-drive motor from its top-of-the-range TTX model. A real record sits atop a real platter, any movement of which has a corresponding effect on the CD in the slot loader beneath. And just to make you feel at home, you can change the vinyl you use, so that Barry Manilow LP will still get the airing it deserves.• Retail price : cca € 975

Royal Enfield Bullet Electra X

www.royal-enfield.com The average computer is state-of-the-art for just shy of 10 minutes. Mechanical engineers, on the other hand, have a more 'if it ain't broke, don't fix it'attitude. But even they agreed that the 50's design of the Royal Enfield Bullet-the mechanical equivalent of a 486SX25 was in need of a revamp. Which is precisely what it's just had:new Britishdesigned 5-speed gearbox, 25bhp 500cc engine, forks, disc brake and gas-filled rear dampers. It's also been slightly restyled but still manages to evoke Steve McQueen's steed in The Great Escape.Cool.• Retail price : cca € 5243

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Techno Talk SHARP Aaquos Designer Edition www.sharp.co.uk There are people in this world who would kill to have the lifestyle aesthetics of a flat-screen TV in their living room. Maybe that is not good enough for you.

Perhaps you hanker after something even more individual; even more attention-grabbing. The Designer edition of Sharp's acclaimed LCD TV is available in three finishes, not least of which is this tan leather outfit. Also available are a black oak wood ar a high-gloss black lacquer finish. The 37 inch TVs have a max resolution of 1366x768, and to take advantage of those pixels a variety of connections, including component and PC input, can be found on the external tuner box.• Retail price : cca € 9000

Magellan Explorist 200 'Where I am?'- an immortal line in myriad films, books and plays. But every time Magellan's engineers hear it, it's like someone's calling their mum fat.

So they ‘ve set out to make accurate (to three metres with Magellan's TrueFix technology) GPS systems pocketable and affordable. The sub-12cm, 115g chassis is constructed from waterproof plastic and rubber, and the 200 model squeezes North American or European maps into its diminutive frame.

Cheaper eXplorist 100 and more expensive 300 models are also available.• www.magellangps.com Retail price : cca € 285

Mirage Nanosat

www.miragespeakers.com Fans of Mirage's Imnipolar technology will be pleased to hear that there is a new dinkier appliction, which will allow them to have 360' sound in even the smallest of rooms. While we wouldn't necessarily recommend installing Nanosats in the cloakroom under the stairs, there's a good chance that only these speakers would make the most of it. They even come in a bathroom-friendly white finish, although the platinum or black might be more suitable for those with modern lifestyle toilets.• Retail price : cca € 900

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Techno Talk Pure Digital Evoke - 1XT www.puredigital.com

Here is the perfect solution for those who want to sort Christmas presents early. If the proposed recepient doesn't have a DAB radio, the Evoke is a plug-and-play route to the joys of digital quality broadcasting, station-name searching and extra services. If the proposed recipient already has an evoke , the XT is the upgraded version with a new 3in driver with bass port and improved aesthetics including rounded edges, new finishes and blue LED display. You can also add stereo capability in the form of the XT-1 external speaker as a stocking filler.• www.dell.co.uk

Retail price : cca € 150

The X30 is the first palmtop to boast the second edition of Windows Mobile OS, formerly DELL Pocket PC. Apart from finally enabling more backend grunt, the main new benefit is the ability to flip the screen into landscape orientation.The three models in the X30 range include a non-wireless 312 MHz, a wireless 312 MHz and a range-topping wireless 624 MHz version. It's worth nothing that the lower speed version's architecture actually makes it faster than the current 400 MHz ARM versions. The 624 MHz is the winner, though.

Applications open instantly, and media files handeled with ease. Be wary of comparing clock speeds with Palm OS. Dissapointingly, the X30 doesn't have a VGA screen, despite the new OS support for it. No need to feel insolated: the X30 has both Bluetooth and Wi-Fi. What's more, you can use them simoultaneously, so you can be browsing files on your corporate network and sending them to a Bluetooth printer at the same time .•

Axim X 30

Retail price : cca € 420

Future Spy FSV270 www.futurespy.com For the company that promises to let us 'see what's coming', this LCD screen isn't particularly shocking. Buying a 27-inch LCD for the price of a decent 32-inch CRT is very much a present day dilemma. If you want heads to turn, the decision is simple: do it. The FSV is a study in LCD design: slim, silver, understated. Combine it with attractive AV furniture and tasty 5.1 system and you have yourself a very up-to-date living room. You might want to choose a surround receiver with an S-Video monitor out, as the FSV has no Scart sockets, but apart from that this TV should be a large part of your future.• Retail price : cca € 1950

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Techno Talk Kitchenaid Artisan Espresso Maker www.kitchenaid.com

What could be better than an espresso machine with a built-in constanttemperature boiler? Why, one with two of them, of course! And with a Ferrari-style red finish, no less. One of the boilers is dedicated to heating the espresso itself, while the other handles steam production for milk frothing, should cappucino be your cup of tea(as it were). Both boilers have status gauges, and the cup warmer means you need never drink from a cold vessel again. If red's a little racy for your taste, the Artisan is also available in a more discreet pearl-metalic finish.• Retail price : cca € 1500

LASERPOD www.laserpod.com Out of our boxes on cheap cider one night, we plucked this wee fella from its container and plugged it in. It's a simple but awe-inspiringly attractive illumination station. With domed diffuser in place, the Laserpod works like a kind of hi-tech lava lamp.

