Another one down, a few more togo by Igor Dakić

march 20th - april 2nd

feature / Serbia's Long Trip to Europe politics / Bosnia & Herzegovina Finally Applying for eu Membership?

southeast europe · a fortnight in review no.03 / subscription only / 20 th march 2012

the economy / Adriatic Aviation? When Irish Eyes Are Smiling... destinations / Kopaonik All Spruced Up

ANOTHER ONE DOWN, A FEW MORE TO GO

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march 20th - april 2nd

content

introductory epistle

Another One Down, a Few More to Go

fortnightly news

The Economy Of General Interest

06 08

fortnightly feature

Serbia’s Long Trip To Europe

in the margin

Nomen Est Omen: Montenegrin Dualities at Work

harsh realities

Trials of the Kosovo Ashkali Children

politics

B&H Finally Applying for eu Membership?

the economy

Adriatic Aviation? When Irish Eyes Are Smiling…

fairing about

Kopaonik Business Forum: Heavy Words and Quality Networking

financial

Slovenia Tax Snapshot

in perspective

Middle Market Restructuring: Early Action Can Preserve Business Value

real estate

RE/MAX Your Second Home… Courtesy of a Franchise Model

culture

The Austrian Cultural Forum

destinations

Kopaonik All Spruced Up

good stuff

Dietpharm's “Pharmacy of Champions”

Balkan Beer Bash

to do list

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march 20th - april 2nd

introductory epistle

Another One Down, a Few More to Go

llow me to open this issue in a somewhat unorthodox fashion, with a relatively outdated joke, and a semi-blasphemous one to boot. The first time I heard it was back in the midnineties, during one of my customary summers-away-from-university, but it will do. It will have to do. Well, then, the Pope (Vojtila), the Croatian President (Tuđman), and a backpacker find themselves aboard a falling aeroplane with only two parachutes available. Having realised this, after a brief moment of what looked like strenuous thought, Tuđman proclaimed that he was instrumental to the future of his people, an entire nation, and with feigned reluctance grabbed the cherished package and jumped. At which moment the backpacker, obviously a stand-up chap, turned to the Pope and said: “Holy Father, I think that you, being the unprecedented moral authority and the leader of the Catholic world and all, should take the other one.” But the Pope only slowly exhaled and, his eyes aflutter with amused resignation, replied: “Hush, my son, that

politician took my rucksack. God rest his soul, he will be in a better place in a matter of seconds.” Another one down, a few more to go, we shall repeat, and insist that the attempt at a simile here is indeed meant to be quite broad, for it is certainly nobody's intention, least of all mine, to sound morbid. Politicians come and go, but the proverbial Everyman remains, and it is on his shoulders that the fate of nations rests, on his common sense and even occasional understanding of decorum. In other

words, treaties also come and go, and they are usually useful insofar as they can imbue societies with a sense of direction. If this be the case with Serbia's newly attained eu Candidate status, then we welcome it with all our might. If, on the other hand, it is to serve as an excuse for nonaction and general and generic apathy, then… well, it is quite obvious. The forgiving reader will also, I hope, give us pardon for toying in this issue perhaps a bit too much with the aviation theme and motif, but landings, though often harsh, can also be rewarding. The montage on the cover was truly not intended to be sarcastic – Tadić has every right, especially in light of his political realities, to be flashing thumbs up in our direction, even dressed in a flashy bomber jacket. Congratulations then, and let us hope that other countries in the region, still on the so-called outskirts of Europe, will get to experience a similar panacea in the near, rather than a distant, future. In any event, we have no other choice – if we wish to remain sane, that is – than to think positively, and push forward.

impressum

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

contributors Evliana Berani (Kosovo) Stephen Fish (the economy) Nada Drobnič (finance) Nevenka Kržan (advisory) Vladimir Žerjavić (real-estate)

art editor Stiv Cinik

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

country editors Dylan Alexander (Slovenia) Milan Milošević (Serbia) Aida Tabaković (b&h) 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 99 7357 356 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

agrokor further expanding into serbia Agrokor have announced that they will be investing 100 million Euros in their Serbian operation over the following year. The Croatian food and retail giant have been present in the Serbian market since 2003, trading under the names Frikom, Diamant, and Idea. Agrokor have already invested in excess of 400 million Euros in Serbia, and employ 7000 workers. It must also be noted that the Slovenian Supermarket chain Mercator has announced investments totalling 25 million Euros for their Serbian market. Mercator has experienced 18% growth in Serbia this past year, having expanded its holdings not only in the supermarket format but also in in traditional ‘mom and pop’ stores. In addition to this, Mercator has announced a number of further acquisitions. It must be commented upon that both Agrokor and Mercator were involved in a takeover battle at the beginning of the year, which fell through due to a combination of currency fluctuations, a measure of protectionism on the part of the Slovenian government, and diminishing profits on the part of the aggressor, Agrokor.

b&h vat rate to rise

slovenian government amends the constitution The Slovenian Government has accepted the amendment to the constitution regarding the implementation of the so called ‘golden fiscal rule’, which dictates that total budgetary income must be equal, or higher, than total outgoings; in short, no more budgetary deficits. This legislation is in keeping with Slovenian membership in the Fiscal Pact, alongside 24 other eu countries. The Government still needs to define the legislation regarding the implementation of this golden rule before passing the bill in Parliament, where it will require a two thirds majority. The golden rule legislation, if passed, would take effect as of 2015.

unemployment in croatia set to rise

bosnalijek under scrutiny A Bosnian pharmaceutical firm, Bosnalijek, is being investigated by the Finance Police following allegations of fiscal malfeasance, which were presented to the Federal Assembly at the beginning of March. The Federal Government, which owns 20% of Bosnalijek, has urged that the supervisory board meet to discuss the possible dismissal of ceo Edin Arslanagić and the management of the company. In addition to the federal investigation, a letter has been sent from the Prime Minister’s office to the District Attorney’s office in Sarajevo, asking that the da launch a criminal inquiry into the alleged wrongdoings.

There was bad news for the Croatian economy recently as new figures released showed that the number of those on the live register rose, seeing over 340,000 without work. Unemployment has been steadily increasing since 2008, and now stands well over 18%, in stark contrast with the 15% rate in 2009. Unless the economy experiences a reversal of this trend, that rate may well pass the 19% mark before the year’s end. This comes on top of a report which states that over 47% of Croatians pay in excess of 50% of their monthly salary to service bank loans. On occasion their income hasn’t even been enough to cover the minimum payment required. The Neighbouring Serbia saw some mild improvement in their rate, which is currently just below 17%; Slovenia is just under 11%; b&h has it worst of all with 43% of the workforce unable to secure a position.

It was announced by the b&h Federal Minister of Finance, Ante Krajina, that a vat hike from its current rate of 17% to an increased 23% was being considered. However, this announcement was quickly met with harsh criticism by the Chairman of the Council of Ministers, Vjekoslav Bevanda, and the Deputy Finance Minister, Fuad Kasumović, both of whom argued that such a change would only lead to further impoverishment of the population, with almost no positive longterm effects on the economy. The Government of Republika Srpska is not adverse to seeing a vat increase, but would prefer it to be in a differentiated format; with one rate, on necessary or Giffen goods being lowered, while a second rate, on luxury items, could be increased. However, analysts are unanimous in stating that any vat increase would be counterproductive, as it would not only reduce an already low level of disposable income, but would also bring a halt to what is clearly a struggling economy, something which would represent yet another in a long line of financial blunders by the Federal Government.

rs looking to raise credit for the construction of motorway Republika Srpska has entered into talks with the European Bank for Reconstruction and Development (ebrd) with regards to acquiring a line of credit so that it might offer a tender for the construction of a portion of the Corridor 5-C which passes through RS. Although there is no firm seeking to take this potential tender, rs has seemingly sought access to funds in the amount of 150 million Euros. This section of Corridor 5-C would link Banja Luka and Doboj. rs is also in the process of negotiating with the European Investment Bank for the sum of 200 million Euros, which would be used to connect Doboj with Prnjavor.

march 20th - april 2nd

igh announce a public offering

bosnian banks out of the red

The Croatian Construction Institute (igh) has announced plans to offer shares to the public in a bid to increase their core capital. Both management and the supervisory board have scheduled an egm for April 26th to decide upon the model for recapitalisation. It is proposed that the stock be offered to the public at no less than 100 Euro per share, with a minimum investment of 50,000 Euros per interested party. Current shareholders will first have the right to exercise the option should they wish to avail themselves of the opportunity.

The b&h Federal Banking Agency has announced, although growth in the banking sector is stagnant, and the foreign investment sector is experiencing a decline, that 2011 has seen some positive trends. The most important of these was the revitalisation of the credit markets (with mild growth rates), a continued rise in savings on deposits, a rise in general banking profit, and a reduction (though not a reversal) of negative trends in relation to asset quality. According to preliminary reports, banks within the Federation have realised an accumulated profit of approximately 55 million Euros – figures, though low, which have nonetheless not been seen since 2007. Within Republika Srpska, the banks saw almost 160 millions Euros in profit (mainly due to their loan book), which is a 15% increase on 2010 figures. According to the Banking Agency of rs, the banking sector saw a gross revenue of 230 million Euros, with a net profit of 35 million Euros.

croatia seeks new sources of fuel

jat ‘reunion’ recommended The Secretary General of the Association of European Airlines, Ulrich Schulte-Strathaus, has suggested that the individual national carriers of the former Yugoslavia should reunite into one, larger carrier, if they are to have a future. “The once single Yugoslav market is now fragmented and a regional solution is necessary. The region needs an airline that would cover local needs and connect with global hubs.” SchulteStrathaus noted that jat Airways, Croatia Airlines, Montenegro Airlines, and b&h Airlines are all currently enduring financial hardship (terminal in the case of b&h Airlines who have suspended operations), and that only under the stewardship of the Slovenian Adria Airways would any rescue plan work. “However, due to political quarrels I doubt this could happen”, he went on to say.

President Ivo Josipović has confirmed that he met with his Azerbaijani counterpart, President Ilham Aliyev, in order to discuss possible cooperation in the energy sector. Azerbaijan is looking to build a pipeline which would transport oil and/or gas across Europe, through Turkey, Bulgaria, Romania, and Hungary. Croatia, naturally, would be included were some agreement to be reached between the two heads-of-state. ”We discussed possible gas flows and we are definitely interested in participating in this project. Indeed, energy, shipbuilding, agriculture, military industry, and mine clearance are just some of the areas where we can achieve better cooperation”, said Mr. Josipović. It is expected that, once Croatia has formally become part of the European, it will assist Azerbaijan in forging closer links with other European institutions. Croatia recently announced that it would be relaxing visa restrictions for a number of countries, one of which is the oil rich Azerbaijan.

fitch confirm croatia's credit rating

split winery to begin bankruptcy procedures

Croatia's unenviable credit rating of bbbwas confirmed as unchanged by Fitch on Monday, March 5th. Although reports suggest that Croatia is still ideal for investment, the country remains on negative watch pending the resolution of proposed changes to the Labour Law, expected in June. Both Moody's and Standard & Poor’s have also confirmed that they concur with the bbb- rating, noting that that eu accession and a lowering of the budget deficit were key factors.

After the failed attempt on the part of the American businessman Salamon Berkowitz to take over the failing winery Dalmacijavino, the Croatian Ministry of the Economy, or rather its head Radimir Čačić, has made what appears to be a final ruling; the factory is to undergo a bankruptcy procedure, which, in theory, does not necessarily mean it will be entirely liquidated. Naturally, the fates of the workers will be of some concern to all in the current economic climate.

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fortnightly news / of general interest

serbia to see a crackdown on corruption? The eu is to break with 'tradition' and demand that Serbia begin a crackdown on top-level corruption at the very start of their accession talks. Previously the eu expected such matters to be dealt with towards the end of the talks (this section is referred to as Chapters 23 & 24), but clearly it is felt that wholesale changes must be made before both parties move forward. We would expect that heads, figuratively, will roll over the coming months.

croatian parliament ratifies the accession agreement

nikolić ahead in the polls Tomislav Nikolić's Serbian Progressive Party, a break-away group from the Radical Party, is currently ahead in the polls for the upcoming Serbian Parliamentary elections. While he is in the lead, it is only by a narrow margin of 2-6%, depending on which poll you read. Should Nikolić win an estimated 30%, he will still require another party to enter into coalition with him if he is to become Prime Minister.

