Sveska 02 Relations Between Serbia and The Eu History and Prospects

FACULTY OF ECONOMICS, FINANCE AND ADMINISTRATION
RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

History and Prospects
RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION History and Prospects
Research team leader Prof. dr Mihailo Crnobrnja Prof. dr Ana S. Trbovich Research Coordinator Milo Eri Research Assistants: Vanja Alini Marina eni, Dejan Jovanovi Anja Simani
CONTENTS
FOREWORD .............................................................................................................................9 INTRODUCTION .................................................................................................................. 10 1. GOVERNMENTAL ORGANISATION AND INSTITUTIONAL STRUCTURE OF EURELATIONS ......................................................................................................... 13 1.1. Governmental organisation and institutional structure of EU-relations ............. 13 1.1.1. The EU Integration Office of FR Yugoslavia .......................................................... 13 1.1.2. The EU Integration Office of the Republic of Serbia .......................................... 14 1.1.3. The Serbian Government Council for European Integration ......................... 16 1.1.4. Intergovernmental Commission for EU Accession Coordination ................ 17 1.1.5. EU related organisational units within ministries .............................................. 18 1.1.6. The EU Negotiating team ............................................................................................... 18 1.2. The Parliament .............................................................................................................................. 19 1.2.1. The Parliament of Serbia - European Integration Committee ............................. 19 1.3. Changes in institutional arrangements ................................................................................ 21 2. POLITICAL RELATIONS ................................................................................................ 22 2.1. Official positions on EU relations ........................................................................................... 22 2.2 Major events marking EU-Serbia relations ......................................................................... 28 2.3 Negotiations, EU level agreements ......................................................................................... 33 2.4 Positions of EU Member States................................................................................................. 35 3. ECONOMIC RELATIONS................................................................................................ 39 3.1. Trade with the European Union.............................................................................................. 39 3.2. Labour migration to the EU since 1900 ............................................................................... 51 4. LEGAL ALIGNMENT ....................................................................................................... 61 4.1. Evaluation of the national legal system ............................................................................... 61 4.1.1. Transformation since 1990........................................................................................... 61 4.1.2. Adaptation to the EU acquis communautaire ....................................................... 62 4.1.3. Pre-accession help and actions ................................................................................... 63 4.2. Comparative analysis according to the EU negotiation chapters ............................. 65 4.2.1. Single Market....................................................................................................................... 65 4.2.2. Investments ......................................................................................................................... 68 4.2.3. Environment, consumer protection, labour legislation.................................... 70 4.3. Official positions on the future of legal adaptation......................................................... 72 4.3.1 Programs or road maps of developing the national legal system ............. 73 4.3.2. Feasibility analysis............................................................................................................ 74 7
4.3.3. Institutional background ............................................................................................... 74
5. EU PERSPECTIVES, EFFECTS OF CONDITIONALITY AND FORECASTS ......... 75 5.1. The internal effect of non-specific sanctions .................................................................... 77 5.2. Serbia specific conditionality ................................................................................................... 79 5.3. Likely accession of Serbia to the EU ...................................................................................... 82 ANNEX: THE HISTORY OF RELATIONS OF SERBIA AND THE EU......................... 87
FOREWORD
This research paper is a result of collaboration between the FEFA Institute and the Center for Enlargement Studies of the Central European University in Budapest, Hungary. The CEU-ENS conducted a large comparative study called INTEGRATION PERSPECTIVES AND SYNERGIC EFFECTS OF EUROPEAN TRANSFORMATION IN THE COUNTRIES TARGETED BY EU ENLARGEMENT AND NEIGHBORHOOD POLICIES Main objectives of the research project: provide a basic overview of the political and economic transformation processes of the target countries for the period 1990-2006, assess the reform processes triggered by the attraction of the European integration and its norms, make forecasts for the period 2007-2010 and 2010-2015 regarding development paths of the target countries including their outlook for convergence and perspectives for EU membership (where applicable). Countries Two newest EU Member States: Bulgaria, Romania Southern neighbouring states of the EU: (Albania, Bosnia-Herzegovina, Croatia, the FYR of Macedonia, Montenegro, Serbia) Eastern neighbouring states of the EU (Moldova, Russian Federation, Ukraine, Belarus) Basis of overview: 1990-2006 Forecasts: for 2007-2010 and 2010-2015 FEFA produced the case study of Serbia within this large project. FEFAs research and indings are presented in the following pages.
INTRODUCTION
To better understand Serbias current relations with the EU, one must look very briely into the genesis of the relations even before the fall of the Berlin Wall, the event that symbolised the beginning of a new era in post-socialist, EU aspiring countries. Serbia, like other countries emerging from the former Yugoslavia, had a far longer history of economic, political, even formal, contractual relations with the European Union (EU) than any other former socialist country. The Socialist Federalist Republic of Yugoslavia (SFRY) had established diplomatic relations with the former European Communities (EC), as early as 1967, even before the irst EC expansion, signalling a strong interest to improve relations at a time when other countries viewed the EU as yet another capitalist creation. The so-called Belgrade Protocol on Relations between SFRY and the EC, signed in 1976, proclaimed the joint goal of improving and expanding bilateral relations between the EC and SFRY primarily, but not exclusively, in trade. As a result, the Cooperation Agreement was signed in 1980, giving SFRY preferential treatment in trade and free access to the EC for 80% of traded products.1 This led to a very rapid increase in trade over the next decade. At the time when the Berlin Wall fell, and other countries of Central and Eastern Europe knocked at the door of the European Communities, SFRY was already a well established trading partner and the EC projected by far the largest external economic inluence, by means of trade, inancing and investments, on Yugoslavia. In February 1990, Yugoslavia formally submitted an application for Associate Membership to the EC Council. The Council took note of the application and promised serious consideration. A formal response to the application never materialised. Negative internal political developments in SFR Yugoslavia, the broad span of attention that the fast moving events in post-socialist countries required of the European Community, and the Maastricht Treaty that was in preparation, did not provide the conditions necessary for a rapid response to this initiative. That was the high point in the evolution of SFRY-EC relations. From that point on, things only deteriorated until Yugoslavia disintegrated as a state. Paradoxically, at the very time when the EC underwent the greatest transformation since the original Treaty of Rome, emerging in Maastricht as the European Union, the former Yugoslavia was in a process of self-destruction which would delay, by almost a decade, the initiation of the EU accession process for all countries emerging from SFRY with the exception of Slovenia. SFR Yugoslavia formally ceased to exist in January 1992 when the EU recognised Croatia and Slovenia. Soon there1
Mihailo Crnobrnja, Jugoslavija i Evropska zajednica, Ekonomska politika, Belgrade, 1991.
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INTRODUCTION
after, the EU recognised Macedonia and Bosnia and Herzegovina. Serbia and Montenegro then formed a new, successor state called the Federal Republic of Yugoslavia. The new state came into formal existence on 27 April 1992. This new state was very soon expelled from the international community through the imposition of probably the most rigorous and severe United Nations (UN) sanctions, which came into effect on 31 May 1992. After more than two decades of furthering relations with the EU, the rump Yugoslavia saw relations plummet to a bare minimum. This minimum consisted of diplomatic charg daffairs level of keeping some form of communication open, without any real substance to the relations. Throughout the nineties relations between the EU and FR Yugoslavia were barely kept alive. After the signing of the Dayton Peace Accord in 1995, which ended the war in Bosnia and Herzegovina, trade sanctions were lifted and some trade resumed. Diplomatic relations were elevated to the ambassadorial level. But at the time when most other countries were busy negotiating accession to the EU as oficial candidates, the countries of the former Yugoslavia, except Slovenia, but including Serbia, had no formal negotiations, nor a negotiating framework. This was to change only in 1999, when the new EU regional initiative, the Stabilisation and Association Process, was launched. Bilateral negotiations with individual countries began soon thereafter. Notably, the events in the former Yugoslavia during the nineties led to a more profound change in the nature of relations between Serbia and the EU. There was a deterioration of attitudes and perceptions on both sides towards the other side. Political elites, governments and the population of EU countries, as well as the European Commission representatives, held Serbia largely (if not exclusively) responsible for the brutal and tragic way in which former Yugoslavia disappeared from the political map. In the eyes of the Western public the bombing of Dubrovnik in 1991, ordered by the Serbian regime, at the time inlicted more damage to the image and perception of Serbia then any resolution of the EC Council or the EC Parliament. The war in Bosnia and Herzegovina (1992-1995), and in particular the Srebrenica episode of that war, which occurred in the summer of 1995, afirmed the prevailing image of Serbs in the Western world as brutal ethnic cleansers. Finally, the conlict with NATO that occurred in 1999, and the new wave of ethnic cleansing that took place during that conlict, left most of the EU public, and a large segment of the political elite, with the impression and conviction that Serbia prefers the use of force over political and diplomatic means in solving its state and national problems. This attitude in the EU changed somewhat after the fall of the Milosevics regime. The change was particularly noticeable in oficial relations and in the perception of Serbia among the political elite in EU countries. It was much less noticeable in the public at large. Serbia had acquired a bad name that was going to be dificult to change. The assassination of the Prime Minister in 2003 and the events that followed the assassination did little to assist the process of changing the image of Serbia in EU countries in a positive direction. At the same time, there were, and there still are, negative perceptions of the EU and EU countries individually in Serbia as well. During the Milosevic period the negative perception was a deliberate instrument of his foreign policy. While Milosevic was popular, the perception of EU as an enemy was also popular. One of the main 11
slogans of the democratic opposition that inally ended Milosevics reign was Serbia in Europe. And for a period of time, during the Djindjic Government, this positive perception of the EU was very strong. However, the overdose of conditionality imposed by the EU helped antagonise a growing segment of the Serbian public, generating exactly the opposite effect from the one that was desired. This is particularly true of the manner in which the EU essentially stalled associate status negotiations with Serbia for almost a year, and then oficially froze them for another year, only to restart negotiations even without getting the desired effects of conditionality. A large segment of the political elite, as well as a large segment of the public at large, felt and continue to feel a strong resentment toward these tactical moves of the EU. The current situation is yet another instance of cooling in the perceptions of the two sides. The Serbia as an irritant feeling is present among many EU and member countries oficials. Most of the EU countries, and certainly all of the most powerful and inluential EU countries, are all but committed to a solution of the Kosovo status that is not accepted in Serbia, i.e. their preference is controlled independence offered by the Ahtisaari Plan. This is unacceptable to the present political elite and Government of Serbia. Hence, Serbia is once again perceived as an obstacle to reaching stability in the region. On the other hand, the European sentiment in Serbia is on a decline, fed by the nationalist perception that the EU is involved in amputating Kosovo from Serbia. It is sure to fall even further if and when this problem is solved in a way which will have the EU supporting a solution unacceptable to Serbia. Following the major regime change in October 2000, Serbia has had four governments. Since there is no national consensus on the European future of Serbia, the attitude of these governments toward the EU did not necessarily relect an unbroken continuous line of improved and enriched relations. So far, Serbia did not have an anti-EU Government but the emphasis that was placed on developing relations with the EU and moving more rapidly on the accession path by the four governments was different and generally speaking, on the decline. Today, the pro-European forces in Serbia are weaker then they were seven years ago.
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1. GOVERNMENTAL ORGANISATION AND INSTITUTIONAL STRUCTURE OF EURELATIONS
The administrative capacity and institutions charged with EU integration in Serbia have followed the political faith of the country. In the early stages of the period under investigation in this report, i.e. in 1990 and 1991, all matters related to the EU were dealt with through the Ministry of Foreign Affairs and the Ministry of Foreign Economic Relations of SFR Yugoslavia. As SFR Yugoslavia dissolved, and FR Yugoslavia came under a prolonged period of UN sanctions, relations with the EU became practically non-existent. During this entire time, 1992 2000, there were no organisations or institutions dealing with EU accession, nor was there a need for them. Things changed after October 5, 2000. During the irst year (2001), EU relations were conducted via the Ministry of Foreign Affairs and the Cabinet of the Deputy Prime Minister of FR Yugoslavia. The chief negotiator, the point man toward the European Union at the time was the Deputy Prime Minister of FR Yugoslavia. Serbia had no institutions or organisations that were formally dealing with EU matters. As far as Serbia is concerned, it makes sense to observe and report on the institutional set-up for EU Integration only in the post-Milosevic period, i.e. from 2001 until the present day.
1.1. Governmental organisaon and instuonal structure of EU-relaons

1.1.1. The EU Integration Office of FR Yugoslavia
Initially, Serbia dealt with the EU and EU matters only through the FR Yugoslavia. The irst FR Yugoslavias EU Integration Ofice was established on the 1 November, 2001 as a body of the Council of Ministers of FR Yugoslavia, but not as an independent unit. Rather, it was a part of the Ministry for International Economic Relations of FR Yugoslavia. The primary task of the Ofice was the organisation and the coordination of the integration process of FR Yugoslavia. Due to the fact that FR Yugoslavia was a weak state, and the real power rested with the two republics, the scope of initiative of the Ofice was very limited and it had to work in very close cooperation (and under the scrutiny) of similar respective ofices of the two members of the State, Serbia and Montenegro. The Ofice at the federal level basically focused on four activities: 13
1. Coordination of activities related to the irst stage of the accession process i.e. the meetings of the joint EU-FRY Consultative Task Force, which was relected in the annual EU report on the progress of FRY in EU related reforms;2 2. Increasing administrative capacity for EU accession, based on the Strategy of Training the State Administration;3 3. Translation of acquis communautaire into Serbian language; 4. Communicating to the public the accession process and accomplishments, again based on a Strategy that was approved and co-edited by the European Commission. When the state changed its structure and its name from the Federal Republic of Yugoslavia to the State Union of Serbia and Montenegro, the Ofice also changed its name to the EU Integration Ofice of Serbia and Montenegro and, to an extent, also adjusted its scope of work. Namely, the change of state structure from federal to a more loose state union meant that the level of joint activities of Serbia and Montenegro was further reduced and, consequently, the power of the institutions that represented the joint state was also reduced. At the end of July 2003, the State Union of Serbia and Montenegro established a high-level Council for European integration. It was presided by the Head of State of the Union and the other members were: Prime Ministers (PM) from both Republics, deputy PMs from both republics, Minister of Foreign Affairs of the State Union, as well as ministers of international economic relations from the two member republics. The Council met only a few times and did very little to accelerate the EU integration process. At the time, the top of the political agenda was dominated by the up-coming separation of the two member states and signiicantly more energy was spent on politics of disintegration then on the politics of integration, of which the integration into the EU was a key factor. With the dissolution of the State Union both the Unions Ofice for EU Integration and its Council for European Integration ceased to exist.
1.1.2. The EU Integration Office of the Republic of Serbia

Serbia, as one of the two federal units of FR Yugoslavia, started the institutional preparation for EU accession in January 2002. At that time, a Unit for European Integration was formed within the Ministry of International Economic Relations of the Serbian Government4. In May of the same year, by a governmental decree, the Unit for European Integration was elevated to become a Department for EU IntegraEuropean Commission. The Stabilisation and Association Process for South-Eastern Europe First Annual Report [COM(2002)163 inal, - Not published in the Oficial Journal], 3 April 2002. 3 European Integration Ofice, Strategy for the EU education of civil servants, Belgrade, 2002. 4 The irst Director of the EU Unit was the coordinator of the present project, prof. Mihailo Crnobrnja
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GOVERNMENTAL ORGANISATION AND INSTITUTIONAL
tion within the same Ministry, headed by an Assistant Minister.5 This arrangement was in place for almost two years. The current Serbian EU Integration Ofice (SEIO) was established on 8 March 2004.6 The Ofice took over the tasks that were previously undertaken by the Department for European integration. The political signiicance of the Ofice was elevated by the fact that it no longer reported to the Minister of International Economic Relations but, rather, to the Deputy Prime Minister. The creation of the Ofice presented a clear indication of the Cabinets determination to speed up the preparations for integration with the EU. The following graph illustrates the SEIOs organisational structure.
Graph 1: The organisational structure of SEIO7
The activities of SEIO are determined by the founding Statute as follows8: Strategy for association with and accession to the European Union; Monitoring and participating in preparations and negotiations for conclusion of the Stabilisation and Association Agreement with the European Union, implementation of the Stabilisation and Association Agreement with the European Union and the very European Union accession; Strategy, stimulating and screening the harmonisation of regulations of the Republic of Serbia with the European Union regulations and standards, as well as information of European Union and the public thereupon;
The irst Assistant Minister for EU integration was one of the authors of this report, prof. Ana S. Trbovich 6 Decree of the Government of Serbia, Oficial Gazette 25/04. 7 Website of the Serbian European Integration Ofice; http://www.seio.sr.gov.yu/code/navigate.asp?Id=40 8 Ibid.
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coordination of translation of the European Union priority regulations into Serbian and coordination of translation of Serbian legislation into English language; Assistance to ministries and special organizations in the process of legal harmonisation with the European Union regulations; Monitoring the realization of obligations of ministries and special organisations in the process of European Union association and accession; Harmonisation of Serbian institutional capacities and education of employees according to the requirements of the European Union association and accession; Cooperation with specialised legal institutions; Analysis of economic aspects of harmonisation with the European Union regulations and standards; Participating in coordination of the programming of European Unions technical assistance; Promoting the EU association and accession activities and cooperation with specialised international and domestic economic institutions. SEIO prepares for adoption the acts of the Government designed for supervising, directing and harmonising the activities of ministries and special organisations in relation to the European Union association and accession and to the form of public information on the process of European Union accession and association. SEIO also performs other activities in the domain of European Union accession and association as delegated to it by the Government.
1.1.3. The Serbian Government Council for European Integration