Remove the diffuser, though, and the effects are projected onto wall or ceiling with scant regard for architecture. Rise above the riff-raff and Mathmos-lamp everymen with your very own lasery light show.• Retail price : cca € 90

SONY Cybershot DSC-T1

www.sony.co.uk The 5megapixel resolution means top-quality images, and the sliding lens cover/power switch is preatty neat. You get a whopping 2.5in LCD, and the controls are first-rate, with easy navigation through all the various options. The 3x zoom doesn't extend in use, so the camera retains its slim profile even when it's switched on, and the Info-Lithium battery offers a fair amount of juice. It also displays how much operational time is left on the LCD.• Retail price : cca € 1500

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Belgrade Directory

Theatres, Music & Museums

THEATRES • ATELJE 212, Svetogorska 21, tel. 324-7342 • BELGRADE DRAMA THEATRE, Milesevska 64a, tel. 2423-686 • BITEF THEATRE, Skver Mire Trailovic 1, tel. 3220-608 • DADOV, Djure Salaja 6/I, tel. 3243-643 • DAH THEATRE, Humska 12, tel. 2441-680 • ISTER THEATRE, Koste Glavinica 7A, tel. 650-757 • YUGOSLAV DRAMA THEATRE, Kralja Milana 50, tel. 644-447 • KPGT, Radnicka 3, tel. 3055-082, 3055-070 • NATIONAL THEATRE (Opera, Ballet, Theatre Plays), Francuska 3, tel. 620-946 • CHAMBER OPERA MADLENIANUM, Zemun, Glavna 32, tel. 316-25-33 • TERAZIJE THEATRE, Trg Nikole Pasica 3, tel. 3245-677, 410-099 • SCENA RADOVIC, Aberdareva 1, tel. 323-8817 • SLAVIJA THEATRE, Svetog Save 18, tel. 436-995 • THEATRE T, Bulevar kralja Aleksandra 77a, tel. 403-570 • THEATRE BOJAN STUPICA, Kralja Milana 50, tel. 644-447 • THEATRE KULT, Bulevar kralja Aleksandra, 77a, tel. 242-860 • ZVEZDARA THEATRE, Milana Rakica 38, tel. 2419-664 CHILDREN’S THEATRES • BOSKO BUHA, Trg Republike 3, tel. 632-855 • MALO POZORISTE DUSKO RADOVIC, Aberdareva 1, tel. 323-20-72 • POZORISTANCE PUZ, Bozidara Adzije 21, tel. 2449-464 • POZORISTE LUTAKA PINOKIO, Karadjordjeva 9, tel. 2691-715 • THEATRE RODA, Pozeska 83a, tel. 545-260 CINEMAS • AKADEMIJA 28, Nemanjina 28, tel. 3611-645 • BALKAN, Brace Jerkovica 16, tel. 3343-491 • DOM OMLADINE, Makedonska 22, tel. 324-8202 • DOM SINDIKATA, Trg Nikole Pasica 5, tel. 323-4849 • 20. OKTOBAR, Balkanska 2, tel. 687-182 • DVORANA KULTURNOG CENTRA, Kolarceva 6, tel. 2621-174 • FONTANA, Pariske komune 13, tel. 602-397 • JADRAN, Trg Nikole Pasica, tel. 624-057 • JUGOSLAVIJA, Bulevar Mihaila Pupina bb, tel. 2676-484 • KOZARA, Terazije 25, tel. 323-5648 • MALA MORAVA, Spasicev pasaz, tel. 623-198 • MALI ODEON, Kneza Milosa 14-16, tel. 643-280 • MILLENNIUM, Knez Mihailova 19, tel. 2623-365 • MUZEJ KINOTEKE, Kosovska 11, tel. 324-8250 • ODEON, Narodnog fronta 45, tel. 643-355 • PALAS SUMADIJA, Turgenjevljeva 5, tel. 555-465 • RODA, Pozeska 83a, tel. 545-260 • SAVA CENTAR, Milentija Popovica 9, tel. 311-4851 • TUCKWOOD CINEPLEX, Knez Milosa 7, tel. 3229-912 • VUK, Bul. Kralja Aleksandra 77a, tel. 2424-860 • ZVEZDA, Terazije 40, tel. 687-320 CULTURAL CENTRES • BRITISH COUNCIL, Terazije 8, tel. 3023-800 • CENTRE FOR CULTURAL DECONTAMINATION,

