CorD Magazine No.15

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interviews | opinions | news | comments | events

YEAR OF EUROPE FOR SCG

No15 - April 2005

Director: Ana Novcic ana.novcic@cma.co.yu

There is now a real window of opportunity for Serbia & Montenegro to move ahead towards European integration. The country cannot afford to waste this opportunity.

Editor in Chief: Dragan Bisenic d.bisenic@cma.co.yu

Javier Solana

Deputy Editor: Mark Pullen m.pullen@cma.co.yu

EU High Representative for Common Foreign and Security Policy

Art & PrePRESS Director: Branislav Ninkovic b.ninkovic@cma.co.yu Editorial: Milan Culibrk, Dragan Bisenic, Nina Nicovic, Rajka Sinik, Vojislav Stevanovic, Zeljko Jovanovic, Tanja Njezic, Slobodan Vucicevic, Zoran Knezevic, Aleksandra Sekulic-Stojanovic, Marija Krickovic, Maja Vukadinovic, Jelica Putnikovic Photo: Andy Dall, Stanislav Milojkovic FoNet, Tanjug and Beta Translators: Milos Milosavljevic, Dejan Zubac, Dusan Jelic, Milica Kuburu-Jovanovic Office Manager: Sonja Rados sonja.rados@cma.co.yu Subscription: Ivana Petkovic i.petkovic@cma.co.yu Advertising Sales: Milos Maksimovic m.maksimovic@cma.co.yu Project Manager: Dragana Indjic, d.indjic@cma.co.yu Anica Divac, a.divac@cma.co.yu Olga Bracconi, o.bracconi@cma.co.yu General Manager: Ivan Novcic i.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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24 PRACTICAL RECOMMENDATIONS The FIC White Book positively assessed Serbia's reforms, objected to a number of 'mistaken' government moves and expressed expectations related to an improvement of the business climate.

Mike Ahern President of the Foreign Investors Council

38 FUNCTIONING FEDERALISM 25 Belgian companies have invested in Serbia, mainly in the provinces and mainly in production, and their experiences will encourage others.

H.E. Luc Liebaut Belgian Ambassador in SCG

54 MARKET POTENTIAL We hope that real estate leasing will start this year. That would be a great plus for the economy because the building of new real estate would engage many economic branches and in Serbia there is a great need for housing and business premises

Ognjen Medic director of Raiffeisen Leasing

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contents

14 VIENNESE VIEWS Serbia 'is accustomed to being the leading country in the region and, as such, has obvious economic prospects'…Serbia shall be the most interesting country in the future developments of South-East Europe'…Serbia could become an 'economic tiger' in due course.

Wolfgang Schüssel Austrian Chancellor

20 COMMERCIAL CONFIDENCE

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H.E. Li Guobang, Ambassador of the People's Republic of China in SCG

The issue of debt is not a pre-condition for mutual visits of our officials. However, it definitely presents an obstacle when it comes to the establishment of mutual trust among business partners.

PROFESSIONALISM PREVAILS At this moment I think that we cannot succeed without the agreement with the IMF. That institution is a very good excuse to do things which are not popular but which are necessary

Bozidar Djelic former Serbian Finance Minister, professional consultant

EXPORT TIGER

MEDIA TRANSITION

During 2005 we plan to invest another 22 million euros. The financial construction is closed and plans have been worked out in the smallest detail. If the chance for more rapid development arises our partners will consider the possibilities for additional investments.

Dragan Nikolic General Director of Tigar, Pirot

SUPPORTING ENTERPRISE

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the state has to do what is in its authority: to pass adequate laws and thus create conditions to allow for functioning market principles.

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Dragan Kojadinovic Serbian Culture and Media Minister

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…trust in the banking sector is inextricably linked with the general situation in the country. The overall economic and political situation is very important in terms of establishing trust in the banking system…

Dörte Weidig General Manager - ProCredit Bank, Serbia CorD | April 2005

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Comment

Skating Bear's grace

By Dragoljub Zarkovic - Chief Editor of Belgrade weekly “Vreme”

T

he article published herein has and the readiness to admit some errors and mistakes. I will menalready been published in tion only a few of them: the Government started with a bad fiscal Serbian weekly Vreme, and policy and then gave up the populist concept and admitted, parts of the text have been quoted in through the Budget rebalance, its own mistake; it gave up the revianother two or three newspapers. sion of the privatisation process and adapted its policy to the Then, just when I thought that the demands of the Hague Tribunal … Critics will say that all that was ticklish episode appraising the first done because of pressure from the international community, but, year of the work of Vojislav Kostuas it looked at the beginning, it seemed that this same community nica's Cabinet had fallen into oblivwould be the "last hole on the flute". ion, CorD's editor in chief came to me In the end, every appraisal is a sort of comparison. This with the idea of "extending this Government would receive one mark if we compared it with anoththing". First I had it in mind to extend er one, another mark if we compare it with our own expectations, this thing in Milka Babovic style, with but if we compare it with itself at the beginning of the mandate and marks for technical performance and now at the end of the first year I am not ready to go under the mark Dragoljub Zarkovic artistic impression, like in figure skatI already corrected - three." ing, but I then realised that artistic Later, as is the norm, more interesting things happened which impression cannot be quantified because there isn't any, since strengthened my belief that this Government has shown a higher this Government has about as much gracefulness as a bear on level of adaptability than seemed to be the case a year ago. skates in a Russian circus: even what they do well they present In one ritual, usually boring, interview which Vojislav shabbily.

Kostunica gave on the Government's first anniversary, he estimatTherefore, here follows the article I wrote on the first annivered that the approach of Serbia to the infamous Feasibility Study … sary of Kostunica's minority Cabinet. as a small, but first step towards European integration, is also the It seems that I have the most respect for the Serbian Government. On this, the first anniversary of Kostunica's It seems to me that the Government's critics Cabinet, the predominant assessment of experts and the have forgotten exactly why I gave the general public, on a scale of 1 to 5, rated the government between an abusive zero, a prevalent one to a consolatory Government a passing grade. Namely, this two. However, I gave them a three plus on some oppor- Government has shown a good level of polittune RTS programme aired on Thursday 3rd March.

The telephones started ringing immediately, and ical and social adaptability and the readiinstead of receiving the usual "good evening", I began ness to admit some errors and mistakes. receiving calls of "are you mad?!" Under public pressure, the very next day, on Friday 4th March I corrected my mark on a result of the works of the previous, post 5th October Government, B-92 TV programme. "I can see that the public doesn't agree", I which was, according to me, an important move at least on the said. "Therefore I am taking away the plus and giving the level of political and general culture because it cancels out the hard Government three." I thought that was it. However, on Utisak appraisals about previous the government as mafia connected and Nedelje (B92's Impression of the Week), on Sunday 6th March incapable of look after the nation's pockets with the same passion political analyst, Slobodan Antonic stated: "I agree with Dragoljub as they look after their own.

Zarkovic who gave the Government three plus"!

Perhaps this respect is a consequence of the coincidental fact His analytical judgment was brilliant: he quoted me as if I was that the Government's anniversary happens to fall on the annivera classical author, but the telephones started ringing again; for sary of Zoran Djindjic's assassination, but that does not change me, not for Antonic. the political importance of the statement. This statement I do not feel the need to justify the mark I gave them. I am announced a refreshing move towards understanding that everyguilty only because I accepted to participate in a game without thing good does not start just from you, nor that somebody else is any clear criteria, one as dangerous as scoring points in the to blame for everything bad. After all, politics is an unusual proEurovision Song Contest, where, in both the case of the fession. Just remember when Dusan Mihajlovic, Interior Minister Government and the case of the song, everyone who voted was in the governments of Djindjic and Zoran Zivkovic, organised a immediately divided into "ours" and "theirs". jamboree practice in Belgrade's Republic Square, where the Again, I do not feel the need to justify what prompted me to policemen apparently spontaneously protested against the possimark the Government's output in this way, but it seems to me that bility that police General Sreten Lukic would be extradited to The the Government's critics have forgotten exactly why I gave the Hague. What I want to say is that there is not always consistency Government a passing grade. Namely, this Government has in politics. Who would have believed one year ago that Kostunica shown a good (for three) level of political and social adaptability would be swallowing Djindjic's metaphorical frogs?•

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CorD | Arial 2005

Interview

YEAR OF EUROPE FOR SCG Exclusively for CorD

Javier Solana, the European Union's High Representative for Common Foreign and Security Policy (CFSP) has had intensive dealings with Serbia and Montenegro over the past month, meeting Montenegrin PM, Milo Djukanovic, in early March, SCG Foreign Minister, Vuk Draskovic, in mid-March and, finally, Serbian President Boris Tadic. From these meetings it has become clearer than ever that Mr. Solana supports the continued existence of the Serbia & Montenegro State Union and does not agree with the concept of changing the union, as recently proposed by the Montenegrin leadership.

Javier Solana, EU High Representative for Common Foreign and Security Policy

By Dragan Bisenic

M

r. Solana has clearly expressed that he is encouraged by the latest developments in Serbia regarding co-operation with the ICTY, which has provided arguments for the EU to strengthen relations with SCG and provide a positive assessment of the Feasibility Study, which will create the possibility for institutional links between the state union and the EU. The senior EU representative welcomed the opportunity to continue close contacts with Serbian leaders, with a view to developing Serbia & Montenegro's progress towards the EU. While expressing appreciation for recent developments regarding the co-operation of Serbian authorities with the ICTY, he encouraged further efforts in that direction. He emphasised that additional progress on co-operation with the international tribunal was needed now to allow faster progress towards Europe, underlining that it was essential to seize the opportunity and keep the momentum.

At their meeting last month, Solana and President Tadic briefly discussed recent developments concerning the State Union of Serbia & Montenegro. Javier Solana underscored that a solution on all open issues had to be found quickly and reiterated the EU's strong support for the Union. He encouraged President Tadic to use his influence to

Javier Solana - EU High Representative for Common Foreign and Security Policy let all leaders understand that existing divergences had to be overcome without delay through legally sound proposals. He emphasised that all energies should be spent in focusing on concrete matters, such as reforms and fulfilment of international obligations.

Regarding Kosovo, Javier Solana invited President Tadic to exert his influence in order to define a realistic Serbian position and to allow Kosovo Serbs to re-engage in the dialogue process and in the institutional life of the province.

Speaking exclusively to CorD, Javier Solana gave a broader explanation of certain points of his talks with Serbian and Montenegro officials and evaluated the last developments in SCG. Mr. Solana considers that SCG remains an area of instability, but he has a positive view regarding the latest developments in Serbia.

How do you see last developments in Serbia & Montenegro regarding co-operation with the ICTY? I welcome recent developments on ICTY co-operation, but more efforts are needed. It is important that the present momentum is maintained. The sooner Serbia & Montenegro turns this page from the past, the better for its European future. Recent decisions of the EU on Croatia and the indictment of former Kosovo PM Haradinaj clearly show that the old story of an 'anti-Serb' bias of the international community does not hold water. There is now a real window of opportunity for Serbia & Montenegro to move ahead

towards European integration. The country cannot afford to waste this opportunity.

What is the possible outcome of the Feasibility Study for SCG and, in the case that it will be positive, what consequences will it have for the country and its co-operation with the EU? We have to wait until mid-April to know what the Feasibility Report will recommend. In the meantime it is crucial that the authorities in SCG focus on the pending issues, in particular further progress on co-operation with the ICTY. The Feasibility Report will be based on an assessment of the current situation in the country.

It is likely to indicate problem areas, which need to be addressed if Serbia & Montenegro wishes to advance towards Europe. It will also give an indication on whether or not negotiations on a Stabilisation and Association Agreement can be started. If positive, the Commission will then prepare a mandate for the negotiation and submit it to the Council. Once this mandate is adopted, negotiations can begin.

The feasibility report is, thus, only the first step on a long journey. Still, it will be hugely significant. After a long period of stagnation, SCG will finally be able to move forward towards the EU. Which approach will the EU and the U.S. have towards the Balkans in the future; what was spoken with President Bush

FEASIBLE?

ICTY

MONTENEGRO

The Feasibility Report will be based on an assessment of the current situation in the country‌It will also give an indication on whether or not negotiations on a Stabilisation and Association Agreement can be started. If positive, the Commission will then prepare a mandate for the negotiation and submit it to the Council.

The sooner Serbia & Montenegro turns this page from the past, the better for its European future.

Recent decisions of the EU on Croatia and the indictment of former Kosovo PM Haradinaj clearly show that the old story of an 'antiSerb' bias of the international community does not hold water.

When PM Djukanovic was here in Brussels I recalled the generous attitude of the European Union towards Montenegro in recent months, especially with the adoption of the twin-track approach. I asked him to respect the existing agreements and to do his part to ensure that 2005 will be the 'Year of Europe for SCG.'

CorD | April 2005

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Interview KOSOVO "STANDARDS ARE MY PRIORIT Y"

S

Serbian Prime Minister Vojislav Kostunica and Javier Solana during his visit to the EU in February?

The Balkan region is certainly one of the areas in which the EU and the U.S. have been co-operating most fruitfully. When President Bush paid a visit to Brussels last month we discussed how this co-operation, which is crucial for the development of the region, can be continued. A European future for Serbia & Montenegro and progress towards a settlement of the Kosovo issue will be important priorities of this co-operation.

Mr. Haradinaj has gone to The Hague. What is the meaning of that within the framework of reconciliation in Kosovo?

I appreciated the responsible reactions in Pristina and Belgrade.

I hope his decision represents a starting point of a virtuous circle that will significantly promote reconciliation.

Belgrade officials, including President Tadic and others, have expressed readiness to start direct talks with Pristina. How will the EU contribute to those talks and do you think that now is the time for both sides to take a seat at the table?

I welcome the recent resumption of the Belgrade-Pristina talks on missing persons and hope that this dialogue will soon be extended to other areas. I also believe that the representatives of the Kosovo-Serb community should finally reengage in the political process in Pristina and join the provisional institutions.

The Kosovo-Serbs' legitimate concerns need to be taken into account. In order to ensure this, they need to be represented in those fora where decisions on the relevant issues are prepared.

The EU remains committed to supporting the implementation of standards over the coming months. Apart from political support, there are many concrete projects and programmes to advance multiethnic coexistence in Kosovo. However, success ultimately depends not on us, but on the active participation of all communities in Kosovo. A multiethnic Kosovo is possible, but only if all parties co-operate in good faith You were in Pristina the same day that there was an explosion close to Mr. Rugova's car, an attack on him. Do you believe that radical elements can tolerate the commencement of talks between Belgrade and Pristina?

All in all, the difficult moment of the indictment of PM

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peaking to media in Pristina last month, Javier Solana said that "by fulfilling the Standards you will show us that you also know the answer.

The results of your effort to achieve standards will determine the launching of a status process".

He continued, saying "We need speedy progress and tangible results on the prioritised standards, that is, the ones linked to the protection of all communities, the ones that would support and create a sustainable society where all of Kosovo's inhabitants can live, work and move without discrimination or fear. With the engagement in both the government and in UNMIK, I hope that progress for a positive mid-2005 review can be made. It is in the interests of all that this positive spirit prevails. The big challenge is to involve all communities in the process. The EU has a long-term commitment to Kosovo. The role has developed over the years from reconstruction to capacity building. As the situation is normalising, so is the EU presence.

The EU building in Pristina, with my Personal Representative, the European Commission and the European Agency for Reconstruction, symbolises the future. They support UNMIK and advise the government and other local institutions technically, financially and politically in their efforts to fulfil standards for Kosovo and contribute to capacity-building within the local institutions; to strengthen economy and a tolerant and politically stable society fit to enter the EU. As everybody else, I am focusing my attention on the standards process. A lot of work remains to be done. Nothing can be taken for granted. The government has to redouble its efforts, but it is not only up to them and the institutions. Every individual living in Kosovo can contribute to the fulfilment of the prioritised standards. It is in your hands and I can guarantee that the EU will be there to help you in any way possible".

Solana warned that people in the Balkans "have to be aware" that the world is facing new challenges, but that the Balkans, including Kosovo, are part of EU interests - under some conditions.

"There are many regions and conflicts requiring the International Community’s attention. The world has changed over the last five years and people in the Balkans have to be well aware of the new international challenges. However, it is clear that the Balkans, Kosovo included, are a European priority for obvious historical and geographical reasons. We want to see a stable and prosperous Western Balkans. Kosovo is no exception to this. Kosovo's first important step towards the EU is the implementation of standards. They are based on the EU's values: democratic institutions, market economy and respect for human rights - minority rights being a very important part," concluded Solana

Interview Haradinaj has been handled well. The Kosovo leadership and the population displayed considerable maturity. The attack on the convoy of President Rugova was, fortunately, an isolated incident. The authorities responsible for security in Kosovo assured me that the overall security situation in Kosovo continues to improve.

the generous attitude of the European Union towards Montenegro in recent months, especially with the adoption of the twin-track approach. I asked him to respect the existing agreements and to do his part to ensure that 2005 will be the 'Year of Europe for Serbia & Montenegro.'

You had a meeting with Montenegrin Prime Minister Djukanovic some weeks ago. What were your main messages during that meeting, which touched on the future of SCG? I have regular contacts with all key leaders in Serbia and Montenegro. When PM Djukanovic was here in Brussels I recalled

Do you plan to come to Belgrade soon?

It is always a pleasure for me to travel to Belgrade and I hope to come as soon as circumstances permit.•

PHYSICIST AND POLITICIAN

J

avier Solana Madariaga was born in Madrid on 14th July 1942. Married to ConcepciĂłn GimĂŠnez, Solana is a father of two, a graduate of doctorate studies in physics and a Fulbright scholar at several American universities. After completion of his PhD, the senior EU official worked as a professor of solid-state physics at Madrid Complutense University.

Explaining his interest in science, Solana said: "At home I had an atmosphere of study and of interest in scientific knowledge. My father was a professor of chemistry and I liked to see him doing experi-

ments. I was more interested in physics because of its more conceptual nature and because it allowed me not only to understand natural phenomena but also something that at that time was very fashionable: the theory of relativity and cosmology. I really entered into the world of physics as a result of this mixture of philosophical curiosity with a wish to study natural sciences. As time went by I became much more interested in studying natural phenomena and ended up a theoretical physicist".

Solana joined the Spanish Socialist Party in 1964 and rose through the ranks to become a prominent Spanish politician. He became a member of the Spanish Parliament in 1977 was a Spanish Cabinet Minister from 1982 to 1995, without interruption: December 1982 - July 1988: Minister for Culture (simultaneously acted as Government Spokesman from July 1985 to July 1988); July 1988 - July 1992: Minister for Education and Science; July 1992 December 1995: Minister for Foreign Affairs.

From December 1995 to October 1999 he served as Secretary-General of NATO, during the period in which NATO is not so fondly remembered by the people of Serbia. "That was, personally, a very dif-

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ficult time for me", said Solana.

On 18th October 1999, Solana became SecretaryGeneral of the Council of the European Union and High Representative for Common Foreign and Security Policy (CFSP). In July 2004 he was granted a second 5-year mandate as Secretary-General of the Council of the EU and EU CFSP High Representative. Asked what made him turn away from science, Solana said: "It was not a drastic decision, it happened gradually. I come from a country where the fight for freedom was an important political battle for the people of my generation. I was very much engaged in that fight and that is how I came into politics, with a view to regaining freedom and democracy for my country.

It started while I was still a student and it continued after I became a professor. The day democracy arrived, people who were considered to have certain credibility and who had been playing a role in fighting for democracy were called to be members of the Spanish Parliament and I accepted the challenge. From then on I got more and more engaged in politics and the time that I devoted to science decreased. I would like to think that I had a certain intellectual standing and that this led people around me to push me to get more and more involved in politics. But I didn't lose contact with the world of science. In fact, the last PhD dissertation that I directed goes back to the early 1990's. My own dissertation was on super-fluidity, and the title was rather strange for the non-initiated, "Elementary Excitations in Helium 2".

Explaining that his love of physics continues, he said: "I still know what is going on in the subjects that I used to know best. I don't read the specialised publications, but I pay attention to publications such as New Scientist and Nature. I also maintain contact with many good friends among my colleagues who date back to the time when I was more devoted to physics."

Asked how his scientific training has helped with his political and diplomatic work, Solana said: "I think that the intellectual training that one gets studying physics, the use of mathematics and logical reasoning for instance, and a certain discipline in decision-making, as well as the scientific way in which you approach problem-solving, can be considered useful for any profession. I think that clarity, disciplined thinking, all of these things, are good in helping you accomplish your professional goals and tasks, including in the realm of politics."

Interview

Viennese Views Exclusively for CorD

Wolfgang Schüssel, Austrian Chancellor

By Dragan Bisenic

E

Austria has politically and commercially influenced the region of the West Balkans for centuries. And today, with a substantial and increasing economic presence in the State Union, the Central European republic continues to play an important role in the region. With Austria's presidency of the European Union on the horizon, we spoke exclusively to Austrian Chancellor Wolfgang Schüssel.

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xplaining the mixed responsibilities in the region today, Chancellor Schüssel noted that "it is important for Belgrade to find a way to join the European Union", but also insisted that European and U.S. allies still had responsibilities in the Balkans and "unfinished work" to do regarding the future of the Serbia & Montenegro state union, and in particular Kosovo. He stressed that the issue of Kosovo would be among the most important topics during the Austrian presidency of the EU next year.

Addressing senior EU and U.S. officials at this February's EU summit during the visit of a senior U.S. delegation led by President George W Bush, Schüssel said that 'Belgrade shall not be excluded' during the resolving of Kosovo's status.

Describing the Balkans as 'a troublesome region', he said that the region had seen 'the most obvious and most spectacular successes in joints EU-U.S. efforts' that could 'definitely encourage other regions'.

Schüssel has undoubtedly acknowledged the strategic importance of Serbia, particularly on an economic level. He has noted that the country 'is accustomed to being the leading country in the region and, as such, has obvious economic prospects'. Speaking at commercial gatherings and conferences held in Salzburg last year, the head of the Austrian Government predicted that 'Serbia shall be the most interesting country in the future developments of South-East Europe'. He described Serbia & Montenegro as 'a huge country with an enormous potential', and claimed that Serbia could become an 'economic tiger' in due course.

A great number of successful Serbs call Vienna home.

Chancellor Schüssel explained that members of the Serb community 'hold leading positions in various areas of trade and commerce in the Austrian capital, and Serb-owned MSE's are

Interview among the best companies in Austria', With the Diaspora community flourishing in Austria, and Austrian companies continuing to command a powerful presence on the Serbian & Montenegrin markets, the maintenance of commercial links between the two nations is increasingly important. No surprise then that, in the past few months, both SCG President Svetozar Marovic and Serbian President Boris Tadic have paid official visits to Austria.

Speaking to CorD's editor in March, Chancellor Schüssel said that Tadic's February visit had been very successful. He hastened to emphasise that the two countries 'continue to maintain excellent bilateral relations. There are many excellent developments in the business sphere and our co-operation increased to a great extent. Austrian companies and enterprises display a great interest in Serbia. According to Chamber of Commerce data, there are approximately two hundred Austrian companies doing business in Serbia.

President Tadic came with 50 Serbian businessmen and left a very good impression on us. We do expect that commercial links will be further improved and more beneficial for both countries'.

During our discussion, special attention was given to the meeting of European Statesmen with U.S. President Bush, in particular the Austrian Chancellor's comments on the Balkans, as well as the methods, modalities and possibilities regarding further development of the political structure in Kosovo.

Chancellor Schüssel explained that he'd told President Bush the EU's standpoint was that the Kosovo solution could only be reached by guaranteeing borders and regional integrity, citizens' personal and property rights and the protection of ethnic minorities and religious sites.

Admitting that President Bush and his delegation presented 'no specific display of the American attitude in this regard', he felt there was general agreement regarding the principles of the Kosovo 'roadmap', though there was no

'Tadic came with 50 Serbian businessmen and left a very good impression on us.

Austrian premier said that the Balkans could only be a success story if "the Americans act together with the Europeans. That is the very first point emphasised in the talks. Just think about where we were ten years ago and where we are now. We had wars, and now there is a comprehensive peace. There are tensions, of course, but everything is under control and even the most dangerous conflicts were resolved by the actions of the international community. In terms of business developments, with some minor exceptions we have completely positive developments and economic growth in the past five years, measuring from to fifteen percent. This shows us that there is a 'Belgrade shall not be excluded' dur- five tremendous business potential in the Balkans. ing the resolving of Kosovo's status. Thirdly, we have an excellent example in the Balkans when it comes to a satisfactory division of labour proposed plan of action to reach the standards required and between Europeans and Americans. In the very beginning an ultimate solution for the troubled province. The the Americans were leaders in terms of military operations, Chancellor added that the U.S. did not signal any intention to however at this point in time we have about 19,000 European soldiers there, while there are only 1,800 act unilaterally in recognising Kosovo's independence.

Speaking of Belgrade's role, he said that he believed "it is Americans. The ratio is therefore 10 to 1 in favour of Europe. in the best interests of the European Union', and, after admit- This is a fact that clearly shows the important role that is ting he was not the man to scrutinise or interpret American played by the Europeans, as well as their intention to continstandpoints, he said: "I am of opinion that the proven wise ue to play that role in the future." and sensible joint standpoint is to secure Belgrade's particiCan we expect the European Union to assume full pation in the process". responsibility in Bosnia, with some sort of division of Turning to the wider issue of the region as a whole, the

KOSOVO

POTENTIAL

ALLIANCE

…if all parties take into account and maintain the European perspective, everything will appear to be very simple. A federalist system is an excellent example of what can be achieved by autonomy and decentralisation. This is probably the best way to organise a country..

Serbia 'is accustomed to being the leading country in the region and, as such, has obvious economic prospects'…Serbia shall be the most interesting country in the future developments of South-East Europe'…Serbia could become an 'economic tiger' in due course.

The Balkans can only be a success story if the Americans act together with the Europeans…in the Balkans we have an excellent example of a satisfactory division of labour between Europeans and Americans.

CorD | April 2005

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Interview labour between the EU and the U.S. existing in Kosovo?

I don't believe we can expect the exclusive responsibility of only one of these two parties anywhere. That was my crucial argument and the result of my talks with President Bush.

It is necessary to act carefully and jointly. There is a possibility that the UN will appoint a special representative for Kosovo, who will first consider and carefully assess the issue

Wolfgang Schüssel talking to CorD of standards before discussions about the standards can commence.

All these developments have to be supervised and accomplished under the auspices of the United Nations, of course, and as a result of joint actions taken by Europe and the United States.

Do you consider the Balkan nations as certain candidates to join the European Union?

When it comes to joining the Union, and its further expansion, the positive examples show that each and every region can be integrated with the European Union. Thus it is possible for Croatia, Serbia & Montenegro and Albania to do likewise. It

is clear that the genuine unification of Europe is not possible as long as the Balkans is not a part of the united Europe.

You have stated that boundaries should not be a central issue in Kosovo?

I stated precisely that from a European perspective, which is to be a compulsory perspective for the entire region; an importance of the traditional criteria that is to fade away.

Slovenia is already inside, Croatia is about to start the negotiations, Macedonia is signing the Stabilisation and Association Agreement, and we also believe that Serbia & Montenegro will soon strengthen its links with the EU. In that European perspective, the issue of boundaries becomes irrelevant.

For instance, we used to have problems with South Tyrol.

Austrians living in South Tyrol had a very painful experience with the boundaries. This boundary is irrelevant nowadays.

We have exactly the same money, a full freedom of movement and wide possibilities. From the European perspective, we can safely conclude that the situation in Kosovo will have to be changed, and that the issue of imposing boundaries and insisting on separation cannot seize the essential importance. The idea is to establish the principles, roadmap and guidelines, with the support of the U.S. and the EU, and carried out under the auspices of the UN in order to arrive at a mutually acceptable agreement for interested parties, namely Belgrade and Pristina. The accord of Belgrade and Pristina is the best way to arrive at a solution, since it is impossible to resolve the conflict by simply imposing a solution from outside.

Therefore, it is not necessary for Kosovo to become an independent state?

The issue of status cannot be narrowed to the issue of the boundaries. Instead, it is about more complex and, above all, quintessential issues. It seems to me that the U.S. agrees with the European perspective of how to resolve the Kosovo problem. It is simply a constitutional question. I believe that the talks are imminent. They cannot be imposed from the outside. I would like to stress that if all parties take into account

ZORAN DJINDJIC FUND

Austrian Chancellor Wolfgang Schüssel was very close to assassinated Serbian Prime Minister Zoran Djindjic. "He was one of the very few brilliant politicians, who was an example par excellence of the European vision and commitment that he lived himself", emphasised Schüssel when addressing the Parliament the day after the 12th March 2003 assassination of the Serbian Prime Minister - on the very same day when he was tabling the programme of his new government.

'We tried very hard to help Serbia find a road to the European Union' Schüssel stated. The Austrian leader pointed out that for him, as a former chief of Austrian diplomacy and later a Chancellor, the Serbian Prime Minister truly represented 'one of the very few hopes in Serbia and the entire region as well’.

'I believe that it is very important to understand Djindjic's legacy and to protect and strengthen those rare hopes still existing in Serbia, in order for assassins not to claim a double victory', stressed the Austrian Chancellor.

Immediately after the assassination, the Austrian Chancellor invited PM Djindjic's widow, Ruzica, to visit Vienna, a city where she and her husband had lived some years before. Early last year the Austrian Chancellor met the wife of the late Serbian Prime Minister in Vienna and promised that he would support the 'Dr. Zoran Djindjic Fund'.

Speaking after the meeting, Mrs. Djindjic said: 'I had a very emotional discussion with Chancellor Schüssel. He was not only a colleague of my husband, but a true friend. And he confirmed that he intends to be my friend as well'.

The Austrian Chancellor also said that he would immediately give €15,000 to the Fund as a personal donation. He also pledged to wholeheartedly continue to support the Fund in the future.

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Interview European Union and has a state identity that cannot be described as a weak identity.

Apart from Kosovo, there is a problem of the relationship between Serbia and Montenegro within the State Union. The European standpoint is favouring joint entry in the Union, claiming that it is a faster way to join than separate entries. What is your opinion on this issue?

Montenegro has the right to call a referendum in 2006 about the future of the State Union with Serbia. Let me add that the referendum in question could also influence a resolution of the Kosovo problem. I think that the European perspective is the best way to overcome these obstacles and problems. The Kosovo issue is an open question and by the summer an assessment of standards will have to follow. It will have to be done under the auspices the United Nations and only thereafter the talks about the status may commence. We hope that it is possible to find a single solution by

It seems to me that the U.S. agrees with the European perspective of how to resolve the Kosovo problem.

Wolfgang Schüssel and maintain the European perspective, everything will appear to be very simple. A federalist system is an excellent example of what can be achieved by autonomy and decentralisation. This is probably the best way to organise a country.

Federalism makes provisions to guarantee the protection of different identities, as well as preserving cultural differences. Let us take, for instance, the state of Belgium - a state with possibly the most intellectually challenging concept of federalism, with developed institutions which protect differences, however, at the same time it is a member of the

guaranteeing borders, integrity of the region, and full spectrum of citizens' rights. And that implies the freedom of movement, ownership rights, protection of religious sites and protection of the minority rights. These are the key principles, and within the principles thereof, the United Nations, supported by Europe and America, can find, and must definitively find, a solution.

What is meant by 'borders have to be guaranteed', taking into account that the Albanians from Kosovo demand full independence?

This is not a key question right now, since if we define the status upfront, then it makes no sense to initiate the negotiations.•

BIOGRAPHY

Wolfgang Schüssel was born in Vienna on 7th June 1945. Following his primary schooling, he attended a well-known classical grammar school in Vienna (the "Schottengymnasium") where he took his secondary school leaving certificate in 1963. He went on to study at Vienna University and received a Doctorate in Law in 1968.

Schüssel was secretary of the parliamentary group of the Austrian People's Party (ÖVP) from 1968 to 1975; from 1975 to April 1991 he served as Secretary General of the Austrian Business Federation, a sub-organisation of the People's Party.

On 24th April 1989 Schüssel became Minister for Economic Affairs in the coalition government formed by the Austrian Social Democratic Party (SPÖ) and the People's Party, under Chancellor Franz Vranitzky.

At the 30th Party Congress of the ÖVP, Schüssel was elected national leader of the Party on 22nd April 1995. On 4th May that same year Wolfgang Schüssel was sworn in as Vice-Chancellor and Federal Minister for Foreign Affairs in Franz Vranitzky's fourth government. He held the same posts in Chancellor Vranitzky's fifth government.

In Chancellor Klima's first government, from 28th January 1997 to 4th February 2000, Schüssel was again Vice-Chancellor and Federal Minister of Foreign Affairs.

On 4th February 2000 Wolfgang Schüssel was sworn in as Federal Chancellor and he was reappointed to the same post on 28th February 2003.

