see magazine 05 by Igor Dakić

april 18th - may 1st

in medias res / The Red Line of Sarajevo feature interview / Ivica Dačić: “No Allies, Only Competitors And Adversaries” / From Minutes To Bytes: Shifting Business Models In The Telecom Industry

southeast europe · a fortnight in review no.05 / subscription only / 18 april 2012 th

investment forum / A Plate Full of Silver: Or Not All That Glitters Is Gold

the silver lining

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SOLVE THE LIKE A MAN T

oday more and more men suffer from erectile problems, and the age limit for such dysfunctions is becoming ever lower. Potential causes for impotence are many, but the main causes can be identified in systemic diseases or their treatment, in the diseases of the venereal-urinal system or glands with inner secretion, as well as in psychological problems and stress. Situations in which impotence comes as a result of disease, as opposed to psychological problems or stress, are quite different. In the former case, treatment removes the very cause of the affliction, and only then can psychological problems stemming from the situation be properly assessed. Seeing one's physician is imperative, because these types of problems are much more easily dealt with if nipped in the bud.

he French pharmaceutical manufacturer Yves Ponroy has managed to combine the ancient knowledge of the properties of ginseng and maca with libisterol, its own patented formula, thereby creating the supplement Formen ®, intended exclusively for men. The patented herbal formula known as libisterol affects the prostate and urinary tract in a positive manner, and its anti-inflammatory proper-

ties are especially beneficial in terms of improving the functioning of the uro-genital system. Libisterol contains citroflavonoids, which improve the microcirculation in the genital area, thereby facilitating erection. B1 and B9 vitamins, as well as thiamine and folic acid, act as key factors in the transfer of nerve impulses in the erectile process. One of the main ingredients in Formen ® capsules is the so called Panax ginseng (also known as Korean ginseng). Its name is derived from the Greek word “panax”, which means “that which cures all”. It is a good stimulant, it enhances stamina, relaxes the tension in the nervous system, improves concentration, lowers the level of lipides and cholesterol in the blood and boosts one's immune system.

he supplement is also an anti-oxidant, and another of its active components is the extract of the plant Lepidium meyenii, which also goes by the name of maca. This Peruvian plant is a natural hormone regulator, and is popular because, in addition to enhancing libido, it also has positive effects on the overall energy levels as well as memory.

Formen and Prostabiol are available in pharmacies. Formen is a potency enhancing capsule containing ginseng and maca, while Prostabiol eases urination and alleviates pain in prostate-related problems.

www.yvesponroy.com.hr

Importer and sitributor for Croatia: Medical Intertrade d.o.o. Dr. Franje Tuđmana 3, 10 431 Sveta Nedelja Tel.: +385 1 3374-010

april 18th - may 1st

E PROBLEM N

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april 18th - may 1st

content

introductory epistle

The Silver Lining

fortnightly news

The Economy Of General Interest

10 12

in medias res

The Red Line of Sarajevo

event horizon

A Giant Leap – In the Right Direction

politics

A Serbian Day At The Races

feature interview

Ivica Dačić: “No Allies, Only Competitors And Adversaries”

editorial

A Russian Balkan Comback? 36

in perspective

The Wrong Kind of Money

financial

Slovenia: Reform or Go Bust

the industry

From Minutes To Bytes: Shifting Business Models In The Telecom Industry 40

investment forum

A Plate Full of Silver: Or Not All That Glitters Is Gold

destinations

A Weekend of Nature and History in the Heart of Serbia

good stuff

Accesorise at Full Mast

to do list

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april 18th - may 1st

introductory epistle

The Silver Lining

here has always been plenty of “meat” on the bones of this linguistic commonplace, but rarely could it have been more becoming a phrase than these days. There are clouds all over the place, but then we’ve known that for so long – been living with it for so long – that we have grown quite immune to it. That, in its own right, constitutes a silver lining. There is, as always, plenty of bickering and controversy in Bosnia, but one could expect nothing else on the 20th anniversary of the Siege of Sarajevo; on the other hand, a mere week from now, a Statelevel international donor conference for internally displaced persons will take place, also in Sarajevo, meaning the four principal governments in this neck of the woods are also reaching (at least some sort of) agreement on long standing and critical issues. There is also plenty of bickering in Serbia, but one could expect nothing else in the heat of the election campaign; yet, on the other hand, one cannot escape from the impression that Serbia is simultaneously somehow maturing. There

has been a measure of debate in Croatia as to whether Cabinet ministers should be allowed to hire their assistants without a public tender, yet for the first time it just might be that they’re not taking this course of action for all the wrong reasons: ultimately, to paraphrase Deputy pm Čačić, one should have the right to choose one’s own team and not have the street dictate how something should be done. There is financial hardship and further cuts ahead in Slovenia, yet, on the other hand, it is hard to dispute that

Slovenia has solid fundamentals and that it has nothing to fear, at least not on any cataclysmic level. And so on. There are also both clouds and silver linings in the global telecom industry, as Olivera Blagić of Ernst & Young will tell us later on in this issue, which is probably true of other industries as well. Lastly, on this note, we offer you a piece on silver itself, a commodity which can provide ample opportunity for every man and woman priding themselves on their entrepreneurial acumen. “Think positively” remains the phrase of the day, and “get informed” remains the chief word of advice. Like this author wrote in the previous issue, “no more skulls and bones”. He will be forgiven for this benevolent instance of self-plagiarism. Now I can only invite you to the official see Launch Party, to be held in Belgrade on the 26th of this month. Curious about the details? Expect an invitation in your letterbox. Should that fail, you can always consult with us at www.seemagazine.eu in the “Events” section. Ergo, see you soon.

impressum

editor-in-chief Igor Dakić executive editor Lee Murphy lee@see-magazine.eu graphic editor Ivor Vinski

contributors Dylan Alexander (B&H) Jerko Markovina (Croatia) Sascha Tamm (Russia) Olivera Blagić (advisory) Ante Babić (investments)

art editor Stiv Cinik

photography Mens-Libera Photo, Shutterstock, IStock, Wiki Commons unless otherwise specified

country editors Milan Milošević (Serbia) Aida Tabaković (b&h) Sebastijan Maček (Slovenia) Miroslav Tomas (lifestyle)

printer Tiskara Radin; Gospodarska 9, Sveta Nedelja, Croatia

issn 1848-4107

director Igor Dakić igor.dakic@see-magazine.eu sales & marketing (cro & slo) Miroslav Tomas miroslav.tomas@see-magazine.eu + 385 95 63 99 702 sales & marketing (serbia) Miša Milošević misa@see-magazine.eu + 381 63 224 223 sales & marketing (b&h) Amela Tanović amela@see-magazine.eu + 387 63 691 393 publisher Mens Libera Media d.o.o. Ksaver 215, 10000 Zagreb tel/fax +385 (0)1 46 77 165

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fortnightly news / the economy

s&p confirm croatia’s credit rating

macedonia to see swingeing cuts

Standard and Poor’s, the credit ratings agency, have confirmed Croatia’s BBB-/A3 credit rating for short and long term borrowing. Although S&P expressed optimism with regards to the fiscal consolidation and structural reforms instigated by the Croatian Government, they still indicated that there was a potential downgrade within the following year, especially with a general lack of competitiveness limiting Croatian growth.

The Macedonian budget is to face a massive 5% cut in spending in order to keep taxes in check. The Macedonian Finance Minister Zoran Stavreski is hoping to keep the budget deficit at 2.5% in order to position the country for future growth and eventual EU talks. So far in 2012, Skopje saw almost 10% less income than they had predicted, mainly because of the terrible weather the region endured, as well as the omnipresent recession.

world economic forum ict report published The WEF have published their annual Global Information Technology Report. The report focuses on network connectivity potentials as a means of competitiveness in the global market. Ranking number one on the list is Sweden, with an ICT index of 5.94. Leading in the Adriatic region is Slovenia, ranked 37th with an index of 4.58, followed by Croatia at 45 and Montenegro at 46, both with a score of 4.22. Macedonia sits in 66th place (3.91), B&H in 84th (3.65), and Serbia in 85th place with an index of 3.64. The index takes into account infrastructural development, general literacy rates, and IT proficiency.

southern pipeline announced General Manager of Srbijagas Dušan Bajatović has announced that the construction of the gas pipeline connecting Serbia with Russia will commence this coming November. Bajatović also said that a contract has been drafted, awaiting signature, which will provide a long term supply of gas for Serbia at a reduced rate. Serbia already has the second cheapest price for gas, after Romania, and the cheapest electricity in Europe.

belgrade metro to enter planning stage?

petrol prices on the rise again

mecaplast expansion into zrenjanin Mecaplast, the Monte Carlo based producer of plastic car components, has opened a new plant in Zrenjanin in Serbia. Mecaplast currently employ 5,500 workers in 15 countries. The newly opened facilities represent an investment of 9 million Euros and will create 120 new jobs. The bulk of Mecaplast’s Serbian production will be used in new cars coming off the Fiat line at Kragujevac.

Croatian oil giants INA have raised the price of petrol by 20 lipa (2.67 Cents), putting the price per litre well over 11 Kuna (1.47 Euros). Although petrol has gone up, the price of diesel is to be reduced, something which will be of benefit to the transport industry. The most expensive fuel, however, Eurosuper BS+, now costs 11.67 Kuna, dangerously close to the 12 Kuna mark, a price previously considered unthinkable. Fuel prices in Croatia could, according to the guidelines issued by the Ministry of the Economy, be altered only on a fortnightly basis, but by no more than 3% in either direction. However, the new Government has broken with previous practises and now leaves this fluctuation to be decided solely by market conditions.

It has been announced that the Belgrade Municipal Assembly will be presented with a case study of a Metro Rail System sometime towards the end of April. If the Assembly accepts the proposed study, then the Belgrade Metro project will enter its planning stage and a public tender will be initiated to find a contractor to build it. Should all go according to plan, then it is conceivable that the first metro line would be open for business by 2017. While this current initiative began in 2010, the concept of having a metro in Belgrade is not a new one, with a number of studies on the subject being commissioned during the Communist era, and before. It is expected to be roughly 36 kilometres in length, with tracks running underground and over. There are to be 55 stations situated on 5 different lines, the construction of which should be completed by 2021. Already it has been suggested that Egis Rail, who provided the report, as well as other French companies, will be submitting bids at the appropriate time.

april 18th - may 1st

azerbaijani cash to help boost the serbian economy

terme maribor changes hands Terme Maribor, Slovenia’s largest tourism group, has been bought out by Platanus, a Slovenian firm which is backed by Russian capital. Despite encountering a number of stumbling blocks in the transaction, namely Platanus being unable to produce the money needed to finalise the purchase after making an initial down-payment, the deal was completed with the firm acquiring 86.57% of the Slovenian tourism giant. Terme Maribor owns several hotels and strategically located retail outlets, as well as a medical centre. The new supervisory board should be in place shortly, once a meeting of the shareholders can be announced and convened.

serbian air industry still going strong The Serbian aircraft producer UTVA has unveiled its latest offering, the Kobac (or Sparrowhawk if you will). The plane is to enter full flight testing sometime at the beginning of 2013, and is the result of a joint effort between UTVA and SDPR Jugoimport. The Kobac is propeller driven, and intended as a military trainer/light ground assault aircraft, designed to replace the older UTVA models currently in service with the Serbian air-force. It will also be offered on the foreign defence market.

Following an official State visit to Belgrade funding has been secured from the oil rich Eurasian country which will be used to construct the proposed motorway from the Serbian capital to Bar, the Montenegrin port on the Adriatic Sea. It would appear that all parties are quite happy with this arrangement, Serbia and Montenegro because it will increase trade (and give Serbia pseudo-access to the sea), and Azerbaijan because it represents an investment which will serve to boost their reputation in the region. Azerbaijan is also talking with Croatia about potentially building a pipeline.

serbian dinar still at risk Despite a recent rally on the currency markets, the Serbian Dinar remains weak against both the Euro and the US Dollar. The National Bank of Serbia has already sold in excess of 550 million Euros in an attempt to stabilise the Dinar, but this hasn’t had as big an effect as they might have hoped. Despite a recent rally on the currency markets the Serbian Dinar remains weak against both the Euro and the US Dollar. The National Bank of Serbia has already sold in excess of 550 million Euros in an attempt to stabilise the Dinar but it hasn’t had as big an effect as they might have hoped. The Dinar currently trades at 111.80 RSD to the Euro, which, while only slightly worse than figures from earlier in 2012 (109 RSD) is still well below the 102.00 RSD level it was at a year ago.

kap saga at an end (or just beginning) Following the refusal of KAP, the Montenegrin aluminium plant, to reach an agreement with Deutsche Bank, to whom they owe 23.4 million Euros, it has fallen to the Montenegrin Government to step in and assume the debt. The Government had acted as guarantor when KAP originally sought these funds and will now make provisions in the budget.

zagreb airport concession contract signed Deputy Minister of Maritime Affairs, Transport and Infrastructure, Zdenko Antešić, and the CEO of ZAIC, Christophe Petit, have signed the concession contract pertaining to the management and reconstruction of Zagreb Airport. ZAIC, the Zagreb Airport International Company, is backed by Aeroports de Paris and Bouygues Batiment International, a French construction company, and will be investing 87.2 million Euros into the renovation and construction of a new terminal at Zagreb Airport. The concession is for a 30 year period, and the Government expects to see several hundred million Euros over the lifetime of the contract. The work is to begin by the end of the year, and ZAIC have given guarantees that most of the construction work will be performed by Croatian companies where possible.

public-private partnership for optical network The Novi Sad municipal company Informatika has contracted a consortium of five companies to build an optical fibre cable network for the wider municipal area. The contract is the first ever public-private venture in Serbia, and as such the first project to be confirmed by the Public-Private Partnership Commission. This optical fibre cable network project is estimated to be worth 70 million Euros and is to be completed over the course of the next six years. The strategic partners have agreed to finance the planning, construction of the network as well as the general infrastructure, and will in turn be entitled to 75% of the network’s revenue over a period of 25 years, after which their stake will revert to Informatika, who will be the nominal owner of the network from the very beginning. The consortium consists of the Slovenian companies Sago, E Project and Riko, as well as the British Emtele and Dutch Genexis.