This institution was established on 4 September 2002 as a Government advisory body. The idea, promoted by the late Prime Minister ini, was to elevate the signiicance of EU issues by creating the highest possible political body that would deal on a strategic level with EU accession. The PM was the head of the Council ex oficio, as were 13 ministers covering portfolios of interest to EU accession.9 The Council, thus far, has not been utilised as initially envisaged. Since the death of Prime Minister ini, the Council met only once, clearly relecting on low importance that the ruling coalitions in the subsequent two governments gave to EU integration. The current Governments decision of 7 June 2007 sets out the new responsibilities of the Council as follows: Monitoring the implementation of Serbias European Union association strategy;
Until March 12, 2003, the Council met twice, offering powerful guidelines and endorsing a pro-active attitude to EU accession. The third meeting, scheduled for March 12, was cancelled because of the assassination of the Prime Minister on that day.
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Proposing guidelines for improving Serbias EU accession process; Proposing measures for achieving general national consensus on Serbias EU accession process; Providing other advisory services aimed at increasing the eficiency of the Government and other state institutions in Serbias EU accession process. The Council is still headed by the Prime Minister, acting in the capacity of Council President. Deputy President of the Council is the Deputy Prime Minister. Council members are ministers, president of the European Integration Committee of the National Assembly, the Director of SEIO, and a select group of civil society organisations, including academia, non-governmental organizations, and a representative of the Serbian Orthodox Church.10
1.1.4. Intergovernmental Commission for EU Accession Coordination

This institution was established by a Serbian Government decree on October 17, 2002 as a direct consequence of a recommendation from the constitutive session of the Council for European Integration. The Council pointed out the need for the establishment of an operational body that would coordinate and streamline the activities of republican institutions and organisations in the Stabilisation and Association Process. The Commission has the following tasks: to propose measures for setting up and promoting cooperation between republican bodies and organisations responsible for passing and implementing European integration policies; to determine the priorities and best methods for the approximation of Serbian policies and regulations with the EU standards; to propose measures as regards legal harmonisation, institutional changes and reform of policies that Republic of Serbia is responsible for, which are not only a condition but also a necessity in the European integration process; to monitor the implementation of the proposed measures. So far, besides the SEIO, this has been the most eficient institution in the entire EU organisational structure of the Serbian Government. It meets regularly, at least once a month, at a high civil servant level, including Assistant Ministers.
At the time of writing of this report the newly-established Council has not met once and there are no indications that it will be convened any time soon.
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1.1.5. EU related organisational units within ministries

This was yet another initiative from the inaugural session of the Council in September 2002. The recommendation was to start preparing all involved ministries for the process of accession. The process was initiated in October 2002. Each ministry, as well as government agencies, was required to assess the volume of activities that would be required by the EU accession process in general and the negotiation of the Stabilisation and Association Agreement speciically. Based on that analysis, completed in January 2003, the Government issued a Decree changing the organisation and systematisation of different posts within the Government. Some ministries, such as Agriculture, Environmental Protection, Economy, established a Department for European Integration as an institutional unit. Most ministries established a division within a particular department, and some established a unit within a division. The stafing of these new organisational elements in the Government took the better part of 2003. Since then they have been fully operational, changing only as a consequence of political changes that occurred when Governments changed and when the number and responsibilities of some ministries changed.
1.1.6. The EU Negotiating team

Negotiations for conclusion of the Stabilisation and Association Agreement with the European Union were oficially opened only on October 10, 2005 for political reasons (explained in other parts of this paper).. Having in mind that the Stabilisation and Association Agreement includes political, economic and trade relations between the parties and cooperation in implementing a number of concrete policies, the negotiation team, like in other countries, comprised representatives of public administration bodies in charge of relevant negotiation topics. The Negotiating Team was lead by the Deputy Prime Minister and it consisted of the Head of SEIO, assistant ministers, state secretaries and experts from relevant ministries, altogether nine of them. At this stage, prior to negotiations on oficial candidacy/full membership, the Serbian Negotiating Team had at its disposal eight expert working groups, and twelve expert sub-groups. What is very unusual, and very unlike the situation in other countries, is the fact that in the two years since the start of formal negotiations of the SAA the Team was headed by three Chief Negotiators!11 The changes occurred as a result of internal political reasons. It is obvious that frequent changes of the Chief Negotiator do not help the effectiveness of the negotiating process. This is yet another indication that internal politics can, and do, stand in the way of effective and rapid accession to the European Union.
The irst Chief Negotiator resigned his position as Deputy Prime Minister and as Chief Negotiator in May 2006, and was succeeded by the new Deputy PM until the forming of the current Government in May 2007.
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The institutional set-up of management of EU relations within the Government has, thus, changed quite a bit in the short period under observation. The irst big change occurred in 2002 with the shifting of emphasis in dealing with EU matters from the federal level to the level of Serbia. The second big change occurred when the coordination of EU matters was elevated from an institutional unit within one ministry to an institutional unit that was directly attached to the Cabinet, speciically to the Ofice of the Deputy Prime Minister. The latter of the two changes deserves some additional explanation. When the irst Government of Prime Minister Kostunica took ofice in 2004, there was a debate whether to create an EU integration ministry, or to create an institutional unit that would be above all ministries, that would express the need for strong authority by being attached directly to the Deputy Prime Minister, thus have more leverage over other ministries. At the time of creation of the new structure of Serbian EU related institutions, the experiences of all EU candidate countries were considered, and the best practices were combined with the size and ability of Serbian administration. As a result, the choice was made not to create an EU Ministry, not to appoint an EU Minister without portfolio, but rather to create the SEIO which gets its strength and political leverage within the Government by being attached directly to the Deputy Prime Minister.
1.2 The Parliament

Initially, i.e. after October 5, 2000, there was a Federal Parliament of FR Yugoslavia which was bicameral, consisting of the Chamber of States and of the Chamber of Citizens. The latter Chamber initiated the creation of an EU Integration Committee on November 22, 2001. After the transformation of the Federation into a State Union the Parliament became unicameral but it kept the EU Integration Committee alive. With the dissolution of the State Union and the Parliament this Committee ceased to exist.
1.2.1. The Parliament of Serbia - European Integration Committee12

The European Integration Committee of the Serbian Parliament was formed in January 2004. After the fall of the previous Government, elections were called and the second Parliament in the post-Milosevic era was constituted, bringing into existence the said Committee. Since then, the Committee changed presidents and a number of members in January 2007 when the present Parliament was elected. As in other countries, the main task of the Committee is to consider proposals of laws, other regulations and general acts from the point of view of their compliWebsite of the National Assembly of the Republic of Serbia; http://www.parlament.sr.gov. yu/content/cir/sastav/odbori_detalji.asp?id=67.
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ance with the acquis communautaire and the Council of Europe regulations, mostly in the ield of human rights. The Committee considers plans, programs, reports and information on the process of stabilisation and association with the European Union. It monitors the implementation of the Strategy for EU association and recommends measures and initiatives for the acceleration of the implementation of the Strategy within the framework of the National Assemblys jurisdiction, recommends measures for establishing a general, national agreement on the Strategy. The Committee also fosters international cooperation with other countries parliamentary committees, with the aim of better understanding of the process of association and integration to the European Union and sharing of experience.13 The European Integration Committee consists of 15 members of the Parliament representing all parties. Experience thus far shows that the Members of the parliament from parties of the ruling coalition majority actively participate in the work of the Committee. This is one of the few parliamentary committees that rarely had problems with quorum for reaching decisions. This relects on the responsibility of the members of the Committee and the existence of a high level of awareness on their part that the process of Serbias EU integration requires maximum attention. However, as will be seen later, the hard and conscientious work of the European Integration Committee has often been depleted by the broader political context of the full Parliament in session. So far, the main problems in the Committees work14 were less of party-politics and more of an institutional capacity nature. In facing the immense and challenging task of adopting and synchronizing the laws with EU legislation, the Committee lacked competent professional staff support. Due to the lack of competent staff, the Committee has, in the past, relied on the opinion, advice and information of international missions in Belgrade in forming the Committee decisions. The representatives of the EU delegation as well as diplomats from EU countries were regularly invited to attend the Committees sessions. A major step forward was the establishment of the Parliaments Ofice for the alignment of national legislation with the acquis. The inancial backing from the OSCE Mission to Serbia, the Czech Government and the Senate of Italy. The Ofice was established in 2005. Unfortunately, at the time of this writing it has only four full-time employees. In most of the Annual Reports of the European Commission on the Stabilisation and Association Process in Serbia, the legislative activity of the Parliament of Serbia was given a positive assessment, and especially that of the European Integrations Committee, has been favourably commended. The Committee, in cooperation with the European movement in Serbia, proposed the Resolution on EU Association and Integration, which the Parliament adopted on October 13, 2004. However, the Resolution was passed with only 132 votes out of 250 suggesting that, on such an important issue as the European future of Serbia, there is no national consensus, nor a clear, overwhelming majority. In this case, lack of consensus was attributed to the
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Rules of procedure of the National Assembly of the Republic of Serbia, Article 69 . Evropski forum, http://www.becei.org/EF%200806/intervju.html
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fact that the Resolution linked the EU accession process to NATO accession (for more on Serbias position towards NATO, see below). Thus far, the EU Integration Committee of the Serbian Parliament has been stable in its institutional set-up. Changes that occurred were the normal parliamentary changes that take place after elections but neither the content nor the scope of work has changed substantially.
1.3. Changes in instuonal arrangements

How to assess the relative political importance of managing EU relations within the Serbian Government? The political importance of EU relations has clearly changed over time. As a consequence, the importance of managing EU relations has changed as well. Not all of the changes were in the same direction, i.e. in the direction of positive evolution. The irst Government (2001-March 2004) opened the EU agenda in a big way. The political importance and priority given to EU related issues was very high. As a result, most of the current EU related institutions in Serbia were created at that time. The second, short lived government of Prime Minister Zoran ivkovi continued the effort to keep EU affairs high on the political agenda. For a while there was even an increase of political and institutional activity due to the sympathy factor for the late Prime Minister, both within Serbia and in Serbia-EU relations. In the third government of Serbia, and the irst of two with Vojislav Kostunica as Prime Minister, the relative political importance of managing EU relations subsided. It was a minority government supported by Milosevics socialists and the management of EU relations was delegated to the Deputy Prime Minister. The Prime Minister did not consider management of EU related issues a top priority. A clear indication of lesser importance given to the management of EU matters is the fact that the Council for EU Integration, where the Prime Minister is ex oficio president, met only once in the three years of existence of that government. The current government has a similar problem. The Prime Minister is primarily focused on Kosovo and again he does not see suficient political beneit to manage EU relations directly. He is again the President of the EU Integration Council which has not met once so far. EU relations are the responsibility of the Deputy Prime Minister. Yet, the situation at the current time is somewhat better then in the previous government. In this Government the Democratic Party holds a majority of Ministers, even though the Prime Minister is from a different party. This allows the Democratic Party to press the EU agenda at Cabinet meetings and have a far more pro-active approach then was previously possible. Also, the coalition government has a comfortable majority in the Parliament so it does not have to rely on open or silent support of the non-European opposition.
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2. POLITICAL RELATIONS
2.1. Ocial posions on EU relaons