The Austrian Chancellor has visited Belgrade frequently, establishing excellent economic and political ties between Austria and SCG.

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Interview

COMMERCIAL CONFIDENCE

By Dragan Bisenic, Photo Mirjana Kotlaja

The Ambassador of the People's Republic of China, H. E. Li Guobang, is one of the most knowledgeable individuals of the recent events in the former Yugoslavia. He has spent almost 28 years of his diplomatic career by covering our region. 'I didn't visit Belgrade for more than eleven years between 1992 and the end of last year. However, I have observed a truly great transformation here, particularly in Belgrade and Serbia & Montenegro', said H. E. Li Guobang.

Despite the transformation of the nation, the friendly ties existing between the two countries have remained the same, as proven by the latest visits of local officials from Belgrade to China and vice versa.

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H.E. Li Guobang, Ambassador of the People's Republic of China in SCG

I

Noting the tangible infrastructure changes to the city, ambassador Guobang noted that 'in Belgrade there a lot of new buildings and building sites, especially in the New Belgrade area. A very nice sport arena has been completed. Both our societies have undergone a great deal of change, though the friendly ties of China and Serbia & Montenegro were not broken.

Serbian President Boris Tadic paid an official five-day visit to China in mid-February, which the Chinese ambassador described as 'a very successful visit indeed'. Guobang explained: "He visited Dalien first. It is a lovely seaside city with a population of six to seven million. He paid a visit to Beijing afterwards and during his stay had discussions with the Deputy President of the Republic. Mr. Tadic also met the president of our Parliament [National People's Congress] as well as some ministers, including our Foreign Minister, Mayor of Beijing etc. They exchanged opinions about further developments of our political and economic ties, co-operation among the various experts from our countries and further collaboration and strengthening of the links between Beijing and Belgrade. Let me mention that Beijing and Belgrade were already connected with the long-term friendship. I am of opinion that the visit was above all successful and that it gave a tremendous boost and contribution towards further expansion of our bilateral relations. As I have already stated, we maintain a good relationship. There are changes in our and your society; however, the friendship is here to stay. I can surely state that our friendship stood a test of time and survived all the challenges.

Therefore, such a friendship flourished both in the good times and during the bad times."

Noting an increase in official communication between Beijing and

Interview Belgrade, Ambassador Guobang said: "Recently there have been a lot of exchanges of our delegations. Prior to Mr. Tadic's visit, the president of the Parliament of the State Union of Serbia & Montenegro, Mr. Zoran Sami, also visited our country, while a Vice-Chairperson of Chinese Political Consultative Conference, Madame Liu Yandong, was here.

From the Chinese side, at the beginning of this year, a deputy minister of Education paid a visit to your country, and some other delegations are expected. I believe that a perspective of further development of our relationship is indeed a good one."

After the changes in Belgrade in 2000 we observed a certain impasse in the relationship between Belgrade and Beijing, and even some problems occurred. Are we on the right track in terms of overcoming such obstacles?

I think it is a matter of the past. It is true, however, that certain misunderstandings surfaced. From the Chinese side at that time, no changes whatsoever were forthcoming when it comes to a political attitude towards Yugoslavia, or towards Serbia & Montenegro. We develop our relationships and cooperation with all countries strictly based on principles of mutual respect, equality and common interests, with the policy of non-interference in the internal matters of any country, irrespective of the power-sharing structures in place. We simply respect the popular choice.

scribe to the attitudes emphasizing that now is the right time to resolve this issue. In addition to this, some large Chinese companies, such as Hunawei, are increasingly expressing an interest in business co-operation. Hunawei is a young and huge business enterprise dealing with the production of telecommunication equipment. It has opened its representative office in Belgrade. There are some other big and strong companies arriving here as well. I hope there are more companies to arrive and set up businesses here.

Talking about debt, which is an essential item in our future relationship, what kind of possibilities for the solution of that problem have been explored thus far and how far have we progressed on this matter?

As a representative of the government I do not interfere with the negotiations of the two sides about the debt. We just offer assistance and expect commencement of talks regarding this matter. It is evident that

It is a principled policy of China to favour mutual respect. This means mutual respect for sovereignty and territorial integrity, and mutual respect for the popular choices.

How would you assess current economic co-operation between China and Serbia & Montenegro; and which avenues for the possible expansion of economic, cultural and other relationships have you identified?

When it comes to economic ties, according to my data the exchange of goods is on the rise. Two years ago we had almost $150million of exchanged goods for both sides and in 2004 it was about $170million.

The classic exchange of goods still commands an important role. The time has come for both sides to think about other ways to co-operate, namely about mutual investments and production. In order to achieve that, it is compulsory to get to know one another better. It would be great if the managers from our countries participated in trade fairs in both countries and exchanged visits, with a simple goal of examining possibilities for all possible modalities of mutual co-operation. Businessmen from Serbia & Montenegro can travel to China without hassles. I sincerely hope that the Chinese managers would also be able to travel to Serbia & Montenegro and establish links. Without mutual understanding and contacts there is no co-operation. As far as investments are concerned, in recent years Chinese entrepreneurs started investing overseas. I hope they will come here too.

You possess considerable Balkan experience, having served both in Slovenia and Croatia. Could you compare the scope and scale of Chinese economic co-operation with Serbia & Montenegro and her neighbours?

The Chinese exchange of goods with those countries is significantly higher, irrespective of the fact that they are smaller than Serbia & Montenegro. There are no outstanding questions with those countries, while there is a problem here in our economic relations - the problem of outstanding debts. The issue of debts between Sinochem Corporation and Oil Industry of Serbia [NIS] has been resolved to our mutual benefit and satisfaction. Some of your officials indicated recently that the time has arrived to also resolve other outstanding debts among the banks. The solution of these problems will undoubtedly help to create mutual trust and further expansion of our economic ties. I fully sub-

only through dialogue, namely mutual talks of the concerned parties, can we arrive at a solution that would be acceptable to both countries.

Since the resolution of that problem has been pending for a few years, it is obvious that Serbia & Montenegro must resolve that issue first before any expansion and growth of our co-operation is to follow?

The issue of debt is not a pre-condition for mutual visits of our officials. However, it definitely presents an obstacle when it comes to the establishment of mutual trust among business partners. I have noted a good sign whereby an increasing number of officials in Serbia & Montenegro make an effort to resolve this issue as soon as possible. I hope it will happen soon.

What are the possibilities of military co-operation between our countries?

Our military co-operation is already a matter of tradition. During the old Yugoslavia [SFRY] and the FR Yugoslavia, as well as nowadays, military co-operation has always been good. In September last year Defence Minister Davinic and the Chief of Staff at the time, General Branko Krga, visited our country and had talks with our Minister of Defence, our Chief of Staff and other officials from the defence sector. On that occasion the Memorandum on co-operation between the two Defence Ministries was signed. Very often there are personal exchanges. Some of your citizens travel to China in order to study Chinese language or medicine, while our citizens come here. We expect our military delegation to arrive soon for talks with your officials about military co-operation.

The military collaboration is a true expression of the depth of development of our relationship. The Chinese side attaches a great significance and pays great attention to this aspect of our co-operation.

What are the shared points of view between China and Serbia & Montenegro as far as sovereignty is concerned?

It is a principled policy of China to favour mutual respect. It means mutual respect for sovereignty and territorial integrity, and mutual

TRADE

ARMS

DEBT

When it comes to economic ties, according to my data the exchange of goods is on the rise. Two years ago we had almost $150million of exchanged goods for both sides and in 2004 it was about $170million. The classic exchange of goods still commands an important role.

Our military co-operation is already a matter of tradition‌In September last year Defence Minister Davinic and the Chief of Staff at the time, General Branko Krga, visited our country and had talks with our Minister of Defence, our Chief of Staff and other officials from the defence sector. On that occasion the Memorandum on co-operation between the two Defence Ministries was signed.

The issue of debt is not a pre-condition for mutual visits of our officials.

However, it definitely presents an obstacle when it comes to the establishment of mutual trust among business partners. I have noted a good sign whereby an increasing number of officials in Serbia & Montenegro make an effort to resolve this issue as soon as possible.

CorD | April 2005

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Interview respect for the popular choices. We always behaved in that manner, during the old Yugoslavia [SFRY], the Federal Republic of Yugoslavia [FRY], and nowadays. And we always strive for good bilateral relationships. Our co-operation is firmly based upon these principles of mutual respect.

We appreciate the principled position of Serbia & Montenegro when it comes to Taiwan. This issue is of central importance to the Chinese people, since it deals with sovereignty and territorial integrity of the entire Chinese nation, including the citizens of Taiwan.

There are 23 million residents on the island and we all do our utmost to achieve a peaceful unification. We received great support from you in this regard. We had a session of the Chinese National People's Congress [parliament] recently. The Parliament adopted the anti-secessionist law. It mainly deals with Taiwan. In that law we favour a peaceful solution to this problem in accordance with a principle 'one country-two systems'. In that law there are propositions for further development of our links, for personal exchanges, travel to and from the mainland, economic and cultural links, as well as cooperation in other fields.

It is hard to imagine how the bombardment of our Embassy took place‌ I never expected that there was the possibility of targeting a diplomatic mission.

When it comes to Kosovo, and since there are indications that during the coming summer the assessment of achieved standards in Kosovo and possible change of status are envisaged, can we expect China, as a Security Council member, to support the independence of Kosovo?

I personally believe that now it is of utmost importance to implement the standards in Kosovo and only afterwards to discuss the issue of its status. Up until now and in the future we will respect Security Council Resolution 1244 and we will also respect the sovereignty and territorial integrity of Serbia & Montenegro, as stated in the Resolution.

It is necessary for Belgrade and Pristina to stage direct talks and to make an arrangement about the future.

Yes, but the role of the foreign factors is also important, namely the Security Council plays the most important role, and China is a Security Council member?

It is essential to have direct talks between Belgrade and Pristina. If they arrive at an agreement, as of recently we may fathom that will in turn be a compromise, and it would be much easier for the international community. Nevertheless, Resolution 1244 is the bedrock and a key principle.

I would like to say that you insist on a mutual agreement and you do not condone any unilateral move. Will you accept a unilateral step of Kosovo supported by some international players, namely a proclamation of independence?

It is up to the Security Council to decide the matter.

How important was the Balkan experience for your policy creation towards Taiwan. How closely has China followed those developments?

The Taiwan question is not identical to the Kosovo issue. We inherited the issue of Taiwan after the civil war. Throughout history Taiwan has been a part of China. Only in 1949, when we won the civil war, did Chang Kai-sheck and his government escape to that island. It is the very same language used and we are the very same people. We advocate peaceful unification. We persistently maintained our intention to resolve the Taiwan problem within the framework of a single China, in other words through the 'one China - two systems' policy. In the same fashion that Hong Kong has a different political system. We insist on a policy 'one country - two systems' in Hong Kong and that policy is not subject to change.

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Numerous intellectual and CIA analysis predicts your country will become one of the most powerful forces in the world within 10-15 years, perhaps in some aspects to become the most powerful.

How does China perceive the possibility of assuming global responsibility for the entire world?

It is great encouragement for us and at the same time a great responsibility. We have to increase our efforts to develop better and faster. It is a fact that in the past 26 or 27 years, since 1978 when we opened to the world and initiated reforms, we had an average GDP growth of 9.4%. China has changed dramatically. The entire value of GDP in the past year is in excess of $1,650billion. It would amount to slightly above $1,100-1,200 per capita. Our reserves growth is estimated to be in excess of $600billion. Our exports are increasing by 30% year-on-year. China has indeed changed for better.

I remember times when we even struggled to provide enough food. We plan to achieve a GDP level of $3,000 per head by 2020. We have strong faith and trust in the future. Realistically speaking, there are still serious obstacles to our development. For instance, there are still harsh conditions for people living in villages. We have immense differences among urban and rural areas, and between eastern and western parts of the country. However, we already have a GDP level of $5,000 per head in Shanghai.

In some medium-sized cities it amounts to an even greater figure. However, in the western areas it is much lower. We initiated a strategy in recent years to address these imbalances and speed up development in the west of the country, in order to reduce these differences. We have high hopes for the future, and are capable of resolving our own problems.

As a country which was successful in continuous economic growth and prosperity across the spectrum, what would you recommend to a country like Serbia that needs all of that? What is the most important feature: vision or political leadership?

In the past 28 years of our development we have gained precious experience. The very first condition would be stability of the society and the economic path is the first and foremost task. Without reforms and without opening up to the world there is no development. These three items, namely stability, development and reform, are strongly intertwined and connected.

March saw the anniversary of the bombardment of Serbia & Montenegro, when the old Chinese Embassy was hit and destroyed.

How you plan to mark that occasion?

It was terrible. It is hard to imagine how the bombardment of our Embassy took place. During the bombardment I was the ambassador in Croatia. I closely monitored the television every day and followed events.

However, I never expected that there was the possibility of targeting a diplomatic mission. It is an unprecedented event. A journalist who was killed on that day was my school classmate. We studied together in the same group, she was an exceptional lady, hardworking and enjoyed her job, her duty. The second journalist was a student of my wife. We were, and still are, very sad in this regard.

We marked that poignant occasion on 8th May 2004, when all members of our Embassy staff gathered in front of the destroyed building. We will mark the occasion this year as well. They stayed in the most difficult moments and died in order to inform the Chinese people and the wider world audience about events related to the bombardment. That is why I emphasize that our friendship continues even in the harshest moments.

The people that died, your colleagues, male and female journalists, gave their tremendous contribution for the development of our relationships.

They will be fondly remembered in our memories.•

FIC WHITE BOOK

PRACTICAL RECOMMENDATIONS

By Zoran Knezevic

The Foreign Investors Council (FIC) considers that in order to increase foreign investments in SCG it is necessary to formulate a clear strategy for business sectors and focus on determining investment groups.

They insist that, as long as investment depends on the small investments of old investors', significantly greater inflows of foreign funds cannot be expected. Thus, new green-field investment opportunities have to be identified for the investors representing major investment capital in OECD countries.

R

eforms in Serbia are advancing more quickly than expected, though the application of new laws that would bring Serbia's economy and society closer to European standards are overdue. The year ahead will be full of challenges for the Serbian economy, but it also brings huge opportunities for the continuation of economic growth, improvement of economic co-operation and sending of positive signals to the world that Serbia and Montenegro are ready to do business - this was the evaluation given at the Hyatt Hotel presentation of the White Book of the SCG Foreign Investors

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Council in early March.

Over a hundred representative members of the FIC, which have invested over â‚Ź2billion in the Serbian economy to date, were united in their insistence that sending such positive signals is of "great importance to the acceleration of economic links with developed European countries, to increasing the level of foreign direct investments (FDI) and to achieving a positive evaluation of the EU feasibility study". The Foreign Investors Council views the Government of Serbia as a basic lever that can support this process.

The FIC selected some basic aims as key items that Serbia should work on in order to improve its economic development, and which tally with reform goals recommended by the OECD, but also by the European Council, IMF and the World Bank.

Infrastructural reforms, principally in the telecommunications field; improvement of the communication network, business-industrial field, further opening and stimulation of free market conditions, as well as in the field of regulating conditions for acquiring and utilising land for construction of business and residential properties.

They have recommended that Serbian authorities pass and implement new regulations, like bilateral agreements on free trade with some countries, bankruptcy law, electronic signature, improvement of the work of judiciary. Foreign investors point out to great problem deriving from the lack of implementation of already existing legal regulations.

An important objective of Serbian economy is also to achieve positive feasibility study, which Serbia should receive during March, which would mean undertaking of clear and strict reforms, in order to get closer to European economic standards.

In order to increase direct foreign investments it is necessary to have, think in the Foreign Investors Council, clear strategy for busi-

FIC WHITE BOOK ness sectors and targeted determination of investors' groups. As long as investment depends on old investors' small investments, one can not expect significantly greater inflow of foreign funds, so that new green-field investments must be searched for within those investors who manage majority of investment capital in OECD countries.

The White Book summarizes the greatest obstacles for investors during investment and expansion of jobs in Serbia, as well as suggestions for concrete requirements which should be fulfilled in order to remove those obstacles.

By analyzing economic movements in Serbia during past years, the Foreign Investors Council has found out that after relatively modest economic growth of three percent in 2003, it has been increased during 2004 to seven percent, and in last November it was 12 percent. Especially notable growth has been recorded in agriculture sector, as well as a little bit smaller in service industry.

Until last October the pace of private sector growth increased for 12.8 percent in relation to 2003, while in the same period creditworthiness of that part of economy has been increased for around 9.6 percent, although an obvious slowing has been noticed in that segment. Simultaneously, according to data from October 2004, a high unemployment rate has been stated, amounting to 31.7 percent, which are all problems facing the private sector, coupled with the fact on keeping high rate of share of grey economy, and therefore that sector is not showing good perspective.

Because expected business growth of six percents in Serbia during 2004 has not been reached due to bad business environment, continuation of firm monetary and fiscal policy, as well as lack of stimulus for agricultural development, foreign investors do not expect that in 2005 Serbia will be able to count on greater growth of four percent.

Despite unexpected growth of inflation during the last year, the Council considers that in the last four years significant advancement has been achieved in that field, and that the inflation has been tightly controlled (in 2004 the inflation has instead of 9.7 increase, risen to 13.8). As the main conditions for inflation growth the Council has recognized the leap of oil and basic metals' prices on world Commodity Exchange Markets, as well as dangers for maintenance of this year's low rate. VAT introduction is seen as reason for inflation as well, resulting in increase of prices in some fields and increase of power prices. In 2005, Foreign Investors expect inflation growth of 12.4 percent, but also, that it should again be in one-figure range during 2006, in order to continue nearing to usual EU rates.

Increase of foreign currency reserves of the National Bank of Serbia for three percent by the end of August 2004 has been pos-

The White Book summarizes the greatest obstacles for investors during investment and expansion of jobs in Serbia, as well as suggestions for concrete requirements. itively evaluated, and they are currently amounting to four billion dollars. They expect the NBS to continue handing strict monetary policy during the next 12-18 months, together with the forecast on continuous growth of foreign currency reserves, which is linked to expected decrease of interest rates.

As a basic economic aim of the Serbian Government, the Foreign Investors see maintenance of low inflation rate, while the NBS should have to continue maintaining the stable course of dinar after that period, "to which it has turned on a blind eye, due to unexpected inflation growth, while on the other side business operation conditions deteriorated". The White Book presents expectation that the course of dinar shall continue to gradually adapt to real market in some medium-term period, which could add to additional slowing down of economic growth, but also result in decrease of foreign help. Although Serbia has initiated

MIROLJUB LABUS: FISCAL POLICY

RADOVAN JELASIC: 2.6 BILLION

The priority of the Government of Serbia, pointed out Mr. Labus, remain European integrations, but special attention shall be directed also to decrease of non-commercial risk, increase of macro-economic stability, attraction of foreign investments, acceleration of privatization process and restructuring of public companies.

Fear from uncontrolled inflation, stressed Labus, is unfounded, because the Government of Serbia is decisive in its intention to apply strict fiscal policy, but there will not be any dinar devaluation or freezing of salaries.

The Governor of the National Bank of Serbia, Mr. Radovan Jelasic has announced the continuation of a merging trend in banking sector through privatization and merging of the banks.

- The number of banks has in the last year decreased from 47 to 39, while the banking sector balance has been increased for 41 percent and is 6.5 billion euros. Deposits have been also increased for 58 percent and amount to more than 2.6 billion euros.

Some additional four to five foreign strategic investors should enter the banking system of Serbia through privatization of couple of banks, announced Jelasic.

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FIC WHITE BOOK

Lack of law

implementation P

resident of the Foreign Investors Council, Mr. Mike Ahern, has evaluated that the acceleration of reforms in Serbia is lesser than expected, that the implementation of new laws is late and that besides resolving those problems, Serbia also needs an open market for construction land for larger inflow of direct foreign investments.

Mike Ahern, President of the Foreign Investors Council Ahern expressed his expectation that the Government of Serbia shall increase its efforts for start of implementation of Bankruptcy Act, to enforce Land Title Registry reform and to start implementation of numerous laws passed during 2004.

Pointing out to the Council influence on development of S&M economy, Mr. Ahern evaluated that the success in Serbian economic development during 2005 shall be measured by inflow of foreign investments, where urgent measures of the Serbian Government are necessary, the development objectives of which are in line with the objectives of the Council.

- Decrease of budget deficit has a positive impact for Serbia, but there are also fields in which we expect Serbia to do more.

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negotiations on debt write-off with the London Club of Creditors of 1.8 billion dollars in June 2004, by which external debt would be decreased below 65 percent of gross national product, the mentioned problems shall make significantly difficult the decision making processes in the field of economy.

Price growth in the last two years was, consider the Foreign Investors, caused by fall of productivity, and simultaneously by decrease in exports. Therefore the Government has decided to restructure big state enterprises in order to privatize some of their parts and so has influenced increase of competitiveness of domestic goods and services.

Banking sector privatization has been awaited as very positive, and that could have significant share in increasing economic activity, especially of export, which has grown in 2004 both according to official and real rate.

Simultaneously, the Foreign Investors state, Serbia is still very dependent on import, but that is not something which is significantly different from other countries in the region. Increase in country's indebtedness is also not considered as something unusual, because, as stated "it is a consequence of growing need for export but, also of internal consumption". Foreign Investors consider that by a better economic policy our deficit in exchange with the world should be decreased from current 10 percent of GNP, to five percent in the medium time period, but in 2005 they expect it to be 11.1 percent.

With decreased offer of attractive state owned companies the Foreign Investors expect decrease of direct investments in the next period, but the investments through concessions and donations shall be continued in order to reach around 60 percent of GNP by 2010.

In May this year it is expected that Serbia should sign a threeyear financial arrangement with the IMF, which should enable the country to achieve B+ credit rating, coupled with complete regulation of obligations towards the London club, by which Serbia would more easily and under better conditions appear on capital markets.

Foreign Investors consider that Serbia should continue to perform strict macro-economic policy, by which the country has succeeded to decrease its external debt to around 62 percent of the GNP, but also that the existing payment deficit requires restructuring which would enable growth of exports in medium term.

Simultaneously, the Investors warn, in order to decrease the rate of uncovered exchange and necessity to improve export abilities, macroeconomic stability should not be endangered.

It has been recommended to Serbian Government to be "very cautious with the attempt to decrease budget deficit in a short time to less than 1.7 percent of GNP by decreasing social allowances and public sector salaries". Swift reform, implemented without economic foundation in the pension system can exert just an additional pressure to the fiscal policy, because according to the evaluation of Foreign Investors, the current shortage of the pension fund amounts to around six percent of the GNP. In order to preserve macro-economic stability, it would be necessary, consider the Foreign Investors, to continue strict fiscal policy. As positive impact in this field, the Foreign Investors have evaluated three-year plan of the Government of Serbia for the period 2005-2007, according to which the economic growth should be around five percent a year, growth of foreign investments should

INDEBTEDNESS During presentation of the "White Book" one could hear that the S&M has just in the last year indebted itself for two billion euros, out of which private companies for one billion euros, banks for 500 million euros, and the rest is state debt for IMF and the World Bank structural loans. The credits used by companies were most often used for import of equipment and raw materials, which can be stimulative for economic growth.

FIC WHITE BOOK We have been disappointed by the level of dialogue with the Government, because our experience shows that the countries in which the dialogue has been developed are much more successful than those where the dialogue is on a lower level. We are also disappointed by the level of implementation of law in 2004, but there was no progress within the real-estate market, said Ahern.

He suggests to the Government of Serbia to use expected positive results of the Feasibility Study, in order to communicate with the external world, and to explain that it has harmonized itself for accession to modern European and global economic integrations.

A positive move achieved in the last year is represented by signing of the Free Trade Agreement in the region, as well as adoption of the Value Added Tax Law. Ahern also evaluates as positive impact the high level of fiscal control, but points out

We have been disappointed by the level of dialogue with the Government, because our experience shows that the countries in which the dialogue has been developed are much more successful than those where the dialogue is on a lower level. the new Labor Act as one of the biggest disappointments for foreign investors, which in comparison to the previous one represents a step backwards.

- The most important thing is that the Serbia achieves a positive Feasibility Study during 2005, and to prepare for the Assembly of the European Bank for Research and Development. It is also necessary that the Bankruptcy Act, Electronic Signature Act and Foreign Trade Act should be accepted and implemented - stressed Ahern.

Foreign Investors, Ahern pointed out, want to work jointly with the Government on improving the investment climate in Serbia and evaluated as positive impact "progress achieved in the process leading to accession to the European Union, increase of direct foreign investments' level, reform of infrastructure and free market development, as well as application of legal regulations that can significantly stimulate economic development".

- Foreign Investors want to operate in legal framework enabling them to increase predictability of business climate, as it has been performed in one economic segment with the Bankruptcy Act or Electronic Signature Act, said Ahern.

Ahern has especially referred to the passing of new Labor Act and said that there was not need for Serbia to pass new legal enactment in this field, because according to his opinion, the previous one "was satisfying" and it had "necessary flexibility". The new regulation shall, considers Ahern, cancel that flexibility, which is a step backwards for Serbia in this field.

- Strict harmonization of the existing regulation with the European and global standards was not necessary, because the earlier legal enactment on labor was a solid and modern solution, said Ahern.

Ahern has during speech at the presentation of the White Book also pointed out that he would like to see "that the Government has more strategy in attracting foreign investments, for which political stability is very important, and to enable strict application of law ".

- I think that there isn't any stability problem in Serbia. But, working with the foreign investors I can see that they also have an opinion about Serbia, which is not based on reality, and that is the thing we should work on", concluded Ahern.•

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increase from recent 16 to 20 percent in 2007 and real increase in exports of 15 percent annually should retain low inflation rate.

Increase of investments is expected before all in private sector, but also in parts of public companies that should be offered for sale.

This would additionally require decrease of costs, because Serbia is currently spending 10 percent of the GNP for salaries in public sector, as well as 13 percent for pension fund, while at the same time appropriations for policy and military are still greater then for education, health protection and welfare. Necessary layoff of workers in order to achieve attractiveness of companies that should be sold, and necessity of grants to industrial companies shall represent the greatest challenges for maintenance of country's monetary stability.

According to preliminary and incomplete data for 2004 received from the Privatization Agency, it is stated that at tenders and auctions 257 companies have been sold for total price of 107.5 million euros. For investments and social programs for employees in those companies, additional 102, that is 2.5 million euros have been used. Simultaneously, 31 companies were sold through the capital market for total of 137 million euros. The majority of companies that have changed owners have been sold to domestic legal or physical entities. It has been noted that some 60 large systems are in the restructuring process.

In general, according to the evaluation of Foreign Investors, the privatization has been slower in 2004 than in 2003, as well as that during the last year only SMEs have been sold, while the big companies were not offered for sale. The Council therefore suggests that the Serbian authorities harmonize the laws pertaining to provision of conditions for business operations, regulating the issue of property land rights in order to make it more attractive for investing, as well as to establish efficient cadastral service.

Speaking at the presentation of White Book for 2005, Miroljub Labus, Vice-President of the Serbian Government has pointed out that political risks in the country are decreasing, which represents a better base for achieving better OECD evaluation, which can positively result in decrease of interest rates for credits received by Serbia.

The National Bank Governor has announced further consolidation within the insurance sector, which has started a few months ago, by withdrawing licenses for operation of insurance agencies that have operated against the law and without respect to operation conditions, as well as the state intention to start privatization process of DDOR insurance agency, covering one third of Serbian market.

As one of the objectives of monetary and fiscal policy, Mr. JelaĹĄic has stressed the need that a state decrease real public consumption by enforcing the measures for control of salaries, channeling consumer credits and by increasing mandatory bank reserves.

OECD South Eastern Europe Investments Program Manager, Mr. Declan Murphy said that Serbia should be engaged not only on regional, but also on the global level, in order to attract foreign investments.•

RECOMMENDATIONS The Foreign Investors Council has otherwise expressed in the White Book, positive attitudes in relation to reforms in Serbia, objections on account of wrong Government moves, but also the expectations of foreign investors who primarily want improvement of business climate in Serbia. The Council has expressed its marks and recommendations in 19 fields: Building European Partnership; legal and legislative frame; privatization; tax policy; payments and audit; public administration; financial and banking sector; leasing; property (business offices, land..); insurance, pensions and social reforms; telecommunications; environment; traffic; media; energy sector; mining.

Interview

Professionalism prevails After three years serving as Serbian Finance Minister in the cabinets of prime ministers Zoran Djindjic and Zoran Zivkovic, financial wizard Bozidar Djelic has returned to his roots in consultancy - a profession he revelled in for a decade abroad, prior to his return to Serbia following the democratic changes of October 2000.

With a team of experts at his side, Djelic has established Altis Consulting, which assists companies to improve their performances, and Altis Capital - a classic investment bank which helps connect companies and direct investments, as well as dealing with other classic investment banking activities.

By Vojislav Stejanovic, Photo Goranka Matic centage of ownership and one of the key managerial roles. We also represent the second largest bank in the world, Credit Agricole, in its attempts to penetrate the Serbian market. We will also strategically support Energoprojekt".

How do you attempt to persuade foreign investors to invest in Serbia?

In principal, I am trying to be professional. We do not exaggerate anything, but there are no reasons not to show our

At this moment, regarding market conditions, Serbia is not completely on the right path. As such, I am professionally attracted to a turnabout in economic policy: firstly for a reduction in public spending and the selective increase of custom rates.

Bozidar Djelic, former Serbian Finance Minister, professional consultant

S

peaking exclusively to CorD this month, the former finance minister explained: "My ambition is not only to work from transactions, but also to build up institutions too. It is not enough to be the best in Serbia, but we should aim at the world level. So far we have acted as advisors to the Grand Prom in their original way of merging when their Slovenian partner purchased the controlling package in Grand Prom, but the owner of that company received a certain per-

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CorD | April 2005

'trumps'. It is clear that Serbia is still risky for investing, but is also a very interesting area for the braver element of investors.

Of the countries which will not be EU members after 2009, Serbia has the biggest market. But there are investors who will wait for certain political issues to be resolved. The way things have been developing, for instance in Knjaz Milos, has brought many people to the situation where they ask themselves whether Serbia has sufficiently developed institutions.

The whole fuss regarding the revision of privatisation did not help either. Along with that, the U.S.'s sanctions provided a signal to a number of American companies not to consider Serbia at all as a potential market. The competition is very strong, especially with Bulgaria and Romania.

As regards presenting Serbia as an investment destination, I think that we should take advantage of the increase in the segments of the market which are yet to happen - banking, insurance, leasing and other financial services. Also the hunger of the market for various other goods is not to be ignored.

Interview However, that has limited potential on the domestic market.

The second possibility is the bigger infrastructural investments which will be financed from domestic sources, but also through concessions and state-private arrangements - such as investments in the fields of water, recycling, road infrastructure, energy and telecommunications. It is certain that part of those investments will be in capital, but those are investments which satisfy the needs of the domestic market.

The third thing is those investments which should result in the establishment of industrial sections whose real aim will be to satisfy the European market. Those investments should come because the tax policy in Serbia in the next ten years

When the biggest capacity existed in the Government we were more the creators than the consumers of that policy. Now it is perhaps the time for us to be more consumers and less creators. However, as Deng Sijao Ping said: "it is important that the cat catches the mouse". will be more favourable than in surrounding countries, labour will be cheaper and the EU and Russian markets will be open.

Apart from traditional industry, I am also hoping to see the arrival of the IT industry.

How do you predict that the Serbian economy will develop in the next few years?

The key questions investors are asking are whether the projection of the economic growth of 4-5 percent per year, the decrease to single-figured inflation and the possibility of servicing debts without bigger problems are realistic. Experienced investors know that no country has gone through the first ten years of transition without facing at least one big macroeconomic problem.

The big allergy of the nation to hyperinflation helps, because it is known that such a thing is politically untenable.

That fact ensures that a similar scenario will not be repeated like, for instance, in Bulgaria, where the brutal sliding of macroeconomic indexes took place.

As regards investments, I think that they will be partly introduced through privatisation and partly through green-field investments. The real challenge will be to thoroughly analyse those things which world business leaders will, unavoidably, have to transfer from the EU area in the next 4 - 5 years, and that their calculation between Serbia and China is profitable.

Do we require a turnaround in economic policy in order to achieve that?

At this moment, regarding market conditions, Serbia is

Bozidar Djelic not completely on the right path. As such, I am professionally attracted to a turnabout in economic policy: firstly for a reduction in public spending and the selective increase of custom rates.