The Croatian Parliament, as expected, unanimously ratified the accession agreement with the eu on Friday, March 9th. Although the Government required a two-thirds majority in order to do so, the opposition were only too happy to cast their votes in the same fashion as the Coalition; after all, this was not a victory for any one party, or even for the Government; it was a victory for all of Croatia. What remains now is for the 27 European Union members to ratify the imminent Croatian membership, something which has already been done by Bulgaria, Hungary, Slovakia, Italy, and Malta. The 22 members yet to vote have until July 1st of next year.

macedonia keeping their boot in the eu door fikret abdić released from prison Fikret Abdić, also known as ‘Babo’ (‘Papa’) was released from prison in Pula having served two thirds of his sentence. Abdić was convicted in 2002 for war crimes (several deaths in pow camps) and the formation of the so called autonomous province of Western Bosnia during the Bosnian conflict. Prior to the war, Abdić was the managing director of Agrokomerc, a food industry giant from Velika Kladuša, whose operations brought prosperity to the region. However, Abdić was indicted and convicted for financial malfeasance with regards to his activities within the company. Following the outbreak of war Babo, and his Western Bosnian province, agreed a non-aggression pact with the Bosnian Serbs, which ultimately led to war between the Bosniak people. Always considered a popular leader by his ‘people’, Abdić was greeted upon his release by some 2,000 people, many of whom believe the former prisoner may be able to jumpstart the now-fallen Agrokomerc and perhaps revitalise the local economy.

As we’ve reported in the past, Greece has continued to block Macedonia from entering into eu accession talks. Skopje, however, is keen that they be ready to move significantly forward once this issue has been resolved. Štefan Füel, the eu Commissioner for Enlargement, and Macedonian Prime Minister Nikola Gruevski, met recently in order to discuss potential changes to Macedonian law as regards the strengthening of the Rule of Law and Freedom of Speech, something which is of major concern to the media, as well to the eu observers. While these talks cannot be officially linked to accession talks, they are indeed that in all but name. It is expected that the Greeks and the Macedonians will be able to reach an agreement over their problem, and though that day might be some years in the future, it would be foolhardy to ignore the need for reform until that time. Macedonia would not be able to satisfy more than 11 of the 33 requirements of the eu without monumental efforts on the part of both the Government and Parliament. These informal talks will take place a number of times per year, and are designed to nudge legislative developments in the right direction.

montenegrin media get political The eu delegation in Podgorica have been handed a petition by three leading journalists. Željko Ivanović, Milka Tadić, and Mladen Milutinović handed over the petition, signed by almost 1,500 people, which asks the eu to force Montenegro to provide more protection, through reform, for those in the fourth estate. This is in direct response to the recent attack on Olivera Lakić, a journalist who was working in the capital. It has been suggested that the attack was a result of a series of articles she wrote relating to the tobacco industry in Montenegro. While someone has been arrested for the attack, the media in general does not hold much faith in the ability of the police to do their job adequately in this instance.

march 20th - april 2nd

coalition dropping the ball with public sector jobs? When it should be axes that fall upon the Public Sector, instead we hear that under new amendments to Civil Service Law ministers in the Croatian Government will be able to hire staff for their offices without having to go through the process of advertising any available positions to the public at large. 100 such ‘vacancies’ are expected, and while doubtless many of those who will benefit from the new openings will be friends, family, and party benefactors, it is worth noting that this does not necessarily preclude the appointees from having the requisite experience needed to do their job in a competent fashion. Irrespective of that, Prime Minister Zoran Milanović has surely made a huge political error in this instance. Despite claiming that this “is transparent (and) it will not further burden the state… and it is in line with the practise in other countries”, we suspect that, if other nations’ Prime Ministers were to jump off a bridge, Mr. Milanović would not be so quick to follow suit.

croatia's tax discrepancy

an unusual take on the space race A Slovenian mockumentary has been taking the film world by storm, before it even came out. Brothers Boštjan and Ziga Virc were quite unprepared for the sort of reception their work has been receiving, especially as they are yet to release it to the wider public (the final product is expected for release sometime during 2014). The trailer has already attracted almost 800,000 views on YouTube, and is surely set to reinvigorate the film industry in the region. A combination of fact, fiction, and supposition, it focuses on the idea that Tito sold technology to the United States during the Cold War, allowing them to beat the Soviet Union to the Moon landing. While we can’t comment on whether much of this is wild fantasy, we are hopeful that its success might inspire a generation of imaginative children to pay a little bit more attention during their science classes at school.

croatian supreme court gets tough

macedonia not so transparent

In what will, in all likelihood, be hailed by every media outlet as a great blow for justice, the Croatian Supreme Court has sentenced a group of six men for the murder of Ivo Pukanić, of the news magazine Nacional, and his associate Niko Franjić, to a combined total of 148 years. While it is as yet unclear as to who ordered the pair killed, or the motives for doing so, it will come as some small relief to the men's families, and to the industry in which they worked, to see some level of justice done.

The ngo Macedonia Transparency has claimed that Skopje is not doing enough to combat endemic corruption inherent in the public sector. According to the body Macedonians seek, and receive, almost 1 billion in Euros every year, which would be close to 45% of the entire amount available for an annual National budget. While its parent body, Transparency International, has been accused of using suspect mathematics in the past, it is hard to imagine that these figures are anything but close to the mark.

Moves are afoot to address a rather large tax discrepancy which has plagued the Croatian tax department for over a decade. It is estimated that over 50 billion Kuna is owed to the State in unpaid taxes, contributions and fines, as well as interest which is accruing on the former. It is expected that a number of Croatia’s ‘richest’ will be asked to account for the obvious wealth they exhibit, while on paper they are more akin to pauper than to prince. Those who are found to have been defrauding the state will be liable for a rather hefty tax bill, although it is difficult to see how much of this might be recouped given that the proceeds of any tax evasion are likely to be in the guise of real estate, something which is of diminished value in this economic climate. The State would not be ‘allowed’ to hold onto an increasing property portfolio under European guidelines.

croatian budget cuts lengthen patent approval According to the State Intellectual Property Office, last year saw a decrease in patents filed from 50 (in 2010) to 48, reaching an all time low. In contrast, the World Intellectual Property Organisation recorded an increase in patents filed by 10.7 percent, the strongest growth since 2005. The problem lies in part in the lengthy process of patent approval, which only stands to be further extended as the recent budget cuts have also affected the Intellectual Property Agency. But the worst of it is that current estimates indicate that the process of granting patents might take up to as long as three to seven years.

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It is now official: On March 1st, 2012, Serbia became the latest country to attain the status of eu Candidate.

march 20th - april 2nd

fortnightly feature

Serbia’s Long Trip To Europe It has been obvious for some time that a country’s Europeanhood, for lack of a better phrase, has very little to do with its geographical location, and Serbia, the latest to attain eu Candidate Status, is no exception. What are the forces at work here, both internally and externally, that will set the course for future success or folly? It remains to be seen. With indifference, at least within the ranks of Serbian voters, ostensibly reigning supreme, let us at least begin to unravel this tangle of thorns. By Miša Milošević

t is now official: On March 1st, 2012, Serbia became the latest country to attain the status of eu Candidate, and this after 12 arduous years of negotiations – and one final sleepless night before the official decision owing to the possibility that Romania – over the issue of Serbia’s treatment of the Romanian minority – might potentially ruin it all. Be that as it may, the said date marked the end of a long and painstaking process; it also heralded, as is only natural, the beginning of another, even longer and more painful stage that should, we hope, eventually bring Serbia full membership of the European Union. While many theories abound, about the political future of Europe, survival of the common currency, and the outcome of the global crisis on both sides of the Atlantic, any prediction of Serbia's progress with their eu ‘homework’, even in the short term, might be sheer futuristic speculation. Something else was noticeable immediately, however, and that was the lack of any festive atmosphere, or any great sense of achievement. The eu flag, as one might expect, appeared on several Government buildings, but the events of March 1 simply drifted away with the rest of that day's news. There was actually weariness in the air, as if the first round between an

exhausted David and a depressed Goliath had just ended. In the days, and weeks, to come, we shall see the impact of Serbia's eu breakthrough on the Democratic Party ratings and how it might reflect on the upcoming elections. The ruling coalition, led by Boris Tadić, will try to capitalise on the Serbian candidacy, but it is highly unlikely that they will be able to offer to the electorate anything more with regards Europe than general promises, as already seen, especially in Croatia. For now, suffice it to say that the European

Did Serbia pay too high a price to become a candidate? This question could be heard quite often in the recent years...

Commission is currently designing a programme for 2012-2020, which is to budget more than 14 billion Euros for candidates and potential candidate countries, meaning that the first substantial support should arrive two years from now. Is that enough? We leave to the reader to decide.

the trade-off Did Serbia pay too high a price to become a candidate? This question could be heard quite often in the recent years and at one stage this sentiment almost prevailed, even among the Government officials who were themselves responsible for the entire process. The answer, of course, depends on the perspective; one thing is patently clear, the price was political. Serbia only approached the eu after the year 2000, much later than other former Yugoslav countries. In addition, Serbia had to deal with an albatross around its neck: Milošević's legacy, collaboration (or lack thereof) with the Hague Tribunal, the ongoing Kosovo issue, an obsolete and corrupt administration, and remnants of the ancien régime of the dreaded secret service – all this was, quite naturally, unacceptable from Brussels' point of view. For Serbia, these things were deeply rooted in their recent history and, at times,

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SERBIA & THE EU CHRONOLOGY 1970 First trade agreement between eec and sfry 1990 sfry officially joins the ec's phare programme 1991 War breaks out in sfry

dealing with such issues meant having to establish some distance from its own identity. There were post-2000 periods, particularly during Vojislav Koštunica's term in office (2004-2008), when Serbia was seemingly trying to keep ‘the best of both worlds’, but it only served to show that such attempts were clearly a waste of time. In other words, for the eu, there would be complex but straightforward compliance – for Serbia, a massive makeover. If the trade-off was high, it was only because Serbia was much farther from the European Union ideal than it had initially seemed.

1992 ec imposes sanctions on Serbia and Montenegro

Relations with Kosovo will have to be taken more than one step further, and in a direction away from Serbia...

the hardest is to come It might also seem that the most onerous burden has been removed from Serbia's back now: the relationship with The Hague Tribunal, as well as the situation with Kosovo, has been dealt with in a manner which has seemingly satisfied the international community, at least for the nonce. But from the Government's own perspective, these were external issues in a way. For the next step to be made – the start of negotiations – the Government has to make substantial reforms – both of itself, and of the administration it has created. Brussels had warned Belgrade several times that it was not satisfied with the reforms in their judicial system, nor with their anti-corruption strategy. The Government now has to revise all decrees made by the Supreme Judiciary Council during the initial negotiation period, which were made without quorum, as they are considered illegitimate.

Moreover, The European Commission insists on being present at all coming sessions of the Council concerning the re-election of judges; and it has also demanded access to the files of those judges who were not re-elected, presumably to check for political bias. The proposed National Strategy against Corruption also got the same negative criticism; indeed the latest statement from Štefan Füle, eu Commissioner, shows that Serbia was openly tolerated on these two burning issues when granted candidate status. At least it could be suggested that this indicates faith in some epistemological solutions which might yet be forthcoming. The legislative part of Serbia's approach to the eu will be equally hard to tackle. Experts say that the laws in Serbia are of weak quality, inconsistent, incomplete in mirroring international practices, and that sometimes they are in open

1995 ec suspends sanctions 2000 fry re-establishes official contacts with the eu 2004 fry establishes Government's Office for eu Association 2008 Stabilisation and Accession Agreement signed in Brussels 2009 Serbia unilaterally implements transitional trade agreement 2010 eu unblocks ratification of Stabilisation and Accession Agreement 2012 Serbia becomes eu candidate

conflict with the Constitution and human rights legislation. Over the past several years the Serbian Government has proclaimed thousands of laws and legislative acts, many of which have been, at least declaratively, harmonised in accordance with eu directives. However, in too many cases these proclamations have been suspended; they might as well have been delayed, if for no other reason than to spare

march 20th - april 2nd

the legislators the burning of the proverbial midnight taper...and, of course, the cost involved. Last, but most certainly not least, relations with Kosovo will have to be taken more than one step further, and in a direction away from Serbia. Even though both the eu and Belgrade have indulged in rhetoric about the status of Kosovo, there is still a chocolate coating which does not reveal the tooth-snapping nut inside; a glance at the updated map of Serbia on the eu's official web-site shows the country without its former southern province. Brussels insists that the last remnants of Serbian administrative presence be removed from there, and we should see the first test of Serbia's new obligations, and compliance with eu provisions, during the upcoming elections, elections which the eu absolutely does not want to see held in Serbian enclaves within Kosovo.

change management Probably the most interesting thing we might get to observe in the years to come is how eu-candidacy will influence Serbia's international politics, the nonaligned era legacy relations with the Third World, and the centuries-long dichotomy between East and West. Much of Serbia's identity has been built exactly on this dualistic platform, with not insignificant economic benefits. Initially, Serbia will need to change its relationship with Mother Russia, which has almost always been mythical but has borne little fruit except for occasional coquetting in the un Security Council. Jelko Kacin, the European Parliament's Observer for Serbia, put it very clearly immediately after the candidacy: “It is now certain that the Russian Federation, as an option, does not exist as

Initially, Serbia will need to change its relationship with Mother Russia, which has almost always been mythical but has borne little fruit...