In 1990 Serbia, then a part of SFR Yugoslavia, had excellent relations with the European Community. SFRY was in the process of executing a major shift in its foreign policy. Since the Cold War had come to an end, the concept of Non-Alignment,15 a corner stone of Yugoslavias foreign policy for more then three decades, had become less useful in securing Yugoslavias strategic interests. The strategic move toward the European Union was initiated in October 1989 when Yugoslavia submitted an application for associate membership in the EC. At the time, political relations between the EC and Yugoslavia were very strong. Yugoslavia had, since 1987, a formal political dialogue with the EC that usually took place during the EC General Council of Ministers. Political relations between the EC and Yugoslavia became even more intense during the failed attempt of the EC to intermediate in the Yugoslav crisis. While the federal government sought EC backing and support, hoping that this powerful economic and political partner will help stabilize the country, the key leaders of republics, set on dissolving Yugoslavia, looked upon the EC mediation as an undesired nuisance. The federal position collapsed totally in May of 1991 when a high level EC delegation failed to convince the republican leaders of a need to reach a common, negotiated solution. Milosevic, the key political igure in FR Yugoslavia during the nineties, was always reserved and sceptical about the European Community, later the European Union. He never sought to consider the EC/EU as a possible strategic foreign policy option of Serbia. Thus, the oficial position of Serbia toward the EU was cold, bordering on negative during the break-up of Yugoslavia. When UN sanctions were imposed on Serbia in May 1992, the sum total of all relations shrunk to almost nothing.16 During the entire period of Milosevics rule in Serbia political relations were minimal and an oficial position of Serbia on the EU was negative, rather than positive. The process of normalising the relations, renewal of political dialogue and cooperation between Republic of Serbia and EU began with the irst visit of FR YugoslaYugoslavia was one of the founders of the Non-Aligned movement. The 1st Conference of Non-Aligned countries was held in Belgrade in 1961, as was the 9th Conference, held in 1989 16 The assessment in the irst three paragraphs based on Mihailo Crnobrnja, The Yugoslav Drama, McGill-Queens Press, Montreal, 2nd edition 1996.
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POLITICAL RELATIONS
vias new President, Vojislav Kotunica, to the European Council Summit in Biarritz in October 2000. At the Zagreb Summit of EU and West Balkans countries, held on November 24, 2000, FR Yugoslavia was formally included into the Stabilisation and Association Process that the EU had previously developed for countries of former Yugoslavia and Albania. At this summit the countries of this region were informed oficially by the EU that they are potential candidates for EU membership. The rapid re-establishment of relations was concluded in that year by the visit of European Commissions Chairman, Romano Prodi, to Belgrade, on November 25, 2000. At that time, a Framework Agreement for the provision of Assistance and Support by the EU to the FRY was signed.17 The irst Government of Serbia, under the leadership of the late Prime Minister Zoran ini, declared integration into the EU as its irst and most important foreign policy objective. The political attitude toward the EU was very positive. The EU was seen not only as a strategic foreign policy partner but also as an instrument of promotion of necessary internal reforms. Through the standards and conditions set out during the accession process, the Serbian economy and society would be modernized and brought closer to European standards and values. The vast majority of the complex coalition Government18 believed in, and supported such a political position. As was explained in greater detail in the irst part, this was the period of time when Serbia created most of the institutional structure in support of its objective of EU accession. After the murder of Serbias Prime Minister in March 2003, it seemed that one of the strategic reform objectives that would not come into question would be Serbias European path. However, the energy, the zeal and the European vision of the late Prime Minister could hardly be equalled by his successor, Zoran ivkovi, who was in ofice only 6 months. Even less could be expected from the following Prime Minister, Vojislav Kostunica, who, by that time, had become rather frustrated by the insistence of the EU on Serbias cooperation with the ICTY.19 The credit for much of what has been done during the period 2004-2006 goes to the then Deputy Prime Minister Miroljub Labus. He was the chief negotiator on behalf of Serbia in the discussions and negotiations leading to the Stabilisation and Association Agreement. He was perceived as Mr. Europe in Serbia by his EU counterparts. The Prime Minister remained in the shadows but exerted a strong inluence on the future course of events by non-acting, rather then acting. The Prime Minister never warmed up to the idea of extraditing indicted war criminals to ICTY. He managed to secure the voluntary surrender of a number of generals, but refrained from using force in apprehending others, most notably General Ratko Mladi. Because of failure to cooperate with ICTY the EU froze the SAA negotiations in May 2006 which prompted the Deputy Prime Minister to tender his resignation and, in effect, create conditions for the collapse of the Government six months later.
The full text can be found at http://www.mfa.gov.yu/Srpski/Foreinframe.htm The Prime Minister presided over a coalition of 18 parties, not all of which necessarily shared his vision and action plan 19 International Criminal Tribunal for former Yugoslavia, usually referred to as the Court in the Hague or the Hague Tribunal.
18 17
23
The grounds for entering the new stage of Serbias relations with EU was provided by the Thessalonica agenda for West Balkans, which conirmed the European prospective of West Balkan countries, as well as other documents adopted at EU Summit in Thessalonica and EU West Balkans Summit (June 20-21, 2003). The new basis for Serbias cooperation with EU was now deined by the European partnership for the Republic of Serbia, as an instrument by which the European Commission deines key priorities, political and economic criteria and as the basis for cooperation in the ield of EU sector policies, and monitors and estimates the progress of Republic of Serbia in the European integration process. The Commissioner for EU enlargement, Oli Rhen, during a visit to Belgrade in January 2005, in conversations with Serbias highest oficials, conveyed the message that EU wishes to intensify the process of Serbias integration in EU. During his second visit, in April 2005, he estimated that signiicant progress was made in achieving full cooperation with The Hague Tribunal, and greeted European Commissions decision about favourable assessment of the Feasibility Study. This decision was also conirmed by EU Council for General and Foreign Affairs on 25 April 2005. Negotiations with a view of concluding the Stabilisation and Association Agreement between Republic of Serbia and EU were interrupted (frozen) by European Commissions decision of May 03, 2006 because of European Commissions assessment regarding Serbias insuficient cooperation with The Hague Tribunal. As stated, this led to the resignation of the Deputy Prime Minister. Equally important was the effect of this measure on the Government. The oficial position of the Government regarding the EU did not change. However, behind the oficial position was a growing level of resentment toward the Hague conditionality20 and a stronger determination on the part of the Prime Minister not to cooperate with ICTY. Conclusions from the meeting of EU ministers of foreign affairs, held on July 17, 2006 in Brussels, include a special statement about Serbia from the EU Troika - Serbia meeting, which conirms Serbias European prospective and points to the possibility that immediately after accomplishing full cooperation with The Hague Tribunal continuation of negotiations to conclude the Stabilisation and Association Agreement may follow, with a possibility of signing the agreement by the end of 2006. The technical negotiations at this stage were far advanced. The political condition was the obstacle. On the margins of that EU Council of Ministers meeting, a separate meeting between the EU Troika and the Republic of Serbia oficials was held, at which Serbia presented an Action plan for cooperation with the Hague Tribunal. EU Troika greeted the Action plan, stating that it contains clear commitment to accomplish full cooperation with the International Criminal Court in The Hague. It was emphasised that the Action plan should be further developed and it was estimated that it provides good foundation for further work, and that its implementation should start immediately. During the period of suspension of negotiations, EU made efforts so that the process of European integration in Serbia would not lag. Continuation of dialogue with Serbia, both in the form of technical talks and through the meetings with EU Troika, represented EUs irm orientation towards keeping Serbia on the European
20
The issue of conditionality is discussed later in this paper.
24
POLITICAL RELATIONS
course. Such approach was also conirmed by a meeting between Troika from EU Ministries of foreign affairs and Serbia, on October 16, 2006. In the meantime, cooperation at state, regional and local level continued to grow, with direct engagement of Ministries in charge of particular ields such as justice, internal affairs, defence, energy, transport, agriculture and others. Numerous regional initiatives were launched and certain results were achieved as a result of cooperation at the level of local government. The position of Serbia toward the EU changed yet again with the forming of the present Government in May 2007. The key partners of the current coalition have rather different views on the European future of Serbia. The Democratic Party, the strongest coalition partner, is trying hard to revive the attitude that prevailed during the time of the late Prime Minister ini. It has the support of one of the smaller coalition partners, G17 Plus. The Democratic Party of Serbia, and its ideological ally New Serbia, are far less keen to commit themselves to EU integration as a vehicle of modernisation of Serbia. These two parties cater to the traditional, nationalistic sentiments of the population.21 Oficially, the European Union is Republic of Serbias key partner in the process of international support to democratic and economic reforms in the country. Development of relations with EU is declared as Serbias foreign policy priority. By adopting the National Strategy for EU Accession in 2005, the government deined Serbias accession to the European Union as a top-priority and a long term strategic goal. The short term goal is to sign the Stabilisation and Association Agreement (SAA) with EU as soon as possible,22 given that it has been initialled in October 2007. The medium term goal for the end of 2008, or beginning of 2009, is the obtaining of candidate status. Unoficially, there is a very strong opposition to this course of action within the Government, headed by the Prime Minister himself. He is unhappy with the EU position on Kosovo and is even publicly asking for the postponement/suspension of the signing of SAA if the EU does not change its position. This could perhaps be described as reverse absurd conditionality. The irst Serbian Parliament after the fall of Milosevic (2001-2003) was not very active on issues of EU accession. It did not even have an EU Integration Committee and its involvement was limited to inter-parliamentarian exchange of MPs and delegations. There was no deliberate scrutiny of domestic legislation from the perspective of the acquis. The second Parliament, elected in 2004 established the EU Integration Committee. This was described in section 1.2. Other then institutional inclusion of EU matters, the biggest accomplishment of the second Parliament was the passing of the Resolution on Joining the European Union.23 This resolution passed with a very slim majority: 132 votes out of 250. The Resolution also called for the Government to develop a Strategy for Serbias Accession to the European Union. The
The interesting fact is that the Prime Minister managed to form a Government with only about 12% of the vote. This is explained by the fact that he has the greatest coalition potential. 22 At the time of this writing, the target is January 28, 2008. 23 The full text can be found at http://www.seio.sr.gov.yu/upload/documents/Izvestaji/rezolucija%20engleski.pdf.
21
25
strategy was accepted by the Government in July 2005.24 The Government decided not to send the Strategy for adoption to the Parliament in order to avoid a heated political debate with the opposition. Even though the pro-European parties have had a majority in the Parliament during the last seven years, the fact is that the anti-European minority is very strong both in terms of the popular vote, and in terms of parliamentary presence. The Radical Party has been the single largest party in all three Parliaments so far, usually commanding about a third of the 250 MPs. This relects their popular vote, which ranged between 31 and 35%. If the votes of the Socialists (Milosevics former party), and the wavering support of the Prime Ministers party to the European orientation of Serbia are added to the strong opposition provided by the Radicals, it becomes clear that the pro-European block of parties is actually a minority, depending to a large extent on how the Prime Ministers party will vote. The public opinion has been regularly monitored on EU sentiments and preferences since September 2002.25 On the surface, it would appear that the support for Serbias integration into the European Union is very strong. This is illustrated by Graph 1 which illustrates the responses to the question: If the referendum were held tomorrow, with the question: Do you support our countrys membership in European Union? how would you vote? The graph shows that over the years the positive response hovered around 70% of the population, while those opposed ranged between 8 and 15%. It is signiicant to note that the highest opposition to EU integration occurred at the last poll, taken in June 2007. The pollsters attribute the increasingly negative attitude toward the EU to the position that the EU is taking toward the Kosovo issue.
Graph 1
This is clearly demonstrated by the answers to the question: IF the EU recognises Kosovo unilaterally, what should be our foreign policy? The results in Graph
24 25
The full text can be found at http://www.seio.sr.gov.yu/code/navigate.asp?Id=73. The survey results can be found at: http://www.seio.sr.gov.yu/code/navigate.asp?Id=20.
26
POLITICAL RELATIONS
2 show that a third of the population would be in favour of terminating political and economic relations with the EU.
Graph 2
Other than Kosovo, the ICTY conditionality is also a big obstacle to a more favourable perception of the EU in Serbia. This is clear from Graph 3 which shows responses to the question on cooperation with ICTY. More than half of the population does not support the cooperation and among those who dont support cooperation with ICTY three out of four would not change their mind even if EU integration depended on it.
Graph 3
Finally, a graph representing the knowledge and understanding of the European Union among the Serbian population should be analysed. When asked how well are they informed about the EU, almost 40% of the citizens of Serbia responded 27
that they are not informed. Only 30% responded that they are informed.26 These results are shown in Graph 4. Interpreting these results leads to a conclusion that a relatively large segment of the population wants to be a part of the EU but, at the same time, doesnt know or understand what they would want to be a part of. Furthermore, Kosovo and ICTY clearly reduce the enthusiasm of Serbs toward the EU. It is impossible to assess the cumulative effect of these additional questions because there is a large overlap between the negative segments of responses. But it is clear and evident that if these issues are factored in, the seemingly high support for the idea of Serbias integration into the EU shrinks considerably.
Graph 4
2.2 Major events marking EU-Serbia relaons

The European Community signed a Cooperation Agreement with the Socialist Federal Republic of Yugoslavia in 1980. A Delegation of the European Commission was opened in Belgrade as early as 1981. The Cooperation Agreement was abrogated by the EC in November 1991 when the former Yugoslavia disintegrated, but the Delegation in Belgrade remained in place and has been continuously operational. Following the disintegration of the Socialist Federal Republic of Yugoslavia and the violence that ensued in Croatia and Bosnia and Herzegovina, the EC maintained a political presence in the new self-styled Federal Republic of Yugoslavia comprising of Serbia and Montenegro, but the relations were at a low level based on the sanctions regime introduced by the United Nations. With the victory of a wide coalition of Serbian democratic forces at the federal elections in 2000, relations with the then Federal Republic of Yugoslavia were raised to the highest formal level, already achieved by its Western Balkan neighbours. Belgrade and Podgorica embarked on the road of European integration that should eventually offer an opportunity to become a full member of the EU. The dialogue between two sides takes place regularly since 2001 irst in the form of a Joint Task Force and then in the form of an Enhanced Permanent Dialogue
26
Up from 12% ive years ago, when the polling started
28
POLITICAL RELATIONS
(EPD). At the second plenary meeting of the EPD, held on November 10, 2006 in Belgrade, the European Commission delegation was led by Mr. Michael Lee, General Director for Enlargement in the European Commission (CEU). The last sector meeting within EPD, focusing on transport, energy and environment protection, was held on February 13, 2007, at a time when the current Parliament was elected, but the Government had not yet been formed. It was announced that a new meeting would follow immediately after the Government of Republic of Serbia were formed. Following the dissolution of the State Union and Montenegros declaration of independence after a referendum in May 2006, the political dialogue continued with Serbia, as a successor state of the State Union. As soon as the new coalition was formed, Serbian President Tadic resumed his meetings with EU oficials. He met in Brussels with the EU Enlargement Commissioner Olli Rehn and the President of the Council of Ministers of the European Union, German Foreign Minister Frank-Walter Steinmeier, and discussed with them the process of resolving Kosovos status, relations between the EU and Serbia and the establishment of a new Serbian government.27 Serbian Prime Minister Vojislav Kotunica initiated his relations with EU oficials by pointing that independent Kosovo would seriously endanger peace and stability in the region. And in an apparent reference to the Serb Republic in Bosnia, he told EU oficials that Kosovo was not a unique case and that it may set a precedent for other breakaway provinces.28 The German diplomat and the EU representative in the negotiating troika for the status of Kosovo Wolfgang Ischinger stated that the European Union should send Serbia a signal as soon as possible, to show its readiness to offer Belgrade further support in its efforts at EU integration. The signal could be in the form of further visa liberalisation. Ischinger criticised the U.S. for announcing it would recognize the unilaterally proclaimed independence of Kosovo, and added that all statements that create the impression that the result of the negotiations has already been determined are not helpful.29 The European Commission presented its Annual report on Serbias progress in implementation of European partnership on November 8, 2006. The report was favourable, irst of all with regards to Serbia meeting the economic criteria, as well as in the achievement of European standards. Unfavourable assessment was given in connection with the full cooperation with ICTY, as well as in relation to Serbias constructiveness in negotiations about the status of Kosovo, while encouraging the Serbs in Kosovo to participate in the work of interim authorities institutions. On November 13, 2006 at a regular Ministerial meeting of EUs General and Foreign Affairs Council (GAERC), the mandate was granted to the CEU to negotiate visa beneits and uniform Agreement on readmission with Serbia. The next opportunity for high level contacts occurred during the long political crisis in Serbia precipitated by the election of the new Parliament and the inability
27 28
The full text can be found at http://www.mfa.gov.yu/Bilteni/Engleski/b060307_e.html#N2 The full text can be found at http://www.europeanvoice.com/archive/article.asp?id=28794 29 The full text can be found at http://www.mfa.gov.yu/Policy/CI/KIM/121007_4_e.html
29
to form a new Government. The EU sent the Troika to Belgrade in February to make an appeal to Serbian leaders to form a Government. The GAERC held on February 12, 2007 welcomed the EU Troikas report and made an appeal to political leaders in Serbia to form a European oriented Government soon. The Council has continued to conirm Serbias prospective in EU and its readiness to work with the new Government towards this goal. Referring to the Decision dated October 3, 2005, the Council greeted European Commissions readiness to renew negotiations on the Stabilisation and Association Agreement with the new Government in Belgrade, which should demonstrate clear orientation towards taking concrete and eficient steps for full cooperation with The Hague Tribunal. The Council statement also greeted considerable progress achieved in negotiations about visa beneits and readmission and expressed an expectation that they will be concluded soon. EU said it was prepared to consider other concrete steps which would help Serbia integrate into family of European nations. The Council statement did not help much to change the political situation on the ground. Clearly, at that point the European perspective of Serbia did not represent a factor that would change the political calculus of the Serbian parties attempting to form a coalition government. Following these conclusions of the Council, Javier Solana, EUs High Representative for common foreign and security policy, at the meeting between EU Troika and Serbia held on March 6, 2007 repeated that it was important that the Government in Serbia be formed as soon as possible and said that EU provides full support to Serbias foreign policy priorities renewal of negotiations and signing of the Stabilisation and Association Agreement, candidacy for membership in EU, and entry to the White Schengen list. Since 2001 Serbia has beneited from the EU policy advice provided through the EU-FRY Consultative Task Force (CTF), later replaced by the Enhanced Permanent Dialogue (EPD). The task of EPD has been to encourage and monitor reforms on the basis of the European Partnership adopted by the EU Council in June 2004 and updated in January 2006. Several sectoral groups have been set up to deepen technical discussions. After the end of the State Union, the Enhanced Permanent Dialogue has continued separately both with Serbia as well as with Montenegro. The European Commission prepares annual Progress Reports30, which monitor and assess the political and economic situation in the countries of the region including Serbia and the implementation of reforms and related measures. In the Feasibility Study prepared for Serbia. the Commission deemed Serbia and Montenegro to be suficiently prepared to negotiate a Stabilisation and Association Agreement (SAA) with the EU.31 On 25 April 2005, the EU Council endorsed the Feasibility Study and invited the Commission to submit the negotiating directives for the SAA. In line with the twin-track approach, the negotiations with the State Union and the two constituent Republics were launched in October 2005.The Commission made clear that the continuation and pace of talks would depend on the progress made by Serbia and Montenegro in addressing issues highlighted by the Commission and the EU
30 31
Serbia 2006 Progress Report, COM( 2006)649 Feasibility Report on 12 April 2005.
30
POLITICAL RELATIONS
Council, including achievement of full co-operation with the International Criminal Tribunal for the former Yugoslavia (ICTY) without delay. Once in force, the SAA will establish a contractual relationship between Serbia and the EU through a comprehensive agreement between the European Communities and their Member States, on one side, and the Republic of Serbia, of the other side. Similar to Europe Agreements with countries of the Central and Eastern Europe, the SAA will provide a legal framework for the relations between the EU and Serbia for the entire period prior to the possible future accession. In the context of the external dimension of EU policy in the area of freedom, security and justice - the negotiations for visa facilitation and readmission agreements with Serbia were opened in November 2006 and the Agreement with Serbia initialled on 16 May 2007.32 The Serbian EU Integration Ofice initiated the signing of the Memorandum of Cooperation in the European Integration Process with the non-governmental organisations, having in mind previous role of non-governmental organisations in the process of democratisation of the Serbian society, as well as their role in spreading European ideas and values. The aim of this Memorandum was to institutionalise cooperation with non-governmental organisations in the process of Serbias EU accession, to promote the coordination of activities and establish cooperation in providing regular and objective information to citizens regarding Serbias European integration process. Parliamentary elections were held in January 2007 in line with the Constitutional Law. International observers qualiied them as free and fair and conducted in line with international standards. The removal of the 5% threshold for ethnic minority parties resulted in an increase in ethnic minority representation in parliament. A representative of an ethnic minority party was appointed as deputy speaker. The parliament was formally constituted in February 2007. The parliament constituted 30 committees, including a Committee for European integration. A number of committees are chaired by opposition parties. However, political developments adversely affected the functioning of the Parliament. The irst sitting after its inauguration was adjourned for almost three months due to the protracted negotiations to form a government. Dificulties faced by political parties in reaching an agreement on a common government platform contributed to a climate of heightened political instability which culminated in the Democratic Party of Serbia (DSS) and New Serbia (NS) forming in May a temporary alliance with the Serbian Radical Party (SRS) in order to elect the SRS acting leader speaker of the parliament. The alliance was short-lived and the speaker resigned after a coalition agreement was reached between the Democratic Party (DS), DSS-NS and G17+ to form a reform-oriented government. In May 2007, the coalition government of DS, DSS-NS and G17+ was sworn in and a new speaker elected. The legal framework for elections has not been fully revised, in particular as regards the voters register. The elections also exposed the need for better regulation
32
Council Conclusion on Western Balkans of 18 June 2007..
31
of party inancing. The capacity of the parliamentary committees is not suficient to address current demands, and the parliament continues to lack a suficient number of specialised staff. The current parliamentary rules of procedure also contributed to a slow-down in the legislative process. Overall, the period of political uncertainty in Serbia restricted the work of the parliament and little progress was achieved. The delays in fully constituting a new parliament have had an impact on the pace of adoption of legislation. The capacity of parliamentary committees remains limited. In the months following the parliamentary elections, there was little activity from the caretaker government. A new coalition government was inally formed in May 2007, following a long period of political uncertainty. The new government has 25 members, including one Deputy Prime Minister in charge of European Integration. There are six more ministerial posts than in the previous government, following a restructuring of ministries. A new Ministry for Kosovo and Metohia was established and the Coordination Centre for Kosovo was brought under its framework. The government set out a number of key priorities for its term in ofice: the status of Kosovo, implementation of international obligations and cooperation with International Criminal Tribunal for former Yugoslavia (ICTY), acceleration of the European integration process, economic development and the ight against corruption and crime. Discussions on the status of Kosovo have dominated the political agenda since the new government took ofice. Following the European Commissions decision to resume SAA negotiations in June 2007, the Government appointed a new negotiating team, led by the Deputy Prime Minister. It also reinstated the Council for European Integration, chaired by the Prime Minister and made up of a wide range of ministries, civil society groups, religious organisations and representatives of national minorities. The government agreed to include a debate on progress in EU integration as an obligatory item on the agenda of each of its sessions. In August 2007, the Government adopted a revised Action Plan for the implementation of the European Partnership and an Action Plan for harmonisation of laws with the EU acquis. The Government and the Parliament improved their cooperation on European integration issues. However, more needs to be done to coordinate effectively among ministries and government agencies. In the area of local governance, the European Charter on local selfgovernment was ratiied. Serbian legislation on local government inancing was implemented as of January 2007. This regulates the inancing of local governments in a more eficient manner and provides greater stability and predictability of inancing. The yearly amount of transfers has been set at 1.7% of GDP. The new constitution contains provisions allowing municipal ownership of property. However, the legal framework necessary to transfer state property to municipalities has not yet been adopted. A number of other laws in the area of decentralisation and local government are also pending. Overall, there was little activity during the period when the caretaker government was in charge and few government initiatives. Since the formation of the new government, there has been some progress in re-launching the process of approximation with European standards. However, policy coordination remains to be improved. The legal framework in the area of local governance has still to be further developed. 32
POLITICAL RELATIONS
2.3 Negoaons, EU level agreements