The administration acted very clumsily when they magnificently increased MP’s and ministers’ wages. I do understand that the intention was to satisfy the elite, reduce corruption and attract high quality cadres, but I think that it was carried out in an amateur way. It was impossible, on the current level of poverty, to avoid that all other civil servants, regardless of whether they are doctors, judges or professors, would react in a chain by demanding the same. The number of civil servants should be decreased and those who have pretensions towards

CUTTING THE DEFICIT

According to Djelic, "The foreign trade deficit of 7.4 billion dollars and imports totalling an unbelievable 45% of GDP, as well as the deficit of the current liabilities of 15%, are not maintainable. That can be reclaimed either through devaluation when the purchasing power in euros would drop - though that would be the worst solution - or through the realistic decrease of demands. That is resolved either through payment moderation, firstly in the state sector, or through a special tax policy. Finally, there is the possibility to bind spending through the customs policy, especially for consumer goods. But that is a politically unpopular message to the middle class, which has just reached the moment when they can afford to purchase something. But that is unavoidable."

CorD | April 2005

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Interview high wages should be disappointed. Public companies will be a great challenge in that way because control of wages and employment has been lost there.

As regards the reduction of spending in the private sector, that can also be achieved. At the beginning of Poland's transition, the state introduced a tax on wage increases. I hope that we will not have to resort to such measures. In Serbia there isn't the same level of patience among citizens that existed in other countries in transition.

There citizens started to earn much higher wages and pensions only after years of gathering investments. The other way to reduce spending is the selective increase of customs taxes.

The turnabout in economic policy should be enthroned in the new stand-by arrangement which we will have with the IMF. It is obvious that we will not maintain the dead line for completing the current arrangement, but a new one, three or five years long one, could be signed this autumn.

all prefer it if we perhaps did not do what is best for the trade policy if that would prevent any eventual uproar. I would concentrate the increase in custom rates on consumer goods, which would additionally encourage investors to make their own factories in Serbia, as Gorenje did.

It is necessary that we have a mid-term macroeconomic plan which will show foreign investors that Serbia will have managed to get through by the skin of her teeth at the end of this decade. At this moment I think that we cannot do it without the agreement with the IMF. That institution is a very good excuse to do things which are not popular but which are necessary

Would the increase in custom taxes have negative effects on relation between Serbia and international institutions, considering that the state "brutally" reduced custom taxes almost immediately after the 5th October changes?

Without intending to blame anyone, I would like to say that this was done without the knowledge of Djindjic's Government.

Poland also reduced customs taxes in order to break local monopolies and lobbies. Mistakes in economic policy are always paid for. Two cardinal mistakes were the fixed dinar exchange rate, which the NBS (Serbian National Bank) kept in 2001 and 2002, because the Governor was a politician and not a technocrat. Slovenia cleverly let their tolar fluctuate and that did not jeopardise the competing of Slovenian products for one moment, nor did it diminish the purchasing power of their citizens. In Serbia we went for short-term political points. In 2003 that started to change, but there is still an empty space. In order to avoid the devaluation which would be very harmful in the next three to five years, the dinar should realistically devalue by 3-5 percent above the difference in inflation.

The other thing is customs. However, if the need for an increase in certain custom rates arises, and knowing that Serbia will not become an EU member in the next 5-7 years, I think that those institutions will realise that it is the right moment to make some corrections in that sense. They would

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Does the capacity to successfully carry out such negotiations exist in Serbia?

I think it does exist. Serbia was the leader in reforms because it had a "technocratic moment", but that moment was "broken" because of small political ambitions and is now becoming established with difficulties. However, it is clear that the Serbian determination to enter the European Union is so strong as to be the fusion for many positive things.

With that, the fragile financial situation unavoidably gives strong stimulants to Serbia to have an efficient arrangement with the IMF. Regardless of what that capacity is like, I think that this will happen.

Do you think it is a positive factor that the transition in Serbia relies so much on the IMF? When the biggest capacity existed in the Government we were more the creators than the consumers of that policy. Now it is perhaps the time for us to be more consumers and less creators. However, as Deng Sijao Ping said: "it is important that the cat catches the mouse". It is necessary that we have a midterm macroeconomic plan which will show foreign investors that Serbia will have managed to get through by the skin of her teeth at the end of this decade. At this moment I think that we cannot do it without the agreement with the IMF. That institution is a very good excuse to do things which are not popular but which are necessary, as is the case in all countries with fragile coalition governments.

What would be your role in the future devising of Serbian economic policy?

The virus of public life has got into me, and experience shows that this virus is not easy to get rid of. There is great pressure on me to be present in public life. On the other hand, the forthcoming period has to be the period of financial consolidation for me. In the last four years my budget "melted" a bit. My aim in the next couple of years is to provide for myself and my family, and then return to public life with a free mind.•

Interview

Dragan Kojadinovic, Serbian Culture and Media Minister

By Jelica Putnikovic, Photo Mirjana Kotlaja

Serbia's state-owned print and broadcast media companies are to be privatised this year. Announcing genuine reforms in the media field, Serbian Culture and Media Minister, Dragan Kojadinovic, explained that all prerequisites for the application of approved media laws have now been fulfilled.

He admitted that the Radio-diffusion Act had not yet been applied "primarily due to a lack of political will", and that the Law of Public Information had been applied selectively.

However, he insisted, "This Government has no intention of working against itself and doing something against which it fought during the rule of Slobodan Milosevic."

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CorD | April 2005

K

ojadinovic insisted that the coalition government "will not work against democratisation of the society in this field. There are still many open problems and lots of time has been wasted. I am not saying that our predecessors didn't do anything, but they had much more time for that‌" There has been much speculation about the Ministerial Council of the State Union deciding on privatisation of federal media, although they actually operate in Serbia.

The Ministerial Council of the State Union of Serbia & Montenegro has suggested the textual content of the Agreement to the governments of both members and this text has been accepted. Montenegro accepted it without any intervention, and Serbia only intervened slightly.

According to the Agreement, which has been signed, the Ministerial Council of the State Union retains founding rights and is obliged to start the privatisation initiative. Therefore, both Serbia and Montenegro will actively participate. Revenue from those privatisations is to be divided following the usual percentage agreed by both member states: Serbia 93.3% and Montenegro 6.7%. However, upon commencement privatisation shall be performed according to the laws of the state in which they are located. As all those federal institutions are located in the Republic of Serbia, they will be privatised according to the Privatisation Law of Serbia. In the meantime changes and amendments to the Privatisation Law will be adopted to ensure the situation is clear.

What will happen with the buildings and other property of those institutions?

I could gloat here, because my opinion has been proven correct.

There were those involved in the fate of property not owned by the media company to be privatised who wanted to throw dust in some eyes.

Production departments are not the owners of the buildings. Rather, they are lessees and the Serbian Directorate for State Property governs the area. When we start preliminary privatisation processes it should be

Interview clear what is being sold. I expect the process to start pretty soon.

When should we expect the privatisation of "Borba" and what will happen with state shares in "Vecernje novosti"?

Everybody should do his own job: the auditors, the people from the Privatisation Agency, etc. It seems complex, but in my opinion it is not going to be so when the experts finish their work. I expect the privatisation of "Borba" to start pretty soon; maybe not immediately after the privatisation of YU Info television, but surely by the beginning of September.

There were some unnecessary disputes regarding the fate of "Vecernje novosti". Much time has been spent in vain, just like the words and emotions. Now I think it is clear to anybody what is it all about: the issue of "Novosti" is the issue of the market, and "Novosti" has the greatest circulation. "Novosti" is not the most important part of the federal package…

What federal media will be first to find a new owner?

The privatisation of YU Info television will be the quickest because they are insolvent. The Trade Court should start that initiative.

Evaluation of capital value is under way and I expect that they should be privatised by the start of summer.

It would be good for the privatisation of those media houses to be performed as soon as possible, because both the economic and social situation is very difficult. Debts are also great and the fates of people working there is unsure. Almost all media are in great economic difficulty. There isn't a rose garden for anyone.

What is happening with former YU radio and agency Tanjug?

It has been left to the Ministerial Council to decide as they see fit if some of the companies should be eliminated at once. They have decided not to eliminate anything, but to offer all federal media for privatisation and see what will happen. Some doubt that there are interested parties in Tanjug, but I know that there are. The question has also been raised as to whether any parties would be at all interested in buying YU Radio - a station that uses short wave. Some believe it cannot be commercially viable, although those waves have the longest reach.

Some of the state's media firms are not profitable. Will that prove a hindrance to privatisation?

The intention of the whole privatisation process and of all legal acts from this field is that the state should step aside and be separated from media. The state is evaluating what is in its interest. But in that sphere it also evaluates the importance of the reform itself because, unfortunately, we have had much more opportunity to hear about reforms than feel them. It is exactly because many of the state media are not profitable that one thinks that it should be good that in some of them the state should have at least 30 per cent co-ownership, in order to co-finance them. Similar cases also exist abroad, even in neighbouring countries.

The state could, for instance, fund the correspondence network of Tanjug Agency or YU Radio. There are also examples where several states join forces. The Chinese, for instance, leased an hour of time to YU Radio a year ago. They may be interested in participating in the privatisation of YU radio because they have some of their state interests.

What is to happen with "Jugoslovenski pregled" and "Filmske novosti"?

"Filmske novosti" will probably be very attractive, primarily due to its archive. Workers from "Filmske novosti" say that they are sitting on gold bars. Figuratively speaking, that archive is worth its weight in gold, but because it cannot be sold at the moment they are practically in a sit-

Dragan Kojadinovic - Serbian Media and Culture Minister uation where they don't have money for bread, never mind to pay salaries. The idea is to make something like a register; to make it a part of the Central Film Archive; to keep library footage from "Filmske novosti", "Jugoslovenska kinoteka" RTS, TV Novi Sad, TV Podgorica…the state is considering all options. The aim is to enhance those systems by privatisation…

When will RTS become a fully functioning public service?

In a formal sense, RTS has not become a public service. However, the fact is that in many segments it has started to perform that function. In order to become a public service it is necessary to complete separation balance, which has been more than 80 per cent completed. The formation of

Currently, we don't have any professionalism in our journalism. the public services of Vojvodina and Belgrade will then follow. In the meantime, through welfare programmes and other legal actions, the number of employees is to be drastically decreased…Television must adapt to the modern age and the market game. There is a huge number of television companies, both domestic and foreign, broadcasting their programmes on this market. The competition between satellite programmes and cable TV is enormous. RTS employs 8,000 people on various grounds: permanently employed, contracted workers, part-time or freelance employees. In Serbia

UNDER THE HAMMER

TV LICENSE FEES

R E G U L AT I N G P R I N T

The state envisages the sales of the following media companies: television company YU Info, radio station Radio SCG (formerly YU Radio), national news agency Tanjug, newspaper Borba, publishing house Jugoslovenski pregled and broadcast archive Filmske novosti.

In the Law on Public Information, adopted on 22nd April 2002, there is a legal provision on collection of TV subscription. It is deficient in some parts, principally because the price has been fixed at 210 dinars. But we have to find the right way, even through changes and amendments to the Law if necessary… if one is watching something, one should pay for it.

The tabloids are nurturing the lowest impulses on the market, often publishing unchecked information or misinformation and very easily engaging in something which is slanderous or insulting. But when the state passes adequate laws, when everything not generally permitted in journalism is sanctioned, then those instances would drastically decrease in number.

CorD | April 2005

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Interview it is rare to have a production plant with so many employees. As in other states that passed through transition, the state has to modernise public services. We have to adapt to European trends if we want to be a part of Europe and if we want to live better. We have to accept their standards. That often means also accepting their legal regulations and a different approach. In order to do so, we have to fight with many things in our own heads.

Citizens are dissatisfied because of the reintroduction of the TV subscription fee.

People are dissatisfied by the need to pay, but I'm certain that in this country there isn't a single citizen not watching at least some programmes on national television channels.

There were some unnecessary disputes regarding the fate of "Vecernje novosti".

Much time has been spent in vain, just like the words and emotions.

But why are there so many commercials if RTS is to be funded by license fees?

Resolving this problem will open many other problems. I, in my role as a Minister, cannot forget everything that I said when I was Manager of Studio B. At that time I repeatedly said that those who have subscription don't have the right to broadcast commercials or are entitled to just a small percentage: two, three, maximum up to five per cent of commercials. In underdeveloped markets one must make a strict division of public service and commercial televisions. If RTS has too large a percentage of commercials in its programme it could, theoretically, offer free airtime for advertising within six months, wishing to, for instance, support development of the state-owned economic sector. RTS has the best coverage of territory, and so everybody would place their advertisements on that television. In that case we would again face another type of monopoly and disloyal competition. So, those questions should also be opened and resolved.

In the Law on Public Information, adopted on 22nd April 2002, there is a legal provision on collection of TV subscription. It is deficient in some parts, principally because the price has been fixed at 210 dinars.

But we have to find the right way, even through changes and amendments to the Law if necessary; in the first phase to start financing even through a kind of enactment, because if one is watching something, one should pay for it. In fact, the institution of subscription has already existed for a couple of years, although it has been officially abolished. Lots of people are paying for subscriptions to cable systems. Through cable

vision channel can be pointed out, which is possibly the most watched today. The fact is that during the time of Milosevic that television [Pink] had a backwind because it was a part of semi-state apparatus.

However, if we rescinded the programme of that TV, which is not my wish, we would endanger the living quality of this state's citizens. That is not good. There are also other solutions. To open, besides those seven networks that use national frequencies, two time-sharing networks that would also cover the whole market. So the possibility will be made that you and I, here in Belgrade, watch on some channel an excellent show of TV 5 from Nis, or of some television from Kraljevo or Trstenik because they could rent an hour or two of time from one of those two networks. Still, if we would allow one federal time-sharing network, the conditions would be created for many more local televisions to remain alive. By that, the media market would receive an immense stimulus for faster development, while at the same time we would contribute to promoting and developing local economies. Simultaneously, viewers would also profit because at least 20 to 30 per cent of existing television channels would remain, but their programmes would be much better.

There are several hundred daily newspapers and periodicals on the Serbian market. Is there too much proliferation of the print media industry?

It is too much, but the state has to do what is in its authority: to pass adequate laws and thus create conditions to allow for functioning market principles. Afterwards, the market will regulate it all. Very soon only those who work professionally shall remain on the market. In the end, only one or two will survive. The tabloids are nurturing the lowest impulses on the market, often publishing unchecked information or misinformation and very easily engaging in something which is slanderous or insulting. But when the state passes adequate laws, when everything not generally permitted in journalism is sanctioned, then those instances would drastically decrease in number.

Does that statement represent a new threat of incarceration for journalists?

There would not be any threats with jail to 'journalists' daring to perform their job. However, disrespecting the laws of the trade will result in convictions. There would be just the threat of high fees for journalists. Logical hierarchy will once again revive in editorial offices, because nowadays we have lost the editorial level. Opinions in journalism differ and are completely dislocated. Is it possible that all of us who enter some health institution, for instance the VMA, can say that we are journalists, photo-reporters, camera operators...A person is a candidate for a journalist, but in order to become one that person should pass through a real school of journalism... It is very common here that the editor cannot even touch the journalist's text, to cut it, as we used to say earlier, because it is a question of author's style. Currently, we don't have any professionalism in our journalism. And that is counter-productive because those who engage in easy qualifications for blackening people's images are left without sources of information, they start to publish just hearsay and when the readers understand that they are paying for rubbish, regardless of the price, they stop buying and those newspapers are ruined.

The state has to do what is in its authority: to pass adequate laws and thus create conditions to allow for functioning market principles. systems, the citizens are again watching RTS, although the cable systems are not paying anything to anyone.

Will that situation be resolved and, if so, how?

The basis for cable systems' utilization of the sky over Serbia and how they broadcast their programmes will have to be resolved. Members of Telecommunication Agency have been appointed. The political will exists, and the first effects of their work should be expected from 1st September.

The question of frequencies is also unresolved. Will the privatisation of YU Info channel be akin to buying a cat in a pouch, due to future re-allocation of the frequencies?

Today in Serbia we have over 1,700 broadcasters of radio and television programmes. Every day two or three new transmitters start operations. To increase the irony, the biggest chaos started from the moment of introduction of the Moratorium for Granting Radio Frequencies in 2001.

Currently, the Radio-diffusion Council is being constituted and should start working. Practical results can also be expected from 1st September.

Some speak of the possibility of having seven national networks and it is roughly known what televisions could host those networks. One tele-

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Why hasn't the Information Accessibility Act been implemented yet?

It is interesting and very dear to me, and should be implemented. The Trustee has a mandate of seven years. It is a long mandate. If we did not have a law for more than 60 years, we still need several months to create prerequisites for its implementation. I'm sure that a situation won't be repeated like with the Radio-diffusion Law and Law on Informing the Public, where we have laws that cannot be implemented.•

Interview H.E. Luc Liebaut, Belgian Ambassador in SCG

FUNCTIONING

FEDERALISM Nestled between France, Holland, Germany and Luxembourg, Belgium lies at the heart of the European Union. The home of the EU's central seat of power, this small federal state epitomises the foundations of compromise and co-operation upon which the Union continues to be built. Indeed, it is the very concept of compromise and power-sharing that allows Belgium to continue to function harmoniously today, 175 years after the modern state of Belgium was first formed.

H.E. Luc Liebaut talking to our editor

By Mark Pullen & Dragan Bisenic, Photo M. Kotlaja

T

his month we spoke to H.E. Luc Liebaut, Belgian ambassador in SCG, about the success story that is the Belgium system, as well as developments in the Balkan region as the countries of the former Yugoslavia and the wider region make their perilous journeys towards the ever-expanding European Union.

With seven fully functioning parliaments covering the federal institutions, three linguistic communities (the French, Flemish and German communities) and three regions (Flanders, Wallonia and Brussels), each having its own government, Belgium is blessed with a complicated, but ultimately effective, system of federal government. However, it has not always been so.

The modern Belgium first became an independent country in 1830, and in just over a century, Belgium has undergone six con-

stitutional revisions (1893, 1920, 1970, 1980, 1989, 1993) that have reshaped a system once dominated by the large Francophone community of the southern, Wallonian region. Although the first two revisions changed little, the amendments from 1970 onwards completely redesigned the unitary system of Belgian governance, ushering in greater autonomy for the entities.

Ambassador Liebaut admitted that the Belgian system is complicated and not without its problems, saying "the fact that many pieces of legislation and a lot of international agreements that Belgium has signed, both European and domestic, have to go through seven parliaments and be approved by each one before it can be fully ratified by the country means that our system is a little slow", but it certainly gets the job done.

Liebaut admitted that the pace of the passage of legislation provides ammunition to disgruntled opposition parties and media, but he insisted that the system also ensures all the state's entities, and/or all the coalition members, play a part in the process and, ultimately, display the necessary compromise needed to progress.

He said: "when an important and politically sensitive piece of legislation has to be agreed upon, we usually have one or two-days of intensive meetings involving the top government members of all the coalition partners, who regularly consult their party leaders.

When they know that they have to reach agreement they are more prepared to compromise and the fact that they are able to offer amendments or alterations ensures that each entity can say it is contributing to the end result".

Maintaining harmony in a country divided by something as

There have been ten voluntary surrenders to The Hague since November 2004. That is no mean feat for PM Kostunica's Government.

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CorD | April 2005

fundamental as language is a continuing challenge for the Belgian institutions. Moreover, the language-community-overlap has the potential to cause even greater problems. The constitution and related legislation have ensured that the lines of demarcation between the country's linguistic communities are now immov-

Interview

H.E. Luc Liebaut, Belgian Ambassador in SCG able, but the minority communities caught on the "wrong" side of linguistic borders continue to thrive. The ambassador explained: "There are French speaking communities living in the Dutch-speaking Flanders region along the linguistic border, or German-speaking communities living in the Wallonia region along the border between the German and the French linguistic communities, but they are granted specific language rights in the municipalities where they are strongly present. Thus, for instance, the post office in a French community in the Dutch north will have workers who speak French, as will the local school."

The logistical problems of the Serbia & Montenegro State Union, including Kosovo, pale in comparison when one examines the complex Belgian system, but can lessons be learnt from the Belgians on how to make such a system function? According to Ambassador Liebaut "It is impossible to merely copy any model

of governance or even a specific element of another system. Every country is unique and, therefore, the system that allows that country to function must also be unique. Serbia & Montenegro must find a system that works best for the country. However, it is important that the two Republics learn their own lessons from the experiences of others".

Perhaps then it is simply that spirit of compromise and awareness that progress must be made for the well-being of the citizens from which SCG can learn.

Turning to the issue of Kosovo, Ambassador Liebaut insisted that nothing is certain with regard to the issue of the province's status. "It is difficult to foresee what Kosovo's status is going to be at this time", he said. "However, it is true that in our [EU] capitals, in our foreign ministries, there is a lot of thinking going on as to what kind of status Kosovo should have; whether we should come to final status immediately after negotiations or whether there

PROSPERITY

KOSOVO

DEVELOPMENT

This government managed to achieve six per cent growth in the last fiscal year. That is a growth figure that Western European countries can only dream about. A large number of EUcompatible pieces of new legislation have been adopted. VAT is being introduced successfully. The present government can boast a few nice successes.

It is difficult to foresee what Kosovo's status is going to be at this time".

"However, it is true that in our [EU] capitals, in our foreign ministries, there is a lot of thinking going on as to what kind of status Kosovo should have; whether we should come to final status immediately after negotiations or whether there should be a gradual move towards final status.

What's important for Serbia now is finding a way to encourage Green-Field investments. Procedures have to be demystified and regulations amended, but the levels of professionalism and skills of specific industries, such as metal processing, are beginning to lack elsewhere in Europe and could greatly benefit economic development in Serbia & Montenegro.

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39

Interview should be a gradual move towards final status. All these are ideas in the air, but activity is going on."

He continued: "The first thing on the agenda now is evaluation of the implementation of prioritised standards. This will see an intermediate evaluation scheduled for the end of March, then a more decisive one scheduled for the end of September. Based on that, we will ask the question "do we or don't we commence final status negotiations?" That is all that is fixed so far…it is a fact that Belgrade will be associated with final status talks."

With the exception of the Kosovo issue, there are a number of stumbling blocks remaining on SCG's path to Euro-Atlantic integration. However, Ambassador Liebaut identified one in particular, reiterating the calls of the international community's representatives by saying that "co-operation with the ICTY is crucial."

However, he noted, the current Serbian administration has made much progress in this regard over recent months. "There have been ten voluntary surrenders to The Hague since November 2004. That is no mean feat for PM Kostunica's Government. The formula of voluntary surrenders is non-controversial on the Serbian political scene as it doesn't create political tensions. The succession of voluntary surrenders has almost become a routine. The international community is well aware of the progress and each new element of progress enhances the international reputation and credibility of the Serbian Government," said the Belgian ambassador.

As 2006 slowly approaches, as does the prospect that Milo Djukanovic's government will call a referendum on the continued existence of the state union. Ambassador Liebaut confirmed that this is indeed the right of the tiny coastal republic, saying: "If Montenegro would like to ask the population [through a referendum] …in accordance with the Belgrade Charter, either of the two republics, if they so desire, have the right, after 6th February 2006, to organise a referendum for independence…"

However, Liebaut stressed, it is not the referendum itself that concerns the international community, but rather the way in which such a vote will be organised: "what is of utmost importance to all of us within the Europe Union and the Euro-Atlantic community - my country especially because in 2006 we will be Chairmen in office of the OSCE - is less about the question and more about the framework; the general parameters under which the campaign for the referendum, and then afterwards the referendum itself, will be organised.

"During the meetings of Milo Djukanovic and other Montenegrin officials in Western European capitals and with Mr. Javier Solana, we are pleading for a large consensus within Montenegrin society, and within the political factors in Montenegro, as to how the referendum will be organised: the legal framework, parameters, rules of the game, access to media…How the two options [for and against] will both equally be able to propagate and promote their ideas. That is what we expect from the Montenegrin political factors."

Addressing the Serbian Government's progress in other areas, Liebaut said: "this government managed to achieve six per cent growth in the last fiscal year. That is a growth figure that Western European countries can only dream about. A large number of EU-compatible pieces of new legislation have been adopted. VAT is being introduced successfully. The present government can boast a few nice successes. It has, however, a lot of difficulty in having the good news sold."

Belgium's reputation as a "convinced European" and as the seat of the major Euro-Atlantic institutions is commonly known, yet it is not as internationally renowned for its commercial successes.

Nevertheless, successful Belgian companies are indeed investing in Serbia & Montenegro, and the strategic takeover of Apatin Brewery by Belgian-based InterBrew, the world's biggest brewer, is a purchase of great importance to furthering InterBrew's operations and safeguarding the future of the Northern Serbian brewery.

Ambassador Liebaut revealed the commercial exploits of Belgian firms in the State Union, saying "for now, our investments remain relatively modest, but 25 Belgian companies have invested in Serbia, mainly in the provinces and mainly in production, and their experiences will encourage others. InBev (the new name for 'Interbrew') is by far our biggest investment. The company is being continually modernised and new brands are being launched. In a few weeks time, the Apatingamma of beers will be completed with a global (international) brand: Beck's, which will be brewed in Apatin under license."

Noting that complicated procedures and layers of bureaucracy had been encountered by Belgium's investing companies, Liebaut said: "All of our companies had problems when first setting up operations in Serbia. One of our investors explained to me that it had taken a year from his initial purchase of the site until he received full permission to develop the location and build his factory. However, our businesses have found that once initial hurdles had been overcome, once all government inspections had been conducted, and once they had been able to develop relations of confidence with the local people and the municipal authorities, they could thrive in Serbia & Montenegro."

He insisted that Belgian companies in Serbia were pleased with overall progress in the country and had been pleasantly surprised by the levels of professionalism found. "Of the 25 Belgian companies operating in Serbia, only one is consistently complaining. The others are satisfied with the way they are being treated here, with the way business is developing and with the professional skills of their workers."

Addressing the need for future economic development in the country, Ambassador Liebaut said: "What's important for Serbia now is finding a way to encourage Green-Field investments.

Procedures have to be demystified and regulations amended, but the levels of professionalism and skills of specific industries, such as metal processing, are beginning to lack elsewhere in Europe" and could greatly benefit economic development in Serbia & Montenegro. •

Serbia & Montenegro must find a system that works best for the country. However, it is important that the two Republics learn their own lessons from the experiences of others.

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Politics

T

he fact that legal authority is no longer strictly legal in the state union does not seem to excite too many political practitioners.

MPs believe that they will still be MPs, ministers believe that they will remain ministers and the collective seem to believe that the law will rule all by itself. However, two crucially important institutions continue to function at a "federal" level: the SCG Ministry of Defence (Army) and the SCG Ministry of Foreign Affairs.

Once MPs have completed their parliamentary mandates there will be nobody to control and direct those two ministries, at least not in way that is appropriate to the state. Due to the nature and significance of these ministries, as well as the general attitude towards them, both Serbia and Montenegro are perhaps destined to become what Robert Cooper - acclaimed author, former advisor to British PM Tony Blair and EU foreign policy's second most important man - refers to as "failed states", candidates to become "protectorates" and potential pieces of the "post-modern European empire".

Cooper, who will be interviewed for the next issue of CorD, recently published his book entitled "the Breaking of Nations".

Cooper insisted that his book would never have been written had it not been for the events in South-East Europe.

Both SCG leaders and the two member republics are behaving like very serious candidates for leaders of a protectorate. They expect Brussels to decide the fate of the state and the leadership from Podgorica are openly lobbying for the solution in which Montenegro would become an internationally recognised state within a "Union of Independent States" with Serbia. That is the solution which Moscow introduced at the beginning of the nineties, when they wanted to get rid of their unwanted territories, and for which is not clear what the

By Mirjana Vujovic

motive is for its revival many years later in the Balkans. From an historical perspective of Serbian - Montenegrin relations, when the opposite question was posed - why the two countries are not uniting - the answer was found in the fact that this was a "dynastical" or "bureaucratic" matter which does not suit either the interests or historical conscience of the two nations. If we place the question today - why separation - the answer could be the same. Only the interest of the political bureaucracy is obvious. For that, even Brussels does not have any understanding. The European Union, and Javier Solana in particular, have much more important priorities than to mediate between Belgrade and Podgorica every day.

At this moment it is almost certain that there will be no direct elections for the State Union Parliament, even though the deadline for scheduling such elections has expired. For the time being, Montenegro has not been given the green light from Brussels for separation.

However, the dissension of the political elite in regards to the survival of SCG, and the disregard for the Constitutional Charter since it was adopted, seem good enough reasons for the leading political elite, with the unavoidable mediation from Europe, to sit at the negotiating table and agree on the ways to overcome the obstacles in the way of the functioning of the State Union.

The latest opposing positions of Belgrade and Podgorica were firstly produced by the direct elections for the Parliament of Serbia & Montenegro, which the Montenegrin administration refuses, even though the Constitutional Charter predicts that they should take place two years after the election of the first delegation of MPs to the SCG Parliament. Montenegro is opposing that because of the fact that direct elections would strengthen the union instead of preparing it for the ref-

The comedy that is the defining of states in South-East Europe is continuing to unfold. Under the name of Serbia & Montenegro, a state that nobody would gamble on continues to exist despite the fact that the legality of its parliament expired at the beginning of March.

FATE OF THE UNION

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Politics erendum which Montenegro is hoping will take place in 2006. Only after the referendum, as Montenegrin officials claim, would a direct election be possible and only under the condition that SCG survives.

Several-month-long discussions about whether and when the direct elections will take place were strained by the approach of the deadline for their staging, which expired in March 2005 when the mandates of the current MPs in that Parliament expired.

The absence of direct elections has opened up new possibilities for collecting political points. Therefore, the Montenegrin opposition's Democratic Serbian Party, which has two MPs in the SCG Parliament, together with the Serbian Socialists and Radicals, have started an initiative to question the accountability of SCG President Svetozar Marovic for not respecting the Charter, even though it was clear even to them that such an initiative cannot pass through the SCG Parliament because the Democratic Party of Montenegro and the Social Democratic Party have a majority of MPs in the Montenegrin delegation. The fact is that Marovic could not schedule elections because, in contrast to Serbia, Montenegro does not have a law for such elections. Even though it was obliged by the Charter to adopt such a law, the Montenegrin Parliament did not do so. Serbia does not want to have elections without one being held in Montenegro, but the evolution did take place in some political positions. From their insistence on direct elections, the Democratic Party of Serbia has moved on to the position that elections are needed, but that it will not be terrible if they do not take place.

According to the SCG Parliamentary President, Zoran Sami, in order to neutralize the consequences of the constitutional crisis it is necessary either to schedule the elections or change the section of the Charter which refers to the deadline for the elections (the initiative is that the direct elections and referendum are postponed for one year, which Montenegro refused).

"Those changes can be adopted only by its approval in all three parliaments, the same way the Charter was adopted" said Sami, citing the text of that supreme legal act. The possibility of changing the Charter was not excluded by Human Rights and Ethnic Minorities Minister, Rasim Ljajic, either, who stated in public that the Ministers Council, headed by President Marovic, requested that the Legal Department deliver to the members of that body the legal interpreta-

that this would be a violation of the Constitutional Charter.

The Serbian PM wrote: "The proposal you sent to me represents a strict violation of the Belgrade Treaty, which we signed together and in that way obliged ourselves to respect it. I would like to inform you that I am sticking to what we signed".

On the other side, Serbian President Boris Tadic, to whom, along with President Marovic, this proposal was also delivered, replied that "any proposal from the state institutions of Montenegro has to be heard and analysed". However, Tadic added that he is in favour of pre-

Serbian Prime Minister Vojislav Kostunica serving the State Union of Serbia & Montenegro because that is, according to him, the fastest route to the European Union.

Svetozar Marovic announced that soon, with the mediation of Brussels, an agreement between Belgrade and Podgorica could be reached regarding "some open question regarding the functionality of the State Union". Such a position was announced after Djukanovic held talks with the EU High Representative for Foreign Policy and Security, Javier Solana, in Brussels, from whom he received support for the proposal for the union of independent states.

Marovic stated: "I am convinced that very soon we will be in a position to come out with an agreement between Belgrade, Podgorica and Brussels regarding some open question regarding the functionality of the State Union"; although he did not specify what kind of agreement this would be.

The SCG President said that he is expecting a positive appraisal of the Feasibility Study before the end of March, and "after that we will have the fastest possible beginning to the negotiations regarding stabilisation and association with the European Union. Meanwhile, SCG can become a full member of the Partnership for Peace because I do expect everybody to complete their part of the obligations for that to happen".

On the other side, Montenegrin PM Djukanovic told press that

At this moment it is almost certain that there will be no direct elections for the State Union Parliament. tions of the situation which refers to the expiry of the MPs mandates in the SCG Parliament and propose a solution. Ljajic personally interceded for official agreement between Belgrade and Podgorica and, without excluding changes to the Charter, he appraised that "any solution is better that a legal vacuum".