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CorD | December 2004

Bircaninova 21, tel. 681-422 • STUDENTSKI GRAD CULTURAL CENTRE, Bulevar AVNOJ-a 179, tel. 2691-422 • BELGRADE YOUTH CENTRE, Makedonska 22, tel. 3220-127 • DOM VOJSKE JUGOSLAVIJE, Brace Jugovica 19, tel. 323-99-71 • FRENCH CULTURAL CENTRE, Zmaj Jovina 11, tel. 3023-600 • GERMAN CULTURAL CENTRE, Knez Mihailova 50, tel. 2622-823 • ITALIAN CULTURAL CENTRE, Njegoseva 47/III, tel. 244-23-12, 444-72-17 • BELGRADE CULTURAL CENTRE, Knez Mihailova 6/1, tel. 621-469 • INTERNATIONAL CULTURAL CENTRE - JUBIN, Terazije 26, tel. 687-836, fax. 687-760 • RUSSIAN CULTURAL CENTRE, Narodnog fronta 33, tel. 642-178, 688-300 • REX, Jevrejska 16, tel. 3284-534 • STUDENTS CULTURAL CENTRE, Kralja Milana 48, tel. 659-277 • FOUNDATION OF ILIJA M. KOLARAC, Studentski trg 5, tel. 630-550 • GUARNERIUS, Dzordza Vasingtona 12, tel. 33-46-807 EXHIBITION GALLERIES • GALLERY OF SERBIAN ACADEMY OF ARTS & SCIENCES, Knez Mihailova 35, tel. 334-2400 • BELGRADE GALLERY, Andricev Venac 12, tel. 323-8789 • BAZALT GALLERY, Lazarevacki drum 7, tel. 553-689 • PAVILJON CVIJETA ZUZORIC, Mali Kalemegdan, tel. 2621-585 • DOMA OMLDINE GALLERY, Makedonska 22, tel. 3248-202, ext. 25 • THE GREAT GALLERY OF STUDENTSKI GRAD, Bulevar AVNOJ-a 179, tel. 2691-442 • GALERIJA FAKULTETA LIKOVNIH UMETNOSTI, Knez Mihailova 53, tel. 635-952 • FRESCO GALLERY, Cara Urosa 20, tel. 2621-491 • GALERIJA GRAFICKOG KOLEKTIVA, Obilicev venac 27, tel. 627-785 • GALERIJA HAOS, Cara Lazara 12, tel. 627-497 • GALERIJA KULTURNOG CENTRA BEOGRADA, Knez Mihailova 6, tel. 2622-926 • JUGOSLOVENSKA GALERIJA UMETNICKIH DELA, Andricev venac 4, tel. 3238-789; Dositejeva 1, tel. 627-135 • GALERIJA-LEGAT MILICE ZORIC I RODOLJUBA COLAKOVICA, Rodoljuba Colakovica 13, tel. 663-173 • GALERIJA-LEGAT PAJE JOVANOVICA, Kralja Milana 21, tel. 3340-176 • GALERIJA-PETRA DOBROVICA, Kralja Petra 36, tel. 2622-163 • SANU GALLERY OF SCIENCE AND TECHNOLOGY, Djure Jaksica 2, tel. 3283-490 • GALERIJA PROGRES, Knez Mihailova 22, tel. 182-626 • GALERIJA PRIRODNJACKOG MUZEJA, Mali Kalemegdan 5, tel. 328-4317 • MUSEUM OF CONTEMPORARY ART, Pariska 14, tel. 630-940 • GALERIJA STARA KAPETANIJA, Zemun, Kej oslobodjenja 8, tel. 612-023 • GALERIJA SULUJ, Terazije 26/II, tel. 685-780 • GALERIJA 73, Pozeska 83a, tel. 557-142 • GALERIJA ULUS, Knez Mihailova 37, tel. 2621-954 • GALLERY OF THE YUGOSLAV ARMY, Brace Jugovica 19, tel. 323-47-12 • GALERIJA ZADUZBINE ILIJE M. KOLARCA, Studentski Trg 5, tel. 185-794 • ZEPTER GALLERY, Kralja Petra I no.32, tel. 328-1414 MUSEUMS CULTURAL&HISTORICAL MUSEUMS: • VUK AND DOSITEJ MUSEUM, Gospodar Jevremova 21, tel. 625-161

• ETNOGRAPHIC MUSEUM- Studentski trg 13, tel. 328-1888 • SERBIAN ORTHODOX CHURCH, Kralja Petra 5, tel. 3282-595 • NATIONAL MUSEUM, Trg Republike 1a, tel. 624-322, 438-886 • MUSEUM OF PEDAGOGY, Uzun Mirkova 14, tel. 627-538 • THE MANSION OF DUCHESS LJUBICA, Kneza Sime Markovica 8, tel. 638-264 • THE MANSION OF DUKE MILOSH, Rakovicki put 2, tel. 660-422 • DJURA JAKSIC HOUSE, Skadarska 34, tel. 324-7334 • MANAK’S HOUSE, Gavrila Principa 5, tel. 633-335 HISTORICAL MUSEUMS: • MILITARY MUSEUM, Kalemegdan, tel. 3344-408 • BELGRADE FORTRESS MUSEUM, Kalemegdan bb, 631-766 • YUGOSLAV HISTORICAL MUSEUM, Trg Nikole Pasica 11, • MUSEUM OF BANJICA’S CAMP, Veljka Lukica-Kurjaka 33, tel. 669-690 • JEWISH HISTORICAL MUSEUM, Kralja Petra 71, tel. 2622-634 • SERBIAN HISTORICAL MUSEUM, Nemanjina 24/VII, tel. 3674-057 MEMORIAL MUSEUMS: • MEMORIAL MUSEUM JOVAN CVIJIC, Jelene Cvetkovic 5, tel. 3223-126 • NIKOLA TESLA MUSEUM, Krunska 51, tel. 2433-886 • MEMORIAL MUSEUM TOMA ROSANDIC, Vasilija Gacese 3, tel. 651-434 • IVO ANDRIC MUSEUM, Andricev Venac 12, tel. 323-8397 CITY MUSEUMS: • BELGRADE CITY MUSEUM, Zmaj Jovina 1, tel. 630-825 • ZEMUN CITY MUSEUM, Glavna 9, tel. 617-752