Only a few weeks weeks after the fall of Miloevi regime in October 2000, Serbia (then part of the Federal Republic of Yugoslavia) signed the Framework Agreement FRY-EU for the provision of Assistance and Support by the EU to the FRY. Serbia has beneited from Autonomous Trade Preferences, granted by the EU since the change in regime, which allowed it to become part of the Stabilisation and Association Process (SAP) endorsed at the 2000 Zagreb summit of EU and Western Balkan countries.. Feasibility Study was adopted by the Commission in April 2005, which concluded that Serbia and Montenegro is prepared to negotiate a Stabilisation and Association Agreement with the EU. In October 2005, Serbia launched the negotiations for a Stabilisation and Association Agreement, which were called off in May 2006 because the country did not fulil its commitment to fully co-operate with the ICTY. Following the declaration of independence by Montenegro on 5 June 2006, the Serbian Parliament, acting in accordance with Article 60 of the Constitutional Charter of Serbia and Montenegro conirmed the continuity of Serbia as a legal successor of the State Union. On 12 June 2006, the EU and its Member States recognised Montenegro as an independent state and took note that Serbia is the successor state to the State Union. On 15 June 2006 the Government of Serbia oficially recognised Montenegro as an independent state. SAA negotiations with Serbia resumed on 13 June 2007, following a clear commitment by the country to achieve full cooperation with the ICTY, and concrete actions that have matched this commitment. Negotiations advanced rapidly and the last technical round took place on 10 September 2007. Full cooperation with the ICTY is required before the SAA can be signed. The negotiations on Visa Facilitation and Readmission Agreements with Serbia were started on 13 November 2006 by the European Commission, following the mandate granted by the EU Council. The draft agreements were signed on 18 September 2007.33 The Visa Facilitation agreement makes it possible to maintain the visa handling fee of 35 instead of 60 for Serbian citizens and provides a total exemption from the visa fee for certain categories of applicants. Furthermore, for certain categories of persons, e.g. businesspeople, students and journalists, the supporting documents for a visa application became simpliied. It is also possible to issue multiple entry visas to certain categories of frequent travellers. Finally, holders of diplomatic passports are exempted from the visa obligation. EU citizens are already exempt from the visa obligation by Serbia. The Readmission Agreement set out clear obligations and procedures for the authorities of both Serbia and the EU Member States as to when and how to readmit the people who are illegally residing on EU territory.
33
The full text can be found at http://www.seio.sr.gov.yu/code/navigate.asp?Id=54.
33
The entry into force of the Visa facilitation and Readmission Agreements is foreseen for 1 January 2008. Effective implementation of the Visa Facilitation and Readmission Agreements will ensure a better management of migration and will make it possible to envisage a structured dialogue along the path set out by the Thessalonica agenda towards a visa free travel regime also for Serbian citizens. Adopted conclusions on Western Balkan and Serbia were as follows:34
Serbia
1. The Council welcomed the fact that the new government in Belgrade had shown clear commitment and had undertaken concrete and effective action for full co-operation with the ICTY, and that this had enabled the Commission to resume negotiations on a Stabilisation and Association Agreement (SAA) with Serbia. 2. The Council encouraged the Serbian authorities to build on this positive dynamic, to vigorously pursue the necessary reforms to bring Serbia closer to the European Union and to continue its efforts to ensure that all remaining fugitive ICTY indictees are brought to justice. The Council recalled that the pace and conclusion of the negotiations on the SAA would in particular depend on Serbias progress in developing the necessary legislative framework and administrative capacity to implement its obligations under the Agreement, and on full co-operation with ICTY. The Council and the Commission will jointly review Serbias performance in these areas before the decision to sign is taken by the Council. 3. The Council reafirmed that Serbias future lies within the European Union and that the Union stands ready to work with Serbia towards this goal.
Serbia /Kosovo.
4. The Council conirmed its support to UN Special Envoy Martti Ahtisaari and reiterated its view that his comprehensive proposal submitted by the UN Secretary General to the Security Council on March 26, 2007, provides the basis for the settlement of the Kosovo issue by a new Resolution of the United Nations Security Council. The Council expressed its support for intensiied efforts to ensure that the Security Council can adopt such a resolution in a timely manner, also as a basis for a future EU and international presence. 5. The Council underlined the necessity of rapidly inding a solution to the Kosovo Status issue, which is essential as a basis for a democratic and multi-ethnic Kosovo committed to the rule of law as well as for maintaining and reinforcing regional stability. 6. The Council reafirmed its conviction that resolving the pending status of Kosovo constitutes a sui generis case that does not set any precedent.
34
2809th Council meeting conclusions.
34
POLITICAL RELATIONS
7. The Council underlined that the EU stands ready to play a signiicant role in the implementation of the status settlement. Preparations for a future EU and international presence in Kosovo are being intensiied in coordination with other international actors. 8. Visa facilitation and readmission agreements 9. The Council welcomed the initialling of the agreements on visa facilitation and readmission with Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, Montenegro and Serbia. The conclusion of such agreements will promote people-to-people contacts between the EU and the Western Balkan countries and will increase the opportunities for travelling, especially for the younger generation. 10. Recalling the Thessalonica Agenda, the Council also acknowledged the importance the people of the Western Balkans attach to the perspective of visa-free movement. In this respect, it welcomed the efforts of the Commission to take these issues forward in concrete terms. Furthermore, the Council underlined the desirability of promoting people-to-people contacts by also making available more scholarships for the students of the region. 11. Therefore the Council looks forward to a prompt conclusion of all necessary procedures to ensure that the agreements enter into force as soon as possible.
2.4 Posions of EU Member States

The new post-Milosevic era started with full and unequivocal support for the new, democratic Serbia. In the meantime, as various problems emerged (to be discussed later in this segment) the support became much more nuanced both in terms of its strength and in terms of the countries offering it. There is no question in Serbia as to the full support of all EU Member States for Serbias European path. What follows are statements of some of the important oficials of EU countries. The French Foreign Minister Bernard Kouchner assured the Serbian Foreign Minister in October 2007, France will support Serbia, now and in the future, on the road toward full EU membership.35 Great Britain has also supported Serbias ambition to join Euro-Atlantic structures.36 The German Foreign Minister Frank-Walter Steinmeier told his EU colleagues that the EU cannot lose Serbia.37 The European Union should formally recognise Serbia as an EU candidate and strengthen cooperation with Belgrade to help resolve the diplomatic deadlock
The full text can be found at http://www.mfa.gov.yu/Policy/Minister/191007_1_e.html The full text can be found at http://www.mfa.gov.yu/Policy/Minister/190907_2_e.htm 37 The full text can be found at http://www.rferl.org/featuresarticle/2006/02/fe1401e9ec7f-4764-b3aa- 7fc792ab7b95.html
36 35
35
over Kosovo, stated Italys prime minister Romano Prodi.38. The Greek Foreign Minister Dora Bakoyannis said that any attempt to link Serbias European perspective with the developments in Kosovo would be erroneous and counter-productive.39 The support of the leaders of EU member countries was particularly intensiied during the pre-election campaign for parliamentary elections in January 2007. We want Serbia as a full member of the EU as soon as possible, asserted the British Prime Minister Tony Blair.40 However, from a Serbian perspective, it seems that the EU member states can be grouped into four categories when it comes to support and understanding of the position of Serbia: 1. Group of countries that for reasons of a history of friendship, or because of their own interests, have a strong understanding for the position of Serbia and are willing to advocate Serbias case in the Council; 2. The countries that are keen on interpreting the ICTY condition and the current Kosovo issue in a very irm and non-yielding way; 3. Countries that have no direct interest for or against, but are concerned about the unity of the EU (most notably France and Germany) 4. Countries that consider Serbia of little economic, political or any other interest and that will follow the views of the inluential majority. The irst group is neither large enough not inluential enough within the EU to sway the outstanding problems and issues in a way that would be more compatible with Serbias own strategic interests. The EU General Affairs and External Relations Council (GEARC) welcomed in Brussels on 12 February 2007 the EU Troika visit to Belgrade on 7 February 2007 and called on the political leaders in Serbia to rapidly proceed with the formation of a government committed to reforms and a European future. The Council reafirmed Serbias EU perspective and expressed its readiness to work with the new Government towards that goal. Referring to the Decision of 3 October 2005, the Council welcomed the readiness of the European Commission to resume the SAA negotiations with the new Government in Belgrade which should demonstrate its clear determination to undertake concrete and effective steps along the lines of full cooperation with the ICTY. The EU welcomed the signiicant progress achieved in the negotiations on visa facilitation and readmission and expressed an expectation that they would be concluded shortly. The EU further expressed readiness to consider additional concrete measures in order to assist Serbias accelerated integration with the European family of nations. In accordance with these conclusions adopted by the Council, the EU High Representative for Common Foreign and Security Policy, Javier Solana, reiterated at the EU Troika Serbia meeting on 6 March 2007 the importance of the most rapid establishment of Government in Serbia and expressed EUs full support for Ser38 39
The full text can be found at http://www.javno.com/en/world/clanak.php?id=86554. The full text can be found at http://news.xinhuanet.com/english/2007-12/23/content_7296570.htm 40 The full text can be found at http://www.mfa.gov.yu/Srpski/Pressframe7.htm
36
POLITICAL RELATIONS
bias foreign policy priorities, such as resumption of the negotiations and signing of the SAA, presenting its candidature for EU membership and inclusion in the White Schengen list. The EU agreed on the need to conclude the SAA with Serbia. At the last Enhanced Permanent Dialogue meeting, the European Commission representative announced a redeinition of the European Partnership in respect to Serbia, scheduled for adoption by the EU Foreign Ministers Council for January 2008. The major political prerequisite of this remains Serbias cooperation with the Hague Tribunal. However, there still exist certain differences with regards to the sequence of steps to be taken by Serbia towards the ICTY. The initialling of the SAA between the European Commission and the Republic of Serbia took place on 16 May 2007 in Brussels. On that occasion, the EU Commissioner for Enlargement, Ollie Rehn, stated that, thus the possibilities were created for starting the work on the preparation of a road map towards full abolition of visas for the citizens of Serbia, that is, for the inclusion of Serbia in the White Schengen List. The EU Commission and the delegation of the Republic of Serbia headed by Deputy Prime Minister Boidar eli resumed the SAA negotiations suspended a year ago and held the irst oficial round of negotiations on 13 June 2007 in Brussels. On that occasion, a technical round of negotiations was held to review the state of the previous negotiations and identify the outstanding issues that will determine the pace of the meetings in the period to come. The adjustments of the new SAA text were made, incorporating the modiications emanating from the separation of Montenegro and those resulting from the negotiations held between the EU Commission and Bosnia and Herzegovina and Montenegro (mainly trade issues). The European integration of Serbia depends very much on Europe. What is Europes position towards this issue is the key question. At this moment Serbias position is such that the majority of EU member countries, European Union oficials, and countries in the region support Serbia on its road to Europe, subject to resolution of the Kosovo issue and full cooperation with the International Criminal Tribunal for the Former Yugoslavia. The proof for this is Serbias membership in a number of regional organizations, South-East European Cooperation Process (SEECP), Stability Pact for SouthEastern Europe (SPSEE), establishment of the free trade zone in the region (CEFTA signed on 19 December 2006 in Bucharest and came into effect in June 2007; regional energy market compatible with the EU internal market, Central European Initiative (CEI), Southeast Cooperation Initiative (SECI) were also established. The current development of bilateral diplomacy between Serbia on the one, and Romania, on the other hand, serves predominantly the purposes of regional harmonisation that will eventually lead to NATO and EU accession, and this process also serves to resolve not that infrequent problems and dissonances in the recent history 37
of bilateral relations, especially between Bulgaria and the former FRY, which particularly occurred during the NATO bombing of FRY in the Spring of 1999.41 Bulgaria and Serbia are going through the best phase in their bilateral relations and there are conditions for these relations to develop further. The relations between the two countries are on a good track and in constant progress.42 Hungary is uncompromisingly committed to supporting Serbias prospective EU membership, backed by the fact that it has launched a process that puts Serbia on track to receive a visa waiver, which is also of vital importance for ethnic Hungarians in Voivodina.43 The issue of dual citizenship for ethnic Hungarians certainly was an important topic in mid-2007, both in Serbia and Hungary. The proposal of dual citizenship emanates from the concept of personal autonomy of the Hungarians in Voivodina, without any change in the state borders. After numerous initiatives by local Hungarian political leaders, as well as their colleagues from Romania and Ukraine, and unsuccessful dual citizenship referendum in Hungary, introduction of this privilege for Hungarians from Voivodina was also supported by the President of Hungary Laslo Shoiom. Judging that Serbia would not become a member of the European Union in the near future Shoiom said, dual citizenship of the Voivodina Hungarians falls into signiicant state affairs. In any case, in the Republic of Serbia dual citizenship has already been functioning with some countries and it is universal. Therefore, Serbia certainly will not be an obstacle for the Hungarians to achieve their potential right to dual citizenship in the future, or say the Montenegrins who live here. Certainly, this would be subject to the condition that such right is irst acknowledged by their mother countries. In the previous few years there have been several initiatives for holding such referendum and the fact that this time the initiative for the parliamentary referendum was submitted by (for some nationalistic) World Federation of Hungarian makes one think.. Collective granting of dual citizenship is contradictory to EU norms, and it remains to be seen what conditions, acts and laws will be adopted in Hungary. In addition, it remains unclear in what way it will be determined who is and who is not a Hungarian in the Diaspora.44
The full text can be found at http://www.scindeks.nbs.bg.ac.yu/clanak.php?issn=00258555&je=en&prv=1&zad=2&id=0025-85550302223F 42 The full text can be found at http://www.neurope.eu/articles/81044.php 43 The full text can be found at http://www.mfa.gov.hu/kum/en/bal/actualities/ministers_ speeches/071204_kulugyi_bizottsag.htm 44 The full text can be found at http://www.dnevnik.co.yu/modules.php?name=News&ile= article&sid=26823
41
38
3. ECONOMIC RELATIONS
3.1. Trade with the European Union