The story about direct elections was set aside in late February when Podgorica proposed to Belgrade that union members recognise each others independence, and after that make the Union. Even though many practitioners were apparently surprised by this proposal, it is known that this was nothing new, but already existed in a similar form at the time of signing the Belgrade Agreement in 2002. The Serbian Government and its Prime Minister, Vojislav Kostunica, refused the proposal signed by Montenegrin PM Milo Djukanovic and Montenegrin President Filip Vujanovic. In the letter, Kostunica wrote

PODGORICA'S PROPOSAL Podgorica's latest proposal predicts that the Union State's institutions would be the Parliament and the Commission. The Parliament of the Union of independent states of Serbia and Montenegro would be one house (House of Lords) and representatives' mandates would last for four years. The Parliamentary President and vice president should be from different member states. The agreement predicts that Serbia and Montenegro, in the union of independent states, would establish a military alliance. The mutual activities of the two armies would be commanded by the Supreme Defence Council, made up of the Serbian President, the Montenegrin President and the President of the Union's Commission, which would reach decisions by means of a consensus. Serbia would be the successor of SCG in the international political organisations, and Montenegro would, in recognition of membership in those organisations, receive all the rights and obligations which come with such memberships. The succession of the properties and property rights and obligations would be agreed according to the principals of succession applied for the SFRJ (the Former Yugoslavia).

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SCG President Svetozar Marovic Montenegro wants to be part of the European Union, but is not prepared to pay the price, if anybody requests it, of its sovereignty being revoked yet again. Revising that statement after his meeting with Solana, Djukanovic said that "this was an inappropriate and unprofessional journalistic interpretation of his statement. He explained that nobody had asked Montenegro, on its joining the EU and NATO, to give up its sovereignty.

Apprising that SCG is a dysfunctional project from the point of view of European integration, Djukanovic thinks that the political thesis that the State Union is the fastest way to Europe is manipulative.

The Montenegrin PM said "We have already had the Belgrade Treaty for three years and the Constitutional Charter for two. In that

time we have been standing still. We are the only country in the region which does not have a Feasibility Study. It is a paradox, but it is the truth - Serbia & Montenegro is at the bottom of European integration".

Brussels is aware that the lack of institutional connections with SCG, only because of formal matters, completely misses the point. The EU even has those connections with Kyrgyzstan - a country that will never be an EU member - not to mention the African Mediterranean countries which have a higher level of relationship even than EU candidate member countries.

Djukanovic has emphasized several times that he is convinced Montenegro will be an independent state in 2006.

"We do not want to go to Europe as part of a state or as a province, but as an independent country", said Montenegrin Foreign Minister, Aleksandar Vlahovic whilst talking at a conference about federalism in Brussels to a panel comprising those who are not satisfied with the current status in their countries.

PM Djukanovic indicated that "the day when Montenegrins will manage Europe is not far away" in view of the fact that Montenegro too, like other small countries, will increase its "foreign and diplomatic capacities".

Djukanovic had said the same a day earlier, during lunch with Javier Solana. In response, Solana openly said that he does not support any kind of premature redefinition of relations and non-respect of the Belgrade Treaty. Solana emphasized that, regarding SCG, the European Union's priorities are completely different and SCG will almost certainly receive a positive appraisal of the Feasibility Study. Solana will probably come to Belgrade when the Study is published in mid-April. He was supposed to come in December, but the visit was cancelled and the EU Commissioner for Expansion, Olli Rehn, visited Belgrade.

Meanwhile the "Hague signals" have become more encouraging, therefore the first man of European foreign policy will point out what the perspective of the SCG survival looks like from that point of view.

Montenegrin officials point out that their opposition and the administration in Belgrade always complain about the violation of the Charter only when it suits them, but keep quiet when the violation is to their benefit.

IMMUNIT Y AND ITALY The deputy president of the Montenegrin opposition's Socialist People's Party, Srdja Bozovic, has accused Milo Djukanovic of "having intentions to ensure amnesty from the criminal charges being brought against him by the Italian Public Prosecutor", alluding to the possibility that Djukanovic's immunity, in the case of his apparent responsibility regarding smuggling, cannot be recognized because he is not a representative of an internationally recognized state. The Italian judiciary has been leading the case against the Montenegrin Prime Minister for several years. The public is regularly informed about that. Many transcripts have been published, but there have been no legal consequences. That opens the space for speculation that this is a case with a "delay" which will receive its legal form and turn into some sort of scandal only when the destiny of Montenegro is definitely decided.

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What could additionally worry officials in Serbia, and of course even more in Montenegro, is the mood in the EU, which is that in the case of separation, the whole process of joining the Union would be returned to the beginning, i.e. with a new Feasibility Study and all the other things which come with that.

Several reactions on the Montenegrin proposal for the Union of Independent States have come from the international community.

Therefore, the Italian Foreign Minister, Gianfranco Fini, stated in Belgrade that Italy respects the principle of self-determination, but that his personal opinion is "that we should think carefully before making any decision regarding the eventual separation of Serbia and Montenegro, because SCG, according to the appraisal from the international community, has produced positive results".

U.S. Ambassador to SCG, Michael Polt, emphasized that the U.S. will support any agreement the State Union members reach in a democratic way. However, he emphasized that he hopes that Serbia and Montenegro will "consider" the existence of the close mutual economic, social and other connections while making this decision.

Many analysts believe that Podgorica drawing attention away from the direct elections with its last proposal and trying to force Belgrade to give up the story about direct elections until the staging of a referendum regarding Montenegrin status, which the current Montenegrin administration promised their citizens during their pre-election campaign. So far, it is proving quite a good tactic, considering that the administration in Belgrade is increasingly less preoccupied with that issue, apart from when occasionally some ministers, such as Minister of Justice, Zoran Stojkovic, announce that the direct elections should be scheduled. Opponents are accusing Djukanovic and Vujanovic of trying to give up the referendum for an independent Montenegro because, apparently, they know that they do not have majority support from the electorate, while others are saying that this is the beginning of the campaign for the Referendum in February 2006.

Srdja Bozovic, Vice President of Montenegro's strongest opposition party, the Socialist People's Party, said that "the political elite in Belgrade and Podgorica do not have the constitutional basis to negotiate changes to the constitutional status of the State Union", and accused the administration in Podgorica of having the only aim of "avoiding direct elections and bringing the Belgrade Treaty down".

Montenegrin People's Party leader, Dragan Soc, thinks that this proposal is Djukanovic's and Vujanovic's "attempt to simulate the readiness for the agreement with Serbia" and to avoid the consequences of leaving the State Union.

Meanwhile, supporters of an independent Montenegro who do not support the current administration have also criticized Podgorica's proposal. Liberal Alliance President, Vesna Perovic, considers this proposal as "avoiding the final solution for the state's status. There is again no word about the referendum", said Perovic. Group for Change executive director, Nebojsa Medojevic, also believes that the Montenegrin administration "has given up on the referendum and independence" and that it could be said that this proposal refers to "an almost identical state to the one made by the Belgrade Treaty".

The governing Democratic Party of Socialists and the Social Democratic Party (SDP) are rejecting such critics, stating that in the case of the acceptance of the proposal the same one would also be placed at the referendum. At the same time they are strongly criticising Belgrade's administration for refusing to attend talks regarding the latest proposal. SDP and Montenegrin Parliamentary president, Branko Krivokapic, has strongly criticized Vojislav Kostunica. He said that Kostunica had signed the Belgrade Treaty outside the Constitution and "suspended SRJ (the Federal Republic of Yugoslavia) outside the Constitution, in the same way in which we want now to suspend something which is much looser, and was only temporarily established.

"Now he is referring to legalism and the Charter, and as President of SRJ he suspended the country" said Koprivic, adding that "the nationalist block in Serbia reacted to this proposal with the great-state reflex".

Krivokapic thinks that the proposal is a good test for the democratic forces in Serbia to check whether there are any "capacities for agreeing, negotiating and reaching solutions which would be of mutual interest". According to him, Podgorica will invite Belgrade to reach an agreement before February next year, when the referendum, which can be held three years after the adoption of the Constitutional Charter, will take place.

Djukanovic also denies the accusations from his opposition, stating that his political opponents "are deceiving the public" when they say that DPS is afraid of the referendum. "If they think that we are afraid, why don't they organise one as soon as possible. We are ready now, but they know that they do not have a majority and because of that they are trying to obstruct it, behaving like a child who loses the game and takes his ball home", said Djukanovic.

Montenegrin officials point out that their opposition and the administration in Belgrade always complain about the violation of the Charter only when it suits them, but keep quiet when the violation is to their benefit. They reproach the Serbian Prime Minister, Vojislav Kostunica, for violating the Charter, which predicts that Defence and Foreign ministers and their deputies should be from different state members when they appointed Prvoslav Davinic and Vuk Draskovic, both from Serbia, to those positions.

Moreover, if the Charter was strictly respected those ministers should now be rotated with their deputies, as the Charter predicts should be done after two years. In that case Montenegro should have four out of five ministers in the Ministers Council (even though the Charter predicts that one state member has three ministers and the other has two ministers plus the President of the State Union), while Serbia would remain with only one ministerial post. Additionally, Montenegro has the Presidency of SCG, who is at the same time the President of the Ministers Council. Ministers from Montenegro are the Minister of Domestic Economic Affairs, Amir Nurkovic, and the Minister of International Economic Affairs, Predrag Ivanovic.

Davinic's and Draskovic's deputies are Montenegrin cadres Vukasin Maras and Predrag Boskovic. In the case of the rotation of the defence and foreign affairs ministers with their deputies, Serbia would be represented in the Ministers Council with only one Minister: Human and Minority Rights Minister Rasim Ljajic.

Montenegrin Prime Minister Milo Djukanovic However, it seems that, as before, everything will depend on the wishes of the international factor whose project the State Union is.

Without approval from Brussels and Washington it will not be possible to make any decisions. Having learnt from experiences of the not so distant past and the wars of the 1990s, it seems that the worst solution would be if Europe gave up on the State Union and let the political elite agree by themselves. In that case even 2020 would probably prove an overly optimistic deadline for joining the European Union.•

Politics The government of Prime Minister Vojislav Kostunica will not only "celebrate its next anniversary", as he aptly announced, but is likely, judging by some polls, to hold out until the end of its four-year mandate. Contrary to some expectations, the ruling coalition of parties may comprise a weak minority government, but, nevertheless, it has managed to endure in power.

WEAK, YET STABLE Serbian Prime Minister Vojislav Kostunica

P

By Jasmina Lukac

olitical analyst Slobodan Antonic says the stability of tions, whilst making the public believe this was not what Kostunica's government relies heavily on the status they were actually doing. of two parties that are not members of the ruling The manoeuvre was simple - at first no one was handed coalition - the Socialist Part of Serbia (SPS) and the over to The Hague, the government insisted on two-way coDemocratic Party (DS). He also predicts that Kostunica's operation, which created a positive public image. Then the DSS could remain in office for a decade or more with a government came upon a "fair model", as Deputy Prime clever strategy anchored in the political centre that could Minister Miroljub Labus from G17 Plus coined it, of volunyield more ministerial and other attractive posts in govern- tary surrender of Hague indictees to the Tribunal, which de mental structures.

However weak Kostunica's Cabi- The bottom line is that if local coalitions between net may look, it seems that none of DS and DSS are an indicator of a prospective the opponents have the strength to rush him into early elections. Hence, coalition at national level, then we can look fora year after becoming Prime Minister, ward to a fragile and vulnerable pact.

Kostunica managed to perfect a formula for maintaining a weak, yet stable government. facto met the "one-way" demands of the international comPolitical analysts inclined towards DSS, such as Antonic, as munity. Furthermore, according to Labus, after the most well as its detractors, agree that the Prime Minister is sure important obligations to the international community have of a place in the next government, regardless of whether it been met, Serbia & Montenegro is very likely to get a posiis formed by the Democratic Party or the extreme Serbian tive Feasibility Study for accession to the EU. European Radical Party. They justify their claims by citing the fact Commissioner for Enlargement, Olli Rehn, previously that the Serbian Government has achieved the impossible announced the Study would be ready by the end of March. in terms of policy by delivering war crimes suspects to the Kostunica is optimistic about the outcome of the Study, Hague Tribunal, and thus honouring international obliga- while state officials engaged in the procedure are predicting

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Politics that negotiations for Stabilisation and Association could start as early as September this year. This would doubtlessly be the Government's greatest achievement; although there are indications that a positive outcome is dependent on the extradition of the former chief commander of Bosnian Serb forces, General Ratko Mladic, to The Hague between April and September.

This brings us back to SPS, the party of the Tribunal's best-known defendant, Slobodan Milosevic, and the issue of their support to Kostunica's minority government in the Serbian Parliament. No one who is versed in the subject matter expects the Socialists to deny support to Kostunica's government in the event that generals Sreten Lukic and Nebojsa Pavkovic are arrested and handed over to the Hague Tribunal. The latter is rumoured to have already left the country. SPS leader Ivica Dacic, who is filling in the role of SPS President in Milosevic's absence, claims they are more concerned with the principle of refraining from forced extraditions to The Hague than with what those charged had done. "We stick to our principles and do not wish to make reprisals against Lukic for arresting everyone within reach during Operation Sabre, or Pavkovic for not stopping Milosevic's extradition", Dacic said.

His archrival within party ranks and representative of the hard line faction in the SPS, Milorad Vucelic, also prefers stability and EU accession to downing the government. He said that the issue of extradition to The Hague was concluded from an ethical, military and political aspect after General Vlastimir Lazarevic agreed of his own accord to appear before the Tribunal in The Hague.

Since Vucelic is among those who visit Slobodan Milosevic at Scheveningen, and is considered to be acquainted with his views, he can claim with authority that the former Yugoslav President has no political affiliation on the domestic scene. Certain media alleged there was a possibility that Milosevic could appear in some future elections with an independent candidate list that would draw support from the SPS voter corpus, but this is another story altogether. The last remaining "hawk" from the SPS innermost leadership, Milutin Mrkonjic, who had threatened to withdraw support to the minority government, is quite fickle on the subject at this point, bearing in mind that he is close to Serbian Capital Investments Minister Velimir Ilic, both in business and in private life. Last but not least, as far as the Socialists are concerned, is that 230,000 has been drawn from the budget to fund Milosevic's defence without government inquiries into how the money was spent. The partnership between Kostunica and the Socialists, as media analysts like to call their dealings, has obviously remained intact.

In the worst case scenario, if SPS should withdraw its

support to the Government in Parliament, there has been mention of an unbelievable but not impossible scenario that would begin in May or June, after the Feasibility Study is concluded, according to which Labus' G17 Plus would be replaced by the Serbian Radical Party in Kostunica's Cabinet. There are even explanations that the international community would accept this course of events under the premise that the status of Kosovo is resolved by granting the region independence. The logic behind this is that the loss of Kosovo would be more bearable to Serbian citizens under the leadership of patriotic and nationalist parties. However, an outcome where the reconstructed Cabinet would incor-

IVICA DACIC, SPS "We stick to our principles and do not wish to make reprisals against Lukic for arresting everyone within reach during Operation Sabre, or Pavkovic for not stopping Milosevic's extradition". porate Serbian President Boris Tadic's Democratic Party is much more appealing to common sense.

Nevertheless, inter-party strife between Kostunica's DSS and Tadic's DS at local level give more evidence of horn locking and conflict than a perspective of political proximity between the two. Namely, DSS helped replace the president of a large municipal unit in Belgrade from DS ranks with a Serbian Radical Party contender. DS replied by offering Kostunica's party to form a minority government in that district and to publicly swear to an obligation of mutual support for a period of three years only for the sake of keeping SRS out of power. Independent sources who are monitoring the situation claim that the DS policy is to discredit DSS as much as possible among the Serbian citizenship and the international community for co-operating with the Radicals.

The local coalition between DS and DSS in Belgrade has been riddled with open conflicts between the Mayor from DS ranks and city officials from DSS. The City Council is at a standstill, while DSS high official and Interior Minister, Dragan Jocic, a close associate of Prime Minister Kostunica, announced the possibility of a new Law on Local Governance in a recent interview with Blic. This law would automatically lead to local elections. The new law introduced in September 2004, in line with European standards,

RECORD-HOLDERS the Serbian Renewal Movement (SPO) and New Serbia (NS), who are absolute record-holders in creating government-related scandals and affairs. As they have 22 MPs between them, they can be substituted with 22 Socialist MPs, which means their support is not crucial to government stability. NS leader and Minister of Capital Investments, Velimir Ilic, whose ministry controls several strategic resources of the state, has his hands on 18 MPs: 9 of his own and 9 of SPO's, while four remaining SPO MPs have remained loyal to their leader, Vuk Draskovic, who, despite his irrational and unpredictable behaviour, is not the tip on the scale that can destabilise the Government.

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Politics now regulates local government. DSS complains, however, that the solutions provided by the law are not currently applicable in Serbia, since they have created a dualism between local assemblies and local executive authorities that is too great. The bottom line is that if local coalitions between DS and DSS are an indicator of a prospective coalition at national level, then we can look forward to a fragile and vulnerable pact.

Moreover, Boris Tadic's DS has an internal problem with the Liberal-Democratic Faction (LDF), led by former Deputy Prime Minister Cedomir Jovanovic. The Faction's leaders claim that DS has stopped evicting Jovanovic's supporters within the party after discovering that 30,000 people had joined LDF. It is hard to take this figure for granted, however, although it cannot be denied that there was some kind of

out of 250 seats in Parliament), so they are looking for opportunities to increase their rating and, although elections are not due in the near future, other actors on the political scene are bracing themselves for the race.

At this point we can include two more parties - the Serbian Renewal Movement (SPO) and New Serbia (NS), who are absolute record-holders in creating governmentrelated scandals and affairs. As they have 22 MPs between them, they can be substituted with 22 Socialist MPs, which means their support is not crucial to government stability.

NS leader and Minister of Capital Investments, Velimir Ilic, whose ministry controls several strategic resources of the state, has his hands on 18 MPs: 9 of his own and 9 of SPO's, while four remaining SPO MPs have remained loyal to their leader, Vuk Draskovic, who, despite his irrational and unpredictable behaviour, is not the tip on the Although Vojislav Kostunica's Government scale that can destabilise the Government. If four should vote in line with the oppohas many weak points and few stable these sition in Parliament, SRS and DS, this would footholds, the impression is that it will last still amount to 123 MPs, which is not enough a vote of no confidence in Kostunica. A and that the Prime Minister will remain in for possibility of five SDP MPs (from G17's list) joining them is not realistic. SDP leader, government even after this one expires.

Nebojsa Covic, has remained at the helm of strategy and plan in the process of creating the Faction. the Co-ordination Centre for Kosovo, despite some indicaA well known analyst from Belgrade believes that the tions that he might be replaced, which he is using as a vanappearance of the former Chief of the Communications tage point ahead of the electoral race. There isn't a press Bureau, Vladimir "Beba" Popovic, in TV B92's show Insider, conference that goes by in which the topic of discussions was in fact a part of LDF's campaign to raise voter support. with "politically kindred parties", such as Rasim Ljajic's It is well known that there is an ongoing debate between SDP and Jozef Kasa's SVM, is not mentioned. These are parJovanovic and Popovic on one side and the current leaderties of ethnic minorities in Serbia that automatically yield a ship of DS on the other about who should be the successor certain percentage of voter support. Analysts say that Covic of Zoran Djindjic's project to reform Serbia. Popovic and is counting on a joint appearance of SDP and the parties of Jovanovic, who were Djindjic's closest associates, are acting ethnic minorities at the elections. In addition, he has left the in concert according to DS sources. They are both allegedly door open for a deal with Ilic's New Serbia. preparing publications with details dating back to Djindjic's There is also speculation that the block comprising SDP, rule and the DOS coalition that were previously unknown to parties of ethnic minorities and NS will be led by Bogoljub the public. Our sources claim that Jovanovic plans to elaboKaric's financially powerful PSS. These parties are obviousrate some of the claims laid out by Popovic in the Insider ly in close co-operation, irrespective of the elections, and show during his testimony at the court trial against the suswield a considerable amount of political and financial influpects accused of Djindjic's assassination. At first glance, ence. The advocates of the theory that Kostunica will resort LDF gathers Kostunica's most bitter opponents, but aside to ousting G17 Plus from the Cabinet rather than allow early from their strategy to attract attention with spectacular revelections provide the argument that the SDP-NS-PSS collaelations, it is not quite clear which target population of vottion is a source of frequent criticism against Government ers they will try to rally around them, and what kind of politministers from G17 Plus. This concludes the full circle. ical influence they can muster to achieve this end.

Although Vojislav Kostunica's Government has many weak According to some public surveys, DS would presently points and few stable footholds, the impression is that it will receive an equal amount or a little more support than it last and that the Prime Minister will remain in government received from voters at the last parliamentary elections (37 even after this one expires•

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I N D I C AT I O N S

S P E C U L AT I O N S

Nebojsa Covic has remained at the helm of the Co-ordination Centre for Kosovo, despite some indications that he might be replaced, which he is using as a vantage point ahead of the electoral race.

There is also speculation that the block comprising SDP, parties of ethnic minorities and NS will be led by Bogoljub Karic's financially powerful PSS. These parties are obviously in close co-operation, irrespective of the elections, and wield a considerable amount of political and financial influence.

Dragan Nikolic,

By Milan Culibrk, Photo Stanislav Milojkovic

General Director of Tigar, Pirot

EXPORT

TIGER Pirot-based Tigar, producer of tyres and other rubber products, is celebrating its 70th birthday this year. However, the company's management and staff have more to celebrate than just the anniversary. Thanks to the company's strategic partnership with Goodrich and its successor Michelin, which has lasted for some 31 years, Tigar is not only the country's leading tyre and rubber products producer, but also the second greatest net exporter in Serbia.

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I

n recognition of Tigar's unparalleled achievements, SIEPA (The Serbian Agency for Foreign Investments and Promotion of Exports), presented the Eastern Serbian company with the prestigious award for Best Exporter in 2004.

With such great success and recognition achieved, we spoke exclusively to Tigar General Director Dragan Nikolic this month.

Nikolic explained: "We received this award thanks to our good export of tyres to the value of 76 million euros, which is a significant amount for the conditions in which we are dealing. That award is recognition of the fact that Tigar managed, with its competing capabilities, to accept all standards in tyre production, especially safety and ecological standards, but also with the whole organisation of management, to win its place on the highly demanding world market. The award we received is also a stimulus for us; an obligation and a sign that we are on the right road, considering that exports are our permanent determination. Tigar can, with a small part of its production, satisfy all the needs of the domestic market, which are currently much lower than there were in 1990. Because of that the increase in exports is the only way to optimise our capacities, regardless of the fact that we are facing increasing competition on the local and world market.

According to appraisals, so far we have managed to meet the competition with our prices, efficiency and productivity."

How realistic are plans for the modernisation and expansion of Tigar; and how much has been invested to date?

Those plans are very realistic. They are the strategic vision for our future development, but are at the same time based on very concrete targets, which are dynamically modified every three years. From 2002 to 2004 we invested around 30 million euros. From our own resources we invested â‚Ź10 million, and we received the remaining â‚Ź20million as a long term investment credit from the IFC International Financial Co-operation. IFC is a branch of the World Bank, and with this they became Tigar's partner in a join investment.

During 2005 we plan to invest another 22 million euros. The financial construction is closed and plans have been worked out in the smallest detail. If the chance for more rapid development arises our partners will consider the possibilities for additional investments.

Under which conditions did you receive the credit from the IFC in 2002?

Interview There you could see the value of the strategic partnership with Michelin, therefore we received relatively favourable conditions from the IFC. The credit was for 10 years, with a grace period of three years, and the interest rate was initially 6.3%, but was soon reduced to six percent per year. Those conditions were, at that time, unbelievably good, because our domestic banks were giving credits with usury interest rates, which with any kind of development was impossible.

This was a big positive impulse because the other banks which wanted to co-operate with us had to adapt their conditions, and on that basis we doubled our production in that period.

Can the announced establishment of the Agency for Insurance and Financing of Exports Businesses improve the position of the export-oriented companies, considering that its founding capital will be only â‚Ź25million?

It can, and I absolutely support that Government decision.

Simply, there are markets we do not dare to export to without insurance because of the high risk. As such, this issue is very important and in some cases even more important than the production and the sale; because if you produce something and export it, and later can-

High interest rates on the domestic market do not present a problem for us, because we can receive loans from abroad, but there are many smaller companies which cannot do so.

What are Tigar's results in the past and the plans for the coming year?

Total net production, at corporation level, was 113 million euros, of which â‚Ź83 million was earned from exports. We produced 5.2 million tyres and the target was met in the production of footwear. Our other departments did not manage to do that because our production programmes for rubber-technical and chemical products are facing certain problems. Namely, those two programmes are following the domestic industry, which works with a small level of capacity exploitation. That also creates problems for us. Those are good programmes which would be very profitable under different conditions, but they have a restricted market because they are not orientated towards exports. Their destiny now depends on the development of events in some economic branches, such as mining, the railways, construction or the arms industry. We are trying to keep those programmes because it would be a pity to close them just because of the bad current situation of potential users of those products. As regards the chemical products, we are hoping that VAT will introduce more order because so far that was a large part of the grey market and both the producers and the state suffered because of that. Finally, on the big public tenders, I expect more consideration for the domestic industry, whose products are in some cases, such as the paint for road markings, even better quality than foreign ones.

So, regular conditions in which the same rules apply to all suit good companies. What else is necessary for such an environment?

Firstly, the state should have a long term consistent plan which will not depend on changes on the political scene. What suits good companies, especially those dealing with exports, is the most organised, stable ambient where it is known what the state will support, and to what extent. Thus, the domestic producer can meet and even beat the competition. We have sent a number of suggestions to the Government and the Serbian National Bank as to what should be done, and some of them relate to changes in the VAT regime.

According to the current law, the predominant exporters are companies which export over 70 per cent of their production, and on condition that the value of exports exceeds 10 million euros. Our position is that this should be one or the other, because many companies, in contrast to Tigar, do not fulfil both criteria. We think that the system of the return of VAT to the prevalent exporters should be simplified. Tigar, as a big exporter, has the right of VAT reimbursement and we received that money even before the legal deadline of 15 days, but because of the valid regulations we have to permanently pay that money and then the state returns the surplus of VAT to us, and that only makes expenses without any effect. Instead of that it would be much easier and simpler to make periodical settlements which would level out the differences.

We have also suggested that some customs tariffs be decreased.

Tigar uses some materials which used to be made in Loznica, but now nobody makes them in Serbia. However, we still pay five per cent tax on them, as if we were able to purchase them in our country. It is true that the abolition of customs taxes would decrease Budgetary income, but that would mean a great deal. Therefore, one could ask what the purpose of the customs tax protection is: to protect domestic products or just to fill the budget?

Domestic companies could magnificently increase exports to some markets where there is a liability risk, and the state could considerably help that by establishing the institution for export business insurance.

not collect payment, then that is a real tragedy. That is one of the pragmatic measures, without too much philosophizing, which can really improve the position of exporters. We should maybe think about exemptions for those companies which have good sale channels on the world market, so they could help the exports of other companies, which have something to offer but do not have buyers on the hard western markets. It would also be logical to introduce tax exemptions for companies, such as Tigar, in which employees work 24-hours-a-day, seven days a week, in three shifts. That overtime is very expensive. It has to be paid, but the state could renounce part of the taxes for the night and weekend shifts, from the companies which are prevalent exporters.

Dragan Nikolic As well as rising inflation, the key problem of the Serbian economy is the high foreign trade deficit. Is part of the reason for that the belief that sales on the domestic market are more profitable than exports?

That is profitable only to those who are only orientated towards domestic buyers. But we can fulfil all the demands on the domestic market with only 10 per cent of our production, thus 90 per cent has to be placed abroad, and that is mostly within the European Union.

The advantages of those markets are that we get strong currency for our goods, we do not have problems with collecting payment and we can plan our production for longer periods. Together with that, on the domestic market we are facing the same competition like everywhere else in the world, because we do not get any kind of customs protection. But, in contrast to our competitors, we do still have many burdens on our back and because of that it is most important for us that the conditions in Serbia are the same as they are in other countries.

What are your previous experiences of the strategic partnership with Michelin and IFC; and is that the type of reciprocity you would advise to other domestic companies?

CorD | April 2005

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Interview We do have exceptionally good experiences, but it is very difficult to get such a quality partnership. We were preparing for that for almost 30 years, because we understood where our place was and that we cannot, by ourselves, influence global trends. Because of Michelin and the IFC, Tigar was much more easily accepted by all other partners, because trust is very important in business. In the end, because of such a partnership, the discipline, technological, financial and other factors were raised to a higher level in Tigar a long time before this happened in other companies. Tangible progress could be seen in the fact that in 1969 we were making 1,000 tyres per day, and sometimes 900 were rejects. During the '70s we improved the quality with our own forces and made good tyres, but understood that we could not sell them. Not because they were bad, but because we did not have such a position and trust from foreign buyers. The positive spiral of development started in 1974 when we signed the contract of technical co-operation and the licence with Goodrich. Last year we produced 5.2 million tyres and our target is to increase production to 6.2 million before the end of next year, and with a bit more investment in 2007 and 2008 we could increase production to nine million tyres.

But for us it is not only the quantity that's important, but also the quality. At the beginning our products were of the fourth category, like tyres from Pakistan, India and China. Now we are in the top of the third category, the same as some renowned companies such as Kumho and Barum, and we are on the way to making a further step forward, because we do already have products in the second group, such as V - tyres for speeds up to 240 kilometres per hour, and our winter tyres are really among the best quality.

and according to that they set up the interest rates. They could behave in such a way because the market was hungry for the money, therefore nobody was even asking about the interest rates. High interest rates on the domestic market do not present a problem for us, because we can receive loans from abroad, but there are many smaller companies which cannot do so.

During 2005 we plan to invest another 22 million euros. The financial construction is closed and plans have been worked out in the smallest detail.

If the chance for more rapid development arises our partners will consider the possibilities for additional investments.

Many domestic businessmen complain that the dinar exchange rate is not stimulating enough for exporters. Is that true or does the problem lie elsewhere?

We can discuss the exchange rates all the time, but that is, as a source of macroeconomic stability, the main task of the NBS's (Serbian National Bank) Governor. Neither a high nor low dinar exchange rate is the solution to all problems and, because of that, it is important that the NBS maintain and gradually adapt the rates in accordance with all other genuine trends, so it does not come to the situation where somebody suddenly pulls the rug out from under our feet and that change in the exchange rates provokes double figured inflation and ruins everything that we have worked hard for many years to build. I deeply believe that the Governor is aware of that and that he is undertaking everything possible to fulfil all the key interests. Of course it would suit exporters if the exchange rates grew and importers if it remained as low as possible. But for us, the prevalent exporters, it also does not suit us that the rates are always growing, because on that basis we would have negative effects, in the sense of exchange rate differences on our foreign currency debts.

Can Serbian companies compete with the foreign competition in terms of interest rates on bank loans, which are sometimes higher than 10% per year?

With those interest rates domestic companies can hardly compete with foreign ones, which do not have such high financing costs‌Now, the competition is increasingly present in the banking sector too.

Before banks used to, sacredly, set up how much money they needed

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Tiger began its privatisation in 1990.

Who are the owners of the company now and what is happening with the small shareholders?

The small stock holders own 66.3% of stock and the rest is owned by the State Stock Shares Fund. The small stock holders are untouchable owners and can decide what to do with their shares: if they are going to keep them or sell them and leave the company to the other owner. Tigar's shareholders have shown a sensible approach so far, and we will see what will happen in the future. The preparation for the stock quotation on Belgrade's Stock Market will be finished by the end of April and trade with them will be possible from May. We do not need a strategic partner, which will take us over and lift us, because we are getting developed anyway. Well, we found our strategic partner in 1974, without any pretensions to be sold for a certain sum, but to work and develop our mutual interests.

Have shareholders had any concrete benefits so far?

Apart from the hyper-inflation year of 1993, they have constantly received dividends. Those were not such large sums, because we were re-investing part of the profits. The total sum of the paid out dividends was between â‚Ź800,000 and one million euros per year.

Does Tigar plan to extend business co-operation in the production of tyres with some other world companies similar to Michelin?

Certainly. We will try to find strategic partners for the bigger programmes, especially in the production of footwear, rubber-technical and chemical products, which are, together with vehicle tyres, our three main businesses. Tigar has 17 different business units. Also, we have not ruled out the establishment of new businesses which will not have anything in common with the existing production. During the '90s we were very close to the realisation of an electronic induction programme.

After all Nokia was the leading producer of rubber footwear, then vehicle tyres and now 80 per cent of their production is electronics.

Some time ago joint company Tigar -Amerika was established.

What happened to that project?