Jelko Kacin, the European Parliament's Observer for Serbia

a political, economic, or democratic alternative anymore”. This might actually induce Serbia to follow a more “realistic” political course, especially after recent Russian actions had at last made it obvious that the Russian yard, in the 21st century, actually begins on the Polish border, down in Syrian waters, and not at all in Kosovo. Will this ‘parting’ from Russia affect eu-members’ trade and investment, which saw Serbia as a deployment zone on the way to the Russian market? This time it was Russia who made their position very clear: in the spring of 2011 they refused to approve the tax-free preferential import of Fiat vehicles coming off the assembly line in Kragujevac, as allegedly it did not qualify as a product of Serbian origin. This was also due to the fact that some years before, Russia had been rebuffed in their bid to purchase the Zastava automobile factory, where they had intended on manufacturing the Lada ‘Niva’ for export to South America. China is an equally important source of infrastructural funding for Serbia. Current Chinese creditor activity in Serbia includes the reconstruction and expansion of the Kostolac Power Plant, the construction of a new bridge over the Danube (between Zemun and Borča), and these are just two of the major projects currently underway. Further possible infrastructure works in the future might well include the Corridor 10 highway from Belgrade to the coastal town of Bar in Montenegro, and the revitalisation of the Serbian Railway, amounting to $5 billion and $4.5 billion in investments respectively. However, China is being politically realistic in supporting Serbia's move towards joining the eu, and it is reasonable to expect less investment from China in the future, as strategic goals for both parties will change, and also because the Brussels legislation wants to see member states depending only on eu loans, with possible limitations on financial sovereignty imposed on candidate countries. Serbia's statutory shift will affect relations not only with these two, but likely with other countries as well. Certainly it appears that Serbia will pay a political price for joining the eu, but, for now, moving forward, without regret, is the name of the game Serbia has elected to play.

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in the margin

Nomen Est Omen: Montenegrin Dualities at Work It has been said, by Oscar Wilde among others, that America and Britain have everything in common, except the language, of course. So then, what happens when we find ourselves faced with one country, one language, and with greater political divides than the former colony and colonial master could ever have imagined? Enter the bizarre world of Serbo-Montenegrin linguistic politics, or political linguistics, if you will. By Igor Dakić

or those of you who are native speakers of any of the dominant local languages in Serbia, Croatia, b&h, and Montenegro, you know this already; as for you who are not, make no mistake: Serbian and Montenegrin are the same language, and in fact the notion of a ‘Montenegrin language’ did not exist until very recently – except, of course, in that aspect of linguistic discourse that deals with dialects and regional or local language variants. Having said that, however, make no mistake: we are not siding with the champions of the ‘Serbian’ language in what is nowadays escalating into a veritable dispute in the smallest of former Yugoslav republics. Quite the contrary, and we shall get there in due time. Unlike in the other neighbouring countries, the portion of the population that declare themselves ‘Serb’ cannot, except in the most formalistic way, be considered as members of an ethnic minority. The most recent 2011 census, conducted a mere eight years after the previous one, shows that the number of ‘Montenegrins’ and ‘Serbs’ tends to fluctuate severely,

owing to the changes in how people experience or express their identity; it is, above all, a political choice. The same is true of language.

…every Montegrin man of letters, from Njegoš over Đilas to the contemporary age, wrote in ‘Serbian’, and was classified as such within the canon of Serbian literature.

For instance, in the 2011 census, out of a total population of 620 thousand, 279 thousand declared themselves as Montengrins (roughly 44%), and 178 thousand

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Igor Lukšić

declared themselves as Serbs (roughly 30%); and although linguistic ‘affiliation’ shows practically inverse figures (266 thousand speaking Serbian and 229 thousand speaking Montenegrin) – something that might surprise a foreign demographer but hardly even the least educated local – the continuing tendency is that Montenegrin, a ‘new’ language, is quite rapidly overtaking Serbian; let us not forget that mere six years ago, when Montenegro gained its independence, none spoke ‘Montenegrin’, as it didn’t exist as an official or formal language. It has been made obvious by now that we are speaking of semantic minutiae, but it is precisely these types of semantic minutiae that make all the difference in the world, especially on the political level. Montenegro’s educational system has been in a state of disarray for some time now, given the reality that there are two

Andrija Mandić

In the meantime, brother and brother, born of the same parents, will discover themselves speaking a different language. languages and two orthographic systems in use – the differences between which, need we repeat, are truly minute. Awfully fertile ground, is it not, for excessive politicking and clouding of the perhaps more pressing issues, such as the economy and fight against corruption… for both sides. The one side, led by pm Igor Lukšić and consisting of his own Democratic Party of Socialists, the Social Democratic Party of Montenegro, the Democratic Union of Albanians, the Croatian Civic Initiative, and the Bosniak Party, may be in power, but it is, within the context of the said argument, on the defensive. Montenegro, as all of us are aware, is also seeking membership of the European Union, and as such it needs to make certain Constitutional changes in order to meet European standards, for which it needs a two-thirds majority in Parliament. And this is where the opposition, comprised of the two leading ‘ethnically Serb’ parties, steps in. While the leadership of the opposition had promised that all “open issues (would be considered) seriously”, it would appear that this did not extend to the political counter-offer. Andrija Mandić, leader

of New Serb Democracy (Nova), said that Lukšić would only see the votes needed if the Montenegrin Government acceded to their demands: specifically that Serbian be recognised as the official language of Montenegro, and that the flag be replaced with the Serbian tricolour, or a variant thereof. In a way, Mandić is right, at least on the point of language – for every Montegrin man of letters, from Njegoš over Đilas to the contemporary age, wrote in ‘Serbian’, and was classified as such within the canon of Serbian literature. However, it does not take a political mastermind to help us understand that a sovereign nation needs to have its own language – even if this happens to be, technically speaking, a dialect of another language – just as it doesn’t take a political mastermind to help us understand s that these demands are a form of blackmail. Miodrag Vuković, of the dps, called these demands just that, “political blackmail”, and, to be sure, he has a point: these sorts of demands are not only politically prohibitive for the incumbent Prime Minister (all he need do is to allow the European talks to stall, and he can point a finger at the Serbian parties), but they are politically naïve. That’s not to say that Nova and the spp should simply capitulate and surrender their position, only perhaps that they should approach the situation, and others which are surely yet to come, with more maturity and common sense than they have currently exhibited. If, like in b&h and Kosovo, this is all a question of maintaining an ethnic identity – as, in fact, it is – then surely this should be possible without having recourse to filibuster style politicking. As it stands, both sides are acting like stubborn donkeys, both afraid to concede ground for fear of losing some element of their heavily intertwined identities. Shoved dead in the midst of the absurd play, in the literal literary sense (pardon the near tautology), it will be interesting to see how Lukšić, a young economist with other things on his mind, plans to finesse himself out of this quaint impasse. In the meantime, two sets of textbooks will be printed, whilst brother and brother, born of the same parents, will on occasion discover themselves speaking - a different language… although, would you believe it, they can understand each other to perfection.

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harsh realities

Trials of the Kosovo Ashkali Children With statehood remaining a key issue at both the local and European level, we wanted to find out more about what life was really like down at Kosovo, especially in the Roma and Ashkali community, proverbially subjected to hardship and poverty. Elivana Berani, a seasoned journalist indeed, reports from the field… By Elivana Berani, Editor-in-Chief, Info Globi News Agency

bout 50,000 Roma, Ashkali, and Egyptians (rae) face various challenges in their daily lives here. In Kosovan society, where more than 40% of the working age population are unemployed and poverty is widespread, members of the Ashkali community, currently living in the suburb of Fushë Kosova/ Kosovo Polje, survive on less than 2 Euros per day. Elizabeth Gowing is the founder of the Kosovan ngo ‘The Ideas Partnership’, which has around 60 international volunteers, and they are doing everything they

Finally in school

can to help this society by helping the building blocks of any community, the children. It was alongside these volunteers, who were working with a large group of Ashkali children, that British Ambassador to Kosovo Ian Cliff chose to spend his weekend, walking in the cold, talking patiently and with understanding with the local people, be it in the street or in their homes. His obvious leadership and his openness were greeted with much enthusiasm by a populace not used to seeing such things exhibited in the former Communist state.

"It is a real eye-opener for me to see the conditions in which the Roma and mainly Ashkali are living in Kosovo Polje. It is a much bigger community than I had previously thought, and the problems of getting children into a school are more complex than I had realised", the British Ambassador said. The Ambassador, who spent more than four hours talking to the members of the Ashkali community, explained that his visit "is giving me an idea of the problems that the rae Community face; it certainly equips me better to talk to the government, to talk to the municipalities about these issues". "It is particularly important here in Kosovo, because we talk a lot about trying to create a multi-ethnic society, where there is respect for the rights of the minorities, and that's very often seen in the context of the Serb community, the Bosniak community, the Turkish community, and of course the Roma, Ashkali, Egyptian communities. All of them have mps in Parliament, and after this experience, maybe I must go and talk to some of them", h.e. Cliff explained. As the travelling party was preparing to leave the area we learned that all 27 members of the eu had accepted a European Commission proposal to conduct a feasibility study in Kosovo; already analysts say that the position of the Roma, Ashkali and Egyptians may receive negative

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opinion if the Kosovo Central and Municipal Governments don't pay closer attention to the problems which people of these communities are facing. "We don't want a Kosovo where somebody is so easily forgotten. These kids need help and this is what I am trying to do," says Antigona Bytyqi, a Kosovan who works with Elizabeth Gowing. The ngo founder herself explained that “(our) main effort in this community is getting children to school. Last year we came across 100 children aged nine or over, who all said they wanted to go to school but were unable to attend because of a Ministry policy preventing registration at school for children over nine unless they had already attended catch-up classes; as no catch-up classes were being organised by the Municipality in Fushë Kosova, these children had no way of getting access to schooling. We provided daily academic support for these children, in The unfortunately proverbial dirt road

Ambassador Cliff in the community

ASHKALI In the Balkans, the Ashkali (also Hashkali, Aškalije, Haškalije) and Egyptians (Balkan Egyptians, Jevgs, Egjiptjant or Gjupci) are Albanian-speaking ethnic minorities (recognized communities) of Kosovo and Albania. Observers consider them Albanized Romanies, but they do not self-identify as such. Prior to the Kosovo War of 1999, Albanized Roma registered themselves as Albanians. Now they are divided by identifying with two different groups, although the people share a culture, traditions and language (Albanian). Albanized Roma formed the ethnic group known as the Egyptians to distance themselves from other Roma in Macedonia. The ethnic identity was adopted by Albanized Roma in Kosovo who wanted to separate themselves both from other Roma and Albanians

the form of catch-up classes, from March through August, and lobbied for a change in this absurd policy. In the end we successfully registered 62 children in the school system". Aurelie Viard is a long-term Italian volunteer in Kosovo, and works as the Executive Director of ‘The Ideas Partnership’. She described the daily routine in their catch-up classes: "Here the pupils engage in various activities; reading; writing; painting; computer skills; languages, etc". Education, however, is not the only challenge that many in this community have to face. "I keep going… During the day I collect plastic bottles and cans from the garbage and then sell them for maybe 4 Euros. I also have 80 Euros per month given as state assistance, but that is far from enough to cover the needs of a family of eleven," says Ridvan Bajraktari, a father of nine. According to him, "the Municipal Government seems to have forgotten this neighbourhood. The garbage has not been collected and we are at risk from disease." "Only internationals are visiting us,” said a lady who wished to remain anonymous,” although on one occasion the Education Deputy Minister paid the visit to our catch-up classes school." She added that there are seemingly no political indications that the lives of the people living in her community might change for the better in the near future.