TEHNICAL MUSEUMS: • YUGOSLAV AERONAUTICS MUSEUM, Belgrade Airport, tel. 670-992 • RAILWAY MUSEUM, Nemanjina 6, tel. 361-0334 • MOTORCAR MUSEUM, Majke Jevrosime 30, tel. 3241-566 • SCIENCE & TECHNOLOGY MUSEUM, Djure Jaksica 9, tel. 187-360, 3281-479 • ELECTRICAL INDUSTRY MUSEUM, Skenderbegova 51, tel. 630-285 • POST MUSEUM, Majke Jevrosime 13, tel. 3210-325 • ARCHITECTURE MUSEUM, Djure Jaksica 9, tel. 187-360, 3281-479 NATURAL HISTORY MUSEUMS: • MUSEUM OF NATURAL HISTORY, Njegoseva 51, tel. 344-2149, 344-2568 • MUSEUM OF SERBIAN MEDICINE, Dzordza Vasingtona 19, tel. 3245-149 ART MUSEUMS • AFRICAN ART MUSEUM, Andre Nikolica 14, tel. 651-654 • THEATRE MUSEUM, Gospdar Jevremova 19, tel. 626-630 • CONTEMPORARY ART MUSEUM, Usce, tel. 311-5713 • DESIGN MUSEUM, Vuka Karadzica 18, tel. 626-494 • CINEMA MUSEUM, Kosovska 11, tel. 324-8250 CONCERT HALLS • ATRIJUM OF THE NATIONAL MUSEUM, Trg republike 1a, tel. 624-322 • BELGRADE PHILHARMONIC HALL, Studentski trg 11, tel. 635-518 • DVORANA DOMA SINDIKATA, Trg Nikole Pasica 5, tel. 323-4849 • SAVA CENTRE, Milentija Popovica 9, tel. 311-4322, 139-840 • KONAK KNJEGINJE LJUBICE, Kneza Sime Milosevica 8, tel. 638-264

THE EMBASSY OF INDIA IN BELGRADE IS PROUD TO PRESENT

MEGA FESTIVAL OF INDIAN CULTURE

The Belgrade Philharmonic Orchestra Concert season 2004 - 2005 (to year’s end)

From November 2004 to January 2005 19 November2004- 31st January 2005 Contemporary Paintings by New Artists Venue- Museum of Jugoslav History th

13th and 14th December Indian Puppet Show Aakar Puppet Group from Rajasthan Venue- Pinokio Puppet Theatre Dolls and Photographic Exhibition Venue National Theatre Museum, N. Sad Dom Omladine, Belgrade

POPULAR CYCLE 10th December 2004 Mladen Jagust B.Smetana: The Bartered Bride, overture D. Shostakovich: Concerto for violin and orchestra No.2 op.

129 C sharp minor P.I.Tchaikovsky: Symphony No. 5 op.

64 E minor Soloist: Baiba Skride, violin

VOCAL CYCLE 17th December 2004 G.Verdi: Soloists:

Peter Robinson Messa da requiem Katarina Jovanovic, soprano, Jelena Vlahovic, mezzosoprano, Marius Vlad, tenor, Gustav Belacek bass Choir "Obilic" AKUD "Branko Krsmanovic"

CorD | December 2004

97

Belgrade Directory ... go hunting?

• For all those interested in hunting or arranging visits to attractive hunting areas in our country, detailed information can be obtained from the Serbian Hunting Alliance at 19 Aleks Nenadovic Street. The Belgrade Hunting Society can also be found at the same address. For further information call (011) 344-32-84.

... obtain a driver's licence?

CorD's editorial staff will attempt to find and give answers to questions of current interest to our readers, so please send in your questions for future editions. In this issue, we reply to the most frequently asked questions amongst newcomers to Belgrade.

... get connected to the local mobile telephone network??

• Serbia has two mobile providers: 'Telekom Srbija' and 'Mobtel'. For information about access to these networks contact the following numbers: Telekom Srbija: tel. 064 789; website www.telekom.yu Mobtel: tel. 063 360100, 063 9863; website www.mobtel.yu

... send a personal flower arrangement?

• You may send a personal flower arrangement, which is so welcome on all occasions, to any address in Serbia & Montenegro or throughout world. 'Teleflora', which cooperates with partners worldwide, will send and deliver flower arrangements in your name at the time you specify. Teleflora's local outlet is located at 11 Svetogorska Street. For further information contact: tel. (011) 30-30-048; website www.teleflora.co.yu

... obtain detailed information about the local antiques market?