In 2000, after a long period of isolation, Serbia renewed its economic relations with the EU, signing the agreement which granted Serbia exceptional trade measures. Along with the Stabilisation and Association Process, technical and inancial assistance, trade has been one of main instruments that allow the EU to stabilise and progressively bring Serbia in line with its own economic and legal systems. Trade policy plays an essential role, by building bridges between Serbia, the region and the EU European Unions Stabilisation and Accession Process has allowed Serbia exceptional trade measures, enabling export of most products originating from Serbia without customs, duties, quantitative limits and other fees. The only exceptions are the following: wine, certain ish products and suger are subject to preferential tariff quotas; for baby beef only the speciic import duty was eliminated and ad valorem duties of 20% continue to apply. In addition, the EU abolished customs duties and quantitative limitations for Serbian textile products and it guarantees to maintain the same policies in the future (based on the EU Autonomous Trade Measures).45 These trade preferences, which were originally adopted in 2000 for a period until the end of 2005, have contributed to an increase in the Serbian exports to the EU, thus meeting their objective so far. In 2005, these autonomous trade concessions were extended until the year 2010. During the period of exceptional trade measures Serbia is obliged to maintain (or decrease) the level of import protection from the beginning of this process towards the EU. Since January 2006 these measures have been applied separately for Serbia and for Montenegro, now two separate countries. Problems which occurred in implementing these measures relate to long and complicated administrative procedures, technical cooperation for export of sensitive goods (food and agriculture products), and the fact that the EU market has a very high level of non-tariff protection (quality standards, consumer protection, health protection). For a country in transition, like Serbia, it has been very dificult to cope with all of these regulations. Therefore, in January 2004 EU had warned its importers, advising them to pay special attention to all goods coming from Serbia. This measure had a very bad inluence on trade cooperation. However, it is not surprising that EU took this measures having in mind that Serbian companies were suspected of cheating in exporting sugar. Fortunately after two years and signiicant improve45
http://ec.europa.eu/trade/issues/bilateral/regions/balkans/index_en.htm
39
ment in customs service, the EU commission stopped that warning about Serbian export goods in December 2006. It is important to point out that EU represents Serbias most signiicant foreign trade partner, with a share of more than 50% both in exports and imports. Total trade between Serbia and EU countries (EU 25) was EUR 7.76 billion in 2006. This represents an increase of 25.7% from 2005. In 2006, Serbian export to EU has increased by 38% (total value EUR 2.7 billion) since 2005. This means that 52.5% of all Serbian exports goes to EU. On the other hand, the imports from EU has also increased by 20% (total value EUR 5.08 billion) since 2005. Almost half (48.5%) of Serbian imports comes from the EU. Export to EU (27) was EUR 1.74 billion from January to June 2007. This represents an increase of 32.8% from the last year. In the same period, import from EU was EUR 3.4 billion and this is an increase of 30.4%. Trade deicit was EUR 1.7 billion. Serbia exported 58.1 % of its export to EU and imported 55.4 % of total goods imported from the EU in the irst half of 2007.
Table 3.1.1: Serbias annual export to EU countries46 in RSD million (Kosovo not included)
country/year Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania
46
2000 1672 521 4891 1178 194 89 1219 7475 1274 1811 5544
2001 8347 3020 9930 5662 1535 516 8030 36333 6918 11614 27415
2002 10215 3847 6768 7622 1983
2003 12993 4473 7461 8229 2380
2004 16945 6733 12902 12451
2005 17050 7416 13705 13069
2006 15152 7474 27747 14312
10654 48576 8323 18835 36169
15518 58712 8912 15010 42001
20362 84680 11684 18198 3158 60928
19430 73298 10552 17959 3085 60978
22968 83354 13357 20392 4199 73319
932 479 2224
5143 2571 11075
6705 3961 8771
7154 6695 7718
9841 10361 11790
9294 10674 18417
9235 14906 29192
http://webrzs.statserb.sr.gov.yu/axd/god.htm
40
ECONOMIC RELATIONS country/year Slovakia Slovenia Spain Sweden United Kingdom Exchange rate47 2000 539 315 418 1113 738 2001 2425 7234 2659 4931 4313 2002 5061 12397 3616 9812 8641 613.211 2003 5390 13961 4551 9334 7042 68,381 2004 8902 19407 7111 12887 9337 78,5823 2005 9282 19204 7566 8640 8649 85,8 2006 9588 20563 7896 11067 9378 78,5
At EUs initiative, the countries of the region (including Romania and Bulgaria, with Moldova having joined unilaterally) signed in 2001 a Memorandum of Understanding on Trade facilitation and liberalisation, under the auspices of the Stability Pact for South Eastern Europe. The Central European Free Trade Agreement (CEFTA) is a trade agreement between countries in Central and South-Eastern Europe that has replaced bilateral agreements between the countries in the region: Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia, Moldova, Montenegro, Serbia and the United Nations Interim Administration Mission in Kosovo. It has been in force since 26 July 2007 and provides companies that operate in Serbia an opportunity to reach a 30 million people market free of customs and boundaries. Also, the Agreement stipulates accumulation of products origin, meaning that products exported from Serbia are considered of Serbian origin if integrated materials are originating from any other CEFTA country, European Community, Iceland, Norway, Switzerland (including Liechtenstein) or Turkey, provided that such products have undergone suficient processing (where the value added there is greater than the value of the materials used) in Serbia. 47 The EU strongly supports Serbian membership in the WTO. It is expected that Serbia will became a member of WTO by the end of 2008 provided that Serbias National Assembly adopts several key laws.
Table 3.1.2: Serbias annual import from EU countries48 in RSD million (Kosovo not included)
country/year Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland
47 48
2000 602 141 372 280 28 12
2001 2208 1979 1915 1116 221 53
2002 4105 1496 1085 1677 1093 299
2003 5076 1612 3094 1007 1310 322
2004 5530 2976 3577 1183 2838 414
2005 7934 4343 6263 4962 4351
2006 12320 5731 10289 2338 6114
http://www.nbs.yu/internet/cirilica/scripts/ondate.html http://webrzs.statserb.sr.gov.yu/axd/god.htm
41
RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION country/year France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom Exchange rate49
49
2000 830 2657 1042 809 3251
2001 2807 14992 3817 3902 19164
2002 3842 15560 5319 4710 19966
2003 6583 16646 3501 4363 20102
2004 7881 20632 7030 7069 26354
2005 10783 28920 8109 8748 43595
2006 15726 42449 10257 12531 61789
374 112 344 122 284 150 145 1096
2304 407 2054 613 2689 912 886 2540
2567 504 3412 2150 5175 1434 594 2770 613.211
3521 770 4119 1520 5368 1087 847 3068 68,381
2973 1685 7272 1161 9086 2387 1349 4766 78,5823
5094 2841 8561 2569 12627 3970 1409 5608 85,8
7012 5019 11624 2948 16817 4335 7806 78,5
Table 3.1.3: EU trade with Serbia in EUR million50
Year 2002 2003 2004 2005 2006 2007 3m 2006 3m 2007 Average annual growth
49 50
Yearly Share of Yearly Share of Imports Imports % total EU Exports % total EU Balance + change imports change exports Exports 1.528 1.471 1.744 2.109 2.985 3.996 664 888 3,7 18,5 20,9 41,6 33,9 0,16 0,16 0,17 0,18 0,22 0,28 0,20 0,26 3.875 3.931 4.944 4.816 6.009 7.778 6.009 1.252 1.621 1,4 25,7 2,6 24,8 29,4 22,7 29,4 11,6 0,43 0,45 0,51 0,45 0,52 0,63 0,46 0,55 2.348 2.460 3.200 2.708 3.023 3.782 6.009 589 733 5.403 5.403 6.687 6.925 8.994 11.774 6.009 1.916 2.509 13,6
33,9 18,2
http://www.nbs.yu/internet/cirilica/scripts/ondate.html http://trade.ec.europa.eu/doclib/html/111565.htm
42
ECONOMIC RELATIONS
Table 3.1.4: EU imports from Serbia in EUR million51

SITC Rev.3 Product Groups Share of total EU imports 0,22 0,24 0,61 0,01 0,21 0,06 0,07 0,04 0,19 0,30
2002
2004
2006
TOTAL Primary Products of which: Agricultural prod. Energy Manuf. Products of which: Machinery Transport equip. of which: Automotive prod. Chemicals Textiles and cloth.
1.528 722 440 24 788 88 96 16 69 161
100,0 47,2 28,8 1,6 51,6 5,7 6,3 1,1 4,5 10,5
1.744 744 396 10 980 103 52 20 148 162
100,0 42,7 22,7 0,6 56,2 5,9 3,0 1,1 8,5 9,3
2.985 1.209 560 22 1.743 196 64 20 210 246
100,0 40,5 18,8 0,7 58,4 6,6 2,1 0,7 7,0 8,2
Table 3.1.5 EU imports from Serbia in EUR million52 (2006)

SITC Rev.3 Product Groups Share of total EU imports
Mil euros
TOTAL Agricultural products Energy Non-agricultural raw materials Office/telecom. Equipment Power/non-electrical mach. Transport equipment Chemicals Textiles and clothing Iron and steel
51 52
2.985 560 22 23 21 130 64 210 246 510
0,22 0,61 0,01 0,00 0,01 0,17 0,07 0,19 0,30 1,72
100,0 18,8 0,7 0,8 0,7 4,3 2,1 7,0 8,2 17,1
http://trade.ec.europa.eu/doclib/html/111565.htm http://trade.ec.europa.eu/doclib/html/111565.htm
43
Table 3.1.6: EU exports from Serbia in EUR million53

SITC Rev.3 Product Groups 2002 % 2004 % 2006 % Share of total EU exports 0,52 0,54 0,56 0,53 0,52 0,46 0,41 0,54 0,49 0,99
TOTAL Primary Products of which: Agricultural prod. Energy Manuf. Products of which: Machinery Transport equip. of which: Automotive prod. Chemicals Textiles and cloth.
3.875 543 419 49 3.241 1.045 367 302 558 259
100,0 14,0 10,8 1,3 83,6 27,0 9,5 7,8 14,4 6,7
4.944 582 392 96 4.275 1.440 581 508 707 273
100,0 11,8 7,9 1,9 86,5 29,1 11,8 10,3 14,3 5,5
6.009 821 392 256 5.071 1.547 718 637 905 362
100,0 13,7 6,5 4,3 84,4 25,7 11,9 10,6 15,1 6,0
Table 3.1.7: EU exports from Serbia in EUR million54 (2006)

SITC Rev.3 Product Groups TOTAL Agricultural products Energy Non-agricultural raw materials Office/telecom. Equipment Power/non-electrical mach. Transport equipment Chemicals Textiles and clothing Iron and steel
53 54
Mio euros
Share of total EU exports 0,52 0,56 0,53 0,36 0,43 0,47 0,41 0,49 0,99 0,51
6.009 392 256 30 392 882 718 905 362 173
100,0 6,5 4,3 0,5 6,5 14,7 11,9 15,1 6,0 2,9
http://trade.ec.europa.eu/doclib/html/111565.htm. http://trade.ec.europa.eu/doclib/html/111565.htm.
44
ECONOMIC RELATIONS
Table 3.1.8: EU import from Serbia by product55

EU Imports from55 Serbia Harmonized System World Sections: Mil euros % Share of total EU imports
TOTAL TDC XV TDC II TDC VII TDC XI TDC XVI TDC IV TDC XII TDC VI TDC IX TDC XVII TDC XX TDC V TDC X TDC XIII TDC VIII TDC XVIII TDC I TDC XIV TDC III TDC XIX TDC XXI
1.350.494 97.086 28.871 34.183 80.995 313.570 26.964 15.342 97.394 12.561 96.186 31.886 356.563 14.282 9.200 11.327 50.510 18.919 32.599 5.023 703 3.042
2.985 1.183 329 270 246 214 172 114 113 75 58 55 43 34 14 11 11 10 9 4 3
100,0 39,6 11,0 9,0 8,2 7,2 5,8 3,8 3,8 2,5 1,9 1,8 1,5 1,1 0,5 0,4 0,4 0,3 0,3 0,1 0,1 0,0
0,22 1,22 1,14 0,79 0,30 0,07 0,64 0,74 0,12 0,60 0,06 0,17 0,01 0,24 0,15 0,09 0,02 0,05 0,03 0,08 0,44 0,02
55
http://trade.ec.europa.eu/doclib/html/111565.htm
45
Table 3.1.9: EU export to Serbia by product56

EU Exports to56 Serbia Harmonized System World Sections: Mio euros % Share of total EU exports
TOTAL TDC XVI TDC XVII TDC VI TDC XV TDC VII TDC XI TDC V TDC X TDC IV TDC XVIII TDC XX TDC IX TDC XIII TDC XII TDC II TDC VIII TDC I TDC III TDC XIV TDC XIX TDC XXI
1.166.109 352.704 167.956 165.195 84.563 46.435 38.332 52.702 26.806 39.019 56.063 19.966 9.123 16.758 6.327 11.948 10.137 12.509 2.604 29.173 1.612 4.721
6.009 1.575 738 687 531 426 365 286 257 228 172 131 129 122 84 80 64 59 10 4 2 1
100,0 26,2 12,3 11,4 8,8 7,1 6,1 4,8 4,3 3,8 2,9 2,2 2,1 2,0 1,4 1,3 1,1 1,0 0,2 0,1 0,0 0,0
0,52 0,45 0,44 0,42 0,63 0,92 0,95 0,54 0,96 0,59 0,31 0,66 1,41 0,73 1,33 0,67 0,63 0,47 0,37 0,01 0,15 0,02
56
46
ECONOMIC RELATIONS
Table 3.1.10: EU trade balance with Serbia57

EU Balance with57 Harmonized System World Sections: TOTAL TDC XVI TDC XVII TDC VI TDC V TDC X TDC XVIII TDC VII TDC XI TDC XIII TDC XX TDC IV TDC VIII TDC IX TDC I TDC III TDC XXI TDC XIX TDC XIV TDC XII TDC II TDC XV 184.385 39.134 71.770 67.802 303.862 12.525 5.553 12.252 42.663 7.558 11.920 12.054 1.191 3.438 6.410 2.419 1.679 909 3.426 9.015 16.923 12.523 3.023 1.361 680 573 243 223 162 156 119 108 76 56 54 54 49 6 1 5 29 249 652 Serbia Montenegro
57
47
Appendix: Labels of TDC sections