Similar opinions may be felt in the home of the Krasniqi family as well. A single room, half of which is still wet from the melted snow that broke through, is the place where Agron Krasniqi, his wife Hatmane, and their six children have lived for 11 years now. Although temperature is low, the stove is quiet and no wood can be seen anywhere. Hatmane is one of five women in this community that make soap as a means of livelihood, a project initiated by Gowing and her team. "We sold 2000 bars of soap in three months, but I can still can’t afford to send kids to school", she says. Little as can be added. For there is another problem facing this humanitarian effort, and that is the question of visibility; all too often a cause can generate enough media attention to force a response from the officials, but as we know from history, that response may be nothing more than lip-service, designed to assuage the liberal reader’s sensibilities, sitting, as they are, far from the problem itself. The Kosovan Government have much to do if they are to rebuild the country; and while there are certainly pressing issues surrounding the very statehood of Kosovo, it would be foolish to ignore the very people who live there. After all, these people, and their children, are the future, and as is known far and wide, a society is successful only to the extent to which it can protect its minorities.

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politics

B&H Finally Applying for EU Membership? Serbia received its candidate status at the beginning of March, and Croatia gains full membership in 2013. B&h remains the only country in the region that has not, as yet, even sought eu membership. There are reasons of course, but there might yet be cause for optimism as the heads of the major political parties have managed to make some headway: they’ve announced their intention to apply for Bosnian candidacy by the end of 2012. By Aida Tabaković

e it speculation or wishful thinking, the prospect of a viable application, by b&h, for membership of the eu is looking more and more possible, if the frequency, that is, of dialogue and meetings between the political leadership is anything to go by. Of course, although whether any application will be made remains to be seen, there can be no denying that the news of the 'b&h 6' reaching a consensus, as they did on March 9th in Banja Luka, sounds wonderfully reassuring. Hosted by the President of Republika Srpska, Miodrag Dodik (snsd), the gathering was attended by those who needed to be there: Zlatko Lagumdžija (sdp b&h), Sulejman Tihić (sda), Dragan Čović (hdz b&h), Božo Ljubić (hdz 1990), and Mladen Bosić (sds). The six discussed

the matter of implementation of the ruling in the case of Sejdić-Finci, the division of state property, and the need for reduction in the number of administrative personnel and their salaries as measures of austerity, the latter point serving to highlight their intention to see business done.

a matter of army and state property The meeting at Banja Luka was able to reach an agreement on the principles, which will serve as the basis for resolving the matters surrounding the remaining property of the former Yugoslav army. This is also one of the key prerequisites for nato membership – and possibly for

Much work lies ahead, but there finally seems to be a at least an inkling of political will, that ever elusive phrase, oft abused (especially) in b&h, beloved of both politicians and the civic sector.

the division of state property, so crucial for the abolition of international supervision in the form of the Office of the High Representative (ohr). Following the meeting, Sulejman Tihić stated that the decision on army property would likely be reached within 60 days, and on state property within no more than a year; of course, in bureaucratic fashion, all of this depends on the said property being inventoried within 90 days, so that it can be determined which b&h institutions might ‘need’ to retain a quantity of what they have. Tihić explained this by saying that “the property still in the possession, say, of the Ministry of Defence (b&h), will fall to the municipalities on whose territory it is located”. The ohr have rated this meeting as “significant” in terms of b&h's Euro-Atlantic aspirations, providing, of course, that the agreement was reached in accordance with the b&h Defence Law, which stipulates that ownership must be such as not to get in the way of defencerelated matters. In other words, there is also the national security aspect which must not be overlooked. The issue of property allocation is no longer a matter of economic nature, but a political one as well, as several of the larger items happen to be buildings, which house the Federal Government, the

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Federal Assembly, along with numerous Governmental agencies. Let us illustrate the conundrum facing the ‘6’: the Federal Government pays rent for the use of their building to sdp b&h (the legal successors to the former owners, the Communist Party of Yugoslavia). Since the Federation of Bosnia and Herzegovina claimed that such assets should belong to the State, while Republika Srpska countered that they should belong to the bodies occupying them, it was clear that a compromise had to be agreed upon. nato, of course, insisted that this be done. Much work lies ahead, but there finally seems to be a at least an inkling of political will, that ever elusive phrase, oft abused (especially) in b&h, beloved of both politicians and the civic sector.

the implications of the sejdić-finci ruling Leaving nato behind we turn to look at European accession; this process depends upon the implementation of a ruling by the European Court of Human Rights, in the case of Sejdić-Finci, on the matter of the constitutional definition of minority privileges. However, no agreement was forthcoming on the matter as, according to Dodik, “there is no desire for partial solutions to this issue”. A meeting of the Joint Committee of the Parliamentary Assembly (for the implementation of the Sejdić-Finci ruling) also failed to reach any agreement; despite promises being made to exhaust every avenue

The famous "6"

Bosnia and Herzegovina's (new) first step towards full membership of the European family is shortly coming into force, with the Stabilisation and Association Agreement (saa)... of discussion. Meanwhile, the President of the sds, Mladen Bosić, attributed the failure of the process to the “bad relations between the Bosniak and Croatian parties within the Federation”; it may well have been too much to expect that the proceedings could remain entirely cordial. And while the ‘6’ convened in Banja Luka, both Vjekoslav Bevanda, Chairman of the Council of Ministers, and Igor Radojičić, Chairman of the National Assembly of Republika Srpska, were paying a visit to Brussels. The message coming from the European capital was clear; prospective b&h eu membership had the full support of all of the 27 member states, but the primary responsibility for progress in Bosnia and Herzegovina lay firmly upon the shoulders of its leaders and institutions. The (new) first step towards membership of the European family is shortly coming into force, with the Stabilisation and Association Agreement (saa) which will, according to the highest ranking eu

BOSNIAN APPLICATION FOR EU MEMBERSHIP: THE PROCEDURE The procedure involved in a membership application is not a lengthy one (18 months on average), nor complex (a short letter addressed to the highest ranking representative of the country currently presiding over the Union); the eu Council first reviews and accepts (or denies, if need be) the request, the eu Commission then drafts an assessment of readiness of the applicant, and finally issues a questionnaire (comprised of several thousand questions). Based on that assessment the country is then awarded candidate status by the European Council. B&h remains the only country in the region not to have applied for membership, and though there was nothing formally preventing an application, it was only last year that the eu Council defined the terms for doing as much. Two of these terms have already been met; the passing of the State Aid, and Census Laws; next on the list is for the ‘6’ to agree, on some level, on the implementation of Sejdić-Finci. In addition to this, b&h will be required to improve its structures for the future coordination of European matters (so that such three-way impasses do not occur again), to adopt the Social Inclusion Strategy, both in the Federation and Republika Srpska, to reduce the number of instances of the ‘two schools under one roof’ phenomenon, to continue the transposition of the Acquis Communautaire into domestic legislation, to enhance the scope of activities regarding the development of small and medium-size businesses as well as infrastructure, and to battle corruption and money laundering.

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IMPLICATONS OF THE IMPENDING CROATIAN MEMBERSHIP OF THE EU Also Facing b&h is the task of undertaking adequate measures to counteract any possible negative effects of the pending Croatian entry into the eu. Croatian membership is expected to affect the property related issues, border regime, trade relations, transport, employment and labour, social protection, and pensions. To put it another way, when Croatia enters the eu, they will have to change their border control protocols, which presents a problem since there are only two border crossings between the two countries that are up to eu border control standards. If that does not change, then b&h could see a collapse in exports.

Izačić border crossing

officials, “further strengthen the ties between the eu and b&h”. After b&h had finally convened the new session of the Council of Ministers and adopted the State Aid Law and the Census Law, Brussels made it clear that it expects b&h to focus on finding the “best way to define credible effort that must be undertaken in order to harmonise its constitution with the decision of the European Court of Human Rights in the case of Sejdić-Finci, as one of prerequisites for the saa with Bosnia and Herzegovina to come into force”, as was stated by the eu Expansion Commissioner, Štefan Füel, immediately following the meeting with Bevanda. Igor Radojičić, after meeting eu officials, stated quite openly that there was a need for “at least a partial agreement, or an agreement in part, on Sejdić-Finci... such agreement as would be seen as a show of credible effort and as would allow a ratification of the saa within the next 3-4 months.” However, Radojičić also conceded that the attainment of Candidate Status would require “full implementation, as well as progress, in all aspects of the saa,” finishing by saying that “certain matters remain to be resolved”. Vjekoslav Bevanda for his part, on his first official state visit as the Chairman of the Council of Ministers, stated after meeting Füle in Brussels that the issues discussed were “difficult but not beyond

the economic aspect

The proposed budget for 2012 does not include the financing of any new institutions that have to be formed in order to meet the requirements of the saa. resolution”, and continued by saying that he would be conveying the message to officials in Sarajevo. The prevailing attitudes of the eu officials were that “(the b&h political leadership) all need to become serious in taking measures to fulfil the conditions placed before us, for the benefit of the peoples and citizens of b&h”, indicating a far more pro-active position than previously seen in the political arena.

However, despite all of this, the most pressing goal for b&h is to reach an agreement on the fiscal framework for 20122014, and in such a way as would be consistent with the constitution and also allow sufficient funding for state institutions. On this point both the ohr and Brussels are in agreement.If this can be done, b&h stands to receive 211 million Euros from the ipa funds (paid in three tranches over two years). The budget is said to be on the level of last year's spending – a ‘matter of formality’, as it were – and could soon be adopted by the b&h Parliament. However, if b&h is to see any of the money, it has to meet a number of conditions, and as long as the ordnance on temporary financing remains in effect, that will be hard . The proposed budget for 2012 does not include the repayment of foreign debt, nor does it include financing of any new institutions that have to be formed in order to meet the requirements of the saa. Prior experiences regarding fiscal planning by the State and cantonal budgets have only shown that the Governments at various levels prefer to cover any deficit with new borrowing rather than make the tough calls being made in other eu States right now. At present, it is highly unlikely that the eu will allow for the continuation of such practices.

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Pula Airport, despite future Ryanair investment, is at risk also… Pula made the news when it was discovered that small quantities of explosives were not detectable by their ‘new’ security system.

A Ryanair docked at Pula Airport

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the economy

Adriatic Aviation? When Irish Eyes Are Smiling… St. Patrick’s Day is behind us, and those of us with Irish heritage, or even a tenuous Irish connection, are likely still shrugging off the effects of overindulgence. To commemorate the festive occasion we said we’d take a look at what sort of impact the Irish have had in the former Yugoslavia, either prior to, or post-break-up. What followed from there was somewhat unexpected… especially as concerns the business of aviation. By Lee Murphy

hen we began compiling notes to write this article we’d envisioned doing something along the lines of cataloguing Irish investment, and/ or involvement, in Croatia, Serbia, and most likely the other former Yugoslav elements. Of course, like most good journalism (or entirely unfocused journalism if you prefer), it was never really going to go to plan: a bit like an episode of MacGyver, if you know the tv show. Certainly see Magazine never intended on it becoming a critique of Croatian business practise, if that was what it was veering towards. However, when we saw Ryanair mentioned in the local media, intending to open new routes out of Pula

Airport, it felt only right that we drop them a line and ask them their opinion on the regional market. For anyone familiar with the Irish company’s business model it was no surprise that they didn’t pull any punches.

all talk and no action Ryanair told us, as you might expect, that they, as any comparable business would do, “sought out low-cost opportunities”. This in itself is not exactly a revelation, since Ryanair are currently one of the largest airlines in the world. What was to follow from this, however, was of some surprise. Michael Cawley, the Chief Operating

“Zagreb Airport is all talk and no action… some markets are enlightened, others are not.”