• In addition to the city's many antique shops, an antiques fair is held at the Slavija A Hotel in Svetog Save Street. A large number of exhibitors offer diverse and often very valuable and interesting objects for sale. The fair is open from 10am to 4pm every Saturday and Sunday.

... purchase tickets for cultural and entertainment events?

• If you want to buy tickets for almost any cultural, entertainment or similar events in the city, contact the ticket service on 065 8880555, or visit the website at www.ticketservis.com

... find a Vet for your pets?

• Should you require veterinary assistance for your pets, call the Veterinary Faculty Clinic on (011) 656-677. The centre's skilled staff provide comprehensive, expect information, advice and services. Visit the clinic at 18 Bulevar JNA.

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CorD | December 2004

• All foreign citizens wishing to get a driver's licence should first complete the required training. The driving test for foreigners is the same as that taken by citizens of SCG. Detailed information is available via the Ministry of Internal Affairs' Traffic Department on Ljermontova Street: Tel. (011) 347-0200.

... get help using Microsoft programmes?

• If you are having problems using your Microsoft computer software, you would be well advised to contact Belgrade's Microsoft Company Programme Support Centre. All information on program solutions can be obtained over the phone: (011) 337-30-60, or via the website at www.microsoft.co.yu

... have stationery delivered to your door?

• A profusion of office supplies and almost all items and equipment necessary for any modern workplace can be ordered from Office 1 Superstore's catalogue and delivered directly to your office, institution or department. Telephone orders and information are now available. Just call (011) 346-0600.

... get accurate weather forecasts?

• Accurate three-day weather forecasts are available thanks to the experts of SCG's private meteorological service. Detailed information can be forwarded directly to your mobile by calling 064 1010 and additional information is available via the website at www.meteos.co.yu

... improve language skills?

• If you want to improve the professional English, Italian, German or other language skills of your staff or yourself, contact Berlitz - one of the world's leading language schools specialising in helping organisations reach their language goals. Berlitz's new Belgrade centre is now open at 9 Avalska (near Slavija).

For further information, call (011) 244 3944 or visit the website at www.berlitz.com

... obtain repair and maintenance services?

• If you require minor repairs or maintenance services for your home or workplace, simply call for the expert services of Hauzmajstor - Tel: 011 3034 034, or visit the website: www.hauzmajstor.co.yu.

Hauzmajstor's fast, efficient and professional team include plumbers, electricians, carpenters and others.

The Property Market in SCG Foreign citizens can purchase flats, houses and business premises in Serbia

Foreign owners by law Serbia & Montenegro has reciprocity in acquisition of real estate with 72 states. When buying properties it is highly recommended to choose a reputable agency, as the market includes tricksters. Urban Construction Land is in state possession and is graded right-of-use or leased. The Real Estate Cadastre (Cadastre) covers sixty-two percent of the territory of Serbia (excluding Kosovo).

By Tanja Spalevic

ty in Serbia) need to fulfil another condition, namely that the property will be used for commercial purposes.

Of course, land in cities is excluded from this story because, according to article 60 of the Serbian Constitution, Urban Construction Land is owned by the state and is only leased.

That exact issue is one of the main complaints made by foreign investors, because, in the majority of cases, they do not want to only be the owners of the premises, but also the land on which the premises stand.

The previous Serbian Parliament adopted the new Law on Urban Planning and Development in April 2003 which overcame that barrier. Now urban land can be "public" (if it is of state interest), and "other" which can take different ownership forms and is freely available on the market. However, the municipali-

According to Ivan Aleksic, director of the Republic Geodetic Authority, 62 per cent of the territory of Serbia, excluding Kosovo, has been covered by the Real Estate Cadastre to date.

F

lats, houses and business premises can be purchased by expatriates whose homeland has reciprocal agreements for acquiring real estate with Serbia. There are 72 states on that list. That means that foreign citizens can be owners of real estate in Serbia. If they engage reputable law offices or real estate agencies there are no legal obstacles preventing foreign citizens from buying flats and becoming registered owners. For individuals purchase is conditioned only on reciprocity, while firms and legal entities (which do not have a separate legal enti-

ties were supposed to make the distinction between the "public" from the "other" forms of land and the majority of them have yet to do so. Among lawyers there is a dilemma as to whether this part of the law is against the Constitution. According to Serbian Deputy Minister for Capital Investments, Dr. Vladimir Milic, in practice this means that according to the new law the sale (and hence transfer) of "rights of use" is allowed, which was not the case in the previous version of the law, which is exactly what lead to such a large number of illegally constructed objects in Serbia. Furthermore, one of the aims of the new Law is the simplification of the procedure for receiving planning permission. Industry experts suggest that this has not played out in practise as it still takes a minimum of 6 months to gather all the necessary documents. That translates to an industry average conception to completion time of about two years for a construction project.

The Urban Planning and Development Law does not differentiate between local and foreign citizens - emphasizes Milic.