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fortnightly news / of general interest

handbags at 40 paces for serbia and kosovo

proposal for serbian federalisation

Petty bickering and spiteful comments have never been in short supply when Serbia and Kosovo are dealing with each other, and nothing much has changed in that regard. Just recently, two Kosovan policemen were arrested/abducted (depending on who you ask) in the area of Merdare on the border. Now, while the men have since been released unharmed, it has only served to highlight the distance between both parties in reaching an amicable solution to their ongoing dispute. Belgrade claims that the men in question were in Serbian territory, which constitutes an offence under the current circumstances, while Priština has accused Serbia of sending forces over the border to remove the men from their legitimate patrol route. The EU, the UN, and Human Rights Watch have already confirmed that questions will be asked as to what actually happened, and as to how this occurred. Irrespective of the outcome of any inquiry and the concepts of guilt and innocence, SEE finds some of the posturing by ether side to be entirely unconstructive. A number of the photographs released are in poor taste and can only inflame the overall situation. Cooler heads will need to intervene, and prevail, if this is to be defused without any lasting harm.

Živan Berisavljević and Đorđe Subotić, representing a ‘coalition’ of Vojvodina-based political parties, have proposed that Serbia be split into two federal republics, Serbia and Vojvodina. This idea, according to the two men, is seen as a way of furthering economic and infrastructural development of the region, something which they feel has been neglected since the break-up of the former Yugoslavia. At present an autonomous province within Serbia, Vojvodina is home to 26 ethnic minorities, the largest of which are Hungarian and Croatian.

sarajevo remembers Marking the 20th Anniversary of the beginning of the war in Bosnia, and the siege of Sarajevo, the city remembers its fallen with 11,541 red plastic chairs set up all along Marshall Tito Street. Each chair represents one of the citizens who fell during the 44 month long siege which, sadly, was the longest siege witnessed by Europe, longer even than that endured by Leningrad. The commemoration began with the haunting melodies of Barber’s Adagio, and saw inhabitants of Sarajevo walking past the silent chairs in sombre reflection of the loved ones that they, and others, have lost. More in the article…

arrests to be made in the case of us embassy torching

more to do for montenegro Stefano Sannino, Director of the European Commission’s Directorate General for Enlargement, has remarked that Montenegro has made considerable progress in their reforms, which are needed for EU accession talks to begin. He praised the efforts made with regard to human rights, but it is in the realm of corruption that Montenegro needs to do the most work. While things are moving in the right direction, Podgorica still needs to pass Constitutional legislation in order to get to a point where EU talks become a reality.

Serbian State Attorney Zagorka Dolovac has confirmed that plans have been put into motion for the arrest of 14 suspects who are accused of torching the US embassy on the 21st of February, 2008, during the 'Kosovo is Serbia' protests. The arrests will take place in several cities across Serbia, and the accused will then be charged and put on trial for their actions. Dolovac stated that the Attorney’s office had spent over a year compiling evidence, which included security footage from the Embassy itself. Most of the suspects are said to be known football hooligans, associated with Crvena Zvezda and Partizan supporters. One individual, Milan Živanović, is already standing trial before the Belgrade High Court and has been charged with counts of destruction of property and endangerment of the public.

diocletian's palace gets ft seal of approval The Financial Times have declared that Split’s historical centre, or the part of Split which is situated within the walls of Diocletian’s Palace, is first on the list of the ten most desirable urban UNESCO World Heritage destinations. In achieving this, Split gained popularity over such famed spots as Old Havana, Bruges, and Venice. The ‘Pink Un’ states that Split boasts a quality of life which is unparalleled among its peers on the UNESCO list.

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best of the rest? The American based Media Sustainability Index (MSI) has listed Croatia as being the ‘best’ out of 21 transitional European and Eurasian countries. The index takes into account the levels of State interference, as well as who owns the various media outlets. In several countries many TV stations and newspapers are owned by politically active tycoons who merely seek to push their own agendas through their holdings. Albania, Bulgaria, and Macedonia all scored badly in the survey.

political squabbles ahead of elections While Serbian Prime Minister Mirko Cvetković was telling the world that Serbian political and economic stability relied on lasting regional peace, Minister of the Interior Ivica Dačić (interview with Minister Dačić later on in this issue), took a more relativistic approach. Dačić, who is standing in the upcoming Presidential Elections, has intimated that Kosovo will not be ‘allowed’ to remain outside Serbian control should he be elected to office. Dačić is running on a ‘Serbia first’ platform, and holds the opinion that the progression of Serbia’s EU talks should not be contingent on Kosovo gaining full independence.

leskovac ajvar recieves wipo certificate The World Intellectual Property Organisation, seated in Geneva, has granted a certificate of authenticity to Leskovac’s homemade ajvar, a paprika and eggplant hot sauce, making it the third Serbian product to be awarded the certificate after Leskovac grill meat and kajmak from Užice. From now on, only the registered producers of the sauce from Leskovac will be allowed to use the brand Leskovac ajvar for their product. The President of the Leskovac Chamber of Commerce, Goran Jović, stated that the present production of 30,000 jars per year could now be quadrupled, depending on the demand of the domestic and foreign markets.

smoking ban to be modified? The Croatian Government has announced that they will be seeking to modify the current act which bans smoking in public spaces. They have stated that the act, in its present form, is flawed and has caused considerable financial strife for cafe and restaurant owners. The proposed alteration is to allow smoking in restaurants, but only if they possess an adequate ventilation system. The debate on this will begin shortly, and it is expected that any changes will come into effect within 18 months.

zagreb to host eu crisis forum It’s been announced that Zagreb is to host the 5th Subversive Forum, from May 13th to the 19th. The forum hopes to explore issues of political, social, and economic concern, all of which currently affect Europe. Key speakers include Stéphane Hessel, former French Resistance fighter and notable diplomat, Michael Hardt, an American literary theorist and political philosopher, and Tariq Ali, a noted author and journalist. The forum will be preceded by the 5th Subversive Film Festival, running from the 5th until the 12th of May.

slovenian officer to assume command position with kfor Following the withdrawal of the Italian and Austrian candidacies for the position of Deputy Commander of KFOR, an officer in the Slovenian Army, Brigadier General Bojan Pograjc, has been selected to fill the post. Pograjc is currently serving as Commander of KFOR’s Doctrine, Development, Educational, and Training Command, and will be assuming his new position sometime in October. The Slovenian Army currently contributes 300 of the 5,800 soldiers which compose the Kosovo peace keeping forces, whose activities are overseen by the German Major General Erhard Drews. Pograjc will become the second highest ranked Slovenian in Kosovo after the appointment of former Foreign Affairs Minister Samuel Žbogar as EU Special Representative and Head of the EU Office, in February.

tadić cutting his term short Serbian President Boris Tadić announced that he will be cutting short his current mandate so that the Presidential Election can be held on the same day, May 6th, as the General and Local elections. It is believed that his decision was conditional upon assurances of non-violence from various groups within Kosovo as the interim acting-President, Slavica Đukić-Dejanović, would not possess the full mandate needed should any situation arise. Tadić, it is assumed, is hoping that his personal popularity will act as a boost to his own party and increase their vote during the election. Already Tomislav Nikolić (SNS), twice a Presidential runner-up, Ivica Dačić (SPS), and Istvan Pastor (DZVM) have confirmed that they are to contest the battle for the top post.

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in medias res

The Red Line of Sarajevo April 5th marked the 20th anniversary of the beginning of the Siege of Sarajevo, a tragedy that lasted for 1,425 days, claiming the lives of 11,541 of the city’s inhabitants. This sad and humbling reminder was marked by numerous manifestations which evoked memories of life, and survival, in the besieged city, a city whose social and cultural life never stopped even during the darkest of times. This project, the Red Line of Sarajevo, has, nonetheless, stirred up a storm of emotion, as the city remembers its fallen. By Dylan Alexander

vast row of empty red chairs, numbering 11,541, awaited the denizens of Sarajevo as the city began marking the 20th anniversary of the beginning of the Siege of Sarajevo. The poetry of Aleksa Šantić, his work Što Te Nema, or Why Aren’t You Here, drifted out over the crowds, both visible and invisible. The musical repertoire was intended for those who could not be there to occupy their seat, the sort of poignant symbolism reserved for such tragedies as befell Leningrad, Hiroshima, Nagasaki, Srebenica, Vukovar, and New York. It was, for all, a horrific reminder of one of the worst crimes in post - wwii Europe. “The red chairs would have seated that many citizens, if they had not been struck down by enemy fire”, said the man behind the 'Red Line Project', author Haris Pašović. “The chairs will remain empty for the day as these people are permanently prevented from attending”. A delegation from Sarajevo, as well as guests from Barcelona, Vukovar, Dubrovnik, Zagreb, Tirana, and Pogorica, laid wreaths at the Eternal Flame, by the sculpted images of Vladimir Perić-Valter and Josip Broz Tito, as well as at the Old Hebrew Cemetery and at the zavnobih Square. Honouring the fallen were a great many dignitaries, both foreign and domestic, including the Minister of Foreign

Affairs, Zlatko Lagumdžija, the Mayors of Zagreb and Sarajevo, Alija Behmen and Milan Bandić, the Bosnian Ambassador to Switzerland, Jakob Finci, as well as former members of the Presidency Stjepan Kljujić and Ejup Ganić. The latter had something to say: “We are here to remember, to teach our children to remember, so that we can all be stronger together. We all love Bosnia and Herzegovina and will not relinquish it to anyone.” Mayor Alija Behmen added, “We send out a message of peace, reminding Europe of how wrong they were in their inaction which could have prevented

Upon facing the sea of chairs, it was difficult not to recall those who might be present had they not perished prematurely.

the carnage, as even today there are places in the world suffering the same fate as Sarajevo once did.”

the hartmann-bildt conflict At one stage during the commemorative events the police were forced to stop traffic as a vip delegation, which was headed by the current Swedish Minister for Foreign Affairs, Karl Bildt, sought to join the ceremony. Bildt was an eu Special Envoy and the first High Representative for b&h after the signing of the Dayton Peace Accord. In spite of his argument that no one had expected events to turn-out as they had 20 years ago, his presence clearly brought back the most bitter of memories to the surface, memories of the International Community sitting more or less idly by as the carnage took place. Florence Hartmann, the former French journalist who covered the Balkans during the conflict for Le Monde, took especial insult at the Swede’s appearance: “Why are you here today? You shouldn’t have come to Sarajevo today. You should have been here on a day when something could have been done to prevent the massacres, back when you were saying that ‘Slobodan Milošević is a good guy’.” When Mr. Bildt turned his back on this tirade the French humanitarian continued

april 18th - may 1st

to address the gathered press, saying, “Bildt had no place in Sarajevo today! He fronted the European policies of inaction when he could have cut short the suffering of the people here, and the entirety of Bosnia. I am a free European citizen, and as such I have the right to voice my opinion, in the same way that (Bildt) has a right to be here. I have asked him why he is here but he has not replied!” Ed Vulliamy, a British journalist who also covered the events of the 1990s, added that the Swedish diplomat had no place here “unless he came to apologise to the citizens of b&h. It is common knowledge that the International Community tolerated three long years of destruction,

In turn Bildt felt it necessary to remind the press that Hartmann had been found in contempt of the Tribunal in The Hague, fined 7000 Euros, which she refused to pay, all of which led to an arrest warrant being issued accordingly. Without any further ado, both had taken it too far. The commemoration in Sarajevo deserved a higher degree of solemnity.