The status of that company was frozen for a long time until we reactivated it last year. Meanwhile we have managed to collect all the claims and now we are trying to find the possibilities to revive our trade with the U.S., not only with our own products but also with those from some other companies such as IKL from Temerin, Metalac from Gornji Milanovac and Kristal from Zajecar. The American market is very demanding and without thorough preparations and an adequate offer we cannot do anything there.

Tigar has several companies abroad. How is their business doing?

They are all doing well, and the best one is Tigar Europe in Great Britain. That company placed 1.1 million tyres on the U.K. market in 2004.•

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Haradinaj answers Hague call

R

amush Haradinaj, a former commander of the outlawed Kosovo Liberation Army (KLA), resigned from the post of Kosovo PM on 8th March and promptly surrendered to The Hague to face war crimes charges.

The thirty-seven point indictment lists crimes allegedly committed between 1st March and 30th September 1998. Crimes detailed in the indictment accuse Haradinaj of persecution on the grounds of race, religion and political persuasion; murder, rape, crimes against humanity, abuse of civilians, destruction of property, unlawful imprisonment and deportation.

Haradinaj is alleged to have been part of a joint criminal project aimed at purging non-Albanian residents from the Dukadjin region around Pec and placing the KLA in complete control of the area.

The indictment accuses Haradinaj of ordering KLA members under his command to attack local Serb inhabitants, as well as Albanians and Roma who were believed to be collaborating with Serbs. He is also charged with being responsible for the deaths of 39 Serbs, whose bodies were later dumped in Lake Radonjicko.

The same indictment also names former Black Eagle unit commander Idriz Baljaj and the former commander of the Jablanci camp, Lahi Brahimaj.

Kosovo governor Soeren Jessen-Petersen expressed his satisfaction with Haradinaj's swift surrender, saying that the fact that there was no violence in Kosovo after the issuing of the indictment represents "a giant step ahead" for Kosovo.

Also speaking on the issue and its ramifications, Robert Hand, U.S. Congressional advisor for the European Security and Cooperation Commission, said that "The departure of Haradinaj to The Hague will have an effect on Croatia and its need to extradite Ante Gotovina and focus will be put on the question of what Belgrade and Banja Luka plan to do with their remaining indictees."

on Kosumi, though they do not anticipate a marked change in the administration's relations with Serbs.•

Hague transfers gather pace

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ollowing the surrender of former Kosovo premier Ramush Haradinaj to the ICTY, March saw a wave of activity towards the international tribunal. In mid March the Serbian and Republika Srpska governments announced the surrenders to the Tribunal

Replacement PM sworn in Haradinaj has been replaced in Pristina by Bajram Kosumi, who immediately announced that the implementation of democratic standards would continue in the province with the goal of building an independent Kosovo.

Appeasing minority communities in the breakaway Serbian province, Kosumi said that special attention will be given to the return of refugees.

Leaders of the province's Serbian community have said that it is too early to comment

of former Republika Srpska interior minister Mico Stanisic and fellow Hague suspect Gojko Jankovic.

According to Stanisic, he decided to surrender after meeting the Serbian National Council for Hague Co-operation's Zoran

Loncar and Bosnian-Serb Interior Minister Darko Matijasevic.

Jankovic, accused of committing war crimes against non-Serbs in Foca (Srbinje), is reported to have informed the two governments that he would surrender in an effort to help his nation fulfil its international obligations.

Meanwhile, SCG Military Chief-of-Staff, Dragan Paskas, has reiterated his claim that no Hague suspects are being hidden in national military facilities. Speaking to RTS, Paskas said that he was repeating his insistence because those who cannot accept the truth of the matter are continuing to make accusations against the military. Also discussing the subject of the ICTY in March, Rasim Ljajic, head of the SCG National Council for Hague Co-operation, insisted that Hague suspects Nebojsa Pavkovic and Sreten Lukic are causing irreparable damage to the nation by refusing to accept the need to surrender to the Tribunal.

Accusing the pair of "playing games" to avoid their inevitable extraditions, Ljajic insisted that they were damaging the nation's credibility in the eyes of the international community at a key juncture when the State Union is attempting to move towards a positive result of the EU Feasibility Study. Rodoljub Stanimirovic, vice-president of Pavkovic's National Bloc Party, said that the party is prepared to protect the former Yugoslav Army Chief-of-Staff if state officials attempt to arrest him.

Insisting that arrests and extraditions would have no bearing on the EU Feasibility Study, Stanimirovic said that Pavkovic will not surrender because he is ill and is also maintaining his "military honour and dignity".• CorD | April 2005

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Interview

MARKET POTENTIAL

By Milan Culibrk, Photo Mirjana Kotlaja

Raiffeisen Leasing is one of the leading leasing companies in Serbia. In the last year this company achieved strong growth, increasing its portfolio almost nine fold, from zero to eighty million euros - so said Raiffeisen Leasing General Director Ognjen Medic, speaking exclusively to CorD magazine this month.

During 2004, all of the leasing companies in Serbia financed equipment and vehicles worth €330million, and in some countries, where leasing has already existed for seven to eight years, that sum is much larger.

In Slovakia, for instance, it was €1.1billion and in the Czech Republic €3.7billion. The Serbian market has great potential and I expect the value of leasing contracts in 2005 to be twice as high as they were in 2004.

On what do you base that opinion?

I will state one reason: the vehicle park is in very bad condition. The average age of cars in Serbia is 10 years, light commercial vehicles 18 years and some machines are more than 30 or 40 years old…Moreover, the irrigation systems, which are in a worse state in Serbia than in Albania, can also be purchased on leasing. Some people see that as something terrible, and for us that is only the potential because many of those problems can be solved by purchasing vehicles and machinery on leasing. That has just started in Serbia. Besides, the demand is not the problem at all because it does exist. The biggest obstacle now to hastening development is how quickly the leasing companies can process all of the demands. By the end of 2004, all leasing companies in Serbia signed over 16,000 contracts, which is no small amount.

Ognjen Medic, director of Raiffeisen Leasing aiffeisen Group's twelfth leasing company was established on 10th February 2003 and the leasing market in Serbia is already showing signs of competition, regardless of the fact that less than ten players are active in the country. This, according to Medic, is a relatively small number for eight million citizens. Slovenia, in contrast, has just two million citizens and 36 leasing companies.

Medic is certain that "there is still lots of space for expansion in Serbia, but the effects of the long lasting isolation can still be felt here and all international leasing groups were present in transitional countries during that period, including the countries of the former Yugoslavia. During that time they gained considerable experience of doing businesses in such, for them unknown, markets. As soon as Serbia opened up, those companies came to our market and at the very beginning they were able to apply the best models of business dealings. That enabled a high rate of growth and our company is one of the leading companies in Serbia.

R

How big do you believe the potential of the leasing market in Serbia is, and what are its developing perspectives, especially in comparison with the surrounding countries?

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CorD | April 2005

Does the legal framework enable the free development of leasing companies and what else, according to you, should be done in the system plan?

The legal framework is quite good. Serbia is specific in that in 2003 the Financial Leasing Law was adopted and came into effect in August of the same year, together with amendments to the Tax Sales Law, by which all transactions connected to financial leasing were freed from all taxes.

That contributed to the popularisation of leasing. Besides defining the participants (supplier, donor and user) and regulating the minimum funding capital of 100,000 euros, the Financial Leasing Law also determined the deadline of only three plus three days (three days for the court decision and the same for carrying out that decision) for the return of the leasing subject (repossession) when the client does not regularly meet his payment obligations according to the contract. That is really a revolutionary thing, which ensures a much higher level of security for the leasing companies because the collection of mortgages in Serbia can last for several years. Luckily, the leasing houses have not tested this legal solution yet because there have been no repossessions.

However, in Croatia in 2004 as many as 5,400 vehicles were repossessed from clients who did not regularly pay their instalments.

Compared to banks, leasing companies are slightly less exposed to risk, because when leases are approved for vehicles the company remains the owner until such time as the client pays the last instalment and has the legal right to be declared as the owner of the leasing subject, and Casco insurance covers every potential loss. Those things have enabled the strong development of leasing in Serbia.

How many contracts have you signed to date and what is their value and structure?

Ognjen Medic - director of Raiffeisen Leasing By the end of 2004 we signed 4,000 contracts for a total sum of â‚Ź97million. Of that total, 65% are vehicles (33% commercial and 32% pri-

vate) and 35% are equipment and machinery. Even though we deal with citizens, our main clients are companies. Raiffeisen Leasing is the only company in Serbia which offers rental services, but the majority of contracts were financial leasing.

Does it come as a surprise to you that you did not have to break a single contract?

For me that was no surprise, because Serbian clients meet their obligations and I was convinced about that when I was working in the banking sector. In addition, we do take care about who is our client. There is nothing worse than getting into illogical business because that creates problems for the company and the client later. It is very important that companies in Serbia understand that growth is a good thing, but that uncontrolled growth can be very bad.

and the user of the leasing subject is the economic owner. In operational leasing the aim is that the client uses the leasing subject until the end of the contract and most often returns it or takes some new, more modern model. The other key difference is accounting treatment.

As regards financial leasing, the subject is in the client's ledger and has similar bookkeeping treatment as a loan. In operational leasing the subject is in the leasing company's books and the client presents only the rent of the object in his ledger. As such, western companies very often go for operational leasing, because in the bank's views that does not represent a credit debt, therefore they can take more credits. On the other side, banks lower the client's credit capacity for the amount of the obligation, according to the signed contracts of the financial leasing.

There are some illogical solutions which impede the work of leasing companies‌ bank credits are free of VAT in Serbia, while leasing transactions are not.

What were the results you achieved in the last year, were you satisfied and what are you plans for this and the forthcoming years?

We were very satisfied with the achieved results, which were much better than we had expected. The biggest growth was achieved in the last quarter of 2004 and that was mostly as a consequence of the introduction of VAT, but in July and August, which are traditionally bad months for leasing companies, we worked with unchanged intensity.

The majority of those who are interested do not understand the difference between operational and financial leasing. What is the basic difference?

The aim of financial leasing is that the client becomes the owner of the leasing subject at the moment of settling the last instalment.

Meanwhile, the leasing company is the legal owner of the leasing subject

O B S TA C L E S Demand is not the problem at all because it does exist. The biggest obstacle now to hastening development is how quickly the leasing companies can process all of the demands. By the end of 2004, all leasing companies in Serbia signed over 16,000 contracts

Which conditions do you offer to those who are interested in financial or operational leasing and can you give us some examples?

For the upcoming Motor Show, all leasing companies and car dealers are preparing a special fair discount. Raiffeisen Leasing has prepared a very attractive package of discounts and presents for all of its future clients. The fair action will last from 25th March until 30th April 2005.

Are there any restrictions for citizens, legal entities and enterprisers?

For private individuals, the stipulation is that half of the wage covers the monthly instalment and the monthly Casco insurance repayment. If that is not the case the citizen can qualify with the help of an endorser.

The client and endorser's wages are added up so that half of both wages cover the monthly instalments. If the subject of the leasing is a vehicle of

R E S U LT S

PROPERTY

We were very satisfied with the achieved results, which were much better than we had expected. The biggest growth was achieved in the last quarter of 2004 and that was mostly as a consequence of the introduction of VAT.

Real estate is not regulated by the Financial Leasing Law. One of the reasons is that the land registries have not been sorted out yet, and the other reason is that the repossession of the leasing subject in the case of real estate would not be as short as for vehicles. We hope that real estate leasing will start this year.

CorD | April 2005

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Interview Golf, Opel Astra or Renault Megan class, in the case that the clients fails to meet his financial obligation we repossess the vehicles and, since those cars are very popular in Serbia, we can easily sell them and cover the debt. However, if the leasing object is a special machine for production, which can only be used in RTB Bor, if the client stops paying his monthly instalments it is difficult to sell that machine to someone else.

Because of that it is very important for us that the leasing subject can be sold easily. However, as soon as some car is driven out of the shop its value drops by 20-30%.

If the leasing house does not take the participation, and the client stops paying the instalments immediately, then the debt can be higher than the value of the vehicle. That is the main difference in comparison with banks, for whom only the client's credit liability is important. Here we have to consider the subject of leasing, especially since we do not take any other means of insurance.

What distinguishes Raiffeisen Leasing from the other leasing companies which operate in Serbia?

We treat every client as a partner. They usually come with their ideas, and if we see that some other solution would suit them better we suggest that to them. Luckily, we do have Raiffeisen Bank beside us, therefore we can combine leasing and credit together, which is also to our advantage.

Thanks to Raiffeisen Bank we are present all around Serbia.

What is the relationship between Raiffeisen Bank and Raiffeisen Leasing?

The owners of 50% of the stock in Raiffeisen Leasing are Raiffeisen Bank from Belgrade and Raiffeisen-Leasing International GmbH from Vienna, which is the leading leasing company in Central and Eastern Europe. That is a very good combination because of the effect of synergy, because when the client comes to us he can literally finish everything he needs to.

How long does the procedure to conclude contracts take?

That depends on the amount. For contracts up to â‚Ź25,000 everything is finished in one day, up to â‚Ź250,000 in 48 hours, and over that amount up to five working days.

Do they have any additional privileges or impediments?

The conditions are absolutely the same for everybody. Big multinational companies are mostly registered in Serbia as limited companies, which come under the jurisdiction of local laws.

When, on the initiative of SEED (the World Bank's programme for the improvement of the operations of small and medium-sized companies), nine leading leasing companies established the Association of Serbian Leasing Companies (ALCS), you were elected as the first president of the association's managing board. How many members does the Association have now, what are its aims and have you managed to achieve anything concrete to date?

The Association's main aim is to secure the most favourable conditions for leasing companies in Serbia. At the same time the Association is the information point where potential clients can become informed about which leasing companies exist and which services they offer. The purpose of the Association is to enable the concrete co-operation of leasing companies and avoid unfair competition. We co-operate with the Ministry of Finance and the Tax Administration, and are especially in connection with the consequences of the VAT implementation, because we think that some things should be changed.

The irrigation systems, which are in a worse state in Serbia than in Albania, can also be purchased on leasing.

Do you have a contact with the Crediting Bureau?

We have slowly started negotiations for establishing that co-operation. That could be the way to avoid the scenario from Croatia, where many citizens got into debt. Namely, with the data from the Crediting Bureau leasing companies will be able to realistically estimate the client's credit liability. If some of them are already in debt in banks then the chances of them fulfilling their contracts of financial leasing are smaller, and vice verse.

Vehicles are mostly purchased on leasing. What is the situation with real estate?

Sadly, real estate is not regulated by the Financial Leasing Law. One

CorD | April 2005

How great is the obstacle for the development of leasing real estate in Serbia, considering the fact that denationalisation in our country has not taken place and Finance Minister, Mladjan Dinkic, estimated that the value of nationalised property is between 60 and 150 billion dollars?

Slovenia was in a similar situation in 1993, but they solved the problem by starting to build on undisputed land. In that way this issue could be resolved in Serbia too, since there is lot of land which does not have ownership problems and can be used for building real estate.

Do you have any foreign companies or citizens who are currently residing in Serbia among your clients?

Of course, we deal with everybody: small and medium-sized companies, as well as big multinational companies.

At the beginning of this year in Serbia, the Leasing Register started to work as part of the Agency for Economic Registers. This should record all leasing contracts signed to date.

What are the first effects and has the risk of making leasing contracts with somebody who is already in debt now decreased?

According to the Financial Leasing Law, that register was supposed to start on 1st January 2004. Sadly, it was established one year later and so far has retroactively registered 16,000 leasing contracts, signed in the previous period. Thanks to that register banks can check whether something which is offered to them as a guarantee for a loan is the subject of a lease, i.e. owned by the leasing companies and not the potential client.

In this way the risks are significantly decreased.

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of the reasons is that the land registries have not been sorted out yet, and the other reason is that the repossession of the leasing subject in the case of real estate would not be as short as for vehicles. We hope that real estate leasing will start this year. That would be a great plus for the economy because the building of new real estate would engage many economic branches. In Slovenia, for example, around 35% of investments are directed into real estate through leasing. In Western countries, many companies do not have their own business premises but take one on a lease. By the way, the airport in Munich is owned by a leasing company.

What exactly is this about?

There are some illogical solutions which impede the work of leasing companies, and we believe that this will soon be improved. Those illogical points were noticed by people in the Ministry of Finance and Tax Administration. In other countries there were also problems in the first months after the introduction of VAT, and they were solved in time and I hope that it will be the same in Serbia. What concerns us the most is that VAT is also paid for the leasing transactions, although that is the frequent solution in other countries too. However, bank credits are free of VAT in Serbia, while leasing transactions are not. We would like to see some tax incentives for companies which purchase their equipment and machines on leasing, because it is very important to set the whole economy in Serbia in motion. After all, such a stimulus exists in Slovenia and Croatia.•

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SPS support conditioned

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ontinuing talk that unwilling ICTY suspects may face arrest and forced extradition have prompted Slobodan Milosevic's Socialist Party of Serbia (SPS) to threaten the minority Serbian Coalition Government that it will withdraw its support if any such arrests are made.

SPS Secretary-General, Zoran Andjelkovic, warned that anymore instances akin to the arrest of Veselin Sljivancanin or the "kidnapping" of Milosevic would prompt the party to stop keeping the government in power. The party, however, is not opposed to voluntary surrenders.

Andjelkovic claimed that SPS has already struck a deal regarding this matter with PM Kostunica.

Meanwhile, the Investigative Judge of the Belgrade District Court’s Special War Crimes Sector has temporarily frozen the assets of Hague fugitives, in response to failures to surrender voluntarily. The move is the result of a proposal tabled by the National Council for Hague Co-operation.

A total of 13 indicted suspects have seen their financial resources frozen until further notice.•

Zoran Djindjic remembered

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he second anniversary of the assassination of Zoran Djindjic, Prime Minister of Serbia and head of the Democratic Party, was marked on 12th March at the New Cemetery graveside of the PM. Djindjic was gunned down in front of central Belgrade's government building in 2003.

Boris Tadic, current president of Serbia and head of the Democratic Party, joined DS

representatives, members of PM Djindjic's cabinet and family members and friends in paying tribute to the fallen leader, laying wreaths and flowers by his graveside and lighting candles in remembrance.

Over a thousand visitors visited Djindjic's grave to pay their respects throughout the day and current Serbian PM, Vojislav Kostunica, placed a wreath on the commemorative plaque near the entrance to the Serbian Government building. He was accompanied by SCG Foreign Minister, Vuk Draskovic, and ministers of the Serbian Government.

Kostunica called Djindjic 'the spark that started reforms in Serbia'. Speaking to weekly Evropa, the PM said that his impression of the former Serbian Government had changed since he himself had taken up the reins of power.

"Zoran Djindjic was the first to accept an extremely tough job, to lead a government in a country that was making its first steps towards reforms and democratic change.

There was probably a great sense of energy at the time and the determination which he had was a very important factor in creating change," the prime minister added.•

leader of the former FRY, Slobodan Milosevic, agreed to pull his military forces out of the troubled southern province to be replaced by NATO troops and a UN-led administration.•

Six years since NATO campaign

Thumbs up from World Bank

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O

he 24th March saw the sixth anniversary of the commencement of NATO's bombing campaign against Yugoslav forces.

The campaign, NATO's biggest military action to date, lasted 78 days and saw strategic targets and residential areas bombed in Serbia, including Kosovo, and Montenegro.

The bombing only ended when then

rsalia Kalantzopoulos, representative of the World Bank, has positively assessed economic trends in Serbia.

According to the Serbian Government, Kalantzopoulos told PM Kostunica that Serbia had achieved macroeconomic stability and displayed its readiness for continued co-operation in various areas.

She also said that the World Bank is prepared to finance education, health and infrastructure projects in the country.

PM Kostunica expects the EU's Feasibility Study to be positively completed in the near future. The Study marks the first formal step towards EU membership.•

Journalist awarded

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leksandra Sekulic, journalist of PG Mreza and a regular CorD contributor, has received the Belgrade Media Centre award for the best article of 2004.

Sekulic's award-winning article examined media ethics in Serbia.• CORRECTION In the "Insurance Pays" article published in the FIC Special Edition - February 2005 CorD failed to mention that Zeev Hadar, president of the FIC Insurance and Pensions Committee, is Country Manager of TBI Financial Services Group NV. CorD apologises for any confusion caused by this error.

CorD | April 2005

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Interview

Dรถrte Weidig, General Manager - ProCredit Bank, Serbia

SUPPORTING ENTERPRISE ProCredit Bank was the first bank to enter the Serbian market following the adoption of the democratic system of government in 2001.

By Rajka Sinik ince then, she noted, the Serbian banking system has undergone many positive changes. These include the debt equity swap, the abolishment of ZOP, introduction of the national debit card, the arrival of foreign banks coupled with strengthened banking supervision and the first privatisations, which represent a strong political willingness to modernise and consolidate the banking sector. She determined that it is these and many other efforts that have led to Serbia receiving an international credit rating.

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How have these developments helped Serbia's banking sector and how can they be improved upon?

All of these developments certainly helped to enhance the financial and banking system in Serbia. But establishing a sound and modern banking system - which is the basis for growth and development in any economy - is a long-term task which requires the active participation and support of all of the institutions in the system. There is still a lot to do and one of the important tasks is certainly to continue to foster the confidence of the population in banks and financial institutions. The extremely high mandatory reserve requirements, for example, put a serious impediment to lending to the country's production sectors.

However, I believe that the National Bank of Serbia will continue the process of modernisation and consolidation which has been initiated in the banking system. This in turn will cause cash to find its way back into official money flows on an increasing scale and lead to a decrease in the grey economy.

Your bank is geared to providing finances for small businesses. How many loans have you disbursed to this sector so far?

Yes, ProCredit Bank focuses on lending to small and medium-sized enterprises (SMEs) because we believe that these businesses constitute a vital sector of any economy, as they generate new employment opportunities on a significant scale and generally make a substantial contribution to the overall advancement of the economy. Before ProCredit Bank entered the Serbian market, this sector was neglected by banks and SMEs were almost completely unable to obtain formalsector loans. However, the businesses in this sector need more than just loans. They also need all of the other services which a modern bank can offer.

And by providing its customers with a complete range of highquality banking services, ProCredit Bank is actively supporting the development of micro enterprises and SMEs in Serbia.

Since April 2001, we have disbursed more than 48,000 loans to SMEs with a combined value of €280million. Each month more than 2,000 Serbian enterprises and entrepreneurs receive loans totalling some €12million from ProCredit Bank.

already significant. However, it should not be assumed that cards will completely replace cheques. If banks take their social responsibility seriously they will conduct a prudent risk assessment before allowing members of a household to indebt themselves; not all households living on cheques in the past might have the payment capacity for a credit limit in the future.

I have already mentioned that the introduction of the national payment card is a positive step, as every country needs one local payment card. The payment function, however, will be much more important than the credit function. Having said that, ProCredit Bank issued more than 26,000 Dina cards last year, and our branches in 18 cities across Serbia are equipped with ATMs. The Dina card is issued free of charge, and the only prerequisite is that the client have a current account at ProCredit Bank.

The overall economic and political situation is very important in terms of establishing trust in the banking system…

What products and services does your bank offer for private individuals?

ProCredit Bank offers consumer loans and a full set of services for private individuals. I observed last year that banks were practically racing to see which one could grant the most consumer loans. We did not join in this race, as one of the principles that we follow in all of our lending activities is to avoid allowing clients to acquire debts which are too high for them to manage, and we pay a great deal of attention to the quality of our loan portfolio. As far as banking services for private individuals are concerned, it is estimated that 60% of the population still do not have bank accounts and do not execute their payment transactions via financial institutions. However, we see this as an opportunity for further growth in our non-credit operations, rather than as an obstacle to the development of this part of our business. Also, the personal banking business will be transformed by the abolishment of cheques as an instrument of deferred payment and the introduction of new services. In 2005, ProCredit Bank plans to introduce a number of new services for private individuals.

Will the public's interest in payment cards grow after the abolishment of cheques, which served a credit function?

What payment cards is ProCredit Bank offering, and under which terms and conditions?

We have already seen that people are preparing for the abolishment of cheques, and the demand for payment cards is

N AT I O N A L B A N K I believe that the National Bank of Serbia will continue the process of modernisation and consolidation which has been initiated in the banking system.

This in turn will cause cash to find its way back into official money flows

Responding to the needs of our clients and in line with our mission to offer affordable, quality but straightforward banking products, ProCredit Bank is in the midst of preparations to introduce the credit cards MasterCard and Visa, which will be launched in May. What is the volume of dinar and foreign currency savings at your bank?

ProCredit Bank achieved a 64% increase in its deposit volumes in 2004. The current level of deposits amounts to €98million and is expected to grow even further. This is a result of the sound reputation that ProCredit Bank has established as an institution and, at the same time, a result of our efforts to adjust our products to meet the needs of our clients. One such line of tailored products is ProFit Savings, featuring four types of accounts: ProFit Fleks, ProFit Klasik, ProFit Avans and ProFit 10. Each of these products allows our clients to save at favourable interest rates, and at the same time the terms and conditions are very flexible and allow our clients access to their funds at any time.

Do you think that the banking sector is regaining the trust of the citizens of Serbia?

Looking at the steadily increasing volume of savings in Serbia, I would say that a considerable amount of trust has already been regained, but that there is still a lot to do. This is clearly one of the major tasks facing the financial system as a whole, and at the same time one of the most important challenges facing ProCredit Bank. As a full-service bank, we have already helped to rebuild people's confidence in the banking system, and will continue to do so by offering quality banking services, particularly to people that do not have access to financial services at other banks. This is a part of our social responsibility. However, trust in the banking sector is inextricably linked with the general situation in the country. The overall economic and political situation is very important in terms of establishing trust in the banking system, and it is obvious that many unresolved issues remain, both in the economic and political spheres.

MISSION

EBRD

All ProCredit Banks share the same mission: to become leading providers of credit and general banking services to entrepreneurs and businesses…

The EBRD, as one of the shareholders of ProCredit Bank, has supported our operations from the very beginning. It has demonstrated its support by increasing our capital and by providing credit lines to finance our lending activities.

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Interview approaching levels of those in EU countries are very unlikely to happen this year.

Does your bank grant housing loans and, if not, when do you plan to begin doing so?

At present, ProCredit Bank does not grant housing loans, but we plan to introduce home improvement loans in April 2005. Facing the reality of the country, not many households can afford to purchase new houses or flats. Many families live in acceptable apartments which just need urgent modernisation or improvement.

Loyal to our target group and according to our mission, ProCredit Bank will first tackle this segment of the market which is to allow people to improve their living conditions within their financial capacities rather than to have a product in our range which only a minority of the population can afford.

Could the establishment of a National Corporation for Housing Loan Insurance and the opening of the Credit Bureau lead to a decrease in interest rates for housing loans?

The National Corporation and the Credit Bureau are important institutions, but their existence will not in and of itself cause interest rates to decrease. Housing loans are issued with a long-term repayment period and, therefore, a bank must be able to obtain long-term financing in order to extend them. The ability to acquire long-term financing is influenced by a number of very complex factors and is ultimately determined by the country's credit rating. Improving the country's credit rating is another complex issue and a long-term task that requires the efforts of various institutions, and not just those of institutions such as the National Corporation and the Credit Bureau.

In light of the fact that the EBRD is one of the shareholders of ProCredit Bank, how is ProCredit Bank planning to participate in the EBRD conference that will be held in Belgrade in May? In general, what do you expect from this very important economic forum?

The slogan of this forum is "Building bridges, promoting prosperity", and I believe that this will really be an excellent chance for Serbia to do precisely that. The EBRD, as one of the shareholders of ProCredit Bank, has supported our operations from the very beginning. It has demonstrated its support by increasing our capital and by providing credit lines to finance our lending activities. At the EBRD conference, ProCredit Bank and all of our sister banks in the region will be represented through the patronage of ProCredit Holding, based in Frankfurt, Germany.

ProCredit Holding manages the network of all ProCredit Banks; 9 banks in the region, 19 banks in total worldwide. All ProCredit Banks share the same mission: "to become leading providers of credit and general banking services to entrepreneurs and businesses throughout our countries of operation, by providing exceptional customer service, targeted products and a countrywide branch network". By giving businesses the means to grow, we foster economic development in the countries in which we work. To the general public we offer efficient, affordable banking services.

The aim is to achieve a sustainable return on investment that allows us to expand and develop over the long-term and that allows us to act as socially responsible banks in the respective countries. The network just reached a total loan portfolio outstanding of €1billion; well diversified with over 440,000 loans to businesses.

ProCredit Holding manages the network of all ProCredit Banks; 9 banks in the region, 19 banks in total worldwide.

Citizens are complaining that interest rates are high.

When can interest rates realistically be expected to go down?

Based on ProCredit Bank's four years of experience on this market, I can say that interest rates have already gone down and are much lower than when we started our operations in back in 2001. Interest rates are the price of capital and, like any other price, they are determined by various factors; when you say that interest rates are high, you have to consider all the factors.

Let me give just one example, namely the cost of obtaining financing. The cost of financing is high because of the high country risk currently associated with Serbia. The high country risk makes credit lines from abroad more expensive, as it is calculated into the price we pay for these credit lines. In addition, we cannot use a credit line from abroad in full as there is an obligatory reserve of 21% on these funds, which further increases the price of capital.

You might suggest that the banks turn to domestic sources of financing - that is, using local deposits. But local deposits are not free of charge, as depositors expect favourable interest rates for their funds. And local deposits also cannot be used in full due to the obligatory reserve of 47%, which is another factor contributing to the current high level of interest rates.

As a result of these factors, it is clear that drastic decreases in interest rates will not happen overnight, and interest rates

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What is new at ProCredit Bank in terms of loans and other products for SMEs? ProCredit Bank launched "ProBiznis loans", a new line of loans for micro enterprises and SMEs at the recent major banking fair in Belgrade - Bank Expo. ProBiznis loans attracted a great deal of attention because they are tailored precisely to the needs of SMEs in terms of their amounts, maturities, low collateral requirements and processing times. There are four types of ProBiznis loans: ProBiznis 1, ProBiznis Instant, ProBiznis Sprint, and ProBiznis Partner, and they are all disbursed within very short periods of time and with simple, streamlined procedures.

For example, "ProBiznis 1" - loans of up to €1,000 - can be disbursed in just one day, while "ProBiznis Instant" - which can be up to €5,000 - can be approved within three days. For companies that require larger loans, "ProBiznis Sprint" can be disbursed within a period of five days, in amounts up to €25,000. "ProBiznis Partner" satisfies the needs of companies that require loans up to €50,000. In addition to offering the newly launched ProBiznis loans, ProCredit Bank serves companies that require much higher loan amounts and a more customized service.•

NO COMMENT

Knjaz Milos: Flawed Regulations?

Despite last December's majority sale of Knjaz Milos to Cayman Islands-registered investment fund FPP Balkan Ltd., the sale of SCG’s largest producer of bottled mineral water continues to be dogged by unanswered questions and unresolved issues that will probably never be remedied to the satisfaction of the general public.

By Milan Culibrk

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he Knjaz Milos sale saga has seen the state sell part of its share package to London-based fund 'Salford', who made the purchase on behalf of New World Investment Fund from Gibraltar. New World, in turn, reached agreement with majority owner FPP to perform the role of investment manager in Knjaz Milos. Concurrently, the Inquiry Board of Serbian Parliament completed its investigation into the conduct of state bodies and officials during the sale of Knjaz Milos shares, though the Board members are still at odds over the issue.

In early March 2005, when the Board was supposed to present a final report on the Knjaz Milos case, it was found that representatives of each legislative party had their own version of what had happened. The only thing that every Board member acknowledged was that legislation governing the privatisation and securities trading process was inefficient and largely responsible for creating the impression that there had been irregularities in the acquisition of Knjaz Milos shares.

Milorad Vucelic, Chairman of the Inquiry Board and an official of the Socialist Party of Serbia, is confident that "the loopholes in the law were created on purpose so that certain individuals could pursue their interests". Vucelic went on to claim that some people had taken advantage of these opportunities during the sale of Knjaz Milos shares, though he acknowledged that

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there was no evidence of corruption or breaches of the law by state officials involved in the transaction. Vucelic said that the Securities Commision had reacted on time and in line with its capacity by penalising two broker companies in the first round of acquisition, and Apurna in the second round, when modifying their initial offer after the official deadline through Predrag Danilovic's promise that every shareholder would get an additional 3,500 dinars on top of the 17,500 dinars per share if they sold to Vlade Divac.

Vjerica Radeta, of the Serbian Radical Party, said she would provide a separate opinion if the final report failed to include statements by Commision members that they were under pressure from state officials. She also found it highly inappropriate that Deputy Prime Minister Miroljub Labus had met with representatives of Knjaz Milos-bidding French company Danone during the competition. Radeta added that there was controversy in the attempt to recapitalise the company though a memorandum signed by the Director of the Privatisation Agency, Miodrag Djordjevic, and national basketball hero turned entrepreneur Vlade Divac.