The special edition of CorD magazine THE PROPERTY MARKET IN SCG is published by CMA (Consulting & Marketing Agency), Kneginje Zorke 11a, 11000 Belgrade, Tel.: (+381 11) 30 87 066, Fax: 30 87 335, e-mail: office@cma.co.yu Project manager: Nikola Jurisic, Editor: Mark Pullen, Design: Branislav Ninkovic, Director: Ana Novcic

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CorD SPECIAL | December 2004

The land is not the property of local municipalities, but the Republic of Serbia. But the land is managed by the municipalities, which grants rights of use or leases it. Municipalities have so-called "direkcije" (executive offices), which are in charge of Urban Construction Land. When foreign investors want to build in Serbia our advice is to approach these offices directly. What is of utmost importance at this moment, with regards to land ownership is the passing of the new constitution, which is expected to essentially redefine the ownership status of the land into two categories: public and private. The passing of the denationalisation law is also very important, by which the land and structures built on the land would be returned to the original owners or their successors. This concerns those properties nationalised after the Second World War. The Ministry of Capital Investments has prepared a proposal of changes and amendments to the Urban Planning and Development Law and it is expected that Serbian Parliament

In Belgrade there is a complete Real Estate Cadastre only for the Stari Grad and Rakovica municipalities, with New Belgrade to be completed by the end of the year MPs will adopt those amendments before the end of the year.

But, for now, the sections concerning the Urban Construction Land will remain unchanged even then because the amendments relate exclusively to the legalisation of illegally built objects. The Ministry is appealing to Serbian and foreign citizens to be careful when purchasing real estate, since it is uncertain as to whether all buildings without the proper documentation will be legalised. What has been built on the future infrastructure corridors will certainly be demolished. Also, if expatriates decide to build houses or business premises in Serbia they should look up the regulations under the Urban Development Plan (Master Plan), which gives building allowances and regulations for specific pieces of land. In the case of Belgrade, building permissions for structures up to 800 square metres are issued by the municipalities, while larger buildings are covered by the City Urbanism Office. Foreigners should be careful from whom they are buying real estate. For bigger investments it would be best to directly address the city managers.

The Ministry of Capital Investments has established a commission for the improvement of urbanism and building regulations, which analysed the implementation of the Urban Planning and Development Law to date and concluded that those regulations are problematic in many domains - stated Milic. The idea was that this commission would become a permanent body of the Ministry, which would propose new laws.

Ministry sources suggest that a new version of the Urban Planning and Development will be drafted in the near future, which will correct some of the problems of the current version.

Reciprocity Reciprocity in acquiring real estates exists with the following countries - Algeria, Argentina, Austria, Australia, Bangladesh, Belgium, Bolivia, BiH, Brazil, Bulgaria, Great Britain, Gambia, Guinea, Greece, Denmark, the Virgin Islands, Egypt, Ecuador, India, Indonesia, Iran, Ireland, Israel, Japan, Jordan, South Africa, Canada, Kenya, Cyprus, Monaco, Lebanon, Liberia, Lithuania, Lichtenstein, Luxemburg, Mali, Hungary, Malta, Mexico, Namibia, Germany, Nigeria, Nicaragua, New Zealand, Norway, Panama, Peru, Poland, Portugal, Romania, Russia, USA, Senegal, Singapore, Syria, Slovakia, Sudan, Thailand, Tanzania, Turkey, the Ukraine, Uruguay, Finland, France, Holland, Hong Kong, the Czech Republic, Chile, Switzerland, Sweden and Spain.

According to Snezana Majsorovic, sales director of the Manadzer agency, if the interested party is from a country which does not have a signed reciprocity with Serbia, they need to obtain a permit from the Ministry of Human and Minority Rights.

The big problem in purchasing real estate in Serbia is the registration of the same, because in many cases it cannot be verified who the owner of certain property is. Belgrade is particularly problematic, as are other big towns, because records have not been properly kept. Namely, in the time of the former Yugoslavia scant attention was paid to the registration of real estate in the Land Cadastre and Land Books, since in socialism everything belonged to everybody and nobody. Therefore,

The Property Market in SCG

entire city blocks are registered in the Land Books and Land Cadastre as fields and agricultural lands…

After 5th October 2000 the state began to compile the Real Estate Cadastre as a unique ownership record that unites the older Land Books and Land Cadastre. This job was begun on the initiative of late Prime Minister Dr. Zoran Djindjic and a great deal has been done so far. That project is supported by donations from many countries and organisations, and recently the World Bank approved a credit of US$30 Million for the modernisation of the Serbian Real Estate Cadastre. The World Bank has stated that the government has recognised that an effective national property rights system is a prerequisite for economic growth and broadening economic prosperity through, among other things, land and housing development, increased use of property as collateral for credit purposes, increased property tax collection and efficient land markets.

According to Ivan Aleksic, director of the Republic Geodetic Authority, 62 per cent of the territory of Serbia, excluding Kosovo, has been covered by the Real Estate Cadastre to date. He added that another three per cent will be completed by year's end. For those territories for which there is no Cadastre, the Land Books and Land Cadastre apply. According to the plan of action of the Republic Geodetic Authority, it is expected that the entire territory of Serbia will be covered by the Cadastre by 2010, because 5th November that year marks the end of the project carried out by the Serbian Government with the support of the World Bank. The

final product will include an electronic land plan that can be accessed by the public over the internet. Still, many observers in Serbia do not believe in that timeframe and suggest that the completion date will be much closer to 2015, while pessimists believe that it will not even happen in their lifetime.