The President of the Republic of Srpska, Milorad Dodik, tailored the 6th of April commemoration to suit his own purposes. “It is of course impossible to tell,” he said, “a one sided story of the war, but

and now their politicians walk among us, playing their games. These victims died for nothing, in a senseless massacre…” Unfortunately, that was not to be the end of this, till now, one-sided verbal shoot-out. Upon returning to his homeland the Swedish Minister used his blog to accuse Ms. Hartmann of stating falsehoods, and claimed that she “would be better off reading my book on the events, rather than lying”, intimating that the journalist didn’t know the basic facts of the conflict. Naturally, there was a response forthcoming, and Hartmann chose the medium of television, as she replied that she had indeed read his book, but that, in her opinion, it was full of crucial mistakes and was nothing more than a unilateral perspective of the whole situation.

to present the Bosniak side of the story in such a pompous way means only that we in Srpska have to take that into consideration, and that the those who think that there will be no attacks against our Republic are mistaken. This (the commemoration) is in itself an attack on all present day supporters of Srpska, [as it is not a commemoration but] politics aimed against Srpska”. Dodik also said that the siege, which claimed the lives of many innocent civilians, did not have to happen, but that many were now using the “abuse of the victims for political purposes”. The rs President continued: “[this is a] pathetic story that had been continuously spread around the World in order to procure an unjustifiable status of ‘victim’ for one side only. It is a well known fact

the usual dodik spin

that 150,000 Serbs were exiled from Sarajevo during the war, and that there were dozens of concentration camps for Serbs within the city itself, in which atrocities were committed, and no one has, as yet, answered for those!” Dodik clearly resented the “politicking” of the event, as he did the statements of Bakir Izetbegović and Željko Komšić, who said that “Sarajevo fought against fascism both in the wwii and 20 years ago”. The President of Republika Srpska accused the Bosniaks of being fascist sympathisers during the last global war, and that Alija Izetbegović, father to Bakir, was in fact a member of the fascist’s armed forces. When Izetbegović replied, incredulous, Dodik said of his counterpart’s claims that they were “nothing but a dream… these events have once again proven that the Serbian people of b&h can only ever find their home in rs, where we have our own independent character, an army, a police force, and a working Government. We had b&h forced upon us by the Dayton Peace Accord, and, as such, our Capital is Banja Luka, even Belgrade, but never Sarajevo. It might be written that Sarajevo is the capital city but we certainly do not see it as such. If anyone thinks they can force Sarajevo as a capital upon us then they are terribly mistaken.” Dodik had taken it too far, which is certainly nothing unusual. At a time when b&h needs reconciliation and a federalist mindset more than ever, his approach comes across as nothing but retrograde – as even Belgrade saw some events taking place in remembrance of the siege: for instance, the Youth Initiative for Human Rights handed out postcards with written recollections of life in the besieged city, while the ngo ‘Women In Black’ staged a protest reminding the Serbian peoples of what had taken place during the war in Bosnia.

a task for generations to come The commemoration itself was not without further controversy: those involved in the event, and the city officials with whom they dealt, had neglected to make their plans widely known to either the media or the general public. Leaving aside the fact, for now, that the chairs in question had been purchased from a Serbian manufacturer, for many people the siege

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was a fading memory, one of quiet, personal loss. Upon facing the sea of chairs, and realising what it was that they represented, it was difficult not to recall those who might be present had they not perished prematurely. Thoughts turned to loved ones lost: fathers, mothers, brothers, sisters, and friends… there were also the rows of smaller chairs, intended for the children who had died during the siege. Flowers, toys, and messages were all left for those whose laughter had gone silent, never to return. Any fears that the anniversary would become a banal event, that the city’s legacy would be forever that of war and death, were quickly swept away when faced with the powerful simplicity of Pašović’s installation. It felt somehow appropriate that, after a day of rain, a rainbow appeared. In his blog, Peđa Kojević, a journalist and member of the Sarajevo Canton Assembly, wrote: “The only thing giving me hope is that we will, in spite of everything, survive the fatal wound that ‘the red line’ came to symbolise so well. History has

Even now, almost 17 years after the war, numerous reminders of the destruction can still be seen. provided us with challenges, as it happens every so often. Our parents’ generation had to fight, bare handed, the fascist occupation with all its military might, and subsequently rebuild the country from ruin. The world that they left for the generations to come was a far better place than the world in which they themselves had had to live. Before the youth of (Bosnia and Herzegovina) is a new and historic

challenge: a task which, if not impossible, is definitely the hardest one to date. If they truly want to live in an undivided, democratic, prosperous b&h, a country which recognises equality of all, then they shall have to find within themselves the knowledge, the strength, and a way to remember while being able to forget all at once; to move past the hurt, the anger, and the desire for vengeance, something that I, judging by my personal reaction when faced with the red line, am yet to master.” Even now, almost 17 years after the war’s end, numerous reminders of the destruction can still be seen. Almost every building in the city was hit by either mortar shells or sniper rounds, and more than 35,000 schools, churches, hospitals, and bridges were either completely or partially, destroyed. The road towards reconstruction and reconciliation is still one which b&h needs to travel, and it falls upon the country’s political leadership, as well as the citizenry, to march to the fore and bring b&h, and the generations yet to come, into a brighter future.

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event horizon

A Giant Leap – In the Right Direction With the 20th Anniversary of the Siege of Sarajevo having just passed us by, it seems fitting somehow that the city will play host to a gathering of individuals, not just politicians, who are determined finally to resolve one of the (perhaps) forgotten issues which emerged from the war: that of the internally displaced person. Dutchman Anne Willem Bijleveld was summoned from retirement to oversee the unhcr’s stewardship of it all, as we got the opportunity to pick his mind on the subject… By Lee Murphy

n international donor conference will be held in Sarajevo (a location which was a collective decision it must be said) on April 24th of this year, aiming to raise the 500 million Euros needed to provide housing for 74,000 internally displaced persons (idp) This project, called the Regional Housing Programme (rhp), hopes to provide a roof over the heads of some 27,000 families. Of course it’s not simply about handing over a set of keys and expecting everything to be as it was before. For many of those who are currently living, and have been for over a decade, in various shelters and collective centres across the Western Balkans, there is a lingering distrust of the authorities who have, up to now, been unable to provide an adequate solution. On November 7th, 2011, a declaration was signed in Belgrade by four ministers of foreign affairs, there on behalf of Bosnia and Herzegovina (Sven Alkalaj), Montenegro (Milan Roćen), Croatia (Gordon Jandroković), and Serbia (Vuk Jeremić). That this agreement related to expediting solutions with regard to the conflict of the 1990s, and the 74,000 idps, was of monumental importance. However, we are not here to talk of the past, with its destructive political philosophies or ideologies, but rather to look to the future, a future

marked by a higher degree of social cohesion and economic growth. To begin with, Mr. Bijleveld, who bears the heavily weighted title of Personal Envoy of the High Commissioner for Resolution of the Protracted Displacement in the Western Balkans, was in an ebullient mood. “The fact that we’ve come to an agreement,” he told us, “means that there have been a great many compromises…we

So, can it all be as easy as this? Come up with what is, for the project at hand, a relatively small amount of money? Well, yes and no.

need for the Governments involved to keep their promises, to stick to them”. In order for the Governments to be able to continue on the right path, a number of working groups were established, each one focussing on a different issue (pensions, data exchange, etc) and headed individually by one of the Four. The un oversaw the progress each group made, but refused to intervene: this was something that the Balkans would need to accomplish without any such outside influence as might cause difficulties at a later date. There would be, could be, no room for recriminations. “It wasn’t an easy path, but the political will the Governments displayed was evident – all of them wanted it resolved, but they just didn’t know where to begin. That’s where we, the un, were able to assist,” continued Bijleveld. “Personally I came on board in February of 2011, and at that stage, right up until May, things were very difficult. There was no progress being made. Suddenly, everything changed. By November we had the Joint Declaration and now we are where we are, and I’m of the opinion – and I think all the evidence backs me up – that the working groups which followed the declaration provided the glue which has bound the process: it has created a different mindset. Where there was once only

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hostility and stubbornness, we now see personal relationships forming. You see, it’s all about partnership: all four partners here – the Governments – obviously have their own opinions, their own approaches to various issues, which stem from national experiences, policy positions, etc. As the working groups continue to progress with their own issues, you find a sort of diffusion taking place… the individual delegations begin to understand, even appreciate, the opposing views”. It must be stressed that, just because each of the Four might have different positions on specific issues, that does not necessarily mean that they are a million miles apart. The past four months have seen a coming together of the former enemies, so much so that agreement, or near-agreement, is being reached on several contentious topics, which we needn’t mention, relating to the conflict 20 years ago. And it is as a result of this rediscovered ability to look past certain events and to focus on what is truly important that the status of idps can finally be resolved. All of this brings us to what we hope will be the end-game, or at least the start thereof. “This”, continued Anne Willem Bijleveld, “is what we call ‘Sustainable Return’”. And it is precisely the question of sustainability which continues to blight

any ultimate resolution. Many of those who find themselves under the moniker of ‘refugee’ once had certain tenancy rights within the former Yugoslavia. Following the cessation of hostilities, as the relevant State bodies began adopting more capitalist models, moving away from their previous socialist/Communist ethos, those who were occupying State owned property were given

COSTS - € 584 million The partner countries have already committed to providing €83 million. The remainder required is €501 million. Cost per country Serbia Croatia Montenegro B&H

€ 335 million (57%) € 120 million (21%) € 28 million (05%) € 101 million (17%)

Number of beneficiaries per country Serbia 45,000 (61%) Croatia 8,529 (12%) Montenegro 6,063 (8%) B&H 14,000 (19%)

the opportunity to purchase their domicile, should they desire. Clearly this offer could not be availed of by those who had fled the towns and cities. The idea is to build modern and desirable properties which will then be allocated to the families returning, or remaining (should they wish to integrate into the community where they are currently residing). After a period of time the families will be offered favourable financing so that they might purchase their new abode, as were their once neighbours some decades past. This is the ‘Return’ element, but what of the ‘Sustainable’ part? Basically, the concept is that each family returning can be integrated into their new (or original) community without creating a risk of repeat migration. These risks include safety, accommodation, infrastructure, access to social services like schools, and the health system. Naturally, as things stand, many of these issues will be taken care of by the re-housing itself, but employment is a crisis issue for everyone right now, and it may well be that it will continue to be a problem. However, the construction of these housing projects, while costneutral, will create significant, although temporary, employment for many, and it is envisioned that these newly integrated communities will be able to generate their own economic microcosm. This is

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THE DECLARATION OF NOVEMBER 7, 2011 “We, the Ministers of Foreign Affairs of Bosnia and Herzegovina, Croatia, Montenegro and Serbia declare our conviction that achieving just, comprehensive and durable solutions for refugees and internally displaced persons in the region will contribute in a crucial manner to the deepening of our good-neighbourly relations and stability in the region. We recognise that the successful resolution of these issues is vital to further enhancement of positive and productive relations among our countries and citizens and the underpinning of our respective bids to join the European Union.”

not just important for the returnees, but for the community into which they are returning. So, can it all be as easy as this? Come up with what is, for the project at hand, a relatively small amount of money? Well, yes and no. “While this housing project is incredibly important, and aimed at the most vulnerable, we will not pretend that it will solve all the problems overnight, and unfortunately not for everyone. This is a voluntary solution, in that the people need to want to return or stay,” explained Bijleveld, “At the moment when many of these people fled, there was but one country. Now there are many. To put it simply, many of them no longer have a country as such, even though they identify with a specific ethnic group, be it Croat, Serb, or Bosniak. One of the working groups is dealing with the issue of data exchange, and it is their responsibility to aid in creating an environment whereby the documentation needed can be secured by those who legitimately need it.” That would mean providing passports, identity papers, citizenship, etc. Many of the collective centres which house these idps are filled with people who consider themselves Croatian, or Serbian, but who do not have the papers necessary to allow them to restart their lives elsewhere. Without wanting to appear facetious in any way, the truth is out there: the information needed to resolve this lies in innumerable State offices,

People must be presented with non-conflicting data so that they can make an informed decision. Government buildings, warehouses, and it is just a matter of putting the hours in. Of course, these ‘hours’ will likely be ‘months’ before we begin to see tangible results. To those familiar with the level of redtape and bureaucracy in the countries involved, it must come as no surprise that this was an even bigger problem only a few years ago. It wasn’t just a question of synchronising four databases so that information could be readily disseminated – the information needed to be of a unified nature: all four Governments needed to agree upon certain terminologies, facts, and figures before anything could be done. Who qualifies as an idp? How many are there exactly? Was there to be a timeframe for the construction? What sort of responsibilities would each Government

have towards the idps, and for how long? After all, it was, and is, necessary that the idps are presented with non-conflicting data so that they can make an informed decision. It would do noone any good were a family to be housed in an area they were intrinsically unhappy with because that would, in part, destabilise the community into which they were moving. Integration is a multi-sided process and cannot be imposed upon anyone: not the returnee, and not the community. There is a responsibility here, on the part of the four Governments, that everything be done correctly the first time round so that there does not need to be further tinkering, which would only cause even more instability in the process at a later stage. The end goal here is finally to remove the status of ‘refugee’ from these people, so that they can be recognised, as they should be, as regular human beings, able to contribute to their environment as best they can. This confluence of events, all the meetings and negotiations that led to the declaration of November 2011, and the upcoming Donor Conference, all feel like some kind of perfect storm. As Mr. Bijleveld noted, “All the pieces of the puzzle just fell into place”. There is a saying: Everything will be all right in the end… if it's not all right then it's not the end. Well, it’s not all right yet… but that only tells us that it’s not yet the end either.

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politics

A Serbian Day At The Races As President Boris Tadić resigns in order to facilitate the combination of the Presidential Election with the already scheduled General and Local Elections, we try to find out if this unforced move has been measured enough to help a smooth victory and not diminish the chances of producing a clean sweep for the incumbents. By Miša Milošević

n St George's Day, that is May 6th, Serbian voters will enjoy a full race card, with a handful of ballots and the complete deck of politicians to choose from. After President Tadić stepped down from his office 10 months early, or “shortened his mandate” as he euphemistically puts it, almost every political leader who would ordinarily be seeking an mp’s seat was drawn, if not dragged kicking and screaming, into the same race. Was this intentional? Yes. But being the contender who has staked the most - his own office - on the presidential race, the right question is: was it necessary and will it be beneficial to his reelection and to the victory of his party? In our previous issue, we made a brief overview on why a Presidential Election would be helpful to the major political parties and how it might affect the fragile ratings of the minor parties (negatively, if you must ask). Tadić’s Democratic Party doubtless knows this all too well. Over the past fortnight it would appear that they took the effort to monitor their opponents and assess how they might poll, and perform, should the elections be merged. Tadić’s decision to step down was supposedly ‘delayed’ for reasons of national security. Slavica Đukić-Dejanović, President of the Parliament and interim Headof-State, does not possess the full powers of her new office and would be unable to act, heaven forbid, if there was need to mobilise the Serbian military. This constitutional limitation, established to prevent a theoretical coup d’état by a non-plebiscitary elected President of the Parliament, could become a security risk in the case of unrest in Kosovo, something which is also quite theoretical at this stage.