TDC I TDC II TDC III TDC IV TDC V TDC VI TDC VII TDC VIII TDC IX TDC X TDC XI TDC XII TDC XIII TDC XIV TDC XV TDC XVI TDC XVII TDC XIX TDC XX TDC XXI Live animals; animal products Vegetable products Animal or vegetable fats and oils and their cleavage products Prepared foodstuffs; beverages, spirits and vinegar; tobacco ... Mineral Products Products of the chemical or allied industries Plastics and articles thereof; rubber and articles thereof of animal gut (other than silkworm gut) Raw hides and skins, leather, fur skins and articles thereof; saddler materials; basket ware and wickerwork Wood and articles of wood; wood charcoal; cork and articles of Pulp of wood or of other fibrous cellulose material; paper or paperboard Textiles and textile articles Footwear, headgear, umbrellas, sun umbrellas, walking-sticks Articles of stone, plaster, cement, asbestos, mica or similar Natural or cultured pearls, precious or semi-precious stones Base metals and articles of base metal Machinery and mechanical appliances; electrical equipment; parts Vehicles, aircraft, vessels and associated transport equipment Arms and ammunition; parts and accessories thereof Miscellaneous manufactured articles Works of art, collectors pieces and antiques excl. chapter 99 other products
TDC XVIII Optical, photo, cinema, measuring, checking, precision instrument
Foreign Direct Investment (FDI) from the EU

It should be noted that Serbia, as a part of SFR Yugoslavia, was a recipient of FDI at the very beginning of the period under observation. According to a law passed as early as 1967 foreign companies could invest in SFRY/Serbia through joint venture. In the year 1990 there were 189 joint ventures in SFRY, 56 of which were in Serbia. The cumulative value of foreign invested capital was 1.872 billion dollars and the value of investments in Serbia was 776 million dollars.58 After the break-up of SFR Yugoslavia, and because of the sanctions and isolation of Serbia, foreign investors stayed away from the Serbian economy. The only signiicant exception occurred in 1997 when Italian and Greek investors participated
58
Jugoslovenski pregled, vol 31, # 4, p. 44-45
48
ECONOMIC RELATIONS
in the purchase of the Serbian telephone company. They bought 40% shares in the company for a total value of 1.2 billion German marks. From the beginning of real transition in 2001, Serbia has set its way towards EU, making it its most important economic partner and investor. Lack of capability to afirm domestic savings, indicates that Serbia must do everything that is in its capacity to ensure satisfactory inlow of inances from abroad and to direct greatest portion of such inlows into investments. Progress that Serbia made during these seven years could be well described by the words of its Minister of economy and regional development Mr. Mladjan Dinkic: For seven years we have dedicated our efforts to improving the business environment and enhancing the investment climate in Serbia. The macroeconomic conditions are stable followed by strong growth in both GDP and foreign investments. We have recognised the need for an appropriate set of laws and eficient and stimulating tax environment in order to support existing businesses, but also to attract new ones. Since 2000 a number of laws have been adopted making Serbia a leader in business reforms as reported by the World Banks Doing Business 2006.59 Table 3.2.1. shows the top investments in Serbia made by EU countries from 2002 to 2006. We can see that major investments were primarily focused on banking, energy and food and beverage sector.
Table 3.2.1: Top FDI made in Serbia by EU from 2002 to 200660
Country of Origin Austria Romania Italy Germany Belgium Greece USA/Hungary Slovenia Hungary Greece Germany Austria France Italy Slovenia Slovenia Denmark
59
Company Mobilkom Cuprom Banca Intesa Stada InBev NBG Biotech Energy Mercator OTP Bank Alpha Bank Metro Cash & Carry OMV Lafarge San Paolo IMI CIMOS Droga Kolinska Carlsberg
Industry Telecommunications Mining Banking Pharmaceuticals Food and beverages Banking Energy Retailing Banking Banking Wholesale Energy Construction Banking Automotive Food and beverages Food and beverages
Investment Type Greenfield Privatization Acquisition Acquisition Acquisition Privatization Greenfield Greenfield Privatization Privatization Greenfield Greenfield Privatization Acquisition Privatization Acquisition Acquisition
Investment Value (EUR million) 570 533 508 475 462 425 380 240 166 152 150 150 126 122 100 100 100
Speech at the presentation of the Foreign Investors Council White Book, May 16, 2007 http://www.siepa.sr.gov.yu/site/en/home/1/investing_in_serbia/strong_fdi_igures/leading_investors/
60
49
It is also important to point out that the biggest Greenield investment by an EU country was made by Mobilkom, Austria. In December 2006, Mobilkom Austria signed in Belgrade a licence agreement paying EUR 320 million for a 10-year licence. By entering the mobile operator market in Serbia, until that time dominated by two companies, Vip mobile brings strong competition into mobile telecommunications, which ensures more attractive prices and better product and service quality. It is a member of Mobilkom Austria group, which caters to more than 10 million users in seven countries of the region. Since the Feasibility study had shown the remarkable potential of the Serbian mobile market, Mobilkom Austria group decided to invest an additional EUR 250 million over the next few years, most of it in improving the network quality. The funds will be invested in up-to-date equipment and employee training in order to offer superior mobile communications to the users in Serbia, equal to the services already provided to other customers in the region. Being the main investor in Serbia (see Table 3.2.2.), EU gives a great signal and encourages other potential investor to set up their businesses in Serbia. For example, at the time when Raiffeisen bank from Austria came to Serbia, the market was still quite shallow and very risky. However this bank managed to generate proit showing the potential of this market. Very soon other banks decided to engage. It is important to point out that investing and taking part in reforms of banking sector has had great impact on transition process of Serbia. Opening their branches and taking over domestic banks resulted in the enlargement of product portfolio and in deeper inancial market. Today banking sector is the most developed part of Serbian inancial market. On the other hand one of the biggest FDIs made so far in Serbia has been in banking sector as well. One of the largest Italian banks in terms of assets, Banca Intesa, bought a 75 per cent stake in Belgrade-based Delta Banka on 14 February 2005. The purchase price of EUR 278 million was among the largest sums to have been garnered from the privatisation of Serbian companies to date. Also the Organisation for Economic Cooperation and Development (OECD), which awards foreign investors in the countries of South East Europe each year, assessed the banks acquisition to be the largest investment in the banking sector from the inancial point of view, as well as the largest foreign investment in Serbia in 2005. The strong growth in FDI hasnt resulted in decrease of Serbias trade deicit. The reason for this is that investments have been made in sectors which are not primarily export oriented. On the other hand those export oriented companies have to import raw materials thus decreasing the positive effect they might have on trade balance. Perhaps the solution for this problem is that domestic companies should create supply of these materials and by that way even boost productivity. It had been expected that FDI would have strong impact on unemployment rate in Serbia. However, in spite of the relatively high volume of investment the unemployment rate is still very high it is above 20%. The reason for this lies in the fact that Serbia is still in the phase of transition when new job creation barely manages to cover the job losses which are occurring due to enterprise restructuring and closure of non-proitable companies. Calculations suggest that if investment inlow continues to be above three billion euros per year, and the growth rate of GDP is 50
ECONOMIC RELATIONS
maintained at the level of around 7% per annum, the unemployment rate could decrease by 50% over the next ive years61.
Table 3.2.2: Serbia: Foreign Direct Investments in Cash Net, by Year and Country (in USD thousand)62
Country 1 2 3 4 5 6 7 8 9 Germany Greece Austria Netherlands Slovenia France Great Britain Hungary Luxembourg 2000 6.152 334 183 0 2001 9.788 1.280 1.421 102 2002 82.801 12.496 33.876 2.248 9.561 87.489 6.618 1.167 3.619 5.243 7.553 133 10 5 344 41.717 2003 75.708 62.268 93.747 598.963 29.036 7.858 20.631 4.224 4.108 34.446 21.325 129 18.342 15.330 1.925 31.581 1.019.621 2004 51.985 52.968 146.104 102.008 15.706 24.022 79.620 16.567 2.387 10.806 10.149 9.910 0 17.082 2.523 16.310 558.147 2005 187.320 249.536 201.189 92.113 183.563 62.347 63.330 24.677 108.885 40.484 18.316 655 25.447 6.441 12.407 71.551 1.348.261 2006 905.824 923.698 520.356 -214.119 201.241 159.085 135.915 244.045 8.843 25.240 52.752 54.270 19.325 10.527 6.464 -387.154 2.666.312 TOTAL 1.319.578 1.302.580 996.876 581.315 450.394 340.882 307.339 290.955 127.970 117.315 112.695 65.097 63.137 49.385 23.663 -223.188 5.925.993 2.041.999 7.967.992
33 11.254 0 0 0 0 0 2.006 0 3 0 0 762 81 1.225 275 128 1.096 594 0 10 0 0 2.045
10 Croatia 11 Italy 12 Bulgaria 13 Slovakia 14 Latvia 15 Belgium 16 Cyprus TOTAL EU Others TOTAL
9.473 29.299 294.880 1.779 6.089 31.574
51.789 238.256
92.445 1.620.067
11.252 35.388 326.454 1.071.410 796.403 1.440.706 4.286.379
3.2. Labour migraon to the EU since 1900

Infrastructure
For its position on the geographic borderline between East and West, Serbia is very often referred to as a gateway of Europe. Also two very important panEuropean corridors, Corridor VII: River Danube, and Corridor X: highway and railroad, pass through Serbia, providing excellent logistic connections with Western Europe and the Middle East. It is important to point out that Serbian geostrategic position relative to the EU is very important. It connects from north to south Hungary and
Vlada Republike Srbije, Nacionalna strategija privrednog razvoja Srbije 2006-2012, Belgrade, 2006, 32. 62 http://www.siepa.sr.gov.yu/site/en/home/1/investing_in_serbia/strong_fdi_igures/fdi_ by_countries/
61
51
Greece, two EU countries, and from west to east it connects (together with Croatia) Italy, Austria and Slovenia with Romania and Bulgaria, the new members of EU. Thus, Serbia offers a great transport potential and has an extraordinary potential to become the logistic hub of South-eastern Europe. However much of its transport infrastructure is in a very bad shape due to long period of economic crises, political instability and NATO bombing. Since 2000 much time, money and energy has been invested into reconstruction. The road network of the Republic of Serbia is 40.845 km (25.380 miles) long, out of which 415.7 km (257 miles) of highways with toll collection, 246.5 km (153 miles) of semi-highways with toll collection, 5.525 km (3.433 miles) of arterial roads, 11.540 km (7.171 miles) of regional roads, and 23.780 km (14.776 miles) of local roads 63 . Serbian roads are a part of Pan European Corridors X and VII, offering an access to all European destinations. The rehabilitation of the Gazela Bridge and approach roads, which is the main bridge in the City of Belgrade and forms an integral part of Trans European Corridor X, and construction of the remaining sections of the Belgrade bypass, is in progress. This project is partly inanced by the EBRD and EIB. Liberalisation process of air trafic began with singing the agreement on free sky with EU. Its implementation has begun since 01.01.2007. This means that EU carriers may ly non-stop to the US from airports in the so-called European Common Aviation Area (comprising EU neighbours such as Serbia)64. A highly cost effective way of transport can be pursued on three Serbian rivers giving a total of 959 km of safe navigable routes. 588 km of the International River Danube, represents the most reliable navigable route that can be used for transportation throughout the year. In addition, artiicial canals Rhine-Main-Danube, an international canal that allows barge trafic between the North Sea and the Black Sea, and Danube-Tisa-Danube create a network of routes providing access to all Danube basin countries. However, remains of bridges destroyed during the NATO bombing still represent an obstacle to free transport and it is thus, very important to remove them completely. In 2002 Serbia received a EUR 41 million donation from EU for the reconstruction of the Sloboda Bridge in Novi Sad. The bridge carried the bulk of the road trafic crossing the Danube at Novi Sad and was destroyed by NATO intervention in 1999. An additional EUR 10.5 million were invested in rehabilitation of the Sloboda Bridge access tunnel. In the past two years Serbia secured a stable and regular energy supply for citizens and the economy with all forms of energy products and the country reached the highest level of energy safety in 15 years. By singing the Athens Memorandum Serbia, along with other states agreed to develop a regional energy market in power and gas from 2005. This agreement is better known as The South-East Europe Regional Energy Market (SEEREM) and it became part of the EUs wider internal energy market on 25 October 2005 by the creation of the common European Energy Community in the framework of Stability Pact for South Eastern Europe65.
http://www.siepa.sr.gov.yu/site/en/home/1/investing_in_serbia/modern_infrastructure/ transport/ 64 http://europa.eu/rapid/pressReleasesAction.do?reference=IP/07/277 65 http://www.seerecon.org/infrastructure/sectors/energy/
63
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ECONOMIC RELATIONS
Regarding inter-regional trade, the Memorandum states that the energy market in SEE will be integrated into the European Unions internal energy market. The 2003 revision of the Athens Memorandum also includes provisions relating to gas market development, and proposes the establishment of a SEEREM. For countries in SEE where the use of gas is currently less than 10%, a gas expansion plan to raise the use of gas above this threshold before 2010 must be adopted and implemented. To Serbia becoming a part of SEEMAR is important because it improves the balance between energy supply and demand, crucial to boost and sustain economic development. This requires a strong commitment by Serbia, as a part of SEE, towards market oriented reforms in order to: improve overall energy conservation and eficiency, reduce an excessively high energy intensity of production compared to international standards, strengthen national institutional capacities and adapt legislation and regulation to EU norms and practices. It also means that Serbia should be prepared to draw fully on the substantial gains which can result from energy trading among other SEE countries and with its neighbours. This implies that the current fragmentation of energy supply is to overcome through cooperation among the various entities concerned and through physical connection/reconnection of the network. A regional approach to energy supply, therefore, offers signiicant advantages both in terms of improved utilization of existing supply and production capacities as well as optimizing future investments. Major steps have already been taken over the last couple of years towards achieving these objectives in both the electricity and natural gas sectors. We can say now that when it comes to electricity Serbia is already a part of EU. However much progress still has to be made concerning gas. The common objective of the Energy Community Treaty parties is to stimulate and underpin the secure supply of energy, especially electricity and natural gas, to their citizens, and to secure economic growth and investment in South East Europe by improving the availability, eficiency and reliability of network energy sources at reasonable cost. The parties seek to achieve this objective through promoting greater regional integration, the creation of a compatible regional energy market, competition and increased trade within the SEE region and between it and the European Union internal energy market. The ultimate aim is to have a single regulatory space for electricity and natural gas trade that stretches from Ankara to Lisbon, from Athens to Oslo. Ministry of energy and mining rounded up the legal and legislative framework on the operation of energy entities in Serbia: Law on energy was adopted, as well as the Strategy of Energy Development to 2015. The adoption of the Law on energy should speed up the process of integration of Serbias energy system into the European energy network. Thus, Serbia has become a part of the third largest market in the world, the Pan-European community. The adoption of this law set up a clear legal framework for reorganisation of the Serbian Electric Power Industry (EPS) and the Oil Industry of Serbia (NIS), but it was also made clear that Serbia wants to prevent the national energy companies from being sold. The Strategy of Energy Development to 2015 contains strategic planning of energy development harmonised with overall growth in economic activity. As for infrastructural projects, priorities are the completion of an underground storage in Banatski Dvor, construction of a gas pipeline Nis-Dimitrovgrad, and the completion 53
of thermoelectric power plant Kolubara B. One of the main objectives for Serbian government is to prepare electricity sector for participation at the liberalised regional electricity market, as well as to strengthen and consolidate EMS as an independent transmission, system and market operator. In order to achieve this mobilisation of private sector capital into the energy sector has to be provided. Since 2000 Serbia has received EUR 446.3 million from different EU funds and institutions such as EIB, EBRD, EAR for reconstruction and modernisation of its energy. Last year total volume of received investments was EUR 24.5 million. In 2006, the most important project was the construction of a high voltage 400 kV electricity transmission line between Nis (Serbia) and Skopje (the Former Yugoslav Republic of Macedonia). It was worth EUR 21.5 million. This project has been identiied as an urgent priority both for the creation of the Regional Market in South East Europe, and for the stability and security of the electricity system of South East Europe. EU has very strict rules about environmental protection and standards. Unfortunately Serbia hasnt still done much concerning this issue. Serbia should develop strategic approach to waste management, water pollution and establish quality control system of water supply. In these areas some progress has already been made. Fond for protection of environment has been established by the ministry of inance, and it should be inanced from tax income. Adjusting to European standards and strengthening institution is area represents a large inancial burden. Because of that long term inancial plans should be made. However some progress has been made. These are recent achievements: The Cadastre of Polluters has been initiated with data entry on 20 large industries and training was provided to industries and administrators in national environmental monitoring. Staff of the Directorate for Environmental Protection and related institutions was trained in the implementation of EU environmental directives and instruments, notably Integrated Pollution Prevention and Control, Strategic Environmental Assessment, and the Eco Management and Audit Scheme. A twinning initiative at the Ministry of Agricultures Water Management Directorate has started. This aim is to boost the capacity of the water directorate to safeguard and improve water quality, and bring laws in line with the EU Water Framework Directive. The Hydro-meteorological Institute of Serbia and Institute for Public Health of Belgrade received laboratory equipment for water and wastewater quality Monitoring It is important to point out that Serbia has already received EUR 47.4 million from different EU institutions since 2000. This money has mainly been invested in66: monitoring air pollution and improving municipal environmental infrastructure for wastewater treatment and solid waste disposal (EUR 13 million)
66
http://www.ear.europa.eu/publications/main/documents/AnnualReportJan-Dec2006.pdf
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ECONOMIC RELATIONS
implementation of the guiding principles of the Water Framework Directive throughout Serbia and in treatment and sewerage, and protection of watercourses (EUR 9.5 million) construction of a facility for the safe physical chemical treatment and inal disposal of hazardous industrial waste (EUR 14 million) preparation of a National Environmental Strategy followed by a National Environmental Action Plan, as well as the preparation and implementation of Local Environmental Plans in selected municipalities (EUR 10.4 million)
EU pre-accession funds
Almost immediately after the political changes that occurred in Serbia, the international community organized a big donors conference for supporting the changes in Yugoslavia. The conference was co-organized by the European Union and the World bank and was held in Brussels in June 2001. At the conference, donors pledged a total of 1.8 billion dollars over two years. The European Union and bilateral donations of EU countries covered 75% of that amount67 The EU as provided support to Serbia under a variety of inancial instruments, including CARDS assistance, macro-inancial support and humanitarian aid. In recent years, the emphasis has shifted away from reconstruction and is now more concentrated on institution-building, economic development and reform in line with the European Partnership recommendations. Between 2001 and 2006, the main source of assistance for Serbia was the CARDS programme which was replaced by the Instrument for Pre-Accession Assistance (IPA) in 2007. EU assistance under the CARDS instrument amounts to some 311.8 million and involved over 100 projects. In 2000 substantial assistance was given for electricity imports, to the municipal heating systems, medicines were locally bought and distributed and subsidised vegetable oil and sugar were provided to consumers. In 2001 the EU assistance was more concentrated on medium and long-term investment in key sectors like energy, health, agriculture, and enterprise development68. CARDS National Programmes, in line with the Multi Indicative Programme for 2002-2004, supported the progress of Serbia in the area of economic development, promoting good governance and the strengthening of rule of law. In that period the EU supported rehabilitation of infrastructure; the small and medium-sized enterprise sector; encouraged an independent media and civil society; supported return and reintegration, as well as durable solutions for refugees and for internally displaced people; supported the reform of public inance, justice, local government, health, environmental protection and home affairs.69 CARDS National Programmes, in line with the Multi Indicative Programme for 2005-2006, focused on key challenges such as developing long-term solutions
67 68
The Ministry of External Relations, Izvestaj o donatorskoj konferenciji, Belgrade, july 2001 ISDACON- http://www.evropa.sr.gov.yu/Europa/Management/ISDACON/reports 69 http://www.seio.sr.gov.yu
55
to help the most vulnerable groups, creating a competitive economy that will attract domestic and foreign investors and establishing competition and consumer protection bodies. There was a continued focus on Public Administration Reform - from the judiciary and the media to local government and the health system - all in an effort to improve capacities of national authorities and to assist the countrys integration into the EU. Serbia has also beneited from the regional CARDS programmes that support actions of common interest for the Western Balkan region. During the 2002-2004 period, Serbia was actively involved in regional actions such as the promotion of integrated border management; modern customs and taxation procedures, democratic stabilisation; building the capacities of state institutions; asylum, migration and visa with a project that resulted in recommendations on building up strategies and administrative capacity at national levels, reinforcing regional infrastructure and environmental protection. In the period 2005-2006 the EU supported regional priorities in areas of institution building, justice and home affairs, cross border cooperation, private sector development and infrastructure development. Under CARDS cross border support activities, Serbia developed strong institutional capacities via participation in these programs, contributing to the recovery of border regions, regional reconciliation and stability. In addition to CARDS assistance, Serbia is also a priority country for the European Initiative for Democracy and Human Rights and beneits from the LIFE environmental programme, as well as from the 6th Framework Programme for Research and Development. In May 2007, Serbia was admitted to the EC Seventh Research Framework Programme. The related memorandum of understanding was signed in June 2007. From early 2001 until end-2006, the European Bank for Reconstruction and Development approved loans worth a total of EUR 920.4 million to the Republic of Serbia. So far, most has been invested in the inancial sector 24% and least in the telecommunications sector around 1%70. In the Transition Report 2006: Finance in Transition EBRD stated that the Republic of Serbia had achieved signiicant economic growth and progress in the area of privatisation of small-sized enterprises and that competition had improved71. Part of that success Serbia owes to the assistance provided by EBRD. EBRD continued providing inancial support to the Republic of Serbia, approving a total of EUR 290 million for 2007. These funds are intended for inancing the development of small and medium-sized enterprises, acquisition of equity capital in commercial banks (Komercijalna banka and Cacanska banka), purchase of railway cars for the needs of the Serbian railways, construction of the bridge on the Sava River, etc. A total of around EUR 130 million was disbursed during 200672.
70 71
http://www.nbs.yu/export/internet/english/90/index.html - Annual Report 2006.-pdf www.ebrd.com/pubs/econo/6813.htm 72 http://www.nbs.yu/export/internet/english/90/index.html - Annual Report 2006.-pdf
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ECONOMIC RELATIONS
Table 3.5.1: Overview of EU development activity by sector73 values are in million of Euros
SECTOR/YEAR 2000 22.03 2001 100.43 2002 92.56 2003 73.18 2004 5.84 2005 25.5 2006 24 TOTAL BY SECTOR 343.54
Energy Health Civil society Mineral resources and mining Welfare General budget support Agriculture, forestry and fishery Economic and development policy Education Private sector Banking and financial services Local Public administration Transport and storage Legal and judicial development Public sector financial management Construction Environment protection Home affairs Water supply and sanitation Culture and recreation Environment Economic relations Labour and employment Privatisation, business and services
TOTAL BY YEAR
7.58 0.2 1.43 11.5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