In Belgrade there is a complete Real Estate Cadastre only for the Stari Grad and Rakovica municipalities, and by the end of the year the registration of all flats and business premises in New Belgrade will be completed - said Aleksic. This means that only 10% of Belgrade is covered if we are using land area as the unit of measurement, while 20% is covered if we count the number of housing units (apartments, houses, etc). In the next 6 years, it is expected that all 11 urban municipalities will be covered by the cadastre. US$10 million of the World Bank loan will be put aside for the creation and modernisation of Belgrade's Real Estate Cadastre. According to the proposals for the new catastre law, which should be adopted sometime next year, the registration of real estate on citizens' demand is planned. This means that Serbian citizens, but also those foreigners who own properties, do not have to wait for the Republic Geodetic Authority to start with the creation of the Real Estate Cadastre for the area where their real estate is located, but can individu-

According to Colliers market reports, the prices of exclusive residential properties in the most attractive areas range between €1,500 and €2,300 per m2, while good quality properties in good areas vary between 900 and 1,200. ally submit applications on an ad hoc basis. According to estimates, 180 days are currently needed for properties to be registered, but we are heading towards the goal of decreasing this timeframe to only five days. This period will decrease year-onyear.

What applies to foreigners also applies to Serbian citizens who want to register their real estate in the Cadastre. They should submit proof that they are the owners - for instance, the contract notarised by the court and proof that the excise tax of five percent of the real estate's total value was paid. With that proof the new owner will be registered in the Cadastre if one exists for the area where the property lies, and, if not, it will be registered in the Land Books, which are kept in the court. In the case of a plot of land outside city jurisdiction, i.e. outside the territory of the

Mortgages The newly formed National Mortgage Insurance Corporation (NMIC) The corporation was formed in May 2004 and began its work last month when the first contract was signed with HVB Bank. According to Serbian Finance Minister Mladjan Dinkic, at least five more contracts are expected before year's end. The Corporation provides insurance for mortgage loans, after it has accepted an application sent to it by a partner bank, against default to the tune of 75% of the net loan loss. In that case, the NMIC, envisaged as having a fund of € 10million, covers the annuity payments instead of the lender until the day the money from the client's realised security arrives. A move long supported by the Foreign Investors' Council, the corporation will benefit the state, banks, and clients. One of the ways clients will benefit, for example, is the interest rate limitation to a maximum of 8.95% (participation model) and 7.45% (deposit model), compared to current rates, typically EURIBOR + 8% (9-11%), increasing market access.

According to Mr Aleksandar Jovic, director of the corporation, the new legal framework should lead to an increase in demand for properties and the revival of the construction industry, in the greatest part due to the general improvement of mortgage loan terms and conditions, such as lowering interest rates and lengthening the maturity period to 30 years; as well as lowering the mandatory deposit level. Pedja Slijepcevic of the Status agency believes the rise in demand will lead to a concomitant rise in real estate prices in Belgrade in the short to medium term. Sceptics suggest that the fund is much too small to cover the market (with a maximum loan size of € 200,000, its funds would be exhausted by only 50 loans, for example).

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CorD SPECIAL | December 2004

Urban Construction Lands, the interested party can be registered as both the owner of the building and the land, while if it is on the city land territory, the party is registered as the leaseholder of that land plot and owner of the building on it, and that will remain to be the case until the adoption of the new Constitution.

When purchasing flats, houses or business premises, it is necessary to check all contracts and documents on the basis of which the previous owner was registered - said Aleksic. This task is usually performed by lawyers or real estate agencies. If the property is not registered in the Land Cadastre, Land Books or Real Estate Cadastre, the buyer carries all the risk and begins the process of legalisation. This is because, from the Republic Geodetic Authority's point of view, all real estate that is not registered is illegal. So far, around 400,000 requests for legalisation have been submitted, but they concern objects built without permits. It is estimated that at least that many objects have the required permits, but simply were not registered because registration simply wasn't an issue.

In the case of mortgages, registration can be made in the Cadastre within three days at a cost of 5,000 dinars. If there is no Cadastre within the area where the property is located, registration is made in the Land Books. Mortgages are not commonplace in Serbia and they only appeared on the market in significant quantities in spring this year. According to USAID's SCG website, mortgage initiation is extremely low as a result of the uncertainty of land title; coupled with the inability to perfect or execute upon a title. This is exactly the reason why the Foreign Investment Council, in their 2004 White Paper, recommends a legally-based Temporary Mortgage Register, which would allow real estate not registered in the official registries to be entered by following a strict legally-binding procedure.

Mortgages could then be issued on the basis of this entry, thus protecting the mortgage creditor (owner of the pledge), which would later be used to update the Cadastre. We can also expect the recently formed National Mortgage Insurance Corporation to improve market efficiency (see box - mortgages).

RESIDENTIAL PROPERTIES Sky High Prices Stagnate

Q

uality residential properties in Belgrade don't stay on the market for long. Prices are not realistic, more precisely they are "irrationally high", says Nemanja Mihailovic of the Eurent agency. For some time now a fall in prices has been expected, though it has failed to materialize. If we take into account external shocks, sales prices have not fallen since 1989, and have, on the contrary, followed a slow but steady upward trend according to the Alka agency. Sadly, new residential developments are few and far in between- "clients are moving in, while others are moving out", so the same space is "moving in circles", says Aleksandra Kon of the same agency.