Tadić’s decision to step down was supposedly ‘delayed’ for reasons of national security. So how have things developed in the meantime? We now have a total of eight candidates running for the Office of President: Boris Tadić (ds), Tomislav Nikolić (sns), Ivica Dačić (sps), leader of the ldp and coalition "Preokret" Čedomir Jovanović, Vojislav Koštunica (dss), Ištvan Pastor (svm), and Zoran Stanković (urs). Last but not least, Vojislav Šešelj, on temporary release from The Hague, is also looking to shake things up. His release is conditional, ironically, on him not being healthy enough to remain in detention, so it would be obvious, even to the most zealous Radical, that Šešelj cannot stand

for Serbia’s highest office. Consequently, Šešelj himself presented the candidacy of his wife Jadranka late last week, despite her thin chance of victory. Some would say that this is Šešelj looking to build political capital; others might suggest that this move is simply meant to mock the other candidates. There is evident tension among the minor political parties, especially those who have helped the current Goverment maintain their majority, and there is an obvious reason for that: the Presidential race will significantly overshadow other elections and voters will surely prefer personalities over parties: in these circumstances, voters are likely to be driven by conservative choices and vote for presidential candidates' parties, thus further polarising the political arena in favour of major parties. Still, with Tadić and Nikolić both polling similar figures, it is likely that those parties which do manage to cross the 5% threshold required to enter Parliament will also find themselves in the mix. One thing is sure: we shall not see a ds-sns coalition. If anything, the coming duels between the two strongest contenders for the office at Andrićev venac will only serve both sides as a mechanism by which they can further differentiate their own positions. If the elections were held this Sunday, we would probably see both Tadić and Nikolić duking it out in the second round: in fact, given that there doesn’t seem to be any other serious challengers we will not, it is practically certain, see the new Serbian President elected before May 20th. If it’s to be someone outside this duo, then something of note will need to happen, and it would need to be rather spectacular.

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feature interview

Ivica Dačić: “No Allies, Only Competitors And Adversaries” Ivica Dačić, President of the Socialist Party of Serbia, current Minister of the Interior, and one of the most outspoken presidential election contenders exudes the air of confidence while talking to us about his political and other principles which, whatever option you might fancy, vouchsafed both him and his party a veritable political comeback in the recent years. No doubt, both Dačić and sps have come a long way since the days when Slobodan Milošević headed the same outfit.

EE Your attitudes, which often stand in contrast to those of your political partners from President Tadić’s Democratic Party, have helped you earn the title of “enfant terrible” of Serbian politics, as you often oppose what the international community would like to see and hear in Serbia. In other words, are you making waves with respect to Belgrade's official relations with Brussels and Priština? ID I don't believe that love towards one’s country should disturb anyone. Not so long ago, the British Prime Minister refused to agree with the rest of the eu, and he gave a very brief explanation of his position – it ran counter to British national interests. Much like him – as, I imagine, should be the duty of every politician, including those in Serbia – I put our national interests first. And, speaking of Brussels, I believe they also want to know to whom they are talking and what that person’s positions are. Mine are very clear, because I advocate national and state interests very clearly and very firmly. Though this, make no mistake, is by no means any sort of obstacle to dialogue; on the contrary, it stands as a fundamental premise of any successful dialogue. It is the people who don't know what they want and

“I am not afraid to say that everyone in this campaign tends to avoid holding a clear position – everyone except me.” what kinds of positions they represent that act as an impediment to dialogue. I, personally, play with my cards open for the whole world to see – and as an advocate of territorial delineation I believe this is the only way to put an end to conflict in the Balkans. By the way, putting an end to all these conflicts – and we all know what they are – is a fundamental Serbian national interest.

SEE Should you find yourself in a position in which you might be forced to renounce or water down some of your positions in order to become part of the next Government, what will you do? ID I think it is very clear that I will firmly hold on to my positions even after the elections are over. Let me reiterate - clear, firm and decisive. And that's why I believe that after the coming elections others as well will finally have to decide - not change - what their positions are with regard to the fundamental questions and problems plaguing the Serbian political arena. I am not afraid to say that everyone in this campaign tends to avoid holding a clear position – everyone except me. Never mind, I'll see them after the elections. SEE Economic development has never been a key part of your programme, at least not in terms of what gets the most air-time and media attention. But where, and how, do you see opportunities for Serbia's future growth? ID Economic development is impossible if we don't make that major leap towards having a strong State first and foremost governed by the rule of law, the kind of society primarily characterised by equal opportunities, the kind of society

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â&#x20AC;&#x153;I do not have any allies in the elections, only competitors and adversaries.â&#x20AC;?

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Ivica Dačić a short biography 1966 Born in Prizren (Kosovo) on January 1st 1980 Attended primary school in Žitorađa, birthplace of singer Svetlana-Ceca Ražnjatović with whom he is a friend. 1990 Graduated from the Faculty of Political Sciences in Belgrade. 1990 Introduced to the SPS by Petar Škundrić, one of party's founding fathers (in 2008, Škundrić became minister of mining and energy as Dačić's candidate) 1991 Became the first President of Young Socialists and spokesman of the SPS 1992-2002 Was presiding over the Belgrade section of the SPS 2000 Became Vice-President of the SPS 2004 Was Presidential candidate and came in 5th (3,6% of votes)

in which elementary edicts of social justice are simply inviolable. These are the conditions we need if we wish to develop further, which naturally also includes economic development. Put simply, economic development is a major item in sps's programme, but we, the socialists, tend to work at it rather than just talk about it. If you look at the results in the energy sector, which is managed by socialists, you will get a better picture. SEE What does your economic programme consist of and what are your elections promises, realistically? ID Very briefly - equal opportunities for all people to work and for all investors to invest. So, no more subsidies that are exclusive to foreign investment, but rather for everyone who can create new jobs.

Also, justice and new jobs for workers who have fallen victim to heinous privatisation processes, which have often amounted to little else than practical theft. Prison for those who have stolen. Again, everything is possible if the State is run by people who work more and talk less; we need to run the country so that it functions at least as well as today's Ministry of the Interior, my own Ministry. People will put their trust in such a system, as they have, under my mandate, in the police. Trust must be the foundation of Serbia's future growth. You need to motivate people to trust and love their country. SEE Your colleague Goran Bogdanović, Minister for Kosovo and Metohija, recently said that the Serbian general and presidential elections will probably not be held in the

2006 Following Milošević's death in The Hague, became president of the SPS 2008 Became vice-president of the Serbian Government and Minister of the Interior

territory of Kosovo. Have you changed your position on that score, and how will you resolve differences in opinion with your coalition partners? ID I do not have any allies in the elections, only competitors and adversaries. My position is that the electoral process is defined in the Constitution of the Republic of Serbia, which cannot be contested or called into question in any respectable

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“As things stand, we don't (as a country) have a clear position, nothing is clear about us, we pray to everybody, so one can even say that we also lie to everybody.” country, not only because it is the supreme legal act, but also because it represents the measure of a country's dignity. And, constitutionally, Kosovo is a part of Serbia. Will the international community, currently in charge of Kosovo, allow the elections to take place, is an entirely different matter. SEE Do you believe that Serbia is currently entering the so-called post-political era, in which Serbian efforts will more or less be limited to implementing policies rather than creating and designing them? We are, of course, referring to both domestic and foreign policy issues, which are currently determined by the extremely clear demands as posed by the eu. ID This will primarily depend on how Serbian politicians and the people who run this country behave, or on how clear, firm, and decisive they are in dealing with their surroundings. It will also depend on which allies we choose. If you’ll allow me to put it in my own words – it depends on which God we shall pray to. As things stand, we don't have a position, nothing is clear about us, we pray to everybody, so one can even say that we also lie to everybody. SEE How much manoeuvring space will Serbia have in the eu-accession process? How much of its sovereignty will it retain? ID If we join the eu as a small, poor and weak nation which is what we are more or less being forced to do – then not much. However, if we join the eu voluntarily, because it is in our interest, as a big, wealthy and strong country, I am sure that everybody will show us a high degree of respect. SEE Finally, do you see yourself taking the box with your personal stuff to the President’s Office at Andrićev venac? What would you say to Boris Tadić if you met him in the hallway? ID To quote Walt Whitman, "I would give him a meaningful look". And I would still be his friend.

SOCIALIST PARTY OF SERBIA - DOMINATION AND BACK The SPS was founded in 1990 with the merger of influence, and, as a consequence, an ever dethe Communist Party of Yugoslavia and the So- creasing number of MPs. The SPS arrested their cialist Alliance of Labour People of Serbia. Its first decline somewhat when, in 2004, they backed leader, Slobodan Milošević, led his party into the the DSS by voting for their Minority Government elections that year and took them by storm. This candidate within Parliament. Although the SPS was the beginning of their rise to power, which is did join the Government per se, their members ongoing even today. were rewarded with several important positions The 1990s were notable for not only being a within State run bodies. This would be the birth time of SPS supremacy, but also as their dark- of a more contemporary, and ‘reformed’ rhetoest era: accused, as they were, of being the main ric for the SPS. culprit behind the war that set Yugoslavia alight. In the 2008 elections the SPS, in a coalition Electoral losses in Slovenia, Croatia, and Bos- pact with the Party of United Pensioners of Serbia nia, followed by International sanctions, shook (PUPS) and United Serbia (JS), won a total of 20 the party to its foundations, and it would on- seats in Parliament and were crucial to the Demly get worse. In 1996 the SPS were accused of ocratic Party’s formation of the Government. In winning the local elections by fraudulent means, return for their support the SPS received six posisomething which Milošević admitted to the fol- tions on the cabinet, which included Ivica Dačić’s lowing year. appointment as Deputy Prime Minister. Since 1996 the SPS has been largely backed by In 2009 Dačić decided that the time was right the JUL, another party which was established by to re-launch the SPS, and announced a new beMilošević’s spouse, Mirjana Marković, and her ev- ginning as a party of the modern left-wing, and er increasing political dominance within the Fed- social democratic orientation. That same year the eral Republic of Yugoslavia, were of great disap- SPS became a member of Socialist International. pointment to the SPS faithful. The SPS has been the party of choice for a Milošević's hard-line policy in relation to Ko- number of distinguished intellectuals as well sovo led to the bombing campaign against Serbia as celebrities, and can count actor Velimir-Bain March 1999. ta Živojinović and handball player Svetlana Kitić The 2000 elections saw Vojislav Koštunica’s among its supporters. In 2010 the Serbian film diDemocratic Party of Serbia sweep into pow- rector, Srđan Dragojević (“Lepa sela lepo gore”, er, as well as Vojislav Koštunica himself oust- “Parada”), joined the SPS and is currently a candiing Milošević to become President. This was the date for the upcoming elections, 55th of the 250 beginning of SPS’s time in opposition, declining names on the party list.

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editorial

A Russian Balkan Comback? After meeting his Russian counterpart, Sergey Lavrov, Vuk Jeremić, the Foreign Minister of Serbia, stated that the “Russian Federation remains Serbia’s closest partner and ally.” What are the prospects for this partnership? What has Russia to offer Serbia and the countries of the Western Balkans? Or vice-versa? Are there definitive goals in her foreign policy at all? We won’t call him “Our Man in Moscow”, but it is from there that Sascha Tamm sends us his thoughts.

ussian foreign policy, during the past decade or so, has been more active and certainly more outspoken than under the late President Yeltsin – something, perhaps, that should not have been unexpected, especially when we consider who his successor was. Since Vladimir Putin ascended to the office of President, and subsequently became Prime Minister (and President again), Russia has sought – and indeed in many cases found – a renewed foothold in the global arena, albeit this time an economic foothold rather than an ideological one. This proactive approach also implies a greater involvement with the Balkan region, particularly Serbia: Putin’s own successor, President Medvedev, was the first President of the Russian Federation to visit Serbia (in 2009), and since then both diplomatic and economic ties have clearly been strengthened. In addition, the intellectual community of Russia, once home to Solzhenitsyn and Tolstoy, has regained some level of interest in the Western Balkans: there are more publications and discussions pertaining to the region now than ever before. However, this growing involvement appears aimless, and is devoid any real coherence. Russia, for all its talk, is betrayed by a lack of a comprehensive

By Sascha Tamm

Born in 1965, Sascha Tamm studied philosophy, political science and physics in Dresden, Leipzig and Urbana-Champaign. After working as freelance coach, author and ghostwriter he joined the Friedrich-Naumann-Foundation for Freedom (FNF) in 2001. Since 2009 he has served as Head of the Moscow Office of FNF. He is a Senior Fellow and founding member of the BerlinManhattan-Institute, a free market think tank in Berlin. On antibuerokratieteam.net, a radical liberal blog, he regularly analyses political developments in Germany and Europe. Frequently he comments on developments in Russia in Interviews with Deutsche Welle, a German international Radio station.

strategy: her foreign policy seems to operate on a day-by-day basis, affected as it is by a series of differing, and often contradictory, aims and goals.

russia today In fact, the problem seems to run even deeper. Since the collapse of Communism, Russia has clearly also been lacking a common ideology, or a value system, on which to base its statehood. The administrations of Putin and Medvedev have been trying to find or rediscover some substitute, but the problem, exacerbated during the near-parodical rule of the post-ussr leadership, seems almost insurmountable. The Russian people should have something by which they can stand proud, something that builds trust and social cohesion: in this, foreign policy plays a key role, as it should demonstrate not only that Russia is big, but that it is powerful as well. In short, Russia is still looking for a sustainable source of national pride. It is of course relevant as a country, but it does not yet know how to express that relevance. True, Russia has readily defined itself as a counterweight to American, or Western, hegemony: President Medvedev said back in 2008 that “the world should be multipolar. A single-poled world is unacceptable. Domination is something we cannot allow. We cannot accept a world order in which one country makes all the decisions, even as serious and influential a country as the United States of America. Such a world would be unstable and threatened

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by conflict”. The main thrust of this statement bears some modicum of truth – and could even be welcomed – but one cannot escape from the impression that Russia’s responses in the international arena have

THE EUROASIAN UNION The Eurasian Union (EAU) is a proposed economic and political union of Belarus, Kazakhstan, Kyrgyzstan, the Russian Federation, Tajikistan and any other Eurasian countries as would potentially be interested in joining, in particular the post-Soviet states. The idea, based on the European Union's integration, was brought to attention in October 2011 by Vladimir Putin, but it was in fact first proposed as a concept by the President of Kazakhstan, Nursultan Nazarbayev, during a 1994 speech at a Moscow university.On 18 November 2011, the presidents of Belarus, Kazakhstan and Russia signed an agreement, setting a target of establishing the Eurasian Union by 2015. The agreement included the roadmap for the future integration and established the Eurasian Commission (modelled on the European Commission) and the Eurasian Economic Space, which started work on 1st January 2012.