Democratic Party representative, Milos Jevtic, agreed that Commision members were under pressure from certain state institutions and officials. Radeta and Jevtic insisted that the final report should state that Deputy Prime Minister Labus had pressured the chairman of the Commision, Milko Stimac, and that the Government had tried to influence the activities of this body.

On the other hand, ruling coalition representatives comprising the Inquiry Board claim the culprits are sitting in the Securities Commision. G17 Plus member Vladimir Homan claims that the Commision broke the law when they decided to disqualify Apurna, a joint venture of Danone and Vlade Divac, a key fact that was, according to him, undisputedly demonstrated before the Inquiry Board. Radmilo Milosevic, of the Democratic Party of Serbia, is of the opinion that the greatest irregularities during the acquisition were made by broker companies, adding that the Securities Commision was too lenient when punishing them. However, Milosevic labelled the management of Knjaz Milos as the chief culprit because it had prevented company shares from being traded on the stock market for two years, only to opt for recapitalization as a model of ownership transfer in order to continue pulling the company's strings. He also considers that there were irregularities in both the first and second rounds of the acquisition, when FPP became 25.03% owner of Knjaz Milos. Milosevic concluded that everything that had taken place during the Knjaz Milos affair was the result of the ailment of an undeveloped capital market in Serbia. He insisted that this could be cured with a new Law on Securities.

Miodrag Stamenkovic, representing the Serbian Renewal Movement - New Serbia coalition, drew together the array of views on the Knjaz Milos affair and concluded that the Inquiry Board should never have been formed in the first place, because it only demonstrated that state institutions had acted in respect of the law.

It may be difficult to envisage the Inquiry Board managing to pass a harmonized final report on the case of Knjaz Milos, judging by these "preliminary" standpoints. The same thing had happened a year and a half earlier, when the Serbian Parliament founded an inquiry board to determine whether the state had been damaged during the trading of electricity between the Serbian Electric Company and EFT - a private enterprise owned

by Vuk Hamovic and Vojin Lazeravic. The inquiry board were also tasked with determining whether the law governing the trade of electricity had been breached during the sale.

The draft version of the Knjaz Milos enquiry, tabled in early March, states that no state officials broke the law in the Knjaz Milos affair, though it notes that the parliamentary commision had not investigated whether there had been any acts of corruption because such enquiries fall under the jurisdiction of the Serbian Interior Ministry's Department for the Suppression of Organised Crime.

Therefore, it is uncertain whether board members will ultimately harmonise their views in order to complete a coherent, unified report that they can then submit to the parliament for consideration.

In contrast to the members of the Inquiry Board, investment funds FPP and Salford soon managed to find a common language - thanks to the fact that they are led by common interests.

FPP struck a strategic partnership deal with Salford, which is to co-ordinate FPP's investments in Knjaz Milos. News of the part-

Milko Stimac - Chairman of the Securities Commision nership would only come as a surprise to those not already versed in the matter: it is no secret that Salford had hoped to add Knjaz Milos to its list of acquisitions for some time (the Fund is

DSS Party: “The greatest irregularities during the acquisition were made by broker companies� already majority owner of dairy companies from Belgrade, Novi Sad, Subotica, Zemun, Zajecar and Banja Luka; has recapitalised Pozarevac-based Bambi and is purported to be interested in purchasing Belgrade-based confectioner Soko Stark). Salford initial abandoned plans to acquire Knjaz Milos after being advised that their approach to the mineral water market leader would be treated as an "unwanted acquisition".

PRESSURE

INEFFICIENCY

LOOPHOLES

Vjerica Radeta [Serbian Radical Party] and Milos Jevtic [Democratic Party] insisted that the final report should state that Deputy Prime Minister Labus had pressured the chairman of the Commision, Milko Stimac, and that the Government had tried to influence the activities of this body.

Trade Minister Predrag Bubalo told the Inquiry Board that the sale of Knjaz Milos shares was a success, but added that it would have been better if the company had gone to Danone. He said the Commision made errors and was inefficient.

Milorad Vucelic, Chairman of the Inquiry Board and an official of the Socialist Party of Serbia, is confident that "the loopholes in the law were created on purpose so that certain individuals could pursue their interests".

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NO COMMENT

Milorad Vucelic - Chairman of the Inquiry Board However, there are currently no obstacles hindering Salford thanks to the fact that they are in cahoots with FPP, which owns 58% of Knjaz Milos shares - acquired over two rounds of public acquisition - and has prevented the state from have the space to manoeuvre its way into choosing who will buy its shares in Knjaz.

A number of analysts and experts say that the deal between the two investment funds has provided crucial evidence that Salford used FPP as a faรงade in order to acquire Knjez Milos behind the scenes.

Slobodan Petrovic, managing director of Salford, has refuted such allegations and insisted that FPP is a much bigger investment fund than Salford, with some $750million at their disposal, compared with the mere $500million available to the New World Value Fund. Petrovic added that Salford's aim was not to become Knjaz Milos' majority owner and, as such, they would only be purchasing shares from the state and not those currently owned by FPP. Regardless of their aims, Salford has bought 18,264 shares on the Belgrade Stock Exchange at a price of 18,000 dinars per share (+/- 4.1million).

On the last day of February this year Salford bought a further 9,136 shares at the same price, adding a further 2million to the state coffers.

The contract signed between FPP, the Privatisation Agency and the Share Fund stipulates that the investment fund must purchase all shares from the state portfolio at a guaranteed price of 18,000

dinars per share, under the premise that no other would-be buyer offered more - which was considered as being highly unlikely.

According to plans, the state will sell another parcel of 9,136 shares at the end of March and the rest of its ownership in Knjaz Milos by mid-year. Meanwhile, the guaranteed price of 18,000 dinars per share could rise marginally in line with the advance of the euro against the dinar. The agreement between FPP and the Privatisation Agency and the Share Fund stipulates that the price will not increase by more than 5%.

Although the state is unconcerned with who will buy its packet of shares, the deal between FPP and Salford has once more demonstrated the urgent need for a Law on Investment Funds.

According to Zoran Jeremic, economic advisor and former director of the Belgrade Stock Exchange, "the absence of such a law in Serbia prevents small domestic investors from investing their capital into shares, where returns are several times higher than those coming from bank savings interest".

Jeremic explained: "If such a law had been adopted there would already have been investment funds in Serbia which would have allowed many citizens to pool their individual lumps of capital and invest the entire sum on the financial market". He added that small investors were denied this opportunity because of the absence of such a law, leaving foreign investment funds in Serbia with a monopolistic position. Jeremic also said that the presence of domestic investment funds would increase demand on the financial market and that it was precisely due to low demand that the price of shares on the market was lower than its potential.

"This clears the road for foreign investment funds from domestic competition, which is not good," Jeremic concludes.

The sale of Knjaz Milos raised a lot of dust that hasn't settled several months after the transaction took place. The affair sparked heated debates among experts concerned that the Securities Commision, as the supreme regulator of the financial market, ought to have a lot more independence from state authorities. The Knjaz Milos affair sent the chairman of the Securities Commision, Milko Stimac, and his deputy Djordje Jovanovic to the trauma centre, while a group of 20 minor shareholders are still engaged in a court trial against broker company Emisio, which they have accused of forging orders for the purchase of their shares, which in turn allowed FPP to successfully purchase their package in the first round of the acquisition.

Records will show that Apurna was officially the owner of the control package in Knjaz Milos. Their joy was short-lived, however, since the Securities Commision disqualified Apurna after basketball star Predrag Danilovic promised each shareholder 3,500 dinars per share to every shareholder who sold to Vlade Divac. This was by no means the end of the matter: the Commision also overturned this ruling and provided all interested buyers with another opportunity to cast their bids. However, once the deadline expired only FPP made an offer, while Apurna and Pivovarna Lasko pulled out of the competition.

Finally, many have found it highly controversial that Deputy

FPP struck a strategic partnership deal with Salford, which is to co-ordinate FPP's investments in Knjaz Milos.

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Prime Minister Miroljub Labus received the Vice President of Danone in his apartment. These developments were the main subject of discussion at the sessions of the Inquiry Board, where Stimac had confirmed that the Commision was under pressure from all sides during the acquisition and that he had a very unpleasant discussion with Labus over the disqualification of Apurna. Stimac said that Labus did not demand that he revoke the decision to disqualify Apurna, but that he was displeased with it and spoke with a raised tone of voice. He added that people from Prime Minister Kostunica's Cabinet had also voiced their displeasure over the phone. Stimac reiterated that the

No comment Commision had to disqualify Apurna after the additional offer by Danilovic.

The other Commision members confirmed there was pressure, while Dusan Bajec added that it had prompted him to resign from his position in this body. Bajec described as a form of pressure a night session of the Government and Labus' statement that unless the decision to disqualify Apurna was revoked the Government would topple; while Djordje Jovanovic said the Government kept trying to protect their interests. Trade Minister Predrag Bubalo told the Inquiry Board that the sale of Knjaz Milos shares was a success, but added that it would have been better if the company had gone to Danone. He said the Commision made errors and was inefficient. Bubalo also considered it a mistake to allow FPP's offer for a takeover after the Memorandum of Understanding was signed with Divac, who wanted to recapitalize Knjaz Milos. Bubalo denied having exerted any kind of pressure on the Commision, but confirmed that he expressed interested in its activities and discontent over the decision to disqualify Apurna. Bubalo said the best solution would have been to allow the acquisition procedure to continue and to penalise Danilovic for breaching regulations in his attempt to advance Apurna's offer. He added that there were no contacts between himself and representatives of Danone during the public takeover and that he met with the Vice President of Danone in Paris, where he talked to French businessmen at the same time as Apurna's offer was declared successful in Belgrade.

Secretary of the Securities Commision, Olivera Savovic, said all decisions regarding the Knjaz Milos takeover, including the disqualification of Apurna, were made by consensus. She confirmed to the Inquiry Board that she had been employed as a manager in the Belgrade-based company Dibek, owned by Milan Beko, who was a former Minister of Privatisation in the government of Mirko Marjanovic. Beko was an expert advisor of FPP Balkan Limited and some members of the Serbian Government voiced their suspicion that he was even a stakeholder in the company.

More light was shed on the whole affair by Ljubinka Vucetic, head of the Commision's Supervisory Section. Vucetic said that there was no legal basis for disqualifying Apurna. She said the Commision did not initially accept her opinion that the best solution would be to repeat a segment of the acquisition procedure, which was exactly what happened in the end. After her statement, Stimac, Jovanovic and Bajec stuck to their opinion that disqualification was the right decision, since Apurna had broken the Law on Securities and the Financial Market. "A different verdict was impossible and the Commision had preserved political stability in the country by strictly abiding to regulations and the law", Stimac said.

After pointing out that he did not pressure the Commision and that there were irregularities in the whole procedure from the very beginning, Labus repeated that the consequences of eliminating Apurna were multi-fold, especially with regard to the reputation of the state. He also refused to accept any notion that he was protective of the Danone-Divac duo, stressing that his intent was to protect all participants in the competition and make sure the whole procedure was lawful "Stimac informed me of Apurna's disqualification five hours after it happened. I remember asking him - Are you people in the Commision aware of the consequences? That was where our conversation ended. When I thought about it, we never talked about the decision. What crosses my mind at this point is why the decision was not signed between 9 in the morning and 3 in the afternoon. You claim that I intervened, but between 10 and 15 hours on that day I wasn't even aware why, when everything went along fine, the decision to disqualify Apurna wasn't

signed", Labus said.

He said the Government was not authorised to react to irregularities in the first round of the takeover, since only the shares of minor shareholders were traded at that point. In the second round, when the Government share of 42% was at stake, the Government intervened and demanded, with every right, that

Labus justified his meeting with the VP of Danone: "It was a diplomatic encounter of the highest priority for the state, details of which I have given to PM Vojislav Kostunica" the Serbian Prosecutor's Office investigate whether the Commision had legal grounds to disqualify Apurna, since it turned out that they did not.

Labus also confirmed that he spoke to the Vice President of Danone, Jacques Vincent, on 7th October. He justified this by saying that he was sick on that day. "It was a diplomatic encounter of the highest priority for the state of which I have given accounts to Prime Minister Vojislav Kostunica", Labus said, adding that FPP representatives also wanted to talk to him, but later changed their mind.

Although Minister Bubalo continues to reiterate that the sale of Knjaz Milos does not deserve to be labelled 'an affair', since the shareholders got a price much better than the one initially offered, most experts say the legal framework urgently requires modifications. Otherwise, another transaction with a similar outcome could ruin the reputation of an already fragile domestic financial market.•

Economics

By Dragan Bisenic

Foreign investments fell by some 37% in Serbia last year, according to figures released by Intell News. With this in mind, domestic officials, foreign economic experts and international financial institutions have begun 2005 by insisting that a major FDI increase is needed in Serbia this year.

oped countries. In advanced transition countries, such as Hungary, the Czech Republic and Poland, annual investment totals around 24 to 29 per cent of GDP, while in less successful transition countries it averages around 17%.

U.S. companies are considered the biggest foreign investors in Serbia. However, according to the official statistics of the American Chamber of Commerce in SCG, of its members' (both American and non-American) total investments in Serbia of almost €1.3billion, Dutch companies are top of the investment tree. The investment of American firm Ball Corporation in Zemun's factory is recorded as the direct investment of Ball Packaging Europe, while Philip Morris's purchase of Duvanska Industrija Nis - DIN (Nis Tobacco Industries) is recorded as a Dutch investment, as is Russian company Lukoil's investment in Beopetrol.

German investments often come to Serbia via Austria or other

Investment lacking M

ajor projects aimed at increasing investments have already got underway this year. In January two major projects were announced and, in the banking sector, domestic banks Jubanka and Eksimbanka have been sold, while the recent sale of successful Delta Bank has also been confirmed. As in other countries of the region, profit generated by privatisations represents a basic income considered as foreign direct investments (FDI).

Funds recouped from last year's sales of companies privatised through tenders, auctions and the sales of state-owned shares totalled €1.459billion. However, this figure is disputable due to a lack of clarity: it is unknown whether some of the investments stipulated in purchase contracts have been forthcoming. These pertain to agreed additional investments that are to be provided over the course of the next few years. Thus, it is unclear exactly how much has been paid into the Republic's coffers and how much of the €820million agreed through investments, and the €272million promised for social programmes, has been forthcoming.

This year sees commencement of a new investment cycle from the lower branches, though the real level of investment in Serbia is just a quarter of the 1990 level. The Serbian Government predicts an investment increase over the course of this year to 20% of GDP - a figure common to most highly devel-

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nearby countries and are, thus, not considered as German investments. For instance, Germany company Henkel's purchase of, and further investment in, Merima is considered as an Austrian investment.

According to official National Bank of Serbia (NBS) data (as of November 2004), around $2.8billion of foreign direct investments (FDI) has thus far been injected into the Serbian economy, mainly in cash.

The national average between 1991 and 1996, according to UNKTAD statistics, was $66million. Then, in 1997, $740million was received from the sale of Telekom, and '98 and '99 saw annual investments of $113million and $112million respectively.

In the country's decisive millennium year, FDI dropped to just $25million. However, the NBS noted that the post-Milosevic recovery and marked changes to the investment climate soon saw investment figures climb: from $165million in 2001, to $475million in 2002 and a record-breaking $1.63billion in 2003 - as a result of that year's privatisation of the tobacco industry and the sales of the country's cement factories.

The 2004 slowdown, caused by the formation of the new Serbian Government and subsequent review of the privatisation process to date, saw the annual balance drop to some $776million (excluding December). The question begged is 'was this all that was possible, or was too little done?'

The NBS' Department for Foreign Currency Business and International Relations explained to CorD that the NBS only records individual investments that exceed ten per cent of total FDI, while lesser purchases are recorded as portfolio investments.

Moreover, figures pertaining to investments earmarked for equipment and machinery are now recorded exactly, whereas previously they were estimated, sometimes inaccurately. These exact fig-

ures are regularly received by the NBS from the Serbian Statistics Bureau, which compiles its data through the amended customs law's new Foreign Investments code.

The NBS also receives foreign investment data from commercial banks, which it quantifies on the basis of shares sold by minor shareholders in the country's larger companies, such as DIN, Apatin Brewery or Knjaz Milos. This is because the banks do not record such sales as foreign investments because selling shareholders are paid in dinars.

Experts of the OECD have claimed that the Serbian investment scene was marked last year as the biggest and best new investment in South-East Europe, as a result of Ball Corporation's purchase of Zemun's canning factory and the recent arrival of famous trade chain Metro. Optimistic analysts view this as a positive sign, which it undoubtedly is, while pessimistic forecasters see this upsurge as an exception and not a rule - an assessment that also holds water.

State officials are utilising these recent shining examples that have marked the hibernating privatisation process to cheer the depressed investment scene. The State is also listening closely to the advice of experienced practitioners and organisations. The IMF, which should be listened to carefully, insists that 2005 should be the year of investment in Serbia, while independent investment trend analysts do not expect any crucial changes, either positive or negative, to be forthcoming over the course of this year. However, these forecasts have been overtaken of late by the decision of the U.S. administration to withhold funds set aside for SCG. Overall statistics remain unclear. None of the official institutions are able to reliably answer the basic question of exactly how

None of the official institutions are able to reliably answer the basic question of exactly how much domestic and foreign capital has been invested in the country over the past five years; or exactly how many companies with some foreign investment element are operating in the country at this time. much domestic and foreign capital has been invested in the country over the past five years; or exactly how many companies with some foreign investment element are operating in the country at this time. Due to the major problems associated with tracking and recording foreign investments, current statistics do not provide a genuine picture of the current influx trend or foreign capital stocks.

Perhaps the aforementioned shortcoming accounts for the fact that there remain major disparities between the FDI figures issued by government officials and the figures provided by the websites of state institutions. The differences in these figures are partly as a consequence of different methodologies, sources and definitions of what constitutes FDI. For instance, some add income generated by privatisations to the values of green-field investments and joint investment, while others divide that income up. Moreover, privatisation statistics generally only relate to the budget income generated by the capital sold, additional investments made and social programmes agreed not taking into account delayed payments resulting from extended deadlines. Furthermore, none of the key departments dares to publish figures relating to invested or re-invested capital.

If it is figures you are after, the most reliable source is the NBS' Department for Foreign Currency Business and International Affairs, which has accepted its obligation to adapt foreign investment records in accordance with IMF regulations by year's end. Other institutions are increasingly relying on this NBS department, even scrapping their own incomplete records. Over recent years even UNKTAD's World Investment Report was heavily reliant on this department.•

Interview

Trained

to heal

Dr. Mico Djuricic, PhD - expert in aesthetic, plastic and reconstructive surgery

By Jelica Putnikovic, Photo Andy Dall

I did not graduate medicine to become a public or private physician, but rather to heal people. The property ownership of a hospital doesn't matter to me - so said Dr. Mico Djuricic, MD., speaking exclusively to CorD this month.

D

r. Djuricic, a specialist in plastic and reconstructive surgery, also holds the military rank of lieutenant colonel. During the Yugoslav wars of the 1990s, Dr. Djuricic operated on wounded combatants at Belgrade's VMA (Military Medical Academy). In 1992 he took the bold step of establishing his own private practice, after realising that private clinics would be the future of medicine in the country.

Despite the heavily-enforced sanctions of the '90s, this ambitious physician managed to visit Congresses of the International Association of Plastic, Aesthetic and Reconstructive Surgeons in Bali, Japan, Huston, Mexico and Saint Petersburg. He succeeded in publishing a number of works and gave lectures around the globe. Whilst employed as a professor at the Texas Lipo-plastic University, his Belgrade office for plastic surgery, 'Galatea', prospered and grew into a successful clinic.

Nowadays Galatea is a fully-equipped, modern clinic that boasts a team of specialist expert surgeons and technical staff, performing the most complex of plastic surgery operations. However, Dr. Djuricic insists that this is by no means the end of development.

"I started to perform aesthetic surgery for money and to do that it was necessary to open a private practice. The office was located at Kneza Milosa 93 and my patients are very familiar with that address. We developed slowly and expanded into more and more room until, in the end, we covered ten apartments. It was an old building and the money was hard to earn. The circumstances were such that I didn't have any access to the banks, and I couldn't be allocated any credit, but rather had to borrow money privately. We all worked that way in those days. In one moment we started to think of forther expanding of activities. By that time cooperation with the world had already been accomplished. During sanctions I wasn't handicapped because I maintained constant contact with colleagues from abroad. Moreover, I subscribed to all world magazines relevant to our profession, both in on-line and hard copy forms. My younger associates are today learning from those magazines.

How much did your work at the VMA help you to specialize in this field?

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Besides the VMA, I received training at the world's most famous clinics. However, the VMA was ranked as the fourth school of plastic surgery in the world and has existed in this country since 1948. I participated in expert meetings abroad and realised that the borders of our country were too small for some of my findings regarding aesthetic surgery. I went to congresses, advanced training courses, eventually reaching Brazil and meeting Professor Luiz SĂŠrgio Toledo. He later instructed me regarding some secrets of this field. Professor Toledo introduced me to eminent experts of the field and during discussions and exchanges of experience I started to visit all those world renowned colleagues. I performed training at their hospitals that are non-existent in this country. In that way I adopted certain techniques related to certain aesthetic operations. Little by little, patients from all around the world started to come to Belgrade; colleagues from abroad started to express an interest in us arranging symposiums. Professor Toledo and I made one joint Symposium. Now it is a traditional meeting covering achievements in plastic and aesthetic surgery.

The most eminent experts from the U.S., France and Brazil will gather here for the fourth time this June.

A new building has been constructed. During the last three years I have fought to be given some credits and, thanks to Commercial Bank, and now also Hypo-Alpe-Adria Bank, I have succeeded in completing this building. I think it is one of the most modern buildings on the Balkans. It has been envisaged in such a way to allow immediate further expansion.

Besides plastic, aesthetic and reconstructive surgery, if there happens to be any investor, it can be expanded for further medical services. The hospital has been constructed on a large plot of land so that the expansion can be multidimensional, to reach the size of a hospital with 40 or 50 beds. I plan for it to be equipped with a pressure-chamber, new diagnostic equipment and other apparatus. At the same time, Galatea will remain the backbone of the surgery department, because we already have two operating theatres and eight apartments able to facilitate around 15 patients.

Do you think that the time of profitable investments in Serbia has arrived for your specialist profession?

The changes are high. It is obvious that the country has gradually become more stable. The transitional changes are still big and it is very hard on the people, but gradually, step by step, we're closing in on something like three, four or five per cent interest rate on an annual basis, so that we can work. I started my private practice some 13 - 14 years ago and now have been given a chance to raise credit under nine per cent annual interest rate.

I hope that this interest rate will soon fall to around five per cent.

How much are the prices for your interventions lower than the prices at foreign clinics for aesthetic, plastic and reconstructive surgery?

Our prices are much lower than those abroad. However, they are still

expensive for our patients because the standard of living is poor. People are inventing solutions, finding money somehow, saving. Nowadays we have Contracts with the Hypo-Alpe-Adria Bank and with Raiffeisen Bank for credits allowing treatment and operations at our place, with repayment terms of 36 months. But for foreign patients we are still very beneficial. I cannot compare myself with the lowest prices abroad. In Germany, for instance, a breast correction operation costs 15 to 25 thousand euros, and here that operation is four to five times cheaper. Even when they add all additional costs that they incur, it is still much cheaper than in Germany.

We also arrange a small sightseeing tour around Belgrade and the surrounding area, to visit monasteries, Topola, Novi Sad or Fruska Gora.

So, you are also dealing in tourism?

All this is in our organisation. The tourist agencies could do so, but they are lazy.

Are there any initiatives from tourist agencies to organise arrivals of patients from abroad for checks and interventions at Galatea?

They asked me to prepare all those leaflets for them, so that they can offer that on a Fair. If I should prepare all those leaflets for promotion, I shall also exhibit them myself.

Do you plan to enrich the offers of Galatea?

I'm waiting for amendments to the Health Insurance Act, according to which this hospital could rent its room facilities to other physicians, even those working in public hospitals. Physicians would be able to open their private offices and operate on patients in a rented room. So, I would rent a room to that physician. New legal regulations will stipulate that I, as a hospital owner, will not liable for the success of the operation and the state of the patient, but rather that will be the responsibility of the person performing the surgical operation. I would be responsible only for the success of the hospital treatment.

Do you expect some more positive changes after adoption of new legal regulations on health service?

Public and private health service should be made equal. It is even now equal, but it is a little bit slower in practice. We will tend to our patients and be allocated a concession for a certain number of patients.

We will have a family physician contracted to a hospital for treating his/her patients. It will be irrelevant if the hospital is privately or state owned. I did not graduate medicine in order to become a public or private physician, but in order to heal people. The property ownership of a hospital is of no relevance to me.

By the profit from that health business one can earn so much money that we could open a whole chain of hospitals. We also have spas. Spa healing centres can also join this business. And there is also the sea. Even if Montenegro becomes independent we can organise tours for patients who will recuperate and rehabilitate beside the Adriatic Sea. Is there a specific interest abroad?

Norwegians have started to think that way. I have already started discussions with some of their representatives. I think that pretty soon the Contract will be signed by which they will send their patients here for operations, and afterwards we will send them to recuperate at the Dr. Sima Milosevic Institute in Igalo.

What are the possibilities that such Contracts serve as a basis for foreign investments, more specifically for expanding your clinic with the help of foreign capital?

I would love for that to happen. As yet, we still haven't had any contacts with foreign investors, but I would like to receive people interested in such health related partnerships. I hope that it would start from this year.

The search for aesthetic surgery is globally expanding, which is somewhere also coupled with variegated offers of services. How do you see the state of that field in our country?

Today in Serbia we have hyper production of Specialists of Aesthetic Surgery. Currently, 80 youngsters are specializing in plastic surgery. The problem is that they will not be fully trained. They would, of course, learn procedures from books, but they would not know how to operate. They lack training. Aesthetic surgery is just one small part of plastic surgery.

Today you cannot see much aesthetic surgery during specialisation. And you cannot experiment on people in private practice. Therefore, I would like to pass a message to the professors who are training them, saying "You will be the ones treated by them".

How can this problem be resolved?

I am still educating myself individually. I'm in touch with contemporary achievements in the world. We would have to observe credits allocated to us on the basis of how much we invest in our education, thanks to licensing of our written works and our participation at expert gatherings.

On that basis we determine the prices of our operations. The more you have invested in your education the higher your price will be. The market will precisely regulate everything. It would not be possible to have 80 specialists

We would have to observe credits allocated to us on the basis of how much we invest in our education, thanks to licensing of our written works and our participation at expert gatherings. On that basis we determine the prices of our operations. The more you have invested in your education the higher your price will be.

How would that function?

My concept when I started was such that I did not plan to take money from poor people.

It is still a very poor time, and we are just charging for aesthetic corrections. The aesthetic operations cost so much, and whoever wants them can pay‌But we do perform a certain number of reconstructive operations for free: fissure of the lip and of palate (hare lips and wolf jaws) of babies and reconstruction of breasts for women after breast cancer operations.

The time will come when we will be in a position to tender for various health funds. There are also innumerable other operations that could be performed at our facility with Fund's request, because the request is a kind of collateral. We have been deceived for a long time that health services are free. That request has, in fact, always been a check for payment of hospital treatment, except that we didn't see any money. And we would continue to use it in the future, because that is an opportunity for a patient to receive fair treatment. There is even an opportunity to pay additionally for a specific physician or for certain intervention.

Could aesthetic surgery become one of the export-oriented activities of Serbia for exporting know-how and services?

I am sure it could be. Some 14 - 15 years ago I was suggesting that I be given just one floor in the VMA. I would pay for the maintenance of half of the building just based on plastic surgery services. But we don't have just plastic surgeons in Serbia, there are also physicians. We could treat half of Europe.

Galatea is a small institution and I am a person who has institutionally started private business in the health service industry. In the outside world there are people who are serious health service managers. They can perform the job. It is not necessary that such a person should be a Serbian national. Let an expert come from abroad who would place a hospital on healthy feet. He will organise the arrivals of people from abroad.

who cannot work independently. Tomorrow I shall myself search for a specialist of plastic surgery, invest in them, become their mentor and financier and send that specialist abroad for advanced training. Besides that, the best world experts are coming to Galatea, from which one can learn.

Are 'Western' codes for the treatment of patients observed in our country?

In principle, a person should satisfy all necessary conditions in order to work. The other thing is that now everyone can open a medical office through the courtesy of Local Self-Government. Everybody should work according to one's conscience. You cannot start a private business in the West before you have had five years work experience. The complete programme of operations that a surgeon must perform before he becomes independent is well known. But it is quite different from here, where one finishes specialisation and publishes an advertisement that they are the best plastic surgeons.

Do you expect the new Health System Law to resolve those problems?

It should. But the writers of the new law should not 'invent' anything new. They should take a text body of the Law of some of the Western countries, which have that Law for 200 years already, be it Dutch or French. Slovenians have resolved it in a clever way. They went to the Dutch Queen and asked her if she would like to become a patron for passing their Health System Law. She accepted and they were given money and experts to adopt their law in the best possible way to Slovenian circumstances.• CorD | April 2005

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Faces & Places H.E. Miroslav Lajcak, Slovakian ambassador in SCG, and Mrs. Lajcak, welcoming SCG Foreign Minister Vuk Draskovic at a farewell reception held in the Slovakian embassy on 2nd March.

FIC President Mike Ahern with Deputy PM Miroljub Labus and Governor of the Serbian National Bank, Radovan Jelasic, at the launch of the FIC WHITE BOOK in Belgrade's Hotel Hyatt on 1st March.

Aleksandar Djordjevic, pictured at the Hotel Hyatt during the 28th February ceremony marking his inauguration as UNICEF National Ambassador for SCG. Djordjevic, a basketball star of national and international repute, is firmly committed to promoting children's rights in the country through the powerful medium of sport. Djordjevic will help to develop, protect and promote the rights of children and adolescents.

Serbian PM Vojislav Kostunica, Predrag Bubalo, Serbian Trade Minister, and Srdjan Djuric, the Government's Media Chief, pictured at an exhibition of photography commemorating 'One year of the work of the Serbian Government'. The images on display represent all high-level meetings, actions and undertakings of the Government in the past year.

French actress Catherine Deneuve pictured at a press conference held prior to the opening of Belgrade's famous FEST film festival. This year's FEST ran from 26th February until 6th March and saw hundreds of films screened in three of Belgrade's cinemas.

Henry Russell, Director of the EBRD's Infrastructure and Environment Office, talking to Belgrade Mayor, Nenad Bogdanovic, during an official discussion on 4th March.

Faces & Places

The Italian embassy in Belgrade provided the venue for the signing of a key co-operation agreement between Serbia and an autonimous Italian region on 1st March. Pictured left-to-right are Riccardo Illy, president of the autonimous Italian region of Friuli Venecia Diulia, Slobodan Lalovic, Serbian Minister for Labour and Social Policy, and Antonio Lucia, senior technical advisor to the UNOPS in Belgrade.

H.E. Dr. Gerhard Jandl, Austrian Ambassador to SCG, addressing attendees on 15th March at the official opening of an exhibition of the photographs of Inge Morath, entitled 'Dunav'. The exhibition, made possible thanks to the co-operation of the Austrian Cultural Forum and the Belgrade Drama Academy, is being staged at the Belgrade Faculty of Drama

Andrej Hripunov, Commercial Representative of the Russian Federation in SCG, addressing guests at Belgrade's Ruski dom on 25th February. The reception was held to promote the newly released JUGOSOVERO catalogue for 2005. The catalogue is aimed at presenting Serbian companies and products to the Russian people.

The milieu of the 'Night of Francophones', held in Belgrade's Sava Centre on 18th March. The event saw representatives of all French-speaking countries present their customs, cultures, cuisine and arts.

Presentations of the most popular commercials from French-speaking countries were also made.The Francophone evening was organised under the patronage of the Serbian Ministry of Culture and Societe Generale Bank.

SCG Foreign Minister, Vuk Draskovic, and Norwegian Parliamentary president, Jorgen Cosmo, pose for the press following a meeting held in Belgrade on 7th March. Discussing the issue of Kosovo, the Norwegian delegation was told by PM Kostunica that the solution to the problem of Kosovo-Metohija is to grant it the widest autonomy within Serbia and the state union of SCG without a change of borders.

Cosmo insisted that his country will offer full support and assistance to SCG's European integration process.

Faces & Places H.E. David Gowan, British Ambassador in SCG, addressing guests at a reception held to mark the day of Saint David (Patron Saint of Wales) in Belgrade's Embassy of Great Britain on 1st March.