Nevertheless, in the past few years construction of very luxurious residential properties has gone ahead. Those properties have typically been sold before their completion. The biggest factor influencing price is the location, which is supported by a qualitative study carried out amongst real estate agencies in the capital by research firm MASMI. Along with the Belgrade districts of Dedinje, Senjak, Vracar and Stari Grad, more and more luxurious space is being built in New Belgrade, which has driven up the price of older properties on this market. That, however, concerns only the properties located near the Belgrade Arena complex.

According to Colliers market reports, prices of exclusive residential properties in the most attractive areas range between 1,500 and 2,300 euros per m2, while good quality properties in good areas vary between 900 and 1,200. Properties can CorD SPECIAL | Decembar 2004

5

The Property Market in SCG be up to 30% more expensive if they include central heating, according to the MASMI report.

Monthly rental rates for the most exclusive residential properties in the most-sought-after neighborhoods range from 15-18 euros, while good quality properties go for 9-13 euros per m2.

The rental price varies depending on how the structure of the payments is organised, as well as the quality of the interior, the furnishings and the state of the building as a whole. Investor and client interest has focused on furnished family homes and apartments. The highest occupancy levels are in Dedinje and Senjak, especially in the sub-sector of family homes with 3-5 bedrooms.

Customers should bear in mind that smaller units typically have a higher price per m2 than their larger equivalents, and also the rental and sales markets are fundamentally different: they function according to different principles and procedures and follow a different dynamic. It is interesting that clients, upon

often setting up offices in different parts of the city. Naturally, supply follows demand and many investors entered the market in 2001 to meet these needs. These investors include GTC International, Adamov & Kirschenbaum, Meshulam Levinstein, Durst, Strabag, and Ashtrom, who began activity sometime later.

Their activities led some to believe that the turning point, in terms of the appearance of tens of thousands of square metres of A & B Class office space, would happen in 2003. However, this

Source: Colliers International Serbia

Source: Colliers International Serbia arrival in Belgrade, often expect prices to be up to 50% cheaper than in other global cities, and Srdjan Teodosijevic of West Properties reminds us that Belgrade is envisaged as the metropolis of South East Europe.

We suggest seeking a specialized agency when doing business in the real estate sector. Increased activity in, and development of, this industry is expected to be positively and closely correlated with Serbia & Montenegro's economic growth.

OFFICE SPACE Quality Office Space- Anticipating the Boom

D

ue to years of socialist rule and 10 years of inactivity on the market, corporations which have entered the Serbian postMilosevic market were faced with an inadequate supply of office space, both in terms of quality and quantity. A poor communications infrastructure, lack of adequate parking facilities and quality maintenance services were all too common problems. In these circumstances, demand shifted to converted apartments,

did not happen due to the slow speed of reforms, complicated and outdated state regulations, and the tragic assignation of PM Zoran Djindjic, after which many investors took two steps back, moving from participant to observer status. While interest in office space sales was on the increase, after March 2003 it abruptly halted and has not, as yet, re-gathered pace.

The turning point is now expected to happen in 2005-06 with horizon-expanding developments such as the USCE Tower, Atrium offices, and the GTC Centre soon to become operational.

The total stock of office space in Belgrade currently stands at 140,000 m2, in comparison to Sofia's 216,000 m2 and Budapest's 1,045,000 m2. Supply is expected to leap by 85,000 m2 by spring 2005, with a total of 130,000 m2 operational by the end of the following year (SIEPA). That equates to a year-on-year growth rate of over 60%, compared to 17% in the previous year.

This will affect occupancy rates as well as prices. According to Colliers Serbia & Montenegro, vacancy rates in Belgrade's central business district (CBD) dropped from 12% in 2003 to 7% in the first half of 2004. Due to new developments appearing on the market this tendency will reverse and vacancy rates are expected to rise substantially by the end of the first half of 2005.

In accordance with this trend, prices have fallen from a high of €25 to the current range of €17-21 per square metre over the past 3 years. Even so, rental prices are still the highest in the region, with Sofia, Bratislava, and Bucharest all having rents around €10-13. As far as sales prices are concerned, they currently hover at around 2000 Euro per m2.•

Value Added Tax The Law on Value Added Tax (VAT) comes into force on 1st January, 2005. Many construction firms believe that the price of newly built real estate will certainly jump, as everything that is built from the beginning of 2005 will be taxed at 18% (or more precisely, the difference between the costs of construction and sales turnover will be taxed). Tax authority officials, on the other hand, maintain that there should not be significant price movements. What will actually happen on the market remains to be seen. If we consider the example closest to us, Montenegro, where prices did not jump, but actually fell. This could happen in Serbia too, as the rush to buy before the law comes into force may drive demand prior to the first of January. Mr. Jagoda Bukonja, director of the agency Rondo, believes that the law will have other positive effects, including increasing market definition and customer orientation.

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CorD SPECIAL | December 2004