...Russia can no longer afford to have its longterm economic interests stymied by a misdirected Eurasian nationalism... been reactive rather than pro-active, best illustrated by its behaviour in the un Security Council, where it usually votes (and vetoes) against the “Western” powers rather than to achieve some discernable long-term goal. Naturally, there were the episodes in Nagorno Karabakh, Transnistria, Abkhasia, South Ossetia – all examples of how Russia prefers to preserve the peace, so to speak, if only so that it might project its power over those regions that are closest to it. As always, domestic issues and domestic interest groups wield tremendous influence, so that foreign policy

almost mimics that which is exercised on the home front – and, besides, the simple fact that other sovereign countries are involved in a dispute does not necessarily mean that Russia views a given situation as a matter of foreign policy. Similar sentiments prevailed in the us for decades with regards to Cuba, and we needn’t even mention the plethora of conundrums that the uk faced – and is still facing – following the end of the colonial period. It is no secret that Russia too is still suffering from an imperialistic hangover, milder though it is these days, but the time has come for Russia to outline a functional strategy, not only with respect to those countries which Putin and Medvedev – for now quite romantically – would like to see as members of the Russia-dominated Eurasian Union, but also towards, say, South America (especially Brazil), Southeast Asia and yes, the Balkans. It seems that short term gains are deemed to have greater importance than any specific long term ones, which is especially true when it comes to capitalising on the prevailing pseudo-political mentality of the Russian people. Proclaiming that “Russia can withstand The West” still sells very well amongst Russians of all ages, hungry as they are for some fundamental notion of national self-esteem; but it fails, especially with the (re)emerging urban middle class demanding more transparency all across the board (best illustrated by the recent anti-Putin protests), to create the kind of system which would make Russia competitive in the long run. The economy, it is true, has grown on the strength of the country’s natural resources, particularly oil and gas, but the ruling structures have failed to maximise the effects of this godsend. That said, a more stable and cogent foreign policy should not only be paramount in the process of opening and securing new markets for these goods, but should also be used as a breeding ground for a new type of Russian diplomat and civil servant: he – or she – who first and foremost understands the power of profit, not through the prism of personal gain, but through the prism of a nation’s potential might. In other words, Russia can no longer afford to have its long-term economic interests stymied by a misdirected Eurasian nationalism, as was the case in the well-known disputes with Belarus and Ukraine over the supply and pricing of gas and oil. Simply put, to

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RUSSIA'S FIVE LARGEST DIRECT INVESTMENT IN SERBIA

date the two aspects of foreign policy, the economic and ‘power’ angles, have been mutually exclusive, and it is high time that Russia remedy that.

the balkan connection But what does it all mean for the Western Balkans, and in particular for Serbia? First, macabre as it might sound, Serbia provides an excellent opportunity for Russia to capitalise on the conflict with Kosovo. Without getting into a discussion about the relationship – past, present, or future – between Serbia and Kosovo, the truth is that Russia, though supporting territorial secessionism in other regions, will have the upper hand in the Serbian market for so long as it doesn’t recognise Kosovo’s independence; and Russia, need one say it, is powerful enough to exercise such a policy indefinitely. There is a spiritual unity which exists between the peoples of Serbia and Russia, something which was stressed by both Lavrov and Jeremić when they met, and that, for sure, is part of the mindset of many politicians from both countries. This, however, must not be mistaken as being the driving force behind any political decision making: besides the will to demonstrate strength and power, there are economic interests to consider as well. For one also need not stress that the average Serbian consumer, not unlike in any other country, is governed in his choices not only by price and quality, but also by that ever-elusive term called consumer nationalism. It is safe to say that, to a practical majority of Serbian consumers, Russia and Russian sounds positive,

Whatever the case, Russia can never offer itself to Serbia as a substitute for European integration, either economically or politically... a predicament in which Russia does not find itself often. In other words, there is room in the Serbian market for more than petrol stations and infrastructural investments: there is plenty of room for Russian banks, for Russian insurance companies, even for Russian consumer goods. As the Bank of Moscow, the only Russian bank currently operating in the former Yugoslav region, could probably bear witness, no market is too small, especially during a time of recession or declining growth. For the truth is that Russia, in part (if not entirely) on account of its mixed-message foreign policy, has been losing out in the natural gas game in Central and Western Europe; Russia is even experiencing difficulty in ‘defending’ hitherto safe, or uncontested, markets. It is for this very reason that Serbia might be of utmost

Year

Enterprise

2002 2004 2008 2009 2010

Lukoil FBC Majdanpek Moskovska banka Gazprom Neft Hotel Tulip Inn

Amount $ 300.000.000 € 35.000.000 € 20.000.000 € 990.000.000 € 7.000.000

importance, not only just as a new market, but also as a Southern gateway into Europe, especially with Belgrade gaining candidate status and making headway in its eu talks. By the same token, how exactly should Serbia proceed with regards to Russia? Knowing how the Russians prioritise, then surely a pragmatic approach is the order of the day? Ideologically speaking Serbia can rely on Russian support in relation to Kosovo: whether such support would be widely welcomed (or rejected outright) by Tadić et al, especially given the eu stance on the matter, is a debate for elsewhere. Whatever the case, Russia can never offer itself to Serbia as a substitute for European integration, either economically or politically, and Russia would be wise to comprehend this axiom sooner rather than later. What’s good for the goose is good for the gander, and the other countries in the region can expect much of the same from Russia, except that in other countries there doesn’t exist the same political harmony with Mother Russia. However, Serbian eyes do gaze differently upon the one-time Communist super-power than Russia’s now gaze upon the biggest former Yugoslav state. For one, unlike Serbia, Russia is big and powerful enough not to need anyone to rescue it; which is why, on the part of the Serbs, there is a certain amount of romanticism involved… something which Russia does not quite (have the time) to reciprocate. But, as the old story goes – a story even Adam Smith would be more than happy to back up – Russia maximising profits in Serbia need not necessarily be bad, especially for Serbia.

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in perspective

The Wrong Kind of Money The state purse is empty, and mounting pressure on the Government by of a whole gamut of international institutions to cut public spending means one thing and one thing alone: the solution to the problems of many companies can only be found in attracting foreign investment. By Jerko Markovina

ndeed, Croatia needs a new start, and new starts of this nature usually require fresh money. The overall climate under the new Government may be improving, even improving considerably, but foreign investment in Croatia still faces a great deal of scepticism, even hostility. Much of it stems from the residues of the socialist mindset, which regards wealth and capital - especially if they happen to be foreign - as something unclean, and also from a rather misplaced brand of resource nationalism, resources here largely pertaining to inherited land and property, especially in the coastal belt; in other words, many Croatians are faced with a dilemma: should they continue on living off rent, or allow the development of a system in which their children could find work. For old comfort zones are wearing rather thin - the State can no longer â&#x20AC;&#x2DC;subsidiseâ&#x20AC;&#x2122; household budgets through ineffective appointments and undeserved pensions in the same measure as it has in the past - and new paradigms cannot but be invited.

the wrong kind of legacy Still, a measure of criticism of fdi is not totally unjustified. There have been too many examples of investors whose sole intention was to seize the valuable material assets of companies in trouble, with no intention of reviving the core business or keeping workers employed. These horror stories are presented daily to the Croatian public, showing desperate people trying to hold on to their jobs and livelihoods, while irresponsible owners are nowhere to be found and the hot potato is passed on to the Government (the most recent example would be the situation that emerged after the Polish company Zlomrex pulled out of the steel mill in Split, although it would be perhaps unfair to say that they had foul play in mind when they first decided to invest in Croatia). Infusions of capital from abroad may no longer be a hard sell for the politicians, but all domestic political stakeholders do still practice a rather high degree of caution - after all, it is easier to lose political points as

Serbian capital has never been welcome in Croatia, though there has been even major activity in the other direction.

a result of disgruntling unions or the local electorate accustomed to social giving than to gain them on the strength of mild economic growth or increased fdi. This, of course, is also true of any other country in the region. For any investor work in Croatia is hard enough already, as any report or index describing the ease of doing business will reveal. Although the current Government seems to be going in the right direction, the bureaucratic apparatus is slow and inefficient, which does not spell out an easy ride for the investors, wherever they may come from. The legacy of the investor-unfriendly environment can in fact be traced all the way back to the days of the AustroHungarian Empire (and other empires that ruled the region), as foreign governance was never very well received and was sabotaged whenever possible. After that, decades of socialism created an entire class of bureaucrats who were feared and disliked, and who had no real incentive to be efficient or to serve the best interests of the community. Most recently, under the rule of the Croatian Democratic Union hdz and their vision of the welfare state, the civil service became, even more, a place of safe employment, with positions given away to people who needed to be politically rewarded or rescued from the logic of the free market. Needless to say, this model created large numbers of employees whose efficiency is at best debatable, and whose entitlements are almost

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impossible to revoke without creating a big disturbance in the labour market. Creating a positive and inviting climate for investors is a daunting task. It requires massive structural changes, and even if the Government does all the right things, the issue still remains – what kind of investments will come in and will they play out the desired - or desirable - economic role. As elsewhere, one normally tries to evaluate investors by examining their track record, their previous ventures and their overall success in their industries. However, since hard data is not always readily available, and since some Government officials in charge of this screening process do not have the skills or the work ethic to rise to the occasion, the easier way out is often to judge investors on the basis of some superficial characteristic, such as, say, their country of origin. And this is where politics can have a deep impact on business decisions. It is temptingly easy to evaluate investing companies on the basis where they hail from, and it is even easier to attract investors from countries one has good relations with (what’s more, it is expected). Therefore, it comes as no surprise that the largest investors in Croatia are Austria, Germany, The Netherlands and Italy, followed by other neighbouring countries and other members of the eu. Stereotypes certainly do play a major role – one would usually judge an investor from the us as more reliable than one from, let’s say, Azerbaijan or Kazakhstan. Croatia lost a big pipeline deal with Russia (which is being renegotiated now) by focusing exclusively on doing business with the eu and neglecting to build stronger relations with other parts of the world. Qatari capital was also never allowed to come in, although the Emir from the Al Thani family was purportedly willing to invest, among other things, in a liquefied gas terminal a project, by the way, that has been in the limelight for more than a decade but because of bureaucratic stubborness nothing ever came to fruition. And the list goes on.

dislike of our neighbours' money And as we turn to our immediate neighbourhood and its troubled past, it is hardly surprising that, for political or prejudicial reasons, investors from the states of ex-Yugoslavia were not exactly welcomed with open arms.

The situation in the Croatian economy is such that it can ill afford to overlook any potential business opportunities...

In marketing theory there are two important terms – brand recall and brand recognition. If you ask anyone in Croatia over the age of 22, chances are that he or she will be able to remember a whole list of products from other parts of the former Yugoslavia, and these products will usually be recalled by them with a nostalgic, positive feeling. This, of course, does not necessarily mean that these products were the top of their class, but they do remind us of those times when consumer choices were easier since there was little or no foreign import allowed. They remind us of those times when tv sets and washing machines were built to last a generation, and when buying a car was a life-changing decision. These are the reasons why even today many brands from pre-war times remain strongly imprinted in the collective consumer conscience in states that used to be a part of Yugoslavia. On the other hand, in today’s world of globalised and saturated markets, building

brand recognition is a time-consuming and costly effort, and the advantage of having an instantly recognisable product in the market is a great asset to companies doing business in this region. In theory, of course, for the practice shows that barriers to trade and investment among the states of the region has largely come as a result of political manoeuvring, although each successive government until now promised to put economy first and not let it be held hostage by daily politics. So far, not enough progress has been made in this direction, with many business deals being stalled or rejected for not completely rational business reasons. Let us state the obvious, Serbian capital has never been welcome in Croatia, though there has been even major activity, largely owing to Agrokor, in the other direction. Perhaps the current Government will change this unsustainable trend. We can certainly give them the benefit of the doubt. The data on direct foreign investment in Croatia provided by the National Bank (hnb) shows that only Slovenia ranks among the top-ten investor states, with about 500 million Euros invested in the last 5 years. Investments coming from the other states of the region were much smaller: Bosnia-Herzegovina invested some 30m Euros in the last 5 years, whilst Serbian investments commenced only in 2010, reaching since then the figure of 27 million Euros. The situation in the Croatian economy is such that it can ill afford to overlook any potential business opportunities, or to keep out any investments solely on the grounds that they could constitute a political liability. Many business barriers will automatically be overcome with Croatia's eu accession in July 2013, but Croatia would do well to eliminate the remaining obstacles toward other parts of the world, including the countries in the immediate vicinity. This will take a bit of political courage, but taking into account the clear mandate that new Croatian Government was given to sort out the economic mess, this should not be an insurmountable task. Even if we can understand the reasoning of previous governments for imposing such soft barriers on trade and investment, depending on the political moment, one could hardly pardon any potential failure to dismantle them now - at a time, paradoxically, both of tremendous hardship and an improving climate.