Saint David, or Dewi Sant in Welsh, was a 6th century monk, abbot and bishop who helped to spread Christianity among the pagan Celtic tribes of western Britain.

H.E. Aleksandar Alekseev, Russian Ambassador in SCG, and General-Colonel Lugovoj welcome H.E. Dr Juan Sanchez Monroe, Cuban Ambassador in SCG, to a Russian embassy reception held on 22nd February in honour of National Defence Day.

(Left to right)H.E. Andreas Zobel, German Ambassador to SCG, Dr Hans Mayer, Ministerial Advisor to the Bavarian Council, Dr. Slobodan Milosavljevic, President of the Serbian Chamber of Commerce and Dr. Milan Parivodic, Serbian Minister for International Economic Affairs, pictured in the Serbian Chamber of Commerce at a meeting of the Serbian-Bavarian Commission on 15th March. Participants discussed the realisation of major trade projects in Serbia, as well as co-operation in the fields of agriculture, transportation, tourism, et al.

Chungwon Choue, President of the World Taekwondo Federation (second from left), pictured at a press conference in Belgrade on 7th March. The aim of Choue's visit was to help further promote taekwondo in Serbia and discuss the possibility of the State Union participating in the 2009 University Games.

Photographer Gerard Rondeau, pictured alongside Moroccan Ambassador in SCG, H.E. Kamal Faqir Benaissa, at the opening of his exhibition 'The Faces of Morocco' in Belgrade's French Cultural Centre on 15th March.

Nebojsa Glogovac and Goran Susljik, performers of the play 'Huddersfield', which premiered at the Bojan Stupica Theatre on 26th February. The play, which is being staged in co-operation with the British Council as part of their 'New Drama' project, was directed by up-and-coming British theatre director Alex Chisholm.

Faces & Places

Skadarlija's House of Djure Jaksica provided the venue for the promotion of the Anthology of Canadian Poetry on 10th March. Attendees were greeted by host for the evening H.E. Donald McLennan, Canadian Ambassador in SCG. Among those in attendance were Zoran Kolundzija, director of publishing house "PROMETEJ", Dragoslav Andric, author of the Anthology of Canadian Poetry and actors Radmila Andric and Miroslav Nikolic, who recited selected poems to those gathered.

H.E. Aleksandar Alekseev, Russian Ambassador in SCG, taking part in a debate held at Belgrade's Faculty of Political Sciences on 10th March. The debate was entitled 'Dialogue regarding Europe' and Ambassador Alekseev spoke on the theme of Russia's external political priorities.

Newly Accredited H.E. Gerhard Jandl, Ambassador Extraordinary and Plenipotentiary Republic of Austria (2nd March 2005) Born 30th April 1962 in Vienna, Ambassador Jandl began his career with the Austrian Ministry of Foreign Affairs in 1986, before being relocated to the Austrian Embassy in Cairo a year later. Between January 1988 and April 1989 he served in the Legal Department of the Austrian MFA in Vienna and then served in the Austrian Mission to the United Nations in New York between April 1989 and June 1993. Following Austria's membership of the UN Security Council, Mr. Jandl was Austrian delegate to the Security Council, in charge of Iraq/Kuwait, Libya, Western Sahara and the Former Yugoslavia (sanctions issues). From June 1993 to September 1995, Mr. Jandl held the post of Deputy Chief of Mission in the Austrian Embassy in Tunis, responsible for political relations with PLO Headquarters in Tunis. Upon his return to Vienna in October 1995, he served as Head of the Western Balkans Division in the Political Directorate-General, before being appointed as Austrian Ambassador to Bosnia & Herzegovina in July 2000. During his time in Bosnia, Ambassador Jandl also served as Dean of the Diplomatic Corps in Bosnia & Herzegovina (August 2003 to February 2005). His Excellency Ambassador Jandl was appointed Ambassador to Serbia & Montenegro in February of this year.•

H.E. José Riera Siquier, Ambassador Extraordinary and Plenipotentiary Kingdom of Spain (2nd March 2005) Born 17th February 1949, Mr. Riera Siquier began his diplomatic career on 1st June 1979 and served as Secretary to the Ambassador in the Embassy of Spain in Algeria in that same year. In 1981 he was appointed assistant Consul of the Spanish Embassy in Sao Paulo, before serving as First Secretary of the Spanish Permanent Mission to the UN in New York in 1985. In 1989 he served as departmental chief for South America and sub-section head for Andes' countries, Brazil and countries of the La Plate basin. In 1990 he was appointed chief of the sub-section for Mexico, Central America and the Caribbean, before serving as Advisor to the Cabinet of the President of Government in 1991. he served as Co-ordinator of Spain's Permanent Mission to the EU in Brussels from 1994 and was appointed chief of the sub-section for the Middle East in 1997. Following a stint as assistant to Spain's Permanent Representative to NATO in 1999, he was granted his first ambassadorship on 5th October 2001, when he was named Ambassador of Spain in the Republic of Equatorial Guinea. Between 2002 and July 2004, Mr. Riera Siquier served as administrative chief for security, disarmament and questions of international terrorism.•

CorD | April 2005

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18TH Belgrade "Delta Sport" Marathon

WHITE CITY MARATHON

Some cities have musical postcards and some have panoramic postcards. 3D postcards are also arriving from the world, as well as postcards soaked with characteristic local floral aromas. In the last decade Belgrade had only one globally recognizable "postcard": the "marathon postcard" - live pictures, photos, sound records and texts on "Belgrade Marathon", broadcast by the greatest TV networks, published by the most important runners' magazines and daily newpapers. That postcard of the White City was diametrically opposed from the news and messages that were despatched to the world to our capital city.

By Z. Baljkas

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he "Belgrade Marathon" has been recommended by Bob Beamon, Carl Lewis, Emil Zatopek, Sergei Bubka and a host of other all-time athletic aces and cultural, entertainment and public workers under the patronage of Sir Bob Geldof.

The "Belgrade Marathon", despite its youth and all the difficulties it has faced, has become one of the leaders of the world marathon movement. Neither sanctions, nor the enforced grounding of "JAT" aeroplanes, strict visa regime, lack of fuel, raging wars, nor difficult economic situation could stop the Belgrade marathon's runners.

The voice of the "Belgrade Marathon" was recognised by the

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International Marathon Association and Street Races Organisers (AIMS), and the new ideas were recognised and accepted by the greatest and the most powerful world marathons...

Dejan Nikolic and his associates, who concieved and organised 12 great marathon races, are also preparing for the 18th "Belgrade Delta Sport Marathon". This time they have managed to gain the support of famous basketball player Aleksandar Djordjevic, a UNICEF Goodwill Ambassador and new Chairman of 'Beogradski maraton d.o.o.' (Belgrade Marathon Ltd.), thus announcing that humanitarian activities shall still continue to be one of the marks of the "Belgrade Delta Sport Marathon".

Nikolic said: "We are at the beginning of a new era, fac-

ing new tasks. This year we will become of legal age and it is natural that we are aiming towards great objectives".

He continued: "As the most democratic sports show, the "Belgrade Delta Sport Marathon" adresses all Belgraders and guests of the capital city, regardless of their age, sex or degree of fitness. Simultaneously, we turn to the world, not only to its racing part, because our concept has from the start been the promotion of running and athletic sports in general, but also representation of Belgrade and Serbia to the world, contribution to promoting sports organisations, cultural, tourist and economic potentials. All that should add to enhancing the quality of living in Belgrade and, therefore, we have always tried to co-operate as positively as possible with the people who lead the city, whilst trying to listen to the wishes of its citizens".

Regarding CorD's Charity race, which will be part of the Marathon, Nikolic said: "We are very fortunate to find a partner in CorD magazine, since it shares the same vision on humanitarian work and understands the philosophy of the marathon movement, coupled with a readiness to engage its own resources to develop the humanitarian dimension of the Belgrade Delta Sport Marathon".

Together with the 18th marathon race, other racing events return to the life of Belgrade, events originating from Beogradski maraton d.o.o.

Nikolic enthused: "A city like Belgrade has a need for a larger number of sports manifestations during the year, and we have rounded our working cycle with four athletic shows, enriching the Belgrade offer accordingly. The "Children's Marathon" precedes the "Big Marathon", then follows the "Ladies' Race", for which we have combined efforts with MOK, IAAF and AIMS to include as many females into sports life as possible, and in autumn there will be the "Belgrade Race Through the History" in the Kalemegdan area, which

"We are very fortunate to find a partner in CorD magazine, since it shares the same vision on humanitarian work and understands the philosophy of the marathon movement, coupled with a readiness to engage its own resources to develop the humanitarian dimension of the Belgrade Delta Sport Marathon". has been recognised as a unique blend of sport, history and culture by the International Athletic Federation. All those races are again on the world sporting calendar, and that was warmly greeted at the last Congress of the International Association for Marathon and Street Races".

The introduction to the marathon will be represented by the "Children's Smoki marathon" on 16th April - once again to be staged at the Belgrade Zoo. This race will see the fastest 200 children compete for the title of the fastest little Belgraders.

The finalists will be selected from the fastest runners or the selective competition in Belgrade's nurseries and kindergartens, where around 18,000 children will participate.

Marathon day is 23rd April. The first to start will be participants of the 18th Belgrade Delta Sport Marathon, from the starting point in King Alexander's Boulevard, as well as halfmarathon runners. They will be followed by the river of participants in the "Nike Run" pleasure race over 5,000 metres, which is open to everyone who likes to run, walk fast or simply stroll with a smile. These races will combine to ensure that Belgrade shall again smile to the world.•

Dear friends, We hereby invite you to participate in the biggest local charity race to date: "CorD Charity Masters", which is to take place within the context of the upcoming Belgrade Marathon - to be staged on 23rd April.

Each CorD Charity Master will be tasked with raising money to be donated to charitable causes. Racers will be sponsored per kilometre, thus the further you run the more money you raise. CorD Charity Masters will receive between €10 and €50 for each kilometre ran, depending on the individual sponsor.

Upon completion of the race, this money will be earmarked for charitable causes and distributed to the organisation or individual selected by the participant. CorD Charity Masters need not necessarily be employees of those providing sponsorship.

CorD's own employees will be taking part in the race and, additionally, CorD will provide equal sponsorship to a number of competitors who do not represent a specific sponsor.

All those who regularly receive CorD Magazine, as well as other guests wishing to participate in the race, will be able to compete in the CorD Charity Masters race.

All ambassadors, diplomats, commercial and NGO representatives, associates, mission staff, Serbian political practitioners and domestic company leaders are cordially invited to take up the challenge for charity by applying to participate in this unique race and become a Charity Master.

Every CorD Charity Master will receive a souvenir Tshirt, as proof of their participation, and a number of other awards are being prepared.

Upon completion of the race, the names of all racers will be announced, as will details of how many kilometres they ran and how much money they earned. Winners of race prizes will also be announced.

Please send your applications and any further suggestions you may have regarding the CorD Charity Masters to our email address at: office@cma.co.yu. Applications should detail competitors' full names, employee name and address, the name of the sponsoring person/organisation and full details of the charity to receive the money raised.• CorD | April 2005

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FAQs How can I apply to compete in the CorD Charity Masters race?

Apply by sending your application via e-mail to cordmarathon@cma.co.yu or via fax to +381 11 30 87 066.

You will then receive an official application form to be completed and returned.

What is the role of a sponsor?

To obtain the finances for charity, which would be raised by the racer and dedicated to a charity of the sponsor/racer's choice?

Who will check how many kilometres have been completed by the runners?

This is charity race and each runner is expected to calculate the length of his own race. In addition, special referees will be tasked with assisting.

How does one either become a sponsor or obtain a sponsor?

Sponsors can be any company, organisation, association or mission which accepts to provide finance for the runner. Sponsors could also include work colleagues who would collect the budget to finance your race.

You can obtain sponsorship within your company or from family members, friends...whoever wants to join this charity race. Both the sponsors and the racers should agree who is to receive the funds raised for charity.

How many participants will be accepted for the CorD Charity Masters?

In agreement with organisers of the Marathon, all participants who apply for the CorD Charity Masters will be accepted.

Can runners sponsor themselves?

It is usual for the racer to run to earn money for charity purposes and for the sponsor to secure the budget.

Is there a minimum sponsorship level per kilometre?

The amount of money for sponsoring charity efforts depends on the task. In this case, we are talking about one of the most difficult sports races, so the award should be appropriate. We would suggest that the minimum should be â‚Ź5 per kilometre.

What percentage of the money raised will go to charity?

100% of the money earned is to go to charity.

Collected funds will be delivered to the address chosen by the sponsor and the runner.

Will CorD Charity Masters run alongside all other participants of the Belgrade Marathon?

Yes. Members of the CorD Charity Masters Team would start the race at the same time as all other runners, albeit from a separate start point which would be clearly marked.

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SPECIAL INTEREST EVENTS "I have joined the Belgrade Marathon ogranisation, but also the "Children's Marathon", "Ladies' Race " and "Belgrade Race Through History" because I liked the project of those performances and the fact that the Belgrade City Assembly has declared the marathon to be an event of special interest for the city. That is also my opinion and I think that we can contribute to presenting an even more beautiful picture of our city to the world. My associates are extraodinary professionals and I can promise maximally good organisation. The task of us, top current, past and future sportsmen, is to contribute as much as possible to better sports presentation, one of the most successful institutions of our country", said Aleksandar Djordjevic, Administrative Board Chairman of Beogradski maraton d.o.o.

RETURN OF TRADITIONAL TROPHIES Old trophies shall again be awarded on the 18th "Belgrade Delta Sport Marathon". The winner will receive the "Fred Lebow Trophy", which was awarded from 1995 to 2001 and is named in honour of the founder of the New York Marathon and the world marathon project. Lebow was also a great friend of the Belgrade Marathon. This trophy was first concieved in 1994, immediately after the death of Fred Lebow and with the consent of his family and the New York Racing Club.

As an incentive to domestic marathon runners, the most successful domestic runner will receive the "Franjo Mihalic Trophy", established in 2000 as a tribute to this legendary Yugoslav marathon runner.

Quattro's 25th anniversary Twenty-five years ago, on 3rd March 1980, the world of automobile engineering was changed forever when the first Audi Quattro was shown to the public at the prestigious Geneva Motor Show. The indomitable Quattro went on to achieve competitive successes that ensured this model established a heritage of success that has remained undiminished.

The birth of the first Quattro is a tale of initial driving tests in the snow and of a brilliant piece of technical thinking - the use of a hollow shaft in the gearbox to transmit the drive to the front and rear axles. With the concept refined by the addition of a centre differential between the axles, later to use the 'Torsen' principle, the first Quattro went on sale in late 1980. This coupe model, with its sharp-edged styling, became an immediate best seller. With

Elite business faculty The first crop of students will be enrolled at the new BBA faculty in the upcoming academic year. The founding licence for the BBA (Belgrade Banking Academy) was received jointly by Atlas Bank, Kopaonik Insurance and the Belgrade Institute of Economic Sciences.

A total of 16 candidates applied for a private faculty licence, but the Commission for Accreditation only gave its support to the BBA, which is a Faculty for Banking, Insurance and Finance. Following the Commission's proposal, the Serbian Council for the Development of University Education approved the founding licence during its session on 28th December 2004.

As the only specialized faculty in this dynamic field, the Academy will provide students with practical experience during their regular studies, thus ensuring that students will be trained to deal with specific jobs in the banking and insurance domains prior to their graduation. Upon completion of their studies, graduates will be competent to handle such key roles as payment operations, work on the stock exchange, banking and accounting…

The BBA curriculum has been drawn up in accordance with international standards and in accordance with the Bologna Declaration, which will enable BBA students to take certain examinations at any other faculty, at home and abroad, mutual mobility and exchange of students between different universities and employment in EU countries.•

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its permanent all-wheel drive and 200-bhp and five-cylinder turbocharged engine, it was able to offer sporty high performance in a fascinating, revolutionary form.

Between 1982 and 1984 the Quattro gained four world rally championship titles, and the exploits of its now legendary drivers have remained unforgotten to this day. Following these successes on loose-surfaced sand and gravel tracks, the manufacturer's competition department concentrated on circuit racing, and here too the supremacy of the Quattro's permanent all-wheel-drive principle was patently obvious, with Audi Quattro drivers collecting all the most prestigious trophies in the U.S. and Europe.

As the years wore on, the original Quattro grew into an entire family of road going allwheel-drive models, and today this technology represents one of the brand's most substantial foundations. In the 25 years up to the end of 2004, Audi built 1,815,396 Quattro vehicles, and the current model programme includes 74 versions with all-wheel drive. Thanks to thorough technical updating, the reputation of the Quattro all-wheel driveline is today stronger and more active then ever before. 'Quattro' stands not just for traction, but also for emotive appeal, safe driving and dynamism. The Quattro models in the Audi range are both a driving force for the brand and an integral element of its innovative technology. •

OMV discovers North Sea reserves OMV Aktiengesellschaft, the leading oil and gas group in Central Europe, recently announced that its 100% subsidiary OMV (U.K.) Ltd, together with partners, has drilled a discovery well in the southern part of block 22/12a in the Central North Sea, some 200 km north-east of Aberdeen. The well was operated by Shell and was drilled in November 2004. Information from the well is now being evaluated to determine the options for development or appraisal. OMV has a 10% share in this Exploration license. The discovery lies close to OMV interests in the Howe oil field in the northern part of block 22/12a (OMV 20% and 2,600 boe/d net) and the Bardolino oil discovery, a potential development in block 22/13a, where OMV has recently increased its interest to 38%.

Helmut Langanger, OMV Executive Board member responsible for Exploration and Production, stated: "This oil discovery is the second exploration success after Rosebank/Lochnagar for OMV UK in 2004 and shows that there is still attractive growth potential left in the UK, a core region for OMV where we plan to expand our portfolio."

OMV owns a balanced international E&P portfolio in 18 countries organised around five core regions, namely the Danube and Adriatic, Northern Africa, the British North Sea, the Middle East and Australia/New Zealand.

Following the acquisition of 51% of Petrom S.A., Romania´s largest oil company, OMV's

Director meets unions U.S. Steel - Serbia has announced that newly appointed company director Michael A Fedorenko has met, and been formally introduced to, three representatives of the company's trade unions.

Mr. Fedorenko and the management of U.S. Steel - Serbia expect to enjoy further successful co-operation with all unions within the company.•

daily production volume is approximately 340,000 boe/d, and the company's reserves amount to approximately 1.4 bn boe.

OMV (U.K.) Limited is a wholly owned subsidiary of OMV Aktiengesellschaft, it was established in 1987 and is headquartered in London.

OMV (U.K.) Ltd has currently 10 producing fields and more than 40 exploration licenses in the North Sea. The average production is about 17,000 barrels of oil equivalent per day (boe/d).

The joint North Sea venture also includes Shell U.K. Ltd (30%), Apache North Sea (50%), Petro Summit Investment UK Ltd (10%).

With Group sales of €7.64 billion and a workforce of 6,137 in 2003, as well as market capitalization of approximately €8 billion, OMV Aktiengesellschaft is Austria's largest listed industrial company. As the leading oil and gas group in Central Europe, OMV is active in Refining and Marketing in 13 countries and has set the goal of doubling its 2001 market share to 20% by 2008. In Exploration and Production, OMV is active in 18 countries on five continents. In the Gas business segment OMV has storage facilities and a 2,000 km long pipeline system, transporting 41 billion mł of natural gas annually to countries such as Germany and Italy. With the closing of its acquisition of a majority stake in Petrom in December 2004, OMV has become the largest oil and gas group in Central and Eastern Europe, with oil and gas reserves of over 1.4 billion boe, daily production of around 340,000 boe and an annual refining capacity of 26.4 million metric tonnes.

OMV now has over 2,394 filling stations in 13 countries. The market share of the group in the Refining & Marketing business segment in the Danube Region is now approximately 18%. •

Motor Show success DaimlerChrysler SCG presented its concept "under one roof with our dealers" at March's 43rd International Belgrade Motor Show in Hall 3 of the Belgrade Fair.

DaimlerChrysler showed no fewer than 34 vehicles on more than 2600 m2, presenting Mercedes-Benz, Chrysler, Jeep, Maybach and the Mercedes-Benz SLR McLaren. Some of these models were presented to the market for the very first time.

Special attractions on the Mercedes-Benz side were premieres of the new Mercedes-Benz BClass and M-Class, followed by an outstanding Haut Couture fashion show by designer Milan St. Markovic.

Besides the launches of new vehicles, there were also two brilliant exhibitions.

The first, entitled "The Star of My Dreams", from the Mercedes-Benz museum in Stuttgart represented a collection of Mercedes-Benz posters from the first half of the last century.

The exhibition shows a rich opus of consumer art which is preserved in one of the best archives of European industry: the DaimlerChrysler archive in Stuttgart.

The second exhibition was an exhibition of photographs "Fascinating! Mercedes Benz", which includes the finalists and the awarded works from the competition Mercedes-Benz organized in February this year, as well as seven works of renowned local photographers who wanted to support this campaign. The award ceremony took place in Hall 3 on at 11am on 1st April 1.

Meanwhile, Chrysler and Jeep presentations at the Show included the biggest surprise with launches of the New Chrysler Jeep Grand Cherokee and Chrysler 300C Touring. The outstanding crew from the movie "We are not Angels 2" created an impressive atmosphere, playing live and performing several movie scenes around the vehicles.

At the end DaimlerChrysler special VIP guests, including members of the diplomatic corps and political scene, were given another opportunity to browse through the auto company's 'marvelous' products with the accompaniment of pleasant music and a glass of champagne.•

Enhanced comfort In a new move to provide additional in-flight comfort for Business Class flyers, the Austrian Airlines Group will leave the middle seats in its rows of triple seats in Business Class free from now on. This measure will take effect on all scheduled short-haul and middle-haul flights

Right Direction

Economic Delegation from the Italian Region of Pulia visits SCG

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that the relationships between Italy and our country are deep and strong. He added that in Serbia there is the opinion that the industry in the Pulia region is not very developed, but that that was not true since this is a very developed region especially in the agricultural sector.

With its geographical position, this region is turned towards the Balkans, i.e, to SCG, therefore it is naturally orientated towards our market. SCG can only benefit from that because the foreign capital considers the opening of new working places - said Sekulovic.

He reminded us that the Italian Government recently approved the credit line for Serbian companies for the purchasing of equipment from Italy.

Italy is one of SCG's key partners on its way to the European Union and because of that I do expect more such initiatives in the near future - concluded Sekulovic.

The ICE's Director in Belgrade, Enrico Barbieri said that the representatives of nine companies from Toscany, which mostly deal with the production of footwear, recently visited Belgrade and that two fair manifestations, which will take place in Bari, were recently presented in Belgrade.

The business representative from the Italian Region of Pulia, Salvadore Bosco said that Bari is currently connected with Bar by a shipping line, as well as the flight path Bari - Podgorica

he Italian Institute for Foreign Trade (ICE) organised bilateral meetings between Serbia-Montenegrin and Italian companies from the Pulia region in Belgrade on 10th and 11th March. The meetings took place on 10th March in the Montenegrin Chamber of Commerce, in Podgorica and on 11th March in the Hyatt Hotel's Crystal Hall in Belgrade. The Italian delegation of 11company representatives represented the machinery sector, the furniture industry, building construction, electronics, clothes and transport.

The economic cooperation between the Pulia region and Serbia and Montenegro is very important especially considering that the Italian delegation was represented by 11 companies from various sectors. In addition to that, this is also a significant moment for the establishment of stronger connections between Italy and SCG - emphasised the Italian Ambassador to SCG, Antonio Zinardi Landi.

He reminded us that last year, , there was a manifestation of Italy in Belgrade organised by the ICE and that the results were greater than expected because the exchange between those two countries was increased by over 40 percent. Landi added that a second, and maybe a third flight line Belgrade - Milan will soon be introduced and that one of the leading Italian banks, Inteza has penetrated the

R. Fassano, V. Sekulovic, H.E. Antonio Z. Landi, E. Berbieri and S. Bosco Serbian market.

All this speaks in favour of the fact that cooperation between Italy and SCG is moving in the right direction. However, the cooperation should be extended on a regional level thinks Landi who made a positive appraisal of the presence of the local government leaders from Nis at those meetings.

The Serbian Deputy Minister of Economic Foreign Affairs, Vlatko Sekulovic emphasised

once a week. He emphasised that he is expecting the establishment of the Bari - Belgrade flight path soon.

In terms of the production of furniture the Pulia region is the first in Italy, where 70 percent of all Italian furniture production is manufactured. Apart from that, the textile industry is also developed as well as the food industry.•

By Rajka Sinik

with a duration greater than one hour. By ensuring middle seats remain empty, Austrian Airlines is striving to offer Business Class passengers significantly more space in which to spread out and relax. From this point onwards only two passengers will sit to the left and right of the central aisle. This will enable the airline to provide passengers with greater comfort and privacy during flights, as well as ensuring a genuine improvement in the feeling of space.• CorD | April 2005

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Food and medicine Food and beverage company Podravka is the leading firm in its field in Croatia, and one of the leading food companies in the whole of central, eastern and south-eastern Europe. Belupo, which is completely owned by Podravka, is the second largest pharmaceutical company operating in Croatia. Income from the Podravka Group totalled 2.4billion kunas (over €320million) in the first nine months of 2004.

Podravka has received much recognition and many awards for its successful operations, amongst which was the proclamation by distinguished British journal Finance Central Europe that Podravka is the most successful food company in south-east Europe.

Numismatic Collection Exhibition In mid-2004 the permanent Numismatic Collection Exhibition was set up in the Serbian National Bank on the occasion marking the 120th anniversary of the establishing of the National bank. The existing collection was recently enriched with an interesting selection of domestic and foreign coins, both originals and copies. The protection elements for coins are also on exhibition, so visitors to this interesting exhibition will have the chance to recognise what is original and thus lower the risk of them accepting false coins.

Best euro exchange rate Delta Bank has announced the introduction of what it termed as the most favourable sale and purchase euro exchange rate available on the domestic market.

The first part of the new offer includes an increase in the best exchange rate for purchasing euros from the public - an increase of more than 0.4% compared to the previous euro-purchase exchange rate. Private citizens, whether they are

Lexus arrives in SCG The Lexus brand was introduced to SCG for the first time at a press conference held at Belgrade's Hyatt Regency Hotel on 16th February.

Lexus was created 25 years ago with the simple mission of creating the best luxury automobile

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Podravka boasts its own subsidiaries and branches in 17 countries. In addition to Croatia, Podravka has manufacturing facilities in four other countries: Slovenia, Poland the Czech Republic and Slovakia.

The company's strong distribution network stretches from the Adriatic Sea to the Baltic. As such, Podravka is able to remain close to all of its customers on international markets. •

Cooperation with leading chess players

The concept of this exhibition presents the course of the development and use of money on the territory of Serbia since its appearance until the latest currency issues.

The oldest coins at this exhibition date back to the Ancient Greek period, from the 4th century BC, and include the latest currency issued by the Yugoslav National Bank and the Serbian National Bank, which are currently in use.

With experts from the Serbian National Bank on hand to guide you through the exhibits, the permanent exhibition can be visited weekdays between 10am and 4pm in the Serbian National Bank in Kralja Petra Street, Belgrade.

Entrance is free.

Contact: snezana.radisavljevic@nbs.yu•

The famous chess tournament, the Acropolis Open, organized by the Greek Chess Federation, in this 20th jubilee, took place from 6th - 24th March 2005. The only representative of Serbia and Montenegro at one of the most elite world chess tournament was the young grand master from Novi Sad - Dragan Solak. Considering that currently he is one of the leading chess players who is making his way to the world top, his results are being observed with great attention.

Last year Dragan Solak was the vice champion of the tournament in Athens.

Even though the Akropolis Open is both a male and female tournament, Alisa Maric did not participate, but she expressed her desire to appear there next year. Namely, the selector of the Greek Chess national team is the grand master from Nis, Slavoljub Marijanovic, and Greek chess players Stelios Halkias, Dimitros Mastrovasilis and Ana Marija Bocari are regular guests at tournaments in our country.

The Director of EFG Eurobank A.D. Belgrade, Dr. George Lychnos, as a symbol of the beginning of a long lasting and successful cooperation, gave our chess grand masters EURO 1-2-3 saving accounts with initial deposits of 1,000 euros. •

regular clients of Delta Bank or not, will receive the most dinars for their euros in all Delta Bank branches. For instance, according to the official exchange on 14th March, a private seller of €1,000 would receive 80,430.50 dinars.

The second part of the offer pertains to those wishing to purchase euros and then deposit those funds in a Delta Bank account for periods of 3, 6, 12 months or more than a year. Delta Bank began offering these clients the best sales exchange rate as of 11th March.

Depending on the stipulated deposit period, Delta Bank is offering such clients a euro

exchange rate up to 0.7% higher than previously.

For instance, if a private individual wishes to purchase €1,000 and place those funds immediately in a Delta Bank account for one year, according to the official exchange rate of 14th March they will pay 81,159.19 dinars.

With this unrivalled offer, Delta Bank is providing citizens with extraordinary exchange rates that stimulate foreign exchange savings. In 2004 the bank significantly increased its foreign currency deposits by more than 80%, placing the bank among the top three banks according to this criterion.•

in the world. The Hyatt press conference included a presentation of the Lexus success story, reasons for entering the SCG market and the company's strategic local and global goals.

According to the Lexus team, many things that seem normal today were not so 20 years ago.

Lexus found itself in an innovative role, setting new business philosophy and customer relations standards.

Lexus' innovations in technology and design have made the brand a global name. The company's core values are not related to sales, but rather complete customer satisfaction.

The newly introduced Lexus - SCG has recognised the market potential for sales of highclass automobiles and sales activity in the State Union is planned to commence in late 2005.

Lexus has committed itself to providing the best personnel, service, infrastructure, and

everything else needed to ensure the complete satisfaction of customers.

The next generation IS, which is to go on sale at the end of 2005, is the second production vehicle created under the unique L-Finesse design philosophy. It marks the introduction of the first ever diesel engine to the Lexus range.

The new, all aluminium, 2.2 litre, 130 kW/177 DIN hp Lexus diesel unit is the most powerful engine in its category and also has the highest torque, developing 400 Nm between 2,000 and 2,400 rpm. Fulfilling the most exacting requirements of Lexus power and refinement, it combines exceptionally quiet, ultra-smooth operation with class-leading performance. A new 2.5 litre V6 petrol engine is also available. This unit can be specified with a 6-speed automatic transmission featuring sequential paddle-shift control. •

Bright future for Greek Tourism Speaking to CorD this month, Aristidis Calogeropoulos-Stratis, President of the Greek National Tourist Organisation (GNTO), spoke of the rejuvenation of Greek tourism following the staging of last year's Olympic Games.

Insisting that Greece now boasts the elements necessary to shape a unified strategy for Greek tourism, Calogeropoulos-Stratis explained that his aim is "to utilise the effect from the post-Olympic period and increase tourist growth over the coming years".

Advocating the merits of Greece as a tourist destination, the GNTO president said that holidaymakers should visit Greece because "our country is among the best at combining history, culture, natural beauty and development." He also noted that Greece's tourism tradition is one of the oldest in the world and the country is extremely safe.

Greece's population doubles every year as a result of tourist visitors and, as well as traditional beach holiday destinations, winter

tourism has become increasingly popular in Greece over recent years, with many ski resorts having been established and infrastructure to facilitate winter tourism developed.

Reminding that the Yugoslav wars and subsequent instability affected Greek tourism as well as Serbia's developing tourist sector, Calogeropoulos-Stratis said "I am aware that Serbia is showing major growth in the tourism sector, especially in athletic tourism, outdoor activities and religious tourism. This will have a positive impact on Greek tourists to visit Serbia's ski resorts and other facilities as well, provided there is an appropriate amount of advertising and promotion."

Explaining that Greece does not consider the development of the tourist industries of neighbouring countries as a threat, he said that development in SCG and elsewhere would result in increased flows of tourists to the Balkans and South-East Europe to the mutual benefit of all the region's countries.

He added that it would be a pleasure for the GNTO to develop special relations with Serbia in every aspect.•

Israeli business forum S

By Rajka Sinik

peaking at the opening of the Israeli Business Forum in Belgrade's Hyatt Regency Hotel on 15th March, Israeli Ambassador in SCG, H.E. Jaffa Ben-Ari said that the compatibility of the Israel and SeCG economies ensure that the two countries have great potential for economic co-operation.

The Israeli ambassador reminded those gathered that Israel began quickly developing its economy in 1948 and was initially known for its agricultural industry.

However, she noted, high-tech industries began developing in the Jewish homeland as early as the 1970s.

"From a typical agricultural country, Israel quickly reoriented and became a highly technologically developed country," said Ben-Ari. "Last year Israel's GDP totalled $117.2billion and total foreign investments in Israel were $5.3billion", she emphasised.