42.74
28.47 0.7 16.88 27.98 234 34.92 1.5 14.28 5.12 0.33 4.95 2.5 0 0 0 0 0 0 0 0 0 0 0 0
472.06
31.77 3.29 5.83 28.89 103.5 8.39 5.33 2.84 16.46 0 4.76 5.56 29.41 1.5 0.7 4.28 0.21 0 0 0 0 0 0 0
345.28
7.3 1.69 0 18.53 57.58 7.36 1.17 4.54 9.59 0 11.78 5.78 87.88 1.5 1.53 12.84 0.29 8.48 2.88 2.27 3.77 0.91 0 0
320.85
5.01 0.8 0 4.02 13.85 0.15 0 2.23 13.56 0 1.62 1.59 86.98 1.1 5.99 0 0 0.37 5.57 0.73 0 0.92 0.84 0
151.17
8.5 2 0 12.5 0 8 0 33.5 0 0 0 28.7 47.5 2.5 5 5 0 11.3 9.5 2.5 0 0 0 11.5
213.5
90 9.5 0 0 0 0 0 0 0 0 0 39 167 5.5 0 1 0 11.5 0 2 13 15 8 0

385.5
178.63 18.18 24.14 103.42 408.93 58.82 8 57.39 44.73 0.33 23.11 83.13 418.77 12.1 13.22 23.12 0.5 31.65 17.95 7.5 16.77 16.83 8.84 11.5
1931.1
Source: Date are based on statistic from ISDACON74

73 74
Donors- European Commission, EBRD, EIB, ECHO,EU MFA. It includes all investment types http://www.evropa.sr.gov.yu
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In the period from early 2001 until end-2006, the European Investment Bank (EIB) approved a loan worth around EUR 809 million to the Republic of Serbia. Of this amount, EUR 365 million was disbursed. In 2006, the EIB approved a total of around EUR 140 million to the Republic of Serbia for infrastructural reconstruction and private banking sector development projects.75 For the purpose of inancing of small and medium-sized enterprises and small and medium-scale infrastructural projects of local governments in the Republic of Serbia, the EIB approved EUR 65 million through Apex Global Loan and Apex Global Loan II. Apex Global Loan of EUR 20 million was drawn in full through HVB banka Srbija i Crna Gora a.d., Belgrade, and Komercijalna banka a.d., Belgrade, in the form of 27 loans, which led to the creation of 551 new jobs. Disbursement of Apex Global Loan II of EUR 45 million continued in 2006. A total of EUR 16.8 million was approved to inal beneiciaries, and by end-2006, EUR 13.87 million was disbursed through 26 loans. As local government bodies and public utility companies were very interested in inancing projects by drawing funds from this credit line, the share of such projects in 2006 came to around 50%. Participation of intermediary banks in inancing each individual project from their own sources of funds was abolished in 2006. The plan of the European Investment Bank is to include Privredna banka a.d., Belgrade, and Cacanska banka a.d., Cacak, in the implementation of this credit line. The Instrument for Pre-accession Assistance (IPA) replaced CARDS in 2007 and will cover the period 2007 2013. The main objective of IPA is to help Serbia to face the challenges of European Integration. Serbia will receive around 1 billion euros through this channel until 2012. Success areas under CARDS such as education provision (labour productivity), business related infrastructure provision, local development partnerships, SME support, and employment promotion should attract more IPA support. Public administration reform support for 2007/8 should tackle key areas particularly national inancial planning, interministerial policy coordination and central/local government relations. Support should also be directed to building project pipelines for IPA funding in 2008 and 2009 but well linked with plans for future national investment programmes and IFI priorities. Acquis support actions should complement the policy priority to address the sources of unemployment and improve good governance in areas such as public procurement, judicial reform, competition, trade and metrology. Focus areas for inancial assistance under IPA include political requirements covering, inter alia, democratic institutions, public administration reform, rule of law, reform of the judiciary, ight against corruption, human rights and protection of minorities. Other focus areas are socio-economic requirements and European Standards, as well as cross-border co-operation.76
75 76
Izvestaj o medjunarodnoj pomoci Srbiji-pdf Multi-annual indicative Planning Document (MIPD) 2007- 2009 for Serbia-pdf
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ECONOMIC RELATIONS
In 2007, the irst year of the new Instrument for Pre-accession Assistance (IPA), the national assistance programme for Serbia amounted to 164.8 million. In addition to this, assistance in the areas of nuclear safety, customs, education and cross-border co-operation brings the total assistance budget allocated to Serbia for 2007 to 189.7 million. The overall inancial scope of the 2007-2009 MIPD amounts to EUR 572.4 million. The assistance under Component I, Transition Assistance and Institution Building, may be provided in the form of twinning/twinning light support, technical assistance, project preparation facility, procurement of equipment, works, investments and grant schemes. Under certain conditions assistance in form of budgetary support could be provided. A inancial contribution will be provided for the participation in the Community programmes. The indicative weighting that should be given to the different sectors is77: 1. Political Requirements- 2035% 2. Socio-economic Requirements- 4560% 3. European Approximation of Sectoral Policies- 2030% Through its Component II, IPA will support Cross Border Cooperation by proposing joint programmes at the borders with Hungary, Romania, Bulgaria, Croatia, FYROM, Montenegro, Bosnia and Herzegovina and participation in joint programmes under ERDF (European Regional Development Fund) transnational/interregional programmes wherever relevant. Serbia has already participated actively in EC-inanced cross border cooperation with positive results. Cross border cooperation is crucially important for stability, cooperation and economic development in Serbias border regions. The aim of EC assistance will be to develop local capacity in relation to cross border cooperation in all of Serbias border regions while also targeting speciic local development projects. Development of cross-border cooperation is dependent on general capacity building activities of the authorities responsible for regional policy. Therefore, institution building activities under IPA components I and II have as an objective to generate additionality, complementarity, and catalytic effect between components, and to ensure that the successful cross-border skills base that has been built aup at the national level is further developed. In principle, priorities remain similar to the currently existing ones: Cross-border infrastructure. Flood prevention. Caters management. Economic co-operation (especially, creation of strong logistical links, supply chains and clusters alongside the border) tourism, agriculture and rural development. Address common challenges in the ield of environment, public health, prevention and ight against organised crime, etc.
77
Multi-annual indicative Planning Document (MIPD) 2007- 2009 for Serbia-pdf
59
Ensure eficient and secure borders. Promote legal and administrative cooperation. Promote local people to people type actions, more emphasis should be put on stronger co-operation between public entities, NGOs in the ields such as education and cultural co-operation, development of democracy and tolerance, conlict prevention etc. Cooperation among cultural institutions including Museums, Theatres, etc. Develop the reference framework for CBC activities and developing planning documents; Fostering reciprocal trust at local level; Supporting initiatives in the area of education, research and employment generation The following indicative amounts of IPA funds are earmarked for CBC with MSs78:
CBC programmes Serbia Hungary Serbia Romania Serbia Bulgaria Adriatic (million , current prices) IPA funds2007 1.334 1.580 1.265 0.319 IPA funds 2008 2.279 2.698 2.160 0.546 IPA funds 2009 2.486 2.943 2.356 0.595
78
Multi-annual indicative Planning Document (MIPD) 2007- 2009 for Serbia-pdf
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4. LEGAL ALIGNMENT
4.1. Evaluaon of the naonal legal system

The Serbian national legal system is far from being approximated to the EU acquis. Yet, for almost seven years, every piece of legislation is drafted with the acquis in mind, and since 2003 the Statement on approximation, a document which determines the level of approximation with EU laws as well as establishes deadlines for full approximation, must accompany every draft law to the Serbian Parliament79. Although political issues have ramiications on the EU accession process, the legislative has been one of Europes fastest in terms of approximation. Serbia has entered transition as a post-conlict nation in which the rule of law had diminished. Simultaneously with the adoption of the acquis, Serbia needs to invest a tremendous effort in capacity building, education and extensive economic reforms, but moreover in strengthening the institutions and at the same time decreasing states involvement in the economy.
4.1.1. Transformation since 1990

The Republic of Serbia (i.e. FR Yugoslavia, then Serbia and Montenegro) inherited, following the dissolution of the Socialist Federative Republic of Yugoslavia (SFRY), all federal legislation, which have been converted into new federal level, and inally entered legal system as Serbian laws. It means that Serbia shares legal history with other countries which have formed the Yugoslav federation, including EU member state Slovenia, as well as the candidate country Croatia. Yugoslavia has never been a typical Eastern bloc country though not dominant, private property and entrepreneurship played a signiicant role in the countrys economy. A number of characteristics of market economy were in place, whereas economic cooperation with EEC countries and other western nations has been far more intensive and productive, comparing to the one with the communist East80. As
The EU Integration Ofice of the Republic of Serbia, Statement on Approximation, http:// www.seio.sr.gov.yu/code/navigate.asp?Id=77 80 Gergana Noutcheva, EU Conditionality, State Sovereignty and the Compliance Patterns of the Balkan States (paper presented at the 3rd Pan-European Conference on EU Politics European Consortium for Political Research, Bilgi University, Istanbul, 21-23 September 2006)
79
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a result, Yugoslav legal system, particularly parts which addressed economy, have been fairly close to European standards of the time. Perhaps the most signiicant piece of legislation in the ield of contract law, The Law on Contracts81,82, has been moderately amended and is in force in EU member state Slovenia. However, it is quite challenging to compare Slovene and Serbian legislative, as the former ended its approximation with the EU acquis, even though the two legal systems were nearly indistinguishable only 16 years ago. The fact remains that Serbian legislature could not care less for the level of approximation of draft laws with the acquis. As a consequence, the outcome of harmonisation during the irst ten years of transition in Eastern Europe could not only be considered as poor, but one might say that they are negative Serbia drifted farther from the European Union during the 1990s. Regardless of not so frequent attempts to approximate Serbian legislature with the acquis, reality did not allow for those regulations to actually be implemented. Ministry of Interior, a range of inspection services, such as tax or commerce inspections, but also courts functioned inadequately they were sluggish, prone to corruption and such situation discouraged everyone from taking their grievances to the state institutions. A number of standards of market economy and partly democratised society that have been in place since the inal years of the SFRY, instead of being improved, were derogated during the years of conlict in the Balkans and were applicable only in theory. Therefore, (positive) transition of Serbia starts in October 2000. The main characteristic of this period is exceptionally intensive legislative activity which has been interrupted more than once for purely political reasons disagreements in the ruling coalition and vote of no-conidence in the government, virtually suspended legislative for periods of several months. Similar, but shorter episode of suspended activity followed the assassination of Prime Minister Djindji. Also, it took few months after the reformist government took ofice in January 2001 until it started drafting laws, as the executive was involved in consolidation of power, following the fall of the Miloevi regime.
4.1.2. Adaptation to the EU acquis communautaire