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financial

Slovenia: Reform or Go Bust Could Slovenia, a country that has, for a long time now, served as the eu poster child for the Balkans, be next in line to ask for a bailout from the eu? Finance Minister Janez Šušteršič seems to think so, and so does our new country editor, Sebastijan Maček. Unless... By Sebastijan Maček

inance Minister Janez Šušteršič did not mince his words at a meeting of euro zone treasury ministers in late March, and to avoid going to the eu capin-hand, the Slovenian Government has prescribed a hefty dose of austerity. Predictably, it’s all beginning to kick off: the unions are gearing up for a fight, and it seems Slovenia may end up acting out the script written and proofed by the Greeks. A dress rehearsal is already under way for the opening chapter, ‘Street Protests’, but the ending may yet still be subject to a director’s final cut. Slovenia has little choice if it wants to appease the financial markets, which drove yields on Slovenian treasury bonds over 7% in the aftermath of a failed pension reform in late 2011. Bond yields, since then, have climbed back down, but borrowing at 5% interest is borderline sustainable. Slovenia also needs to fulfil its commitment to the eu in order to sort out its public finances. The Government plans to reduce the general Government deficit, which reached 6.4% of gross domestic product (gdp) in 2011, to about 3% of gdp this year, which is the high end of European guidelines. Economists are near unanimous in their opinion that this is the right path back to affluence, even if it means years of belt tightening. But the cuts amount to a massive fiscal adjustment, even within the Eurozone, second only to Greece and Spain. The Government wants to cut spending by about 820 million Euros this year

and 950 million Euros in 2012. Public sector employees – civil servants as well as teachers, doctors, police officers and soldiers – will bear the brunt of this push for austerity. It was initially proposed that public sector pay be cut by 15% across the board, but the Government has already stepped back, offering the unions ‘only’10%. Public sector employees would have to forfeit their annual holiday allowance this year and settle for only half in 2013. This is projected to save 226 million Euros this year and 176 million Euros in 2013. A special annual allowance for pensioners, originally designed to help the poorest to be able to afford a holiday, would be trimmed, saving the state over

60 million Euros each year. Subsidies for companies would be cut by 135 million Euros this year and the next. Millions in savings will also be squeezed out of the rampant public sector, which now numbers over 160,000 employees: many agencies and public administration bodies will be chopped or folded into bigger departments; perks currently enjoyed by civil servants will be cut, and teachers will have to put in more hours while class sizes increase. This would mean, according to Government calculations, that some 1,400 teachers would be made redundant. Most controversially, the Government has proposed downsizing health services financed by the public health insurance. This will be coupled with lower parental leave and child benefits, lower school meal subsidies and the revocation of a rule that allowed families with multiple kindergarten-age children to pay for just one child.

selling choice cuts Prime Minister Janša has made it clear that trimming the fat is inevitable, stressing that the cuts will be more painful the longer Slovenia waits to implement these sorts of measures. But with the promise of hardship for years to come, he has a tough sell on his hands. The corporate sector has been holding its applause. The powerful Chamber of Commerce and Industry (gzs) regrets the absence of stimulus to kick-start a new

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investment cycle after the burst housing bubble wreaked havoc on the construction industry and manufacturing. However, businesses will probably be appeased by a proposed lower tax on profit – which will be gradually cut from 20% to 15% by 2015 – fully tax-exempt investments in r&d, higher tax credits for investments in assets, and the promise of less red tape. The unions, however, immediately took up arms. A trade union representing police officers probably captured the mood best in saying that the Government may face massive protests in the spring – it just shouldn’t count on poorly paid police officers to provide crowd control. The unions, egged on by leftist parties, have rightly pointed out that the Government had failed to take serious measures to increase revenues. The Government quickly responded with a 14-point package of revenue-side measures: most notably, it has proposed higher capital gain tax (to 25% from 20%) and promised to “examine the possibility” of introducing higher taxes for the very rich. But the other proposals will either have a tiny effect (higher taxes on luxury boats and cars), or they are vague, such as a crackdown on tax evasion and “more effective enforcement of tax regulations”. The one thing that everyone views as sensible is raising the threshold at which the top tax-bracket, 41%, kicks in, which will admittedly benefit the rich but will also, more importantly, ease the burden on the middle class.

spring of discontent With the package on the table, the Government and the trade unions are now engaged in a test of nerves. The unions have been recalcitrant: fearing a revolt from the rank-and-file, they have ceded little ground while simultaneously forcing the Government to make concessions. A paycut of some sorts will be carried out, but the unions are at least trying to squeeze out a solution that would prevent a linear cull in favour of shifting a bigger portion of the burden onto the high-earning senior officialdom. In an attempt to strengthen their hand, public sector workers plan to stage a general strike on April 18th: teachers have signed up for this show of force with gusto; the police and customs officials are

Janez Šušteršič, Minister of Finance

If domestic players cannot agree on how to sort out public finances, fiscal discipline will be imposed from the outside. also on board, as are smaller unions representing different elements of the civil service. More than half of the public sector employees plan to hit the streets, in what will be the biggest labour protests in a decade. Such shows of force have served unions well in the past, showing successive Governments the strength of organised labour and stifling reform efforts in the name of preserving the welfare state. It was labour that spearheaded the revolt against reforms attempted by the previous, Social Democrat-led Government, which was ultimately brought down by a series of union-sponsored referendums. Ironically, those reform proposals were

much milder than the cuts sought by the current Government. But the inevitable industrial action may turn against organised labour. It will be yet more evidence for free-market liberals, who form the core of the Government’s economic team, that unions have too much influence on economic policy and should have their wings clipped. The private sector, shedding jobs at an accelerated pace as the wave of corporate bankruptcies continues, may start to resent those with cushy jobs in the public sector (where pay is a third higher on average than in the private sector) if they complain too much about cuts that workers in the real sector would be more than happy to stomach. Something along the lines of a scenario that has already taken place in Croatia. An admirer of the Chinese general Sun Tzu, Prime Minister Janša is considered a cunning strategist. Although ill at ease with union leaders, he and his party eagerly fanned anti-reform sentiment when he was still the opposition leader, leveraging union power to help bring the previous Government down and paving the way for his return to power. Having, on numerous occasions, proved to be a successful practitioner of divide and rule, he will no doubt seize any opportunity to drive a wedge between public and private sector unions. The first cracks are already starting to appear. After years of binging on cheap credit, Slovenia will have to start living within its means. Spending cuts have their critics, with increasing numbers of economists warning that savings alone without significant stimulus to jump-start the economy will deepen the recession while imposing a heavy toll on the people. But with the eu firmly on the austerity path, Slovenia can ill afford to strike out on its own. In other words, if domestic players cannot agree on how to sort out public finances, fiscal discipline will be imposed from the outside. For older politicians on the left, and for the currently sidelined circle of Keynesian economists, it is a matter of pride that in the early 1990s Slovenia rejected the International Monetary Fund prescriptions of all-out privatisation and painful restructuring in favour of a more gradualist approach. If things go awry, it may not have a choice this time.

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the industry

From Minutes To Bytes: Shifting Business Models In The Telecom Industry Amid the recent global economic uncertainty, the telecommunications sector has performed relatively well, with operators emphasising their strong defensive qualities and well-developed capital expenditure (capex) management capabilities. However, in a sector where new entrants are competing fiercely for revenues created in the emerging service areas, the question to ask is: has the time come to shift from a defensive to offensive posture? For many telecoms executives, the answer this year is a resounding “Yes.”

uestions over new business models, levels of capital expenditure and regulatory uncertainty represent the biggest threats and opportunities in a rapidly transforming telecommunications sector, as operators across the world face changing demands from customers, competitors and regulators alike. These new demands are creating new pressures across all telecoms organisations as recent market signals indicate there will be no room for failure in shifting business models to cater to data services. New approaches to pricing are also crucial, and operators will have an important role to play as telecom infrastructure becomes central to the development of other sectors, such as healthcare and utilities. As the range of services widens, a strong industry environment is required to support new propositions. At the same time, new business metrics are needed in order more effectively to communicate financial and operational performance to the investor community. Organisational structures also have to adapt to a changing industry landscape, so that new capabilities can be

By Olivera Blagić

Olivera Blagić is a Partner in the Ernst & Young office in Serbia, and she has been with the firm since 1997 when the merger of a local audit firm with Ernst & Young Southeast Europe marked the beginning of operations in Serbia. She was in charge of Transaction Advisory operations in Serbia from 2006 to 2009, when she returned to audit assignments with the largest corporate clients Ernst & Young works with in the immediate region, in a whole range of industries. She holds a BSc in Economics from the University of Belgrade and is a member of the Supervisory Board of the Chamber of Authorized Auditors of Serbia.

repurposed all across the board. This reality represents the final new entry in this year's rankings of top business risks for telecommunications. Ernst & Young’s annual study on top business risks for telecommunications has, for the first time, revealed that a failure to control costs is no longer among the top ten risks. While robust defensive positioning reinforced with strong cashflows has helped operators contend with economic uncertainties, new business models are required so as to unlock sustainable growth in the future. The most fundamental change is encapsulated in the risk that tops this year’s list: the migration of sector value from minutes of usage to bytes of traffic - a change that must be mirrored in operators’ business models. Many of the other top risks spring directly or indirectly from that seismic shift. Compared to most other industries, the telecommunications sector has weathered the downturn and subsequent economic uncertainty and volatility relatively well. As a result, the sector is quite solidly positioned as a defensive “safe bet”

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in the eyes of investors (although the mobile segment is slightly more exposed). Looking ahead to future structural trends in the sector, operators in Europe and other mature markets are likely to benefit from some easing of the regulations on mobile termination rates, while the landline segment is set to witness the pace of its structural decline slowing down. More generally, the outlook is positive, especially as smartphone growth opens doors to new opportunities in telecommunications. This silver lining, however, comes with a cloud: investors are taking an increasingly ambivalent view of the entire sector, asking questions about the levels of capital expenditure that will be required to support future growth. They are also questioning whether operators will take their fair share of future expansion in service revenues, or whether the new competitors will once again seize the initiative in monetising new offerings.

TOP 10 RISKS - 2012 01_Failure to shift the business model from minutes to bytes 02_Disengagement from the changing customer mindset 03_Lack of confidence in return on investment 04_Insufficient information to turn demand into value 05_Lack of regulatory certainty on new market structures 06_Failure to capitalise on new types of connectivity 07_Poorly formulated M&A and partnership strategy 08_Failure to define new business metrics 09_Privacy, security and resilience 10_Lack of organisational flexibility

rewards of the defensive approach Throughout its short history, the telecommunications sector has often demonstrated its robustness during downturns and periods of market uncertainty, and the recent past has been no exception. For example, fluctuations in telecoms’ revenue growth in Europe have been far smaller than the volatility in the European GDP over the last three years. This trend is being replicated in other regions across the world, with operators’ robust defensive positioning generally regarded as being reinforced with strong cash flow and rising dividend yields. In Asia, the high valuation multiples currently being applied to mobile operators indicate a continuous confidence in the outlook for the sector. In North America,

History also shows that the operators’ revenue performance tends to be linked to employment rates - which are currently trending downward and are under threat of an accelerating decline.

investors remain optimistic about the ongoing impacts of increasing smartphone penetration as well as investments in 4G networks. However, a number of challenges remain. History also shows that the operators’ revenue performance tends to be linked to employment rates - which are currently trending downward and are under threat of an accelerating decline. Speaking of various different segments, the mobile segment is still growing, but it is also the most economically sensitive of all segments, having seen its voice volumes fall significantly during 2009 in the wake of the recession. Operators can look forward to improving performance, helped by positive structural trends. For example, rates of landline loss are slowing in the European fixed-line segment. Operators worldwide have proved themselves strong in the area of cost control in recent years, while strategies such as network sharing also helped ease the pressure on infrastructural upgrades. Driven by cost control measures, operating cash flow metrics are forecasted to improve for global operators. Investors have an especially positive outlook on North American companies as a result of early investments in 4G and high smartphone penetration. Conversely, high valuation multiples in Asia reflect confidence in continuous revenue growth. This improvement both reflects and reinforces the current assessment by investors and analysts that the global telecommunications sector can weather any financial storms that may lie ahead.

growth and clouds... As these trends play out, the sector is already outpacing recent assumptions of its growth rate. Mobile connections are forecasted to surpass the overall human population in 2014, as the “long tail” of users in emerging markets gets connected. This will be boosted further by the escalation of new trends such as multiple sims and devices per person, embedded sims and machine-to-machine (m2m) connectivity. At the same time, global smartphone shipments continue to escalate at impressive rates, with wireless data growth set to remain strong across the world (although minutes of use –mou- are flattening in mature markets such as the United States).