Also speaking at the Forum, Serbian Finance Minister, Mladjan Dinkic, said that last year had proved extremely successful for Serbia in a macroeconomic sense. The G17 Plus vice-president explained: "After the stagnation of 2003, the Serbian economy began intensive development last year. GDP increased by eight per cent compared to 2003, which is more than in Romania and Bulgaria countries 'closer' to the European Union". He added that last year's growth was the highest growth in Serbia for 25 years.

Dinkic continued, noting that industrial production increased by seven per cent in 2004, mainly in the second half of the year, and the budget deficit totalled 1.4% of GDP, as had been planned at the beginning of 2004.

"The reform of the banking sector is also underway in Serbia," said Dinkic.

Describing the banking sector as "the

most magnificent sector of our economy", Dinkic said: "it is common knowledge that Jubanka was recently privatised, while Delta Banka was purchased by one of the most important Italian banks.

Insisting that political claims that a

Mladjan Dinkic and H.E. Jaffa Ben-Ari debtor's crisis is threatening Serbia are unfounded, Dinkic said that the high foreign trade deficit remained one of the country's main problems.

Turning to the worrying issue of inflation, Dinkic said: "our plan for the forthcoming period is to stop the increase in inflation with a strong monetary and fiscal policy. I expect that the rate of inflation this year will remain at the projected level and that it will be considerably lower in the second half of this year".•

Trade on the up Trade exchanges between Israel and SCG are currently relatively low, though year-on-year growth is being experienced. In 2002, for instance, trade between Israel and the State Union totalled a mere $12million, in 2003 it grew to $16.9million and by 2004 it had reached some $35.9million. Export-import ratios are also shifting in Serbia's favour. In 2003 Israel exported goods to the value of $13million to Serbia, while Serbia only exported $3.9million worth of goods. However, in 2004 imports to Serbia from Israel totalled $24million, while exports from Serbia to Israel tripled, reaching $11.9million.

CorD | April 2005

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The Arts

Film inspires Ballet

By Zeljko Jovanovic, Photo Srdjan Mihic

Discussions on the notion of the existence of a Serbian 'brand' have been commonplace for quite some time. Of the numerous suggestions relating to this concept, the most frequent pertain, quite naturally, to the identification of the Serbian brand through various mediums of art. However, for some unfathomable reason none of those pondering the idea have heralded the innumerable merits of Serbian theatre. Even the legendary BITEF theatre seems to be much more appreciated by foreign residents of Belgrade than Belgraders themselves.

S

ome films become legends, affecting concepts of national identity and gaining an almost religious following. Slobodan Sijan's 1980 film "Ko to tamo peva?" (who's that singing there?) based on a screenplay by Dusan Kovacevic - is one such film in Serbia. The film, focused on the ill-fated passengers of a bus traversing deepest darkest Serbia in 1941, touched the hearts and tickled the funny bones of the nation, immediately becoming one of the most successful Yugoslavian films of all time.

This year Ko to Tamo Peva was reborn through the medium of ballet. Ko to Tamo Peva - the ballet, was first staged this January at the National Theatre in Belgrade. Many consider that this masterpiece of modern film, together with Dusan Kovacevic's other much-lauded film, "Maratonci Trce Pocasni Krug" (The Marathon Family's Victory Lap), have identities stronger than Serbia itself.

These films have undoubtedly reshaped the lives of the people of Serbia and there probably doesn't exist a single adult anywhere in Serbia, or the other former Yugoslav republics for that matter, who has not seen and been influenced by them. As such, deciding to take this 'public property' and turn it into a ballet was nothing if not a daring move.

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The plot of Ko to Tamo Peva sees a mishmash group of rural Serbian folk heading towards Belgrade by bus. Amongst the accidental travelling companions are an ambitious singer heading to the big city for an audition, a honeymooning pair of newlyweds, an aged veteran of World War I, heading to Belgrade to visit his soldier son who has been mobilised somewhere near Belgrade while the nation waits "for the Hun to invade". The weary travellers are buoyed by two instrumentwielding gypsy boys, who continually play the songs "I've been luckless since childhood" and "If only I were dreaming all this".

The magnificent crafting of the ballet by choreographer Stasa Zurovac lies with the attention paid to two genuine Serbian brands: Dusan Kovacevic and Vojislav "Voki" Kostic, from the world of film and theatre.

Inspired by the film, Zurovic is worthy of much praise for the way he interpreted Kovacevic's work in a completely different artistic format and drew attention to the importance of composer Kostic. By paying strict attention to Kovacevic and Kostic, whilst adhering to the rules of stage, the magic of theatre and the miraculous power of presentation, Zurovic, in fact, merely enables what is genuine to become patently obvious.

Zurovic presents the bus and its passengers somewhere on the bor-

der between pantomime, mime and top classical ballet dance. Those who know the entire film almost by heart - and there are many - are able to compare and contrast the film's plot, as well as noting the unexpected observation angle that is also offered.

Through the witty dance of the ballet ensemble, such a well known journey grows into a mixture of first class ritual dance and a game which always pays attention to the entirety and understands the narrative. The magnificence of Zurovac's choreography, his directing step in this film is, above all, faithful in its insistence to follow the plot and flow of the original story. These are all elements inherent in theatre which are increasingly rarely seen in contemporary theatre, especially in modern drama. As such, this performance has far-reaching importance.

The detailed developed narrative plan hides within itself a first class ruse, which becomes visible proportionally to the flow of the performance itself. In that way the happy dance of the losing team travelling to Belgrade slowly but inexorably grows into a metaphor of the general disaster that, inevitably, does not decrease the fact that we are all expecting it and are almost sure that it will happen.

We are even prepared for its arrival.

When death from the first picture, in the role of the old woman who was at first glance almost forgotten among the passengers, at the end, arm in arm with the white angel which "walks" the souls of the dead to hell or paradise, "walks" across the stage, the inevitability becomes obvious. And then that cheerful group of passengers, all of their events and troubles, including the scene where Misko drives the bus blindfold, grow into something which is the special field of this performance. At that moment, those who have not heard about the film upon which this ballet was based are dragged into a game from which there is no return, while those who thought that they knew the film by heart, are dragged into a new kind of intrigue and secret.

However, the most magnificent thing about this performance is the music of Kostic. This concerns the well known musical theme from this film, for which the same composer adapted the music, this time to theatrical rules. This world of unusual arrangements, tunes, models

and memories is performed on instruments such as cowbells, bottles of different sizes, stone cubes, hollowed tree stumps, darabuka, marimba, kettledrums, trumpets and electric guitars...

Of the entire cast, Dusko Mihajlovic and Dalia Imanic particularly dominate the ballet and there is a veritable explosion of musical brilliance. The famous score of the film, 'Za Beograd' (For Belgrade), contains varying and numerous arrangement interventions, such as a mountain stream, rhythmically and inexorably flooding the stage and audience, taking everything away with it.

This music is refined with folkloric elements and, without flaunting what is bad in world music trends, enables one to almost physically feel the flow, connections and common elements. Thus, on the main stage of the National Theatre woodland fairies replace marching soldiers, and at one point Dusan Kovacevic's dramatic heroes, bacchanals and toy soldiers, death and life everything which represents this region and its history, and everything which has found a reflection in culture, all come together. Their common dominator, it turns out, is the para-

This music is refined with folkloric elements and, without flaunting what is bad in world music trends, enables one to almost physically feel the flow, connections and common elements. dox. Dazzling death and even more shining life, sorrow and happiness, poverty and fortune‌ all in one place, framed with dance, that obedient frame of reality the way it is, can be and will be forever.

The story of the film began on that dank April morning in 1941 when the German Luftwaffe bombed Belgrade, and there too it ends.

The surviving passengers from the bus that was actually hit that morning near Autokomanda are two young Gypsies and their song Za Beograd, which, as the only hope appears the possibility "if only I were dreaming all this". Today, when it is clear that even dreaming is no longer of any help, the dance of the National Theatre Ensemble remains as hope. Of course, not as an illusion but as further proof that art is the only permanent reality and the rest is merely fantasy.• CorD | April 2005

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CorD | April 2005

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CorD | April 2005

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CorD | April 2005

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CorD | April 2005

87

Cuisine

Sicilian Fare

CAPONATA

By Sonja Rados, Photo by Andy Dall

Sun drenched Sicily, island of mystery, ancient ruins and the infamous Cosa Nostra, has developed its own brand of cuisine over the centuries. Differing greatly from classic Italian fare, rich and flavoursome Sicilian food is as eclectic in style as the many civilisations influencing its development. he rich gastronomic history of this famous Mediterranean island has Tancient been influenced over millennia by such contrasting civilisations as the Greeks, Romans, Arabs, Byzantines, Spanish and French. Each of these cultures made their mark on the cultural heritage of Sicily and, in so doing, enhanced the culinary styles of the island.

The ancient Greeks fell in love with the island of Sicily at first sight, sending their fleets and establishing colonies. However, the love of the island was coveted by Rome, and the Roman Empire soon sent their armies and conquered Sicily. Next came the Byzantines, who ruled Sicily between the fifth and eight centuries AD. The fall of Byzantine control of Sicily led to the rise of the Arabic powers - Moors and Saracens, who remained in power until the 11th century AD. Since then Sicily has been spared mass migrations to its shores, though it was culturally influenced by the Normans, the Hapsburgs, the Bourbons and many others.

Sicily is a relatively large island with varying geological features.

Subtropical areas are abundant with prickly pears, temperate areas are home to every type of citrus fruit and the eruptions of famous volcano, Mount Etna, provide nutrients that make the soil as rich and fecund as anywhere else on the planet.

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CorD | April 2005

Tasty salad made with aubergines, olives, capers, celery, raisins, pine kernels, tomatoes, vinegar and sultanas.

Wash the aubergines and cut into 1 inch cubes. Dry the vegetable well, before Frying in very hot oil for ten minutes, or until soft and slightly browned. Remove the fried aubergine from the oil and place in a large saucepan. Next brown sliced onion in the same way. When the onion turns golden, add tomatoes and celery. Simmer for 15 minutes or until the celery is tender. Add capers to the mixture and then add the mixture to the aubergines. Dissolve sugar in vinegar, add salt and pepper to your taste and warm slightly. Add to the aubergine mix, cover and simmer for 20 minutes, stirring occasionally.

Most modern Sicilian specialities contain elements of the original recipes from which they were adapted, be that a method, ingredient or peculiar combination of herbs and spices from each of the conquering cultures. Contrary to the popular belief that famous Italian pasta was an adaptation of a recipe brought back from the Orient by famous explorer Marco Polo, scholars now believe that it was the Arabs who invented pasta and introduced it to the island. The Arab invaders also brought their penchant for combining heavy spices and using many dried fruits, particularly raisins, as well as introducing couscous to Sicily. These trends and foodstuffs left an indelible mark on Sicilian cuisine.

Many Sicilian specialities are classically Mediterranean in orientation, comprising traditional Southern European and North African ingredients such as olives, pine kernels, capers, raisins, oranges, almonds, tomatoes and sea fish - often found together in a single dish.

As with traditional Italian fare, Sicilian cuisine includes myriad pasta, rice and tomato based specialities. However, unlike the mild-tongued mainlanders, Sicilians really know how to enjoy hot, spicy food.

Similarly to most Mediterranean nations, meal times here are a time to relax with friends and family and while away the hours. Most Sicilian families

'FRUTTA MARTORANA'MARZIPAN FRUIT

OCTOPUS SALAD

STUFFED SUN-DRIED TOMATO

Boil the octopus until tender. Allow to cool before slicing into small pieces and marinating with olive oil, lemon juice and parsley.

Sun-dried tomatoes are a Sicilian speciality used in many dishes.

For this dish, mix dried raisins, white bread, olive oil, cheese, garlic and parsley. Soak in a little water for a few moments before mixing well. Stuff the mixture into sun-dried tomatoes and grill or fry for a few minutes.

Serve with an accompaniment of choice.

gather around their tables between the hours of noon and 2pm, when the towns close down and everything is dedicated to the pleasures of dining.

A typical Sicilian day begins with a short, sharp hit of espresso and some light biting, usually pastries. Lunch, generally the main meal of the day, falls between noon and 2pm and usually includes pasta and meat dishes, followed by oodles of fresh fruit or fruit-based sweets.

During the working week, lunch often involves light dishes made from dry pasta or similar, but weekends are reserved for veritable feasts of eating. Weekend meals can include up to seven courses, with three or four appetiser courses, and if pasta is used it is generally freshly prepared, usually handmade with much love and devotion by the family matriarch. In the evenings Sicilians generally wind down and eat light snacks or the day's leftovers.

The main components of Sicilian cuisine are olive oil, tomatoes and vegetables. Indeed, Sicilians are the highest consumers of fruit and vegetables in the whole of Italy. Perhaps this is due to the fact that the island lies slap bang in the heart of the Mediterranean and, thus, has a perfect climate for the cultivation of crops.

Naturally, dishes originating in the coastal areas of the island are

"Martorana Fruit" is made with Marzipan; the main ingredients of which are sugar and almonds. Powdered almonds are mixed with sugar syrup and then formed into sweet dough. According to the traditional Sicilian recipe, the marzipan is served alongside fresh fruit. "Martorana Fruit" is a typical Sicilian sweet that is used to make very colourful baskets to give as gifts on special occasions.

dominated by seafood, particularly sardines, tuna, swordfish and different varieties of sprat. Further from the coasts, Sicilian cuisine is richer in meat, cheeses and other dairy products.

Sicilians are also famous for their sweets and cakes, most of which originate from Arabic recipes. Sicilians took Arabic sweets into their hearts and today their pastries are famous throughout Italy.

Sicily is also known for its excellent wines, particularly the high quality wines of Eastern Sicily and the Etna region. Sicily's traditional vintage wines and spirits are famous far beyond the island's shores.

Sicilian grapes are ideally suited for producing wines to compliment the vibrant flavours of the island's cuisine, though the inhabitants of the north of the island tend to drink more wine than the coastal Sicilians.

Here we have the opportunity to sample a little Sicilian cuisine, representing the regions of Trapani and Palermo. Two Sicilians chefs Salvatore and Michele Lombardo - recently visited Belgrade to present the spirit and tastes of the cuisine of these Sicilian regions with the help of Gaetano Sgroi - head chef at Belgrade's Hyatt Regency Hotel.

Here follows a selection of recipes that capture the essence of Sicilian food.• CorD | April 2005

89

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 • JUGOSLAV 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 • THEATRE ON TERAZIJA, 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

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CorD | April 2005

CULTURAL CENTRES • BRITISH COUNCIL, Terazije 8, tel. 3023-800 • CENTRE FOR CULTURAL DECONTAMINATION, 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 THE 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 OMLADINE 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

BELGRADE DANCE FESTIVAL 2005 THE WORLD DANCES IN BELGRADE

AMSJ road assistance

987

Ambulance

94

Police

92

Fire Department

93

Belgrade Bus Station

636-299

Belgrade Airport

601-555

Wake-up calls

9811

Humanitarian phone

9862

JAT ticket reservations

311-2123

Long distance calls (international)

901

Phone line Malfunction

977

Information Exact time Information - phone numbers Telegrams by telephone Medical Center Emergency Room Whether forecast Central Train Station Chemists,"1. maj", Kralja Milana 9 Chemists, "Prima 1", "Sv. Sava"

9812 95 988 96 3618-444 9823 629-400 324-05-33 361-10-88, 361-09-99

Chemists, "Sv. Sava", Nemanjina 2

643-170

Chemists, "Zemun", Glavna 34

618-582

Alfa taxi

244-11-13

Alo taxi

3564-555, 063/252-002

10. April, 20.00h, Sava Centre - THE STARS OF PARIS BALLET, France 13. April, 20.30h, BDT, new stage ON THE WAY INTO THE PROMISED LAND - CHILDHOOD AND YOUTH DURING DICTATORSHIP / Homunculus Dance Theatre Wien, Austria 14. April, 20.00h, BDT, main stage, LANDMARKS OF DREAMS / Jody Oberfelder Dance Project, New York, USA (12. April, State Theatre of Montenegro, Podgorica) 16. April, 20.00h, BDT, main stage - MAGGIO / Corte Sconta Dance Company, Milano, Italy 18. April, 20.00h, BDT, main stage - WHO CARES & GHETTO / National Ballet of Sofia, Bulgaria 21. April, 20.30h, BDT, new stage - 2 PLAYFUL PINK / Yasmeen Godder, Tel Aviv, Israel 22. April, 20.30h, Sava Centre - ENCOUNTERS / Ballet Hanover, Germany 23. April, 20.00h, BDT, main stage - (OB)SEEN / Philippe Saire Dance Company, Lausanne, Switzerland 26. April, 20.00h, BDT, main stage FROM CLASSICAL TO CONTEMPORARY / Young Lyon Ballet, France OPEN CLASS 9. April, 16-17h Sava Centre - The Stars of Paris Ballet MEETINGS / ROUND TABLE DISCUSSIONS 12. April, 12h, BDT - "Dance in Austria" / Homunculus Dance Theatre & Austrian Cultural Forum 13. April, 12h, BDT - "Dance in NYC" w/Jody Oberfelder 15. April, 12h, BDT - "Dance in Milano" w/Laura Balis & Kiko Stella 17. April, 12h, BDT - "National Ballet of Sofia" w/Silvia Tomova 21. April, 11h, BDT - "Dance, Made in Israel" w/ Yasmeen Godder 22. April, 12h, BDT - "Philippe Saire Dance Company" w/Philippe Saire 25. April, 12h, BDT - "Dance in France" / in cooperation w/ French Cultural Centre MASTER CLASSES 12. April, 10-12h, BDT / w/ Betka Fislova 14. April, 10-12h, BDT / w/ Jody Oberfelder 16. April, 10-12h, BDT / w/Laura Balis 17. April, 17-19h, State Ballet School "Lujo Davico" / w/Silvia Tomova 20. April, 16-18h, BDT / w/Yasmeen Godder 25. April, 10-12h, BDT / w/principle dancers of YBL www.BelgradeDanceFestival.com

Beogradski taxi Beotaxi

9801, 064-12-88-000 970

Ekonomik taxi

397-33-27

EURO TAXI (Lux taxi)

334-47-47

Gold taxi

329-18-18

Lux taxi

328-44-44

Maxiss taxi

581-111, 9804

Naxi taxi

215-76-68

NBA taxi

318-57-77

Pink taxi

9803, 488-99-77

Plavi taxi (Cukaricki) Taxi Bell Zeleni taxi Žuti taxi

3-555-999 9808 323-36-66, 324-25-55 9802

CorD | April 2005

95

ENDLESS IMITATION - Part Two of

PIGS DO NOT EAT BANANA SKINS

Photo “Gloria” archive

Tim mothyy Byford for CorD

This month we are continuing our serialisation of Timothy Byford's Endless Imitation.

In the last issue Timothy Byford wrote of his first impressions upon arrival in Belgrade some 35 years ago: "…there were one or two attractive buildings, the Parliament building, the National Theatre and the National Museum among them, but the overall impression was one of gloom and despondency". He also wrote of the culinary delights of Serbian cuisine, referring to national speciality Kolenica as "a severed bone with a bit of red, fatty meat still attached to it, wallowing in a pool of greasy gravy". Despite his obvious revulsion, the brave Englishman managed to devour the meal, writing "…to this day I am proud of how I managed not only to eat every bit of it, literally down to the bone, but also to give the impression that I actually enjoyed it."

I

t was definitely the smile that did it. That smile. It was somehow different from all the others. But I knew at once.

There was no doubt. I was in love. For the first time in my life, I had actually 'fallen in love'. So this was what life was all about. Waiting for the right moment and understanding that it was the right moment.

Masha and I were sitting in a street café drinking iced rosé out of glass tumblers, talking about nothing in particular. We were halfway through the Yugoslav part of the filming and had just returned to Belgrade after filming a village wedding, during which I had learnt to dance the national dance of Serbia, the 'kolo' - much to the delight of the villagers. Srdjan had been with us, but had left for the cutting room. It was very hot and Masha was wearing a loose white blouse with the top three buttons undone. There was a lull in the conversation. I remember that I had wondered for a brief moment what her breasts were like - did she have small nipples? I didn't desire her. Well, not especially. I mean, I was normal and hadn't had sex for nearly a week… Perhaps she noticed the direction of my gaze. Anyway, she casually fastened the third button of her blouse, leaned back in her chair and smiled at me.

What do you do when your whole world changes in the twinkling of an eye? The twinkling of two eyes, to be precise.

Later, I became only too aware of the complications involved, but at that moment it was as though the secret of the universe had been revealed to me. To me, and only to me.

"Would you like to join me for dinner this evening and show me some Serbian food that doesn't make me want to throw up?"

"Yes, I like."

Three words that changed my life. And Masha's life. She knew it, and I knew it.

"Yes, I like." The simple present. And there's nothing like the present, especially when it's simple.

For 'Yes, I like', read 'I love you'.

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CorD | April 2005

That evening Masha took me to a cobblestoned street called Skadarlija which was full of restaurants with delightfully symbolic names: The Two Deer, At the Two White Doves, The Three Hats, There are Days… Naturally, I chose At the Two White Doves. As we entered, three musicians in ill-fitting black suits were playing lilting melodies which Masha explained were traditional folk songs called Old Town Songs; we chose a table next to a beautiful tiled stove and drank very strong slivovitz while we studied the menu. While Masha studied the menu - I had decided that from that evening that Masha was my goddess; I would have no other goddesses before her, I would keep her commandments and she would show mercy unto me who loved her. We ate veal soup with lots of lemon juice and a huge mixed grill with chops and sausages and pieces of meat on kebabs and bits of spicy mincemeat the shape of tiny dog turds called 'chevapchichi'. All on a juicy bed of chopped raw onion and accompanied by a mixed Serbian salad with white cheese and bits of hot chilli peppers that made my eyes water and Masha laugh. The musicians came to our table and serenaded us with what was quite obviously a love song. Masha whispered to me to stick fifty dinars under the strings of the lead musician's violin, which I did. The violinist immediately stuck the note on his sweaty forehead and continued to play, leaning over the table and breathing a mixture of garlic, slivovitz and stale tobacco into my face. Under any other circumstances I would have felt sick - as it was, I felt privileged.

I offered him a glass of wine, which he accepted with a wide, gold-toothed grin. Masha caught the waiter's attention and, using sign language, ordered two more glasses and another bottle of wine, ensuring that the musicians never left our table.

So much for our intimate supper for two! But I knew, Masha knew - and all the other diners in the restaurant knew… The two white doves were in love…

I had to admit that as most men would willingly sacrifice their wanking arm to get a job as a film director with Auntie

BBC, it must have seemed a bit unusual for someone already in that position to chuck it all up and disappear into the jungles of Communist Yugoslavia, a country where Tito, having said 'No' to Stalin, insisting on preserving his own personal brand of socialism, was now sitting in the ex-king's 'White Palace', smoking Havana cigars and saying 'No' to anyone who happened to disagree with his own personal brand of socialism. I had no hope of a permanent job and my knowledge of the lingo was as yet largely restricted to matters sexual.

"You have the beautifullest body, Andrew. But you've got hairs on only one side of your stomach? Zašto? Why? Reci mi.

Tell me."

"To save you a bit of black paint…"

"Vrlo smešno - very funny… Say it."

"Virlo smeshno…."

Masha was taking advantage of having me fixed to one spot for an hour or so to give me a crash course in 'useful phrases'. At home, with the aid of Serbo-Croat for Foreigners, she tried to help me master the rudiments of Serbo-Croat grammar, with its seven case endings - one more than Latin and the peculiar plural rules which seemed to dictate that there was one rule if there were two, three or four of anything and another if there were more than five. Unless they were horses, in which case it didn't seem to matter how many there were. Most other people I came in contact with seemed to think it was most important for me to be able to swear in Serbo-Croat, and once I had mastered the art I quickly realized that generally people of all social levels swore far more frequently than I'd been used to; also that the swearwords and phrases themselves were infinitely juicier than English ones and seemed to indicate that Yugoslavs did, or perhaps had once done, during their turbulent history, unpardonable things to other people's mothers and sisters - as well as to God in whom they weren't really supposed to believe, anyway. The Church was tolerated though, probably because Tito reckoned that God did not present any real competition. Or perhaps he was grateful to Him for being on his side during the war.

Masha did believe in God and so did her parents. Masha's father, Sreten Ristic, came from an old and respected Belgrade family and her mother Maria from an equally old and respected family from Novi Sad, the capital city of the autonimous province of Vojvodina in the north of Serbia. Both Mr. Ristic, as a lawyer, and Mrs. Ristic, as music critic to the state newspaper Politika, were professionally obliged to be members of the communist party, but they were also unofficially practising members of the Serbian Orthodox Church and semi-secretly celebrated Christmas, Easter and other religious festivals, including their 'slava', or patron saint's day, on St. Nicholas's day.

Of course, there was no question of our being married in church, although a priest was smuggled into the house later to bless us. The civil wedding was a cold, official, emotionless affair which lasted twice as long as usual, as everything had to be simultaneously translated into English to make sure I knew what I was letting myself in for. Srdjan was my best man, or 'kum'; he had obviously been celebrating the occasion long before he arrived at the registry office and told me more than once that a 'kum' was not just a best man, he was closer than a brother. He kept hugging me and repeating: 'A kum isn't a button'. Masha didn't have a bridesmaid but a 'kuma' - one of her fellow students by the name of Katarina. She certainly wasn't a button - she had long blond hair, beautifully shaped breasts and long slim legs, which protruded from an extraordinarily short skirt. Mrs. Ristic eyed her very disapprovingly, probably because Mr. Ristic quite obviously didn't. The registrar surprised me by asking if I wanted to keep my surname, change it to Ristic or plump for a combination: Ristic-

Beresford or Beresford-Ristic. While I was wondering if there was enough room on a Barclays cheque for 'Andrew BeresfordRistic, Masha whispered to me that I should stick to Beresford, while she chose Ristic-Beresford. When it was all over, everybody kissed everybody else, regardless of sex, passionately on both cheeks and we made way for the next couple, who were understandably in a hurry as the bride looked as though contractions had already started.

Outside the registry office some gypsies were playing very loud music on an assortment of tarnished brass instruments, and Srdjan threw a handful of coins high in the air, causing a stampede of rather grubby children whom we left grovelling and fighting on the pavement as we drove off for home. The reception was a muted affair, with very few guests, probably to avoid drawing attention to the deficiency of family and friends on the bridegroom's side. The wedding night was spent in the same bed as the wedding eve, although a little more energetically, after the seven-day fast Masha had imposed before the wedding.

It wasn't long before I found some work - thanks to Masha's mother. As a music critic she knew everyone in the world of music, including the head of the Belgrade Television music department, Slobodan Lazic, who looked a bit like a musical Einstein, played the piano as energetically as Liszt and composed as elusively as Webern and Stockhausen. He entrusted me with directing a series of concerts recorded specially for television in the Gallery of Frescoes and I caused something of a sensation by arriving in the recording van with a shooting script that actually followed the music, each cut being marked on a photocopy of the score. It seemed that nobody had ever done this before and this cocky innovator from the BBC was looked at with great suspicion by vision mixer and cameramen alike.

"You're not at the BBC now you know. You're in the Balkans. Don't expect wonders here."

To start with I certainly didn't get wonders. I soon realized that a clearly marked score meant nothing to a musically illiterate vision mixer, and although I snapped my finger on every cut, it became painfully clear that Balkan reactions were as unreliable and inconsistent as Balkan punctuality. The 'academic fifteen minutes' rule meant that one couldn't be considered 'late' as long as one arrived no more than a quarter of an hour after the appointed time.

Working with a crew largely consisting of people who either couldn't or wouldn't speak English was a remarkably effective baptism of fire, and if my knowledge of standard Serbo-Croat remained painfully limited, my ability to communicate with the natives advanced in leaps and bounds. Actually, to direct a concert I found I could manage with a very limited vocabulary: I had made sure I knew the numbers one to four to cover the cameras, as well as the Serbo-Croat for 'close-up', 'mid-shot', wide-shot', 'zoom in', 'zoom out' and 'pan'. I soon found that to these I had to add 'slowly!' and 'enough!' The names of the instruments of the orchestra were largely similar to the English, but to this day I don't know whether the cameraman who slowly zoomed in to the soloists's forehead instead of his instrument during the slow movement of Kraft's Cello Concerto had decided to deliberately make fun of me or was just plain stupid. The Serbo-Croat word 'celo' means both 'cello' and 'forehead', and the variation in vowel stress that distinguishes them was so slight that it was unnoticeable to my Anglo-Saxon ears. I successfully diffused the situation with a clearly enunciated: 'U picku materinu!' - which loosely translated means 'up your mother's cunt'. (How loose can you get?) This had everyone in stitches and suddenly everyone loved me. The second movement was recorded once more with feeling.• To be continued...

CorD | April 2005

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Belgrade Directory ... obtain top legal advice?

• Should you require legal advice of any kind during your stay in Serbia, do not hesitate to contact the Bar Association of Serbia. The association offers advice and legal assistance, as well as providing a complete listing of all registered legal practitioners in Serbia and those specialised in international law.

Find out more about the Bar Association by visiting their website at www.advokatska-komora.co.yu or simply call the Association on 011 3239 805.

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.

• Receive international newspapers or journals at your home or

... learn to dance?

workplace by subscribing to publications or ordering deliveries via specialist companies. Details of such services are available from Global Press. Tel: 011 344 3624 or check out the website at: www.globalpress.co.yu

• Ever had the urge to learn how to dance? If so, central

... make your announcements public?

Belgrade boasts an extremely representative dance hall for those wishing to partake of this the most widespread hobby in the world. The hall is located within Belgrade's Ruski Dom (Russian Home), at Narodnog fronta 33. Beginners can choose between individual or group courses in standard dance, Latin or Swing. By choosing individual lessons, one can define ones own intensity of learning, as well acquiring a detailed knowledge of the art of dance and receiving expert advice from qualified instructors, to improve your technique and help you take the world of dance by storm.

For further information, visit Ruski Dom or call to reserve your place on 011 3547 977.

... learn all about naive painting?

• If you have heard of the art of naive painting, but have never had the chance to see it for yourself; or even if you have never heard of naive painting, you now have the chance to see how naive works of art are created thanks to the Belgrade Tourist Organisation. The tourist organisation runs regular trips to the small town of Kovacica, the home of naive painting. There you can visit the famous Babka gallery, which boasts a comprehensive collection of naive paintings by famous local artists, as well as a detailed history of the development of this remarkable brand of art. The people of Kovacica are also known for their warm hospitality and visitors are generally served with generous portions of the local sweet speciality of strudel with poppy seeds. Call the Tourist Organisation of Belgrade to book your trip to Kovacica on 011 324 8404 or 3248 310.

... donate unwanted clothing ?

• With spring in the air, the time has come to throw out those dated fashion items and stock up for the summer ahead. Instead of simply dumping your unwanted clothes, why not donate them to the Belgrade branch of the International Red Cross? The Red Cross, located at Simina 19, will take your unwanted garments, professionally clean them and deliver them to those desperately in need. For more information, call the Red Cross on 011 3032 125.

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... subscribe to foreign newspapers / journals?

CorD | April 2005

• Ensure your press conferences and public announcements are organised to the highest standards by hiring the complete organising and staging services of Belgrade's Media Centre. The Centre, located at 5 Makedonska Street, has all the necessary technical equipment, personnel and experience to ensure your press conferences are highly professional. Centre staff can also fully record the event and distribute information to selected media outlets both in Serbia and abroad. Contact the Media Centre on 011 3243 225.

... give blood?

• If you want to help somebody in need by donating blood you can do so at the Institute for Blood Transfusion, located at 39 Svetog Save Street. For additional information contact the Institute on 011 3440 479 or 2442-651

... make yourself understood?

Find yourself frustrated by your inability to say simple things in Serbian?

Here at CorD we are endeavouring to make your stay in the State Union a tad less alien by providing a few simple phrases that will help you make yourself understood: Key: Z = as in the 's' in treasure. S = sh, as in shop. J = Y, as in yellow.

C = ch, as in church.

•I am trying to learn Serbian: •Pokusavam da ucim Srpski.

•Could I talk with an English speaker?

•Da li mogu da pricam sa nekim ko govori Engleski?

•Where is the nearest all-night chemists?

•Gde je najbliza nonstop apoteka?

•Could you direct me towards Kalemegdan?

•Mozete li da mi pokazete put do Kalemegdana?

•Which bureau de change has a good exchange rate?

•Koja menjacnica ima dobar kurs?

•Drive more carefully, please: •Molim vas, vozite pazljivije.

•Does your menu have a vegetarian section?

•Da li vas jelovnik ima vegetarijanski deo?

•Does this flat have central heating?

•Da li ovaj stan ima centralno grejanje?