Officer with Ryanair, was unequivocal in his language: “Zagreb Airport is all talk and no action… Croatia, generally, is not very receptive towards the company’s overtures – they (the airport) want to double business in Zagreb, but don’t seem interested in doing anything about it… some markets are enlightened, others are not.” Having said that, we are capable enough to realise that opinion is not necessarily fact, and so we approached the Trade Unions at Zagreb Airport for their input. Ante Dujić, the spokesman for the aforementioned Trade Union, was quick to point out that just because the Ryanair business model was seemingly rejected by the airport, this was not to say that there was a lack of ambition within the state body. “Ryanair are always coming in looking for discounts and concessions,” Dujić said, “but if we feel that it’s not in our best interest to accept them, then why should we?” But… there is always a ‘but’. Simply rejecting a commercial overture is not evidence of any great business malpractice; having Ryanair based in Zagreb may well

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RYANAIR AT A GLANCE Say what you want about Ryanair, but their business model is ever evolving. Having started with a single plane in 1985, flying from Waterford in the South East of Ireland into London, they've gone from strength to strength, thanks mainly to the business acumen and ruthlessness of their Chief Executive Officer Michael O’Leary. They currently operate a fleet of almost 300 aircraft. 2011 figures revenue operating income net income total assets total equity passengers carried

€ 3,629,000,000 € 4,882,000 € 3,746,000 € 8,596,000,000 € 2,953,000,000 76,400,000

Pula Airport Seasonal: Brussels-Charleroi, Frankfurt-Hahn, London-Stansted, Oslo-Rygge [begins 26th March], Paris-Beauvais [begins 16th May] Rijeka Airport London-Stansted [resumes 4th July 2012], Stockholm-Skavsta [resumes 26th March] In keeping with their business practise they are exploring avenues of expansion into other airports in neighbouring countries.

have been profitable for the shareholders, but there may also have been more to the airport’s apparent stubbornness.

sad realities Croatia holds a score of 4.1 on the Transparency International Corruption Perceptions Index, and just to put this into context, Italy holds a score of 3.9, Greece 3.5, Slovenia 6.4, Austria 7.9, and Switzerland 8.7. This is a traditional scale from 0-10, so you can well imagine that 4.1, when compared with Scandinavia, whose countries hold scores in excess of 9.3, is an unenviable position indeed. This scale does not suggest that Croatia is akin to some sort of banana republic, but rather that it harbours a high level of casual corruption such as the classic ‘brown

envelope’ backhander or excess political favouritism, clientelism, or patronage, if you prefer. In this sort of environment, many officials are looking for their ‘cut’ or their ‘share’ of whatever extra income might be available. Having stated the obvious, while one of the main prerequisites for corruption is opportunity, we must also examine the factors that created that opportunity. Of course, we’re not looking at every aspect of Croatian culture here, just the airports, and, by extension, the national airline, Croatia Airlines. You see, despite both entities being quite separate from each other, there is an obvious link: Government ownership. For decades now, the airports have been top heavy with administrative management, appointed by their contemporary Government, often without any real competence for the position they were occupying. Ironically, according to the Croatian Civil Aviation Agency (ccaa), part of their mission statement promises the “outsourcing of activities that are not within the competency of the Agency or that are not economically justified to be performed by the Agency”. Something – or rather everything – in the aforementioned statement is lamentably sad, although hardly to any great surprise. Political interference will almost always impact on any business operation, especially since any Government, their motives aside, will look to enforce Public Sector mentality upon what should be a Private Sector organisation. During the 1990s, the Zagreb airport saw much of its strategic reserves funnelled into some bizarre projects, including the sponsoring of the football club Croatia Zagreb (before and now once more Dinamo Zagreb), as well as a number of companies around Croatia and Herzegovina. At the turn of the millennium, Boško Matković was appointed as manager of the airport: unusually not a political appointee, but certainly approved of by the staff. During his tenure he was able to rectify the airport’s budgetary situation, putting a healthy glow to the balance sheet. Under Mr. Matković’s tenure, we saw over 20 million Euros banked. However, since he was not a political stooge, he soon fell foul of the hdz Government. Having refused to ‘forgive’ the debts of Croatian Airlines, he was summarily dismissed from his post, and

Perhaps we need another runway after all…

his successor, a Mr. Markić (once a catering manager), promptly obliged the Government’s wishes and wiped Croatia Airlines’ balance clean. It has been suggested to us that Markić “didn’t do anything to improve service or customer relations within the airport, but rather spent most of his time watching the trees in the park across the road”. A State-owned body being managed by Government-appointed individuals cannot be considered surprising; and given the neck of the woods we’re writing about here, perhaps it may as well be expected. However, it might be an advantage that those individuals would be able to exhibit a modicum of business ability, to help their airport progress past its current position, and enable it to compete with what is an ever expanding global village. To put

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this into geographical perspective, it requires a flight, from Zagreb, the Croatian capital, to Vienna, the Austrian capital, in order to reach Belgrade, the Serbian capital. That spells a flight totalling 859km, plus delays in changeover, if one wished to travel a distance of only 370km.

money talks, or does it? What is most surprising about the lack of connecting flights between the two national capitals is that Serbia is Croatia’s 5th largest trade partner, accounting for 579.4 million Euros, 2.4% of total trade (according to 2010 figures). That there is no direct commercial flight between Zagreb and Belgrade is an absolute disgrace on the part of those involved, regardless of the opinions to the contrary, which say

Unfortunately both Rijeka and Osijek Airports are on the edge of bankruptcy and may fall victim to future austerity measures...

that a mere three hour drive between Zagreb and Belgrade renders commercial flight between the two capitals pointless; for there exist flights from Zagreb to Skopje, Priština, Sarajevo, and Podgorica. It could not be clearer that there is something rotten in the Kingdom of Zagreb Airport. “Zagreb could be so much more;” an industry expert told us, “Gatwick Airport in London saw almost 34 million passengers last year! Gatwick is a single runway airport, just like Zagreb; Zagreb saw 2.3 million passengers in that same period. Ignore demand; ignore population size; that shows you how efficient an airport can be, how efficient it should be!” Indeed, this level of mismanagement is not confined to Zagreb Airport alone. Split Airport, which saw 1.3 million passengers in 2011 (of which 70% can be estimated to be as a result of the summer tourist trade) is run by Lukša Novak, a member of the Croatian Chamber of Commerce (hgk), and by all accounts ‘untouchable’ in his position. In the past a sizeable proportion of Croatia Airlines traffic passed through Split, but without any due consideration for its economic impact. Ironically, Zadar Airport (285,000 passengers in 2011) may well prosper in the long term because of the undue influence of the Split lobby in that region. Bereft of indigenous flights, Zadar, on the other hand, has been forced to rely on foreign carriers and business specific traffic. Lo and behold, they’ve already seen a rise of 18% in passengers in 2012. Pula Airport, despite future Ryanair investment, is at risk also; while there is potential for expansion (the Travel Agency ‘Brioni’ are looking to increase business in the area), there might not be enough funds to realise that potential. Pula made the news when it was discovered that small quantities of explosives were not detectable by their ‘new’ security system. Currently Pula sees just over 300,000 passengers per annum, but just like Zadar, it relies on seasonal numbers to keep it afloat. Unfortunately both Rijeka (82,000 passengers) and Osijek (22,000) Airports are on the edge of bankruptcy and may fall victim to future austerity measures that are likely to be instigated by the current Government. Rijeka has decent potential, and does see a number of low-cost carriers start, or restart, routes from here

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this summer, but it may very well be too little, and too late. Osijek is perhaps the most tragic of them all: ideally situated and purposed as a cargo field, it has been largely ignored by the political masters for the past decades. With Osijek’s proximity to such a complex distribution network (road, rail, water and air), it is criminal that it hasn’t been utilised more. Almost definitely it can be expected that under eu directives the Government will have to privatise some of their holdings here, but if those holdings are in as bad a condition as it appears, then countless millions will have been invested for almost no return; a terrible waste in these trying times.

warning! opportunity ahead! Ante Dujić was keen to emphasise the solid business core to Zagreb Airport, that it could be very profitable, which was evidenced during Matković’s reign, but that “management should be cleared out because the wasteful spending is costing the state, and in turn is jeopardising the workers’ livelihoods”. He explained that Zagreb Airport is open 24 hours per day, but that clearly flights cease by 11pm normally. “This is the Government interfering in a standard airport business model. Even ina has staff on stand-by at night. For what? No plane operates at that time. It’s the Government who dictates this, as owners of the airport, and partially of ina. They’re spending money, their profits, when it should be going back into the state coffers”. Mr. Dujić added that “the Unions are being effectively prevented from engaging in any decision-making process which would affect all (of us)”. While it can be expected that much

PASSENGER NUMBER FOR CROATIAN AIRPORTS 2011 Zagreb Dubrovnik Split Pula Zadar Rijeka Osijek

2,319,098 1,349,501 1,300,381 343,476 284,980 78,890 n/a

Island fever at its height

And, by the by, wouldn’t it be nice to be able to catch a flight, say, from Split to Belgrade, from the Island of Brač to Tivat, from Trieste to Sarajevo, and so on? will change once the Government, and the ccaa, are forced to change their business relationship with the airport fraternity – the European Union frowns upon State Aid for bodies which compete internationally – there remains the risk that an in-situ hierarchy will be able to keep a hold of their powerbase. That would not be a bad thing if it were not painstakingly obvious that that hierarchy does not possess the competences needed for this industry. Indeed, if they are inclined to act the bully in this small playground, what will happen once they are obliged to mix it with the larger children after July of next year? The Coalition swept into office amid a flurry of promises and potential; if they cannot summon the political will to remedy what should be a straightforward business decision, then what does that say for them? Or is it, perhaps, that this conglomeration of airport managers and cohorts has somehow found itself with too much power and influence? With Croatian Airlines facing a possible takeover by Turkish Airlines (a partner in Star Alliance),

Zagreb Airport itself the target of a French offer (the Government recently awarded a concession to zaic to rebuild the airport terminal, and to run the airport for the next 30 years) which appears to be below the estimated value of the business, and with ina suffering in the aftermath of the Syrian theatre, there might not be much more time left in which to salvage anything… anything worthwhile at any rate. And, by the by, wouldn’t it be nice to be able to catch a flight, say, from Split to Belgrade, from the Island of Brač to Tivat, from Trieste to Sarajevo, and so on? Too long have governments been pridefully investing in their national airlines, if ‘investing’ is the right word. Perhaps the time has come for smaller, more agile players, who will know how to keep the cost low(er) and still service the ‘Adriatic’ market, which has never gone away, in a much better way to boot. For we dare say that, the current crisis notwithstanding, there is plenty of financing out there for solid projects with long term futures. Naturally, if only one could put the airport people on a functional leash.

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fairing about

Kopaonik Business Forum: Heavy Words and Quality Networking From a distance, any top tier business or political gathering has the tendency to inspire, especially in a wider audience, feelings of indignation, loathing, and fear – especially in the so called transitional economies. When it comes to this year’s Kopaonik Business Forum, however, Stephen Fish of Ernst & Young steps in to set us straight and remind us that nothing, nothing at all, can beat one’s ability to think positively.

he 19th annual summit of businessmen (and women), experts, and Government officials is behind us. It was expected to provide answers, where possible, to the numerous questions besetting the Serbian economy: with the Dinar still depreciating, practically all eyes with fixed on the Governor of the Serbian National Bank, Dejan Šoškić, but it is doubtful that he can do much single-handedly in a situation in which, although the recession seems to be on the (howsoever slow) wane, Serbia’s principal trade partners, namely Italy and Greece, are yet to clean up their own yard and finally pursue an upstream current. Let us quote Aleksandar Vlahović, Head of the Alliance of Economists, who stated at the Forum that “high public spending, lack of foreign investment, and inefficient public administration remain the key problems for Serbia.” Prime Minister Cvetković, as a Head of Cabinet would, added that it would "be hard, but we will make it. I see a bright future in the period ahead".

By Stephen Fish

Stephen Fish is in charge of the Ernst & Young country practices in Serbia, Montenegro and Bosnia-Herzegovina. Stephen started his career in his native England, before moving to the Middle East. He then lived and worked for Ernst & Young in Czech Republic, Germany, Hungary, Slovenia and Croatia before coming to Serbia.