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However, set against the generally improving outlook indicated above there are conflicting perspectives on how the sector will evolve. Data contribution to global mobile revenues is projected to rise from 20% in 2008 to 36% in 2015, threatening major disruption to the existing revenue models. Investors are concerned about the massive capex that will be required to support this growth. Their next concern is whether over-the-top players might once again beat the operators in the race to secure new revenue streams, as they did with mobile applications. As a result, investors’ views on the telecoms sector remain fundamentally ambivalent, reflecting the difficulty when it comes to reconciling structural weaknesses with specific opportunities for rapid growth (such as mobile data). There are also concerns over the tradeoff between the cost and value of new growth areas, given the uncertain capex commitments, as mobile traffic growth diverges from mobile data revenue growth. Against this background, focusing on dividend yields tends to encourage a short-term view of the sector’s performance. Yet if there is a sector where the models for long-term value creation need to be addressed - and soon – that would be the telecommunications sector.

failure to shift from minutes to bytes “Losing ownership of the client” was ranked as the telecoms sector’s top business risk in 2008 and 2010. That risk has now been overtaken by the urgent need to develop and deliver new data-enabled services that will generate fresh revenues from users. The customer-focused risk of “disengagement from the changing customer mindset” has slipped to number two, as the ongoing fragmentation of the sector value chain makes it increasingly clear that no single participant can ever truly “own” the customer. The risk of failing to shift from minutes to bytes reflects the new challenges that operators now face around the world, mostly as a result of aggressive moves by competitors entering from other sectors as well as rapid change in telecoms’ established value chains. Pivotal to these changes is the migration of value from charging for minutes of usage to carrying rising volumes of data across networks.

As operators respond to this shift, they need to move away from their legacy strategies that have focused on retaining customers’ loyalty rather than monetising the demand. Focusing on preventing and minimising customer churn has had the effect of commoditising the value of minutes and bandwidth in customers’ eyes. Direct impacts of this commoditisation are evident in offerings such as free upgrades for fixed broadband, flat-rate mobile data services and discounted multi-play packages. These underline the fact that userloyalty considerations are now actually stifling value creation. Instead of concentrating on fighting the churn, operators should consider raising their sights to target revenues from new services that tap into rising demand. This year’s study shows the demand is there, and as it increases, new consumer service areas are being exploited by competitors who come up with new business models, such as “freemium” music and data hosting/file transfer services and advertising-supported applications. Even operator-provided products - such as sms - that were previously insulated from new offerings are now under growing pressure from new free services, such as mobile instant messaging.

adapting and seizing opportunities If they wish to respond effectively to new challenges, operators need to be able to adapt their business models to a wider environment and make firm decisions about which revenue sources they are going to target within that broader environment. The current split of revenues is roughly 50% in the Consumer segment, with the rest divided between Business and Wholesale. Depending on the chosen strategy, this distribution could, by 2020, evolve into a “smart” operator model with revenues dominated by the Customer or a “lean” model rebalanced towards wholesale service provision. In general, telecoms’ revenue mix forecasts point to an increasing shift toward wholesale. Operators face the challenge of identifying new types of wholesale customers in the context of a shifting value chain. Developments such as the rapidly intensifying competition for consumers’ spending also help the revenue growth potential in the Enterprise segment, which remains high when compared to the consumer market. To exploit this potential, business models for enterprise customers should embrace a new approach to provisioning - such as

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should also seek to master a wider array of charging models, ranging from flatrate to per-event and ad-supported. Any cross-sector growth strategy will require vertical market business models, tailored to specific sectors - a need well served by the low costs and high scalability and configurability of cloud services. All of these changes, in turn, require changes to IT and charging systems.

other major risks

If they wish to respond effectively to new challenges, operators need to be able to adapt their business models to a wider environment... cloud computing - alongside collaborative approaches to service development and delivery. Operators indeed embrace this message, as demonstrated by a raft of announcements in late 2011 of cloud-based unified communications and collaborations services for businesses, often supported by new investments in data centres. Small and medium-sized businesses are expected to act as early adopters for these cloud-based services - an area where operators continue to make good headway. Parallel to these initiatives, operators

“Disengagement from the changing customer mindset” ranks number two this year, reflecting how operators need to keep pace with changing user expectations. While losing the customer ownership is an ongoing industry concern, operators recognise that they also share ownership of their customers with a number of players - from device manufacturers to banks. Understanding the fast-changing customer mindset is more vital than ever – if operators are to add value in a rapidly evolving marketplace – and operators remain uniquely wellplaced to achieve this. They have to make the most of their customer information assets to optimise network performance and drive the development of new services. Failure to do so would mean that demand cannot be turned into value. Risks related to infrastructural investments are today more important than in previous years, given that Long Term Evolution (lte) rollouts are underway and aggressive national broadband targets are also in place. Operators have shown themselves capable of controlling capital expenditure as they support high levels of cash flow - but a lack of confidence in return on investment means that by trimming capex they may be sidelining themselves from future growth areas. Regulatory pressures remain a key concern in the telecoms sector. While regulation of legacy parts of the business is well understood, policies evolve quickly in areas such as mobile spectrum release and super-fast broadband deployment. In other words, engaging with a whole range of stakeholders is paramount to incentivising industry investments. Meanwhile, rules around online privacy and security remain contentious. Failure to formulate clear viewpoints on privacy could undermine operators' roles in the digital age.

“below the radar” In addition to major threats, telecoms have also identified such risks as sit directly “below the radar” and may rise up on the agenda in the years to come. The four risks they highlighted are split evenly between four categories. The 2012 study introduces a new risk lurking below the radar – the evolving scenario of “service cannibalisation” in which mobile instant messaging keeps emerging as an alternative to sms, forcing the operators to move beyond legacy assumptions about user behaviour. On the other hand, “the green agenda” is now top of the belowthe-radar list, which forces the operators to move beyond regulatory compliance and make the difference through sustainability. Consolidation is another ongoing feature of the telecommunications equipment market, as operators need to ensure they are not overly reliant on any single equipment manufacturer. Finally, in terms of debt and cash management, the operators have long enjoyed the predicament that they entered the crisis in a better shape compared to other sectors, due to balance sheet repair in 2002-2003; however, a more constrained environment now puts new demands on the sector.

are there opportunities too? Although the answers and opinions inevitably vary from company to company, it seems they all point toward a group of action-points such as undertaking thorough risk assessments and extending these beyond the usual financial and regulatory matters; creating scenarios for the major risks identified; evaluating the organisation’s ability to manage its risks; ensuring effective monitoring and controls processes; and keeping an open mind about where new risks may come from. While the global economy may be facing continuous uncertainty and volatility, there are still major opportunities for telecoms operators. Their individual ability to identify and seize these opportunities depends critically on their individual ability to understand and manage key business risks. Unless their growth strategy has a solid underpinning of risk management, it will be very difficult for them to achieve true sustainability of business operations.

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investment forum

A Plate Full of Silver: Or Not All That Glitters Is Gold There is a feeling nowadays that Silver is an ugly stepsister of Gold. Nothing can be further from the truth. In its making, there is an almost identical combination of chemical and geological processes, as hot magma is driven through a spitting volcano into deposits or veins of gold and silver, which usually intertwine...This is where the story begins. As to how it continues, we have Professor Ante Babić to fill in the gaps.

he price of silver followed closely the price of gold throughout pretty much the entire recorded human history, except in two periods: in the days of the Roman empire, and then after the Spanish and Portuguese “conquest” of the New World, when newly found – and abundant – silver deposits increased sharply the supply of this precious metal and lowered its price compared to that of gold. Nowadays, a wider range of applications is increasing the demand for silver, and its price is rising more rapidly than it ever has before, now standing at nearly $50 per troy ounce. For the record, the biggest suppliers of silver today are Peru and Mexico, followed by Chile, China, and Australia.

a historical lesson Many nations used silver throughout history as the basic unit of monetary value. The name of the Pound Sterling (£) originally represented the value of one troy pound of sterling silver; other historical currencies, such as the French Livre, have similar etymologies. During the 19th century, the bimetallism that prevailed in most countries was undermined by the discovery of large deposits of silver in the Americas; fearing a sharp decrease

By Ante Babić

Professor Ante Babić, one of the most renowned Croatian macroeconomists, combines consulting experience in the SEE region with a scientific approach of a respected university professor. He is actively engaged in a number of committees, supervisory boards and professional organisations. He obtained his Ph. D. in Economics in 1997 at the age of 26 and was, at the time, the youngest doctor of economics in the region. Doctor Babić further specialised in macroeconomics and international economics during his Fulbright postdoctoral fellowship at Harvard University.

in the value of silver and thus the currency, most states switched to a gold standard by 1900.

april 18th - may 1st

Only fairly recently, in the 19th century, when the discovery of large deposits in the Western part of the us reduced the price of silver, did gold manage to oust silver and become the only money or basis for money. This situation lasted until 1971, when the Bretton-Woods system collapsed and money in developed countries could no longer be tied to gold: enter the fiat currency era. Richard Nixon took the us Dollar off the gold standard in 1971, and the last currency that was backed by gold was the Swiss Franc, which – this is something to remember – would not became a pure fiat currency until as late (or recent) a date as the 1st of May, 2000. During this period, silver gradually ceased to be used in the minting of coins: the United States, for instance, minted its last circulating silver coin in 1969. As “Western” economies were becoming more “fiat”, the financial liberalisation of the 1980s and globalisation of the 1990s paved the way for an almost total virtualisation of financial systems and a complete disconnection from the real economy as we once knew it.

Cause and effect here has been and will remain a matter of major debate, but let us just say that what ensued was a series of financial crises: there was the erm crisis (1992), then the Mexican crisis (1994/95), then Asian (1997), Russian and Brazilian (1998), Argentinean (2001), all leading up to the most recent one – the global economic crisis of 20082010 as initially instigated by the financial meltdown in the us. The European

Inflation devalues financial wealth, but it is neutral to commodities such as gold - or silver.

debt crisis may well simply be a natural continuation of these events, and, as we all know, it is far from over.

the precious haven In times of such turmoil and uncertainty, there are rising concerns as to how to protect one’s wealth. Even the most powerful economies, such as that of the US, have suffered declines in real terms of more than 5%, and the investment sector has lost on average at least as much. In these circumstances, the demand for and price of many commodities have naturally also decreased, as has the number of investors’ "safe-havens". Not so, however, when it came to gold and silver. The degree of interest has been continually on the rise – especially in the case of silver – as the price of silver went from $8 a troy ounce, the average price in the period 1990-2005, to $40 per troy ounce at end of 2011. This spells a five-fold increase in price, or almost a 100% annual average return, even in the most difficult recession years. As for gold, it has gone from $400 per troy ounce to almost $2000, also a five-fold increase in just 5 years. But let us look more closely into the heart of the matter. There is inflation looming on the horizon. As a result of unprecedented levels of government interventionism – all with the aim of easing the recession and initiating a new growth cycle – massive amounts of money have been pumped into the economy, especially in the developed countries. Trillions of dollars of government money went to the automotive industry, billions spent on subsidising housing and property development, and then there were the bailouts of a number of major financial institutions. When the signs of real economic growth resurface and the business cycle turns to growth again, this vast amount of money will be just that – vast – so vast, in fact, that it cannot but incite the growth of aggregate consumption and a consequent increase in prices. Governments will naturally hesitate to pull money from the system so as not to jeopardise growth, which, let’s face it, does win elections. They will rather risk a measure of inflation, of a magnitude of in between five and ten percent per annum, which is likely to linger for a couple of years thereafter. Inflation devalues financial wealth, but it is neutral to real

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THE WORLD'S SILVER

100 10 1

assets such as real- estate and commodities. In the case of a 5% inflation rate, financial wealth like money, shares and bonds would lose 5% of their real value per annum, or would have a negative 5% real annual return. Real assets like silver or gold would retain their real value. Simply put, can there a better reason for investing in these precious metals.

what of the region? As in many other processes, we are lagging behind. Apart from some minor activity in Serbia and Bulgaria, there is no silver mining in the region. The deposits, in other words, are scarce. However, resource nationalism aside, these days we live in a global arena in which it is not necessarily the country of origin that reaps the highest yield from any given ore. True, the rising global prices may be driving domestic prices also up, but there is room to manoeuvre, as it pays to buy at a local price and sell in the world market, even if you have to pool it, melt it and transport it yourself. The offices that are buying silver and gold are sprouting like mushrooms all over the region, and exports of gold and silver are on the rise as well. A lack of organised wholesale infrastructure actually presents an opportunity: the pawn-shop

Silver output in 2005 shown as a percentage of the top producer (Peru - 3,193 tonnes)

like establishments and small family-run jewellers do not have the corporate overhead found in the business in the most developed economies, which means that they can be extremely price competitive. Anyone who can get to the root of it all – or find a way to buy in bulk in the uninformed, petty cash driven market – is sure to secure an extremely high margin; and that, coupled with the fact that there is another concern when it comes to preserving one’s wealth under the circumstances – a concern called exposure to the Euro – makes for a very interesting business niche indeed. In other words, if the Euro depreciates as a result of debt crises, such as that in Greece, investing in domestic currency or any other currency in the region (meaning Europe, and perhaps even beyond), will prove to be a markedly bad idea: local currencies are all strongly pegged or tied to the Euro, and will lose their value as well. Right now, however, there are not many vehicles for investing in silver, gold or other precious metals. At times there may surface an open- or closed-ended fund which invests in mines or shares of companies that deal with silver, gold or other precious metals, the kind of fund whose shares are publicly traded in the capital markets, or an etf - Exchange

Traded Fund; but what may be even more interesting is investing into the physical commodity via buying silver or gold bullion, or via life insurance policies designed by such insurance companies as can ensure that your money is invested into companies that either mine or use silver or gold. There is already some activity of this sort in the region. And, for last, let us not forget that we have always believed in silver and gold: in the olden days brides were given and adorned with ducats, which are still passed on from one generation to the next (in this neck of the woods, as elsewhere, a bride’s worth was measured by her dowry, which in turn was for a long time measured by the number of ducats she would bring to her husband’s household). Such as we are – which is hardly something to be ashamed of – we can only hope that things will get better, that we will sell less of our family silver and invest more in it. But it might take a whole generation until we’ve grasped that concept to the full. And I don't think it is a coincidence that silver is the only metal that can kill vampires, which, by the way, hail percisely from this region (the word vampire was in fact borrowed from Serbian). Stick to silver, you won't regret it.