However, another star of the gathering, Bogdan Lisovolik, the permanent representative of the imf in Serbia, also stepped

in to take the stage - as could only be expected. Lisovolik offered his insights on the final day of the event, and highlighted several factors which are undermining Serbian development: high public spending (again), high public debt, and the Eurozone crisis, most notably in Italy and Greece (again). In addition to this, the cost of paying pensions in Serbia accounts for 13% of the gdp, which in turn amounts to one active tax payer supporting one retired individual. According to Lisovolik, this level of spending needs to be addressed immediately, as it seriously impairs economic competitiveness. And so on. All that may be true – indeed is true – and it is also true that Serbia’s economy won’t experience a renaissance overnight. But the point here is that all those who were actually not there, those who merely followed the event through the eyes of the media, cannot begin to understand the level of positive energy that somehow permeated all three days of the

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Bogdan Lisovolik of the imf and Vincent Degert, Head of the eu Delegation in Serbia

The event is a major opportunity for any business person eager to get to know the economy and entrepreneurial community. Forum. What will ensue may sound like a bit of good old fashioned propaganda, but a man cannot help it if he finds something pleasing… and worth his while. Having come to the Forum for the second straight year, I can say that it has undoubtedly positioned itself as the leading Governor Šoškić arriving...

event of its kind in the region. I have attended many national business summits in the past, but the Kopaonik event clearly makes the difference by attracting the entire business community, and by allowing the participants enough time to build relationships that would really matter. The selection of panels and speakers was once again on point, and I am truly glad that, this year, my company too had the opportunity to sponsor this distinguished brand – the ‘Serbian Davos’, if you like. From the practical point of view, the Kopaonik event is a major opportunity for any business person eager to get to know the economy and entrepreneurial community of Serbia. Networking opportunities are countless – not only for experienced corporate suits but also for high-performing entrepreneurs. Whoever decides to attend the Forum is basically guaranteed meeting and making interesting acquaintances anywhere inside the complex, be it the conference room, Grand Hotel or one of the entertainment facilities about. Another clear advantage to attending such an event is its time saving component – you get the opportunity to arrange a string of meetings that would normally require weeks or even months to accomplish. On top of that, the specific environment of Kopaonik creates a more relaxed atmosphere in which you get to know your friends and contacts better. Communication is of course open in Belgrade as well, yet the leisure provided by well-designed entertainment events always adds value to the Kopaonik experience. On the part of Ernst & Young we were very glad to be in a position to honour this year’s Forum and its distinguished guests by throwing our own Midnight Party at the end of the first day. The response we received, along with our own impressions of the conference, encourage us to continue our support of the Kopaonik Business Forum. A positive trend has certainly been set and I look forward to attending this great conference in the years to come. And let us not forget: all plans and strategies aside, economies and businesses are run by people, and people will always do a better job in a stimulating environment. And perhaps that is just what Serbia needs above all else: a few good days… followed by a few more… I think we get the idea, and I think we understand that defeatism and the cynical eye won’t get us far any more.

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financial

Slovenia Tax Snapshot It is usually the further South we go in the Balkans that the more afraid we tend to be of the regulatory framework and every manner of related thing, but taxes are taxes - even in the European Slovenia. Let us comply, then, or else suffer the consequences of not being in the know. Nada DrobniÄ? of kpmg Slovenia will help us out in the process.

n 4th December, 2011, Slovenia held its General Election, but was unable to form a viable Government until 10th February, 2012. During this election process there were serious, ongoing discussions on measures which might be taken by the incoming Government in order to consolidate during the economic crisis (global as well as local), to reduce unemployment, to stimulate investment activities in the industry sector, as well as to attract foreign investment. There were also some discussions related to a proposed increase of the general vat rate from 20% to 21%, and a decrease of the Corporate Income Tax rate from 20% to 18% (or even 15%). Until now, tax rate changes have remained at the level of discussion only and no action has been taken. The question of how the Government would manage to reduce the national debt level, while simultaneously increasing the tax yield, still remains unanswered.

By Nada DrobniÄ?

Nada DrobniÄ? is the Partner responsible for Tax and Legal Services with KPMG in Slovenia. Nada has more than 30 years of extensive experience in providing tax and legal services to domestic and international clients including corporate income tax, international taxation, cross border tax structuring and M&A. Nada holds a degree in Law from the University of Ljubljana and a Master's degree in Tax Law from the University of Maribor. Nada is a licensed auditor and tax advisor as appointed by the Slovene Institute of Auditors.

value added tax Currently there are two vat rates applicable in Slovenia: a standard rate of 20% and a reduced rate of 8.5%, the latter being applicable to goods and services specifically defined by the vat Act such as food, medical products and equipment, books etc. The vat registration threshold is 25,000 eur of taxable turnover generated within the period of the last 12 months. However, foreign taxpayers are required to apply for a Slovene vat identification number before beginning any taxable business activity in Slovenia. The application for obtaining vat identification number should be submitted to the tax authorities using

their web application for electronic rendering of services, called eTaxes (eDavki). The vat registration procedure is usually completed within two weeks from the date when the complete documentation has been filed. Needless to say that kpmg Slovenia too often provides assistance to foreign clients in the vat registration procedure, as well as in subsequent communications and coordination with the tax authorities. This can prove invaluable for the client because the Slovene tax authorities communicate with clients solely in the Slovene language and because access to eTaxes is,

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...this can prove invaluable as the Slovene tax authorities communicate with clients solely in the Slovene language and because access to eTaxes is, for technical reasons, currently available only to Slovene taxpayers. for technical reasons, currently available only to Slovene taxpayers. vat returns are filed electronically on a monthly or quarterly basis (quarterly reporting applies only to domestic taxpayers), and there is no annual vat reporting requirement. Vat liabilities should be paid by the last business day of the month following the expiry of the tax period. The surplus of input vat shall be refunded to the taxable person within 21 days after the submission of the vat return. This has been amended in 2010, and presents an improvement in the sense that it prompts vat refunds. Before 2010, in comparison, the surplus of input vat was refunded within 60 days after the submission of the vat return (within 30 days to predominant exporters). These were the last amendments of the vat legislation, as of October 20th, 2011: the schedule for electronic filing of vat returns has been expanded (almost all the returns are now filed electronically); a new provision has been added in relation to correcting output vat in cases of bankruptcy or compulsory settlement proceedings (this measure has been implemented to reduce the taxpayersâ&#x20AC;&#x2122; costs due to the economic crisis); correcting input vat based on credit notes has been made easier for suppliers. That said, there is no indication there will be any amendments to vat legislation in the near future, unless specifically stipulated by the eu legislation.

personal income tax As of 1st January, 2012, the tax brackets for taxation of individuals have been revised (these are examined every year). Tax rates are progressive, ranging from 16% to

41%; however, the 41% tax rate is charged at a very low level of income, when compared to other countries. Currently there are discussions in Slovenia as regards the introduction of a social security cap, which is meant to limit social security contributions for certain employees. There are arguments in favour of this cap: the reduction of labour costs, higher productivity, better access for the educated work-force and prevention of any further brain drain. As a result of the social security cap, individuals who have a monthly gross salary of between eur 6,000 and 8,000 would receive a higher net salary by approximately eur 200. However, a decrease in social security payments would decrease the receipts of the Pension Fund and Health Insurance Fund by an amount ranging between eur 250 and 300 million, and there are currently no ideas as to how this disparity might be addressed. Trade unions are not inclined to support the social security cap, as they believe that without appropriate taxes there is no welfare state. In any event, the social security cap has been included into the Coalition Agreement; however, if it is introduced it can be expected that personal income tax brackets will also be adjusted accordingly.

transfer pricing Transfer pricing legislation in Slovenia is in line with the oecd Transfer Pricing Guidelines. Slovene taxpayers involved in transactions with their foreign related parties are required to produce transfer pricing documentation that is frequently subject to tax inspection. On the other hand, nonresidents conducting business in Slovenia through their permanent establishments are also becoming frequent targets of tax inspectors. It has been noticed that tax authorities are taking an increasingly aggressive approach in these tax audits.

other developments New rules for remittances of taxes and other obligatory duties were introduced on 1st October, 2011. The number of subaccounts to which taxpayers can remit their tax payments has been significantly reduced. With the new rules, there are only three state transitional tax subaccounts to which taxpayers can remit payments.

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in perspective

Middle Market Restructuring: Early Action Can Preserve Business Value Despite the recently improving economic outlook, lower asset values and poor forecasting continue to create challenges for management. Executives need to take strategic, operational, and financial action if they are to pay down debt, obtain new credit, and drive new growth. There are several actions which companies should think about now, but cash management is the key.

ow the economy got here is a matter of many missteps. For all, the next steps must focus on recovering from historical losses while moving forward and growing business—more easily said than done. The business climate is largely stalled despite bailouts and stimulus funding. In the credit markets the economic recession has lowered the value of assets. The banks continue to repair their balance sheets, manage real estate exposures and face tighter capital adequacy rules under Basel III and national regulators. The Eurozone sovereign debt crisis adds further pressure and risks to the banking system, as well as the wider financial markets. The current conditions have led to the banks taking a more regular and closer interest in their clients. Banks’ decisions are taking longer, with a significant increase in the levels of scrutiny of the company’s business and financial information. Managing for survival in a recession is different from managing for growth in a robust and thriving market. Many

By Nevenka Kržan

business leaders have not previously seen an economic cycle such as the one we are in. Some may lack the depth of experience and skill sets needed to manage through it. All must adapt quickly to an increased number of new complexities.

restructure before you “need to” Nevenka Kržan is engaged as Senior Partner and Head of the Transactions & Restructuring Services in kpmg Slovenia. Nevenka has more than 25 years of professional experience in providing advisory assistance in various fields of expertise, as well as in leading negotiations with investors, financial institutions and public administrative officials. Nevenka holds a degree in Economics from the University of Ljubljana and is a Certified Business Valuation Professional and Auditor as appointed by the Slovene Institute of Auditors.

A company sliding toward distress can take key steps to manage a potential crunch and minimize business risk: Take control of the situation. Do not wait for the grim reaper to come knocking. Confront your issues head-on and develop plans to get your business back on track, either through operational improvements or through financial restructuring. Proactively manage liquidity. Banks are less eager to fill funding gaps, so take a critical eye to cost containment and understand your company’s fixed and variable cost structures. Implement short-term, 13-week cash flow reporting on a receipts-and-disbursement basis to provide

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visibility to all stakeholders. Identifying the appropriate source of capital for a distressed situation is critical. Evaluate strategic alternatives. Is it the whole or just a part of your business that is the problem? Keep all your options open, regardless of how unpalatable some of them may seem and run with concurrent strategies. These decisions may feel difficult to make, but it is essential to separate emotions from hard, cold facts. The focus should be on what is best for the company overall, not just one aspect of it. Improve communications with stakeholders. Increase your focus on transparency to balance competing interests among relevant stakeholders. Open communication channels with your lenders and help them understand the key drivers of your business. Problem situations with lenders often stem from poor or nonexistent communication, or a series of broken promises. In addition, as a loan moves into a workout situation, the characters and motivations change significantly. It is better to ‘underpromise’ and ‘overdeliver’ than the

other way around. External help also can provide credibility and help repair broken lines of communication. Remember, some of your key stakeholders are your employees. Do not leave them in the dark.

seek informed advice as time is of the essence It is essential to understand the relationship between capital providers, cost of capital, and the company’s degree of financial

Take control of the situation. Do not wait for the grim reaper to come knocking.

distress. Many middle market companies do not have the same level of access to capital markets as large-cap businesses, but there are numerous capital solutions available today for the right restructuring opportunities. Many investors have capital to deploy and are seeking attractive returns in a low-interest environment. A fundamental strategy for ensuring the highest probability of a successful financial restructuring is the preservation of all options early in the process. This can be accomplished by pursuing multiple transaction options simultaneously (as compared to sequentially). These options would include negotiating a temporary forbearance with the current lender while pursuing a new equity infusion, refinancing or sale of the existing debt, or sale of non-core assets to raise capital to de-leverage the company’s balance sheet. If there is a strong business case for an increase in the company’s future enterprise value, the existing lender could be open to a debt-for-equity conversion as part of a broader recapitalisation.

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real estate

RE/MAX Your Second Home… Courtesy of a Franchise Model All theory aside, the fact is that this region, and especially its Adriatic belt, is becoming ever more attractive as a second home and retirement destination. And let’s be truthful, no matter what may be going on at present, with all the talk of the recession and other boogie men, there’s still plenty of money in good old Europe – and beyond. And, naturally, there’s plenty of property for sale as well. And who better to put things into perspective for us than Vladimir Žerjavić, Regional Director of re/max, one of the fastest growing real estate agencies around. Specialising in retail, of course.

EE Let’s not beat around the bush. To buy or not to buy? That is the question. VŽ Buy if you can, and if you know what you’re doing. In the turbulent economic times in which we live, real estate may still be treated as a long-term, low-risk investment, especially when compared to investing in the stock market. The ups and downs of the real estate market are by far less acute; also, the depreciation of the price of shares is way faster, so the danger of losing a lot of money in a relatively short period of time is quite high. When it comes to property, on the other hand, an investor’s portfolio can gain in diversity and maximise returns, since the dependency on currency fluctuations is relatively small. I like to think that I’m not only in the business of selling houses, but also in the business of managing people’s portfolios – their financial futures, as it were. SEE But the market – the real estate market in the region – is not exactly at its peak, is it? VŽ Depends on how you look at it; it is a

buyers market, which spells opportunity and lucrative return for those who are doing it right. The nature of any market is cyclical, but I would much rather put my money into property than into a bank account. In 2011, for instance, we saw a significant increase in the purchase of real

RE/MAX EUROPE REGIONAL SERVICES Number one in the world, re/max is now the fastest growing real estate franchising network in Europe as well. A global real estate franchising system in 87 countries that now is in its 39th year of consecutive growth, re/max has more than 6.000 independently owned offices with over 87.000 sales associates globally. In Europe, re/max is represented by over 11.000 sales associates in more than 1.450 independently owned and operated offices across 33 countries.

estate as an investment. Properties were bought as a financial provision or as part of a private investment portfolio. I think people, clever people, are aware that, at the end of the day, the value of property increases over time. Long-term thinking is essential in the real estate game, but it is also much easier than, say, in the financial industry, where the pressures to ‘collect’ are much higher and hence much more short-term oriented. SEE What is your competitive edge, so to speak? VŽ Naturally, finding the right property is key to every successful investment, and that is where we come in. Partnering up with an experienced agent can clear many hurdles and make the process much easier, regardless of whether you are looking to buy for yourself or for commercial purposes. Aspects such as size, location and infrastructure all need to be taken into consideration. Often certain types of buyers have specific requirements; when buying a retirement home, high quality medical services in the neighbourhood

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are essential. I like to think that we provide the expertise necessary for the buyer to find exactly what he needs. SEE But isn’t that exactly what pretty much every real-estate company would tell us? VŽ With offices in 33 European countries and 84 countries worldwide, re/max is a very successful franchise company. Despite the burst of the housing bubble in the United States and the challenging times that followed pretty much everywhere, re/max is still No. 1 in Europe. The reason for our success is our strong network and the associated exchange of knowledge

and know-how. In other words, not only does the hq Office support all the regional centres with pr and marketing activities and offer training programmes, it also, in testing times, serves as a cushion or a safety net to balance out potential difficulties. To me, the advantages of the franchise concept are obvious: you are in business for yourself, not by yourself. I know that to some this may ring hollow, a mere phrase, so let us not forget that the franchise concept works in both directions and that the requirements of franchise companies must be fulfilled completely, which is not an easy task.

“Proverbial problems is the right phrase, and, as you might expect, they are usually related to permitting, or a lack thereof, and to red tape.”

SEE Tell us more about the advantages – the in's and out's – of the franchise model, especially as some real estate companies, the big ones, pride themselves on being “wholly owned”? VŽ The franchise model is booming; in economically challenging times, franchise companies such as re/max offer entrepreneurs a solid ground on which to start their own businesses. An established brand combined with the know-how, marketing services and technical support allow you to build a strong basis for success. Whereas the world has witnessed a downturn in most economic sectors in the recent period, there have also been growth industries, such as the franchise business, where the failure rate is considerably lower than in ‘normal’ entrepreneurship. However, the highly praised business model comes along with challenges for both sides, for both the franchisor and the franchisee. I think people tend to underestimate the pressure and expectations when joining a franchise. Giving a franchise to someone who does not have enough thrive or is not capable of

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SEE Very well, that was the corporate business model, but what of the end user, your customer? How do your customers profit from the franchising model? VŽ Put simply, they have access to a complex but highly functional network, and one which is not overburdened by excessive overheads and many other typically corporate ailments. We can easily reference and cross-reference properties across a number of different countries, or, for that matter, across a continent. The system is fast and expedient, and is designed to save our clients both time and money. Isn’t it nice to speak to an agent in Slovenia and have him help you with property, say, in Montenegro?

VŽ “Proverbial problems” is the right phrase, and, as you might expect, they are usually related to permitting, or a lack thereof, and to red tape, which is why contacting an experienced agency is – this is no self-promotion – absolutely the only way to go. On a more ‘macro’ level, another problem in the region is the general lack of social zoning – extravagantly luxurious properties are oftentimes located right next to borderline slums. As for the hot zones, well, that still remains the relatively high-end yet still affordable offerings in the Adriatic parts of Croatia and Slovenia, the Northern Coast of Montenegro – though Albania too is becoming more and more popular. There is also a surge – by now widely identified – of interest in the so called “ethno-style” houses inland, with Istria leading the way. Still, these things are hard to generalise, as it is often people’s homes that we are talking about. The tailor-made approach truly is the way of the future, and on both ends: both sellers’ and buyers’.

instance, offers countless benefits. With Twitter, for example, a re/max agent can inform all his followers – potential customers as well as other agents – about new properties in a fast and uncomplicated manner, like never before. Moreover, this information can be shared easily and therefore reach thousands of customers who might be interested in exactly this one property. In addition, we use our online channels not only to offer better service to our customers, but also to support our agents. YouTube is a particularly brilliant way to share knowledge regardless of time or place. Again, our offices are spread across 33 countries in Europe, and there are more than 11,000 sales associates in our network. In order to support them we need to be creative. Still, despite all the intricacies and importance of our social media strategy, one should never forget the more ‘classic’ online channels. Allow me to say that a revamped re/max Europe website will also be launched very soon.

SEE That said, which areas in the region do you identify as hot zones, and what are the proverbial problems that you and your clients regularly encounter?

SEE And what are you doing at the moment to meet that “future” prepared? VŽ In an era where time is the most precious commodity, social networking, for

SEE Granted. But in a word, is this the time to buy? VŽ This is the time to seek quality information and, yes, to buy.

the basics in business could lead to brand damage, so ‘lending’ a franchise is a task of great responsibility. Just for reference, in 2011 re/max sold licences in Finland, Lithuania, Albania, Bosnia & Herzegovina, Bulgaria and Poland. The search for potential candidates was not an easy one.

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culture

The Austrian Cultural Forum The former Indian Prime Minster Jawaharal Nehru once described culture as “the widening of the mind and of the spirit”. The Austrian Cultural Forum is an international organisation which seeks to widen things a little bit more by doing what they can to benefit the indigenous cultural aspects of other European countries. We took the time to go visit the nearby Zagreb offices. By Lee Murphy

ll too often when we think of Austria lazy stereotypes spring to mind, the Alps and mountaineering, Wolfgang Amadeus Mozart, and the waltz… If we’re being honest with ourselves these things are undeniably Austrian, there’s no debating that, but there is so much more, and best of all it’s happening right here on our very own doorsteps, and it’s all courtesy of the Austrasia Kulturni Forum, or the Austrian Culture Forum (acf). The acf has been active in Zagreb, responsible at the time for all activities in the former Yugoslavia, under several

guises, since 1955, initially as the Austrian Reading Room, and then, in 1974, as the Kultural Institute, before finding its current moniker. Director of the acf, Georg Christian Lack told see that its “primary concern is to promote modern culture, not just the classical stereotypes of Mozart and the Vienna Boys Choir”, and that they were looking to “support young artists in all genres”, that “culture is not just classical, but everything!” Georg was also keen to highlight the work done by the acf locally, by collaborating on events with European groups like eunic (the European

Union National Institutes for Culture), combined with regional groups, such as the Street Art Museum (@muuzej), which worked to spectacular effect recently when they held a street art festival in Novi Zagreb, not least because art and culture rarely gets to express itself in non-traditional locales. acf put it succinctly when they told us that they “try to bring ‘art’ to quieter areas where not much else is happening”. That’s not to say that these are somehow downtrodden, destitute areas, but rather that they are often lacking in a creative outlet for those who reside there and it is ultimately the aim to tap into as

CULTURE, CULTURE... EVERYWHERE. There is a wide variety of event, to suit almost every cultural taste, and if you can't make one then there's always the next. The Croatian website can be found at www.kulturforumzagreb.org, while www.kulturforumbelgrad. org will direct you to their Facebook page. For those further north in Slovenia, well you have a wonderful opportunity to immerse yourself as Maribor has the proud title of European Capital of Culture 2012, and that can be seen at www.maribor2012.eu.

Georg Christian Lack

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Whatever you might fancy seeing, be it a play, an orchestra or choir, - or perhaps you simply appreciate the adventurous expressions of artists coming into their own - then there is surely something for you.

much potential as might be hidden far out in suburbia. However, this is not Croatia-centric; with other centres operating out of Ljubljana and Belgrade, the acf look to bring their own agenda whilst simultaneously supporting a myriad of Croatian, Serbian, and Slovenian events in their own right, be they the varying film festivals that exist across the region, theatrical performances, artistic expressions, and not just in what might be considered traditional fields; modern and innovative projects are always considered. However, while they do wish to present their own Austrian heritage to a wider audience they emphasise their role in all joint ventures as being of a supportive nature rather than a controlling one; the end goal being the development of as many active and productive cultural outlets as possible. Nicolaus Keller, Director of the acf in Belgrade told us that “while our activities would be of a similar nature to those in Croatia, or other countries, the Austrian Cultural Forum Belgrade puts special

THE EUNIC FELLOWSHIP One of the cultural programmes which the acf help promote is the eunic Fellowship, wherein a ‘cultural manager’ from Croatia can arrange to spend between 1 and 6 months with a relevant European institute of their choice, and is intended that such a spell might create a lasting professional relationship between both entities. The candidate in question can come from either the public or private sector. So, don’t worry if you work in a commercial body, or whether you organize impromptu modern theatre, this, like the acf, does not judge your field, be it art or acting, classical or contemporary. You have until March 1 to be eligible for this year, but don’t worry if you miss the deadline; there’s always next year.

emphasis on contemporary (Austrian) architecture, modern dance, contemporary (Austrian) film or projects relating to our

special focal area which is The Danube and The Danube region”. It is worth noting that the Belgrade office has already begun plans for the 2014 commemoration of the outbreak of World War I. So, whatever you might fancy seeing, be it a play, an orchestra or choir, or perhaps you simply appreciate the adventurous expressions of artists coming into their own then there is surely something for you. The acf have events running for 12 months of the year, in towns all over the Balkans, not just in the main urban centres; there are no excuses for not indulging your cultural bent. See Magazine will present several events of note in our To-Do List, so make sure you take the time to add some of these cultural dates in your diary. The Serbian branch, like the Croatian one, spreads its events all over the country so don’t worry if you’re not a resident in Belgrade or Zagreb. Rijeka, Sombor, Split, Novi Sad, Osijek, and Subotica, as well as many others will all see the benefits of the efforts of Georg and Nicolaus.

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It only stands to reason that Pančić’s mausoleum would be located on the highest peak in the mountain range – and it is definitely worth the climb, all 2017m of it!