april 18th - may 1st

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destinations

A Weekend of Nature and History in the Heart of Serbia So, if you are looking for a relaxed day or weekend not far away from Belgrade, but you also feel tired of over-promising destinations and want to avoid a place where you will likely meet your coworkers or stomp into your competitors' teambuilding session, we warmly recommend to this one or two-day no-logo mixed itinerary of nature, culture, and the best of the unavoidable Serbian mess. Follow the path – and bring your family along. By Miša Milošević

ver the past decade, Serbia has undergone a substantial reinvention of itself as a contemporary tourist destination. From extensive country branding meant to ensure the interest of the contemporary traveller weary of cnn-style promo videos (which make Romania almost indistinguishable from Spain), to the expansion of new resorts and spa centres to suit all tastes, Serbia has made great progress both in terms of catching the attention of international holidaymakers and relieving the tension of its own emerging elite class. To its own (and ours, of course) delight, Serbia has also rediscovered its traditional, unbranded tourist contents, such contents as should hold great appeal even to the package-deal oriented customer.

right to the heart of serbia Take the highway in the direction of Niš, the first exit to Mladenovac and then follow the signs to Aranđelovac, just 74 km from Belgrade. In this charming town, named after the Archangel Gabriel, you will find a votive church, built by Prince

Miloš, and a spa, well-known for its source of mineral water (‘Knjaz Miloš’), in what was once just a humble village. The town nestles serenely at the foot of Mount Venčac, where you will find a mine, which produces some of the finest white marble stone. This stone was, and is, exported worldwide and was used even in the building of the White House in Washington DC, as well as in various squares and palaces on a number of continents. Of course, we would like to note that, while a mine of this calibre is of historical interest, it is also an active industry and probably not somewhere you should consider going for holiday snaps. Welcome to Šumadija, welcome to the Heart of Serbia. And it precisely here that you will find Hotel Izvor, probably the finest hotel in the country, reopened in 2010 following major renovation work and now a luxurious five-star destination. Its pre-eminent architecture is packed with plenty of features: luxury rooms for the romantic couple, congress facilities for the jetsetting businessman, a wellness & spa centre (which has no less than nine pools)

Oplenac

if you just need to let those worries wash away, a water mirror measuring 100m², an exterior aqua park with three pools, slides and other fun stuff, which are all oh-so perfect for the kids (or just the young at heart). The hotel itself sits amidst beautiful surroundings: forests and fields which

april 18th - may 1st

Žiča Monastery

are ideal for relaxed strolls and trekking. It may well be that an hour’s drive is a nothing price just to stay here and enjoy the amenities and the locale. Or you can simply check-in and use the hotel as base of operations to continue your journey… In which case we go South in the direction of Orissa, and find ourselves on an ancient wine route. The landscape, very similar to that of Tuscany, was once entirely covered by vineyards, not even 150 years ago. In fact, wine production in the region was so extensive that it was here that the first Balkan wine cooperative was established. Founded in 1903, it was once so famous for its quality that it attracted a host of illustrious visitors, such as Eleanor Roosevelt and Franchet D’Esperey, to name but two; inspired not only by this duet, in 2003, exactly one century later, a Belgrade construction entrepreneur Tihomir Timotijević decided to sell his business and to revitalise the now abandoned Vrbica vineyard, turning it into a fantastic estate with annual production of over 35,000 bottles of both red and white wine, bringing its old splendour back. Chances are that traffic wasn’t your friend this morning and that right about now it might well be lunchtime. If that’s the case then along the way you’ll find numerous road kafanas which will offer you freshly roasted pork and lamb. Visiting them all on a one-by-one basis is a

holiday in its own right, and many Belgraders do just that whenever a weekend provides the opportunity. Any of these folk will always have the name of their favourite haunt, or haunts, on the tips of their tongues. However, to fully appreciate the area as a passing tourist, you need to stop at the aforementioned Vrbica wine estate. This 10 acre spot is located on the Southern slope of Vrbica Hill, and is fully accessible by car: which is quite handy if you’re looking to get to the Tarpoš Restaurant and Wine Cellar in a hurry. Here you can enjoy an exquisite selection of unpretentious local specialities and wines, all the while letting the scenery, which is easy on the eye, wash over you. It’s straightforward, it’s simple, and these are key factors to consider should you happen to have small ones on your trip: after all, what child ever eats their dinner without complaining?

a royal visit It’s time to continue our journey, and the next stop is the nearby town of Topola. Why? Well, that answer may lie in the Oplenac mausoleum of the Karađorđević royal family. The mausoleum is situated (it would be overly punnish to suggest it ‘grimly haunts’) on Oplenac Hill, whose fame dates back to the First Serbian Uprising of 1804, which was organised in

the nearby village of Orašac: the area surrounding Oplenac’s fortifications was used for military manoeuvres and the defence of the town. The mausoleum was erected by Karađorđe's grandson, King Peter I, as a Dynasty Church. The church is dedicated to St. George and is quite simply a construct of breathtaking beauty and imperial dimensions, entirely decorated in the Byzantine style with frescoes and mosaics. A total of 21 members of the House of Karađorđević are buried in the Crypt, and in the church itself there are two graves: the grave of Karađorđe himself, and that of King Peter I the Unificator, the first ruler of the Kingdom of Serbs, Croats and Slovenes. Take some time to visit the entire royal complex at Oplenac: the House of King Peter, the Villa of Queen Maria, The Winegrower's House (a wine growing museum), as well as the vineyard. Oplenac is an important historical stop on any holidaying pilgrimage around Serbia. Once you’ve been here you’ll understand why.

cultural heritage At this stage it might well be time to return to Hotel Izvor and have some dinner, get some rest, and perhaps prepare for the next day. Of course, if there’s still some steam left in the engine, then there’s something available to do, time, daylight, and the children permitting. If you’re up for it then we recommend a late afternoon at Žiča Monastery. Well? Are we going? Yes? Good. Jump in the car and head south, to the town of Kraljevo, which is another 88km from Topola. Kraljevo is well signposted, and Žiča easily found once you’re there. The crimson façade – stunningly beautiful in our opinion – of the Žiča Monastery is immediately recognisable from the plethora of tourist videos and promotional material. Its building style shows some unevenness and irregularity giving the edifice an overall look of unfinished rusticity, especially when compared to its 7th century counterparts in the West. However, Žiča is the oldest monastery linked to Serbian statehood and ecclesiastic independence, and as such should be viewed with this in mind. It was built in 1211 by the brothers King Stefan and the Archbishop Sava.

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The monastery is a typical example of Byzantine architecture, which attempts to create a harmony between location, architectonic space, and furnishings, with the unmistakeable air of dynastic legacy. This is an outstanding example of sacral architecture in which sculptural elements, readily visible on the façade, and in the interior, achieve dominance over the wall paintings. The monastery also hosts a prominent icon workshop in the so-called Pachomian School of the direct Byzantine tradition, succeeding that of the Holy Mountain's. Icons are painted with egg tempera on linden wood plank, aged for three years, decorated with leaves of real gold and baptised; they are also available for purchase. Make sure you also purchase a bottle of thick, strong, full-bodied wine produced there. Žiča is a community of nuns, and in spite of the local people and visitors coming in large numbers to visit, you will immediately feel that you are on a sacred ground, which will instil a sense of inner calm and peace. You will also notice that the natural surroundings, whether they be flora or fauna, are of almost supernaturally intense colour and beauty.

Hotel Vrbica

more heritage For the most avid of explorers, the journey does not have to end here. If you decide to travel the 39km from Kraljevo to the Studenica Monastery, should you want you can find ample accommodation, such as the Radočelo Motel with understated, but neat, rooms and a good country-house

restaurant, or the Manastirski Konaci (built in the style of a monastic refectory): and while neither of these match the Izvor they are nevertheless both very decent places to stay for a few nights, and won’t hurt the wallet quite so much. We won’t take up too much of your time telling you about the monastery itself (consult see no3). Needless to say you will find a sense of divine peace here, as well as a sense of civic duty: there are bins everywhere, so please keep the area clean so that others can enjoy it as much as we hope you will.

time flies Time to go back: regardless of where your head will rest tonight, make sure you treat yourself to a nice dinner and, after the action-packed day, take a relaxing evening walk through the cool woody surroundings covered in fresh, dense, humid, and still-cold spring air. This is as good as one can get when it comes to unspoiled Balkan nature. And that’s that: back to Belgrade we go. Two days later and approximately 300 km of travel and half a dozen stops, interspersed with not too many hours of drive-time, we now know - or have fully comprehended - that the heart of Serbia has been sidelined far too long. Discovering Serbia on your own is a rewarding cultural experience, and, of course, you’ll never stay hungry or thirsty along the way. If you’re sick of the rat-race or office politics, then this might well be an option for you. Hotel Izvor

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good stuff

Accesorise at Full Mast Think you’re prepared for the yachting season? Think again. Greenline 33 Hybrid If you ever thought that the only way to navigate the seas, either high or not so high, is with a sail boat, please guess again. The Jakopin brothers, acclaimed Slovenian boat designers, have of late developed a revolutionary concept: a hybrid diesel-electric and solar powered motor-boat. The Greenline is a 33 foot luxury motor-boat featuring a low-drag hull and Volkswagen Marine high efficiency diesel-electric engine, complimented by solar panels installed on the boat's roof, making this vessel completely emission-free when navigating under green-power. Named European Boat of the Year 2010, the Greenline series is already seeing expansion with a 40 foot model on the drawing board and awaiting serial production. And, if you think that’s impressive, then you’ll be blown away by the 70 foot GL Ocean Class which will follow as well…

Corum Admiral's Cup Seafender 48 Tides A true marine watch, the Corum Admiral's Cup is something of a legend, bringing together avant-garde design and supreme craftsmanship in an exquisite timepiece, built to withstand the most extreme of conditions. And of the entire Admiral's Cup series, the Seafender 48 Tides represents the ultimate sports watch, featuring a 21 jewel automatic movement with tide level indicator function and 48 hour power reserve. The Seafender comes with a black vulcanised rubber bracelet and stainless steel or rose gold casing. This black beauty is the definite timepiece of choice, be it for true sportsmen or landlubbers with a flair for the nautical look.

Henri Lloyd

Dubarry Deck Shoes The Irish company Dubarry started its long tradition as a producer of quality fisherman’s boots, and has, from its utilitarian beginning, evolved into a company producing a wide variety of high-end nautical footwear (and clothes). Established in the small town of Ballinasloe on the West coast of Ireland in 1937, the company was named after Louis 15th’s mistress, Madame du Barry, in an effort to differentiate themselves from other domestic brands with a touch of continental European flavour. Dubarry footwear is traditionally crafted to the highest production standards from the best available components and raw materials. Spoilt by choice we’ve picked the Yacht model, a stylish and comfortable high-traction slip-on deck shoe. In addition, it would be remiss of us not to note that Dubarry shoes are best referred to as ‘Dubes’…

Henri Lloyd, a British heritage clothing company, was founded in Manchester by Henri Strzelecki, a Polish Army officer who, after World War II, turned to tailoring and the study of textile technology. These days the company is a leading yachting clothes manufacturer with a broad line in specialised sports clothing and footwear, as well as a jeans and leisure clothing line (with a naval touch of course). Henri Lloyd is also well known for pioneering new materials such as Bri-Nylon, Goretex, and Velcro, in their production of top quality attire. As a tribute to the tradition and obvious quality of their products we bring you this nugget of trivia: the first man single-handedly to circumnavigate the globe, Sir Francis Chichester, wore Henri Lloyd during his feat.

april 18th - may 1st

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to-do list

Elementum

The speciality of Bioexo 2012 are exotic species of lizards.

Edin Karamazov

April 16th - April 20th

April 19th

April 22nd

Kongresni Trg, Ljubljana / What's new in Slovenia and beyond? Bibliophiles and avid readers welcome.

National Theatre Belgrade (19:30h) / Ballet to the music by Goran Bregović.

Ada Huja, Belgrade / Ecology and music festival... both being equally important.

Slovenian Book Days

Queen Margot

Supernatural Festival

April 17th

April 19th - April 20th

April 22nd

Mimara Museum, Zagreb / Conference on how to invest in precious metals.

Hypo Business Centre, Zagreb / International real estate and investment expo for the Adriatic region.

Španski borci Culture Centre, Ljubljana / Guest performance by the Chelyabinsk Theatre of Contemporary Dance.

Elementum

REXPO Zagreb 2012

Continuous Interruptions

April 17th - April 22nd

April 19th - April 21st

April 24th - April 28th

Split / Biggest boat show in the region and beyond.

Montenegro, Budva

/ Travel & Leisure communications festival.

Fairgrounds, Belgrade / South East Europe construction and building expo.

April 18th

April 19th - April 22nd

April 27th

National Theatre Belgrade (20h) / National Theatre's Opera Orchestra won't hold back on us.

Trg Oslobođenja, Sarajevo / 5th Sarajevo gastronomy festival. Bon appetit.

KD Vatroslava Lisinskog, Zagreb (20h) / A master of lute performs with the Zagreb Philharmonic Orchestra.

April 18th - April 23rd

April 21st & 22nd

April 30th

CSC Skenderija, Sarajevo / International book and teaching appliances fair.

Botanical Garden Greenhouse, Ljubljana / Exhibition of exotic animals, with lizards taking the spotlight.

HNK Zagreb (19:30h) / Opera by Leoš Janaček.

Croatia Boat Show

Easter Concert

24th Int Book Fair

2012 FOR

Sarajlicious 2012

Bioexo 2012

38th Int Construction Fair

Edin Karamazov

Jenufa

april 18th - may 1st