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destinations

Kopaonik All Spruced Up In a land of contrasts which Serbia certainly is in more senses than just geographical, one gets comfortably to choose whether to spend time in perfectly flat surroundings (Vojvodina), or go wild and ski or hike in the most beautiful mountain scenery; and when it comes to skiing in Serbia, one place traditionally comes to mind - Kopaonik. Although, as usual, there is more to it – indeed much more – than skiing. By Miroslav Tomas

istorically Kopaonik – both the town and the mountain – was an important mining area during the Middle Ages, whence it derived its name, as the Serbian verb “kopati” means “to dig”. Old records show that Serbian kings brought Saxon miners to the area, while several mints were also highly active. The importance of the area is best highlighted by a large number of old fortresses and churches built on the very mountain or in its vicinity. During the Turkish period, mining activities ceased and the mountain's dense forests were used for hiding and, it goes without saying, brigandry. One can say that the earliest tourism-related activities began at Kopaonik as early as the 14th century, when the area was well known for its geothermal springs. However, the mountain became a famous resort during the early 20th century, although the first large centre would not be built until as late as 1986. If one person, who contributed the most to Kopaonik's current glory, stands out, it would be Josif Pančić, the Serbian botanist well known for his passion for this mountain and its abundant flora. During one of his many visits, Pančić

discovered what we know today as the Serbian Spruce, which is referred to as Pančić's Spruce locally. His love of Kopaonik went so far that his last wish was to be buried on the very mountain.

pančić on the top of the world Then it only stands to reason that Pančić’s mausoleum would be located on the highest peak in the mountain range – and it is definitely worth the climb, all 2017m of it! The inscription on one of the mausoleum walls is frequently quoted in Serbia, and it goes – "Only with a thorough understanding and analysis of Nature of our country, can they show how much they love and honour their homeland". They, of course, would refer to Serbia’s youth, and perhaps to recapture that youth one need only stroll a few hundred meters further to the place called “Nebeska stolica” (“Heavenly Throne” or “Chair”), dedicated in the 7th Century to St. Prokopije, the patron saint of miners. There once stood a church, and the locals still gather for prayer here every July 21st. The original mosaic floor is on display at the National Park’s main

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JOSIF PANČIĆ The man in question was born on April 17th 1814 as Josip Pančić in Ugrini, near Crikvenica, Croatia (then Austrian Empire), the fourth son of Pavel and Margarita. After finishing elementary school in Gospić, he went on to the lyceum in Rijeka, and then graduated in 1842 in Budapest with a degree in medicine. It is there that Pančić fell in love with botany, taught by the then renowned botanist Jozsef Sadler. Pančić’s acquaintance with the Serbian linguist Vuk Stefanović Karadžić, who wrote on his behalf a letter of recommendation to the Serbian authorities, allowed our botanist to fulfill his wish and settle in the then Principality of Serbia. Pančić worked as a physician in rural Serbia and spent the larger part of his life documenting its flora. He fell in love with Kopaonik, which he visited 16 times between 1851 and 1886. He was credited with having classified many species of plants which were unknown to the botanical community at that time. His most significant discovery was the Serbian Spruce, which he named Pinus omorika (omorika being the Serbian name for spruce), later being reclassified as Picea omorika (Pančić) Purkyne. Pančić was named the first president of the Serbian Royal Academy, formed on April 5th, 1887, but he would serve in this capacity for less then a year, as he died on February 25th, 1888.

Studenica monastery

centre, but a faithful replica has been put in place, for all those who value “a complete experience.” Should you still feel like walking even after reaching Nebeska Stolica, then it’s a short hike (downhill, thankfully) towards the old zinc and lead mine, and then a mere 1.5km further to a beautiful 70 metres high waterfall called Jelovarnik. Please bear in mind that the waterfall trail is quite a serious hiking adventure, and make sure that you have proper maps and directions.

feeling mediÆval If the information above has caught your attention, you should know that Kopaonik is easily reachable from all parts of Serbia, and it's by far the easiest, and opportune, to travel by car, since there are many historically interesting sites to be found along the way. Here we shall single out the Studenica Monastery, built in the 12th Century and located roughly 40 km away from Kraljevo. The monastery is

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Studenica monastery, Church of the Theotokos - Three Hierarchs of the Church

The monastery is a unesco world heritage site and features stunning carvings in white marble.

Studenica monastery, carvings above the entrance

a unesco world heritage site and features stunning carvings in white marble and stone, as well as medieval frescos painted in the Byzantine style. If you are a fan of Byzantine art and architecture, this is a must-see. If you still want to feel medieval, a veritable fortress is located 20km from Kraljevo, in the Ibar Gorge. The fortress is called Maglić, which means ‘the foggy one’ in Serbian. The fortress itself was built in the 13th Century and features,

within its gates, the remains of a palace, a barracks, as well as Saint George's church. Understandably, a part of the fortress is closed to visitors due to safety concerns, but that won’t detract from the tour.

living it up Once you arrive at Kopaonik, we certainly hope you made your booking in advance, since there are rarely any vacancies, especially on weekends during the skiing

season, which can last quite a long time - Kopaonik has 212 days of snow on average per annum. A quick trawl of the internet will provide you with a good selection of accommodation, be it ethno style bed & breakfast, or full-fledged four star hotels with wellness and spa areas and a selection of rooms to choose from. Accommodation is located in several locations; at the entrance to the National Park, or right up by the ski slopes. Kopaonik features over 50 km of skiable slopes, including

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Blue, Red and Black (the difficulty levels of the ski routes). The latest addition to the ‘family’ is meant to target those who are a bit more inclined towards the extreme – one of the largest snowboard parks in the region was opened on Kopaonik in February this year. Most of the cafes in the vicinity feature typical Serbian cuisine and drinks, as well as the traditional fireplace, so those not interested in skiing can relax, spend some quality idle time, and enjoy the scenery. If you don't feel like cooking after a long and exhausting day on the slopes, Kopaonik offers a selection of restaurants and cafes similar to those available in Belgrade (some of them, in fact, are part of the same chains as their counterparts located in the capital). More traditional options are available as well, featuring wooden cabins with open fireplaces (a hearth at the heart, if you will), usually serving traditional Serbian winter meals (meat, meat, more meat, and lots of alcohol). Live music can be seen on selected evenings, so make sure you brush up on your knowledge of Serbian folk songs. Should you choose to make your stay at Kopaonik a more permanent experience, and are actually considering purchasing property on the mountain, there is a wide portfolio of individual houses available for sale, as well as apartments and land lots.

m² for the more luxurious ones. However, one should pay attention and do the homework before the actual transaction takes place, since many properties are built without proper permitting and in areas where building is strictly prohibited. Thus, proper due diligence is highly advised.

the festive march NOVAK AND KOPAONIK Though born in Belgrade, the now world no. 1 Novak Đoković was first spotted in the summer of 1993 at Kopaonik, where the six-yearold boy’s parents ran a fast food parlour. Upon seeing the dedicated and talented youngster in action, Yugoslav tennis legend Jelena Genčić stated: "This is the greatest talent I have seen since Monica Seles.” That said, it is perhaps a curiosity that before committing to the racket, Đoković had a go as skiing. We can’t say we’re unhappy with his ultimate choice.

Due to the many limitations set by the National Park, the prices of real estate at Kopaonik can be quite high when compared to the rest of the region, with asking prices as high as 1,000 Euros per m² for an average property, and up to 2,500 Euros per

Kopaonik gains the national spotlight during two separate events this March: the Kopaonik Business Forum - a traditional gathering of government representatives, economists and business people (already behind us and covered in this issue of see); and a more relaxing one the Big Snow Festival. The festival is going to be held from March 19th to March 25th and will feature an excellent line-up of both foreign and Serbian acts. The festival also includes several sporting events snowboard jumps and ski and snowboard tours with professionals and festival performers alike. Keeping in mind that the skiing season is expected to last as late as May 1st (thanks to the artificial snow machines), then late March may be just the time to enjoy great music and snow - at the one location. And, for last, who says there is nothing but trouble on the Serbia-Kosovo border? There is Kopaonik, hardly troubling at all.

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good stuff / see promo

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good stuff

Balkan Beer Bash The freezing cold may have subsided, but we're still far from summer heat. What better way to warm up than to reminisce about a selection of the best the region has to offer – beer-wise. Let us start here.

Nikšićko

Union Stout

The only lager produced in large volume on our list is the hallmark of Montenegrin industry and in fact the best known brand of the country. A pale lager produced to the highest standard, Nikšićko’s smooth flavour is sure to win over the heart of the most demanding beer lover. Testifying to the quality of this literal miracle of Montenegrin industry are over seventy international awards that the brew has picked up over the last century. What comes as a true blessing for all beer lovers of the region is the fact that Nikšićko is readily available throughout the region, be it in bars or supermarkets.

Union Stout is a premium quality Slovene dark. What was originally a heavy dark beer produced in winter months is today brewed as a light stout with a distinctive roasted malt flavour. Compared to the Croatian Tomislav (see below), with which it shares a similar richness, Union has a much lower alcohol content (only 5.2 %). For all those willing to experiment (or should we say for the connoisseurs), we recommend a half and half mixture of draft stout and pale Union lager.

Preminger

Tomislav

This pale lager is produced in Bihać, in NorthWestern Bosnia, as a franchise of a little known Czech brand. However, we’re speaking of a pearl here, its bitter aftertaste being the ideal companion to local grill specialities and a welcome presence in a market overrun by pale lagers produced according to corporate standards. Moreover, strangely, the Bihać Preminger has to date won several international awards for supreme quality – unlike its Czech namesake, which appears to be an entirely unremarkable product. One can only say that the producers would have been better off if they had taken some time and thought of an original name for their beer. May we suggest something along the lines of “Bihać Gold”. We’d drink it.

This dark beer named after the first Croatian king is a premium product of Zagrebačka Pivovara. As much as we don’t want to make this article about commercial beers, this dark ale nonetheless made its way into our selection. This is a doppelbock dark beer, a variety not often brewed anywhere outside of Austria. Brewed through a special process, this beer with high levels of extract and an alcohol content of 7.2%.is indeed a true gem of the regional beer industry. Rich in flavour, it is an ideal companion of roast beef or domestic blood sausages, and clearly the beverage of choice during colder times. But beware, this ale packs a mighty punch indeed!

Zaječarsko One of the most well-known Serbian breweries (owned by the Heineken Group) has recently launched a new product – a pasteurised light beer. Rich in extract and low in alcohol, this product has a shelf life of only three months, and is in that respect something of a companion to the Croatian Vukovarsko, following the latest trends of organic

and back-to-the-roots production. Its fresh and smooth flavour is the ideal and welcome refreshment for anyone in need of quenching his thirst, if in Serbia, of course. And please, those of you hailing from other meridians, do not be discouraged by the Cyrillic inscription on the label. Cheers!

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to-do list

Ivo Pogorelić

Goran Bregović

Belgrade Dance Festival

March 19th - 25th

March 24th

March 29th

Kopaonik / The biggest European winter music festival

Zetra, Sarajevo (20h) / The world music icon returns to his home own

National Theatre, Belgrade (19:30h) / Ballet by Ludwig Minkus

The Big Snow Festival

Goran Bregović

Don Quixote

March 20th - 26th

March 25th - 30th

March 30th

Cankarjev dom, Ljubljana / An insight into contemporary documentary film production

Belgrade / 59th international short and documentary film festival

HNK, Zagreb (19:30h) / Opera by Richard Wagner

Documentary Film Fest

Doc & Short Film Fest

Parsifal

March 22nd

March 28th

April 1st

KD Vatroslav Lisinski, Zagreb / Works of Chopin and Brahms, conducted by Dimitri Kitajenko

Tvornica Kulture, Zagreb (21h) / Sevdah-blues-jazz crossover concert

KD Vatroslav Lisinski, Zagreb (20h) / Jazzorkestar teams up with Austrian guitarist and composer Wolfgang Muthspiel

Ivo Pogorelić

Mostar Sevdah Reunion

HGM Jazzorkestar Zagreb

March 23rd

March 28th - 31st

April 2nd

Collectors Fair, Ljubljana / Philately, antiques, militaria and other collectibles

CSC Skenderija, Sarajevo / International tourism fair

Cankarjev dom, Ljubljana / World class mounteneering films from Slovenia and abroad

March 24th

March 28th - April 12th

April 3rd

National Theatre, Belgrade / An opera by Georges Bizet, premiere night

Belgrade / The 8th edition of the international classic and contemporary dance festival

Drama Theatre, Belgrade / A contemporary dance production sponsored by the Austrian Cultural Forum

Collecta

Carmen

Days of Tourism

Belgrade Dance Festival

6th Int Mountain Film Fest

Liquid Loft (aut)

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