Serbian Government adopted the irst Action Plan for the Approximation of Domestic Laws with the Acquis Communautaire at its session of 31 July 2003. Since the entry into force of the Decision of European Unions Council of Ministers on European Partnership of 14 June 200483, the progress of Serbias European integration
Zakon o obligacionim odnosima, Oficial Gazette of the SFRY No. 29/78, 39/85, 45/89, Decision of the Constitutional Court of Yugoslavia No. 57/89, Oficial Gazette of the FRY No. 31/98 and Constitutional Charter of the State Union of Serbia and Montenegro 82 Obligacijski zakonik (uradno preieno besedilo), Oficial Gazette of the Republic of Slovenia, No. 97/2007 83 The EU Integration Ofice of the Republic of Serbia, Action Plan for the Approximation of Draft Laws with the EU Regulations, http://www.seio.sr.gov.yu/code/navigate.asp?Id=76
81
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LEGAL ALIGNMENT
process had been estimated primarily on the basis of fulilment of obligations contained in this document. The Action Plan, which has been updated on a yearly basis, acted as a primary tool for enforcing the priorities in the process of harmonization with the EU regulations, as well as for fulilling the obligations which have been assumed with the initialling of the Stabilization and Association Agreement84. The European Integration Ofice acts as initiator of the Action Plan drafting, but it also informs the government quarterly on the plans implementation. Rules of procedure of the Serbian government also state that, prior to presenting new draft legislation to the government, the ministry responsible for the draft needs to obtain a report from the EU Integration Ofice on the approximation of a given draft with the EU acquis, as well as to submit their own Statement on the Approximation85. The Statement on the Approximation of Draft Laws, Other Regulations and General Legal Acts with the Acquis Communautaire was introduced in the legislative procedure in 2003. It is a written statement of a public institution or organisation responsible for drafting a law or proposing a bill, other regulation or general legal act, which evaluates the level of its approximation with the acquis communautaire. The Statement accompanies every draft law. The head of the public institution or organization that proposed the regulation approves the Statement by signing it. The Statement determines the relevant legal act of the EU, either of the primary or secondary source, evaluates the level of approximation of the domestic legal act (levels being approximated, partly approximated and not approximated), gives the reasons for its partial approximation as well as the deadline for making its full approximation. The introduction of the Approximation Statement does not imply obligatory approximation with the EU legislation; there is a possibility of postponing the approximation in case there are no technical and economic conditions. A draft law, other regulation or general legal act that is not accompanied by the Statement is returned to the public institution or organization that proposed it.
4.1.3. Pre-accession help and actions

Although municipalities with local governments formed by pro-democracy parties during the Miloevi regime received the EU assistance, it was generally consisted of heating fuel and other types of emergency (humanitarian) assistance intended for citizens of those municipalities, and had almost nothing to do with future
The EU Integration Ofice of the Republic of Serbia, Latest News: Initialling of Stabilisation and Association Agreement between Serbia and the EU, http://www.seio.sr.gov.yu/code/navigate. asp?Id=106#697 85 The EU Integration Ofice of the Republic of Serbia, Statement on Approximation, http:// www.seio.sr.gov.yu/code/navigate.asp?Id=77
84
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prospective EU membership for Serbia86. Having that in mind, EU assistance which addresses the approximation of national legislature to the EU acquis began only after October 2000. Serbia, however, had and still has a unique opportunity to learn from experiences of Slovenia and Croatia which, as we have already stated, share their legal history with Serbia. Since 2000, Serbia became eligible for number of EU assistance programmes. Out of those, two have offered a signiicant help in the ield of legislative harmonisation and the administration capacity building. First would be CARDS, Community Assistance for Reconstruction, Development and Stabilisation87. The EU has invested 4.6 billion EUR over the last six years in order to support the participation of Western Balkans countries in the Stabilisation and Association process88. Out of four CARDS areas of interest, one is of particular signiicance for legal harmonisation institutional and legislative development, including harmonisation with European Union norms and approaches, to underpin democracy and the rule of law, human rights, civil society and the media, and the operation of a free market economy Second EU assistance programme is The Technical Assistance Information Exchange Ofice (TAIEX) that was created within the Directorate General Enlargement. It provides short-term technical assistance to the Western Balkan countries on speciic subjects connected with the adoption of the acquis89. It also provides assistance in building the necessary administrative infrastructure. Serbia started using TAIEX services in May 2004, when a two-day seminar in Belgrade on how to use the TAIEX assistance was held90. The representatives of Serbian administration have attended over 50 seminars organised by this programme, which includes not only seminars or workshops, but also experts which can be sent to a beneiciary country or study visits providing opportunities for oficials of beneiciary countries to have a irst-hand experience on how to deal with implementation and informant of acquis. The seminars encompassed broad range of issues, such as customs, VAT, public procurement, energy, environmental protection, agrarian policy in the EU, rural development, veterinary control, phyto-sanitary control, internal market, ight against organised crime, transport, etc91.
The Delegation of the European Commission to the Republic of Serbia, Assistance to the Republic of Serbia, http://www.europa.org.yu/code/navigate.php?Id=195 87 Adopted with the Council Regulation (EC) No 2666/2000 88 The Delegation of the European Commission to the Republic of Serbia, CARDS, http:// www.europa.org.yu/code/navigate.php?Id=97 89 The Delegation of the European Commission to the Republic of Serbia, TAIEX, http:// www.europa.org.yu/code/navigate.php?Id=102 90 The EU Integration Ofice of the Republic of Serbia, TAIEX, http://www.seio.sr.gov.yu/ code/navigate.asp?Id=85 91 European Commission DG Enlargement, 2005: TAIEX fully operational in the Western Balkans, The Delegation of the European Commission to the Republic of Serbia, http://www.europa. org.yu/upload/documents/documents/FrontB.pdf
86
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4.2. Comparave analysis according to the EU negoaon chapters

Serbia has not commenced the negotiations on EU accession, nor has it received the candidate status, which could happen at the end of 2008 at best92. Thus, the screening process has not yet begun, but progress is expected in line with that of former Yugoslav countries which are now candidates Croatia and FYR Macedonia. Environmental legislation is furthest from EU acquis, while Serbia has already joined European programmes in ield of Science and Research, as well as in Education and Culture. The legislation on intellectual property and its enforcement have been well received. Some negotiation chapters are not expected to be an issue due to the fact that Serbia is landlocked, such as large portion of the Fisheries acquis. Serbia averagely adopts 30 new or amended laws annually, which are in line with the acquis, frequently spanning several directives and/or resolutions93.
4.2.1. Single Market Free Movement of Goods

Under the new government, the Ministry of Economy and Regional Development is responsible for the area of free movement of goods. Preparations for approximation have commenced with the entry into force, in early 2006, of framework legislation for instance the Law on Standardisation94, the Law on Accreditation95, the Law on Metrology96 and the Law on Technical Requirements for Products and Conformity Assessment of Products97. Further progress came later in 2006 with a package of decrees for the implementation of these laws, that is the decree on the establishment of the accreditation and standardisation bodies, a decree on conformity assessments and on the designation of bodies for conformity assessment and certiication as well as a decree on adoption of technical regulations. All bodies in the ield of quality infrastructure have become Serbian bodies and all relevant legislation, including laws on standardisation accreditation, metrology, and technical requirements for products and conformity assessment, has continued to be fully applicable following the dissolution of the State Union with Montenegro. In November 2006, a state accreditation body was established as an independent non-proit organisation, while August 2007 saw the government establishing the Institute for standardisation of the Republic of Serbia. In May 2007, the DirectorSerbian Government Deputy Prime Minister Activities, Serbia may get candidate status by December 15, 2008, Serbian Government, http://www.srbija.sr.gov.yu/vesti/vest.php?id=40978 93 National Assembly of the Republic of Serbia, Spisak donetih zakona, http://www.parlament.sr.gov.yu/content/lat/akta/zakoni.asp 94 Oficial Gazette of Serbia and Montenegro, No. 44/2005 95 ibid. 96 ibid. 97 ibid.
92
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ate for measures and precious metals within the Ministry of Economy and Regional Development was established. A National Council for quality infrastructure has not yet been established and an action plan to strengthen this ield has not yet been adopted. The administrative capacity of the Ministry of Economy and Regional Development, in this regard, remains weak98. In the ield of standardisation, a new SRPS designation has been introduced for Serbian standards, replacing the old Yugoslav JUS numbering. The Institute for standardisation is a Partner Standardization Body in the European Committee for Standardization and an afiliate member of the European Committee for Electrotechnical Standardisation. Serbia still needs to establish priorities for the transposition of European standards and to intensify its efforts to adopt and to implement these standards. The area of accreditation has been strengthened following recommendations from a peer review conducted for the state accreditation body in early 2007. For that reason, a new policy of measurement traceability has been adopted and institutional changes have been introduced. However, no designation procedure has yet been established by the government in accordance with the Law on Technical Requirements for Products and Conformity Assessment. A lot is to be desired in the area of metrology, especially in the area of legal metrology, while virtually no approximation has been made in the area of market surveillance, where the need to establish an appropriate market surveillance structure based on adequate product legislation remains, as required by Community legislation and to phase out contradictory pre-market controls99.
Movement of Persons, Services and the Right of Establishment

In the area of free movement of persons, there is still no approximation, only individual bilateral agreements, principally with neighbouring countries, i.e. the social security agreement with Hungary of 2006 or similar agreement with Montenegro of 2007, which also includes a range of provisions relating to students, which especially beneits many Montenegrin students in Serbia. In the area of free movement of services, Serbia has made huge progress since 2000, mostly due to measures by the National Bank of Serbia. The central bank, in an effort to enforce solvency requirements and the introduction of new minimum capital requirements, effectively bankrupted four largest state-owned banks100 and opened the way for foreign investment, but also established public trust in the new banking system, following hyperinlation of the 1990s. Similar action in 2006, following the transfer of supervisory responsibility over the insurance sector to the National Bank of Serbia, decreased the number of insurance companies from 36 to 19. New Banking law101, aligning current practices towards Basel Core Principles,
Commission of the European Communities, Serbia 2007 Progress Report, (Brussels: Commission of the European Communities, 2007), 26. 99 ibid, 27. 100 Further reading http://www.imf.org/External/NP/LOI/2002/yug/01/index.htm 101 Oficial Gazette of the Republic of Serbia, No, 107/05
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has been adopted and is completely in force since January 2007. Question still remains over independence of the capital market supervisory authority. Serbia implements relatively liberal regime concerning the right of establishment. The Serbian Business Registry102, which started operating in early 2005, took over the registration process of new companies from the commercial courts. It provides a rapid and simple registration process which last up to ive days. However, various licences needed before or after registration, often issued by the municipal authorities, take up additional time. The Registry handles around 1.000 new registrants per month. Accounting and Auditing Law103 entered into force in June 2006. The Law mandates all legal entities and entrepreneurs to prepare their inancial statements in accordance with International Accounting Standards. There are dilemmas about the proportionality of this requirement, primarily in regard to small and medium enterprises, as well as about the capacity of the authorities and of the domestic accounting and auditing professionals to apply them in practice.
Customs and Taxation

In the ield of customs, Serbia has reached a fairly advanced level of harmonisation. Customs Tariff Law104, which was adopted in 2007, enables the government to fully harmonise the customs tariff nomenclature with the EU Combined Nomenclature and the Harmonised System classiication. Apart from that, amendments have been passed on Customs Law, and several implementation laws have been adopted, all in line with the all but the newest acquis. Signiicant progress has been recorded in ighting corruption in the customs service, which has resulted in increased customs revenues over the last few years. Also, Serbia has adopted a new law on free trade zones offering tax breaks and simpliied procedures, while enabling foreign owned companies to establish and manage free trade zones in Serbia. Taxation has seen the introduction of the value-added tax in 2005105, at regular rate of 18% and reduced rate of 8% for limited range of products, including basic food products, as well as IT-related merchandise. Registration threshold is about 50.000 EUR. The corporate income tax rate is 10%. As for personal income tax, there are two different taxes, irst, taxation at source of 14% of the gross wage and then another annual income tax at progressive rate of 10%-15%. The law adopted in July 2006106 also provides for tax incentives to stimulate job creation. Alignment with European standards in the ield of direct taxation is at an early stage. A review of Serbian legislation has just started with a view to checking the level of compliance with the Code of Conduct on business taxation.
102 103
Agencija za privredne registre, http://www.apr.sr.gov.yu Oficial Gazette of the Republic of Serbia, No, 46/06 104 Oficial Gazette of the Republic of Serbia, No, 61/07 105 Oficial Gazette of the Republic of Serbia, No. 84/04 106 Oficial Gazette of the Republic of Serbia, No. 62/06
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A new Excise Law107 was adopted, which removes discriminatory elements of the taxation of tobacco products and cigarettes from January 2008. It also establishes a speciic and ad valorem duty on cigarettes, thus bringing the structure broadly into line with the acquis. Though this regulation needed to be harmonised with the EU law, it was the pressure from CEFTA which resulted in fairly quick change in excise legislation.
Public Procurement
The Public Procurement Law108 has still not been amended, thus legal gaps persist. In addition, Public Procurement Ofice has not been able to fully fulil its mandate under the current legislative framework, as political will and adequate funding are lacking in expectation of a new legislation. The ofice has prepared a strategy for the development of the public procurement system, but its recommendations have not been implemented. Limitations in the administrations internal audit system, widespread corruption and the absence of a functioning supreme audit institution represent additional obstacles to the implementation of an effective nondiscriminatory public procurement system in Serbia. To some extent, the institutional void has been compensated by the professionalism of employees of the public procurement institutions. Still, public procurement system remains frail and needs to be further strengthened, both in legislative and administrative terms.
Competition and State Aid

The Commission for Protection of Competition is an independent competition protection body that has been formed subsequent to the adoption of the Law on Protection of Competition in September 2005109. It still deals mainly with the approval of mergers and clariication of the law itself only 15 percent of the cases were related to the abuse of monopoly or dominant positions, while 2 percent were investigations of agreements between undertakings110. Administrative capacity and the inluence of the Commission are still far from European standards. Serbia has not yet established an independent state aid authority in order to introduce a system of control of all state aid measures and prepare the harmonisation of existing state aid measures with the SAA it is most probably a consequence of heavy state-sponsored subsidising of public enterprises, which have not been proitable for decades, but are a huge social issue.
4.2.2. Investments
For years, progress in the area of investments and free movement of capital remains somewhat limited.
Oficial Gazette of the Republic of Serbia, No. 61/07 Oficial Gazette of the Republic of Serbia, No. 39/02, 55/04 109 Oficial Gazette of the Republic of Serbia, No. 79/05 110 Commission of the European Communities, Serbia 2007 Progress Report, (Brussels: Commission of the European Communities, 2007), 29.
108 107
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The Law on Foreign Exchange Operations111 of July 2006 has replaced the federal legislation, previously adopted in 2002. It stipulates further liberalisation of operations with foreign countries the term of payment for the exported goods or services has been extended from 90 to 180 days, as well as the term of import of the goods or services that have been paid in advance. Furthermore, this legislation foresees the possibility for all residents, natural persons included, to perform payments in order to invest abroad in ownership and other irst-class debtor long-term securities issued in OECD countries. The law also prescribes residents abroad and nonresidents in Serbia may freely compensate for acquired ownership of a real estate in line with the law regulating property relations. Following the entry into force of the Law on Foreign Exchange Operations, a number of by-laws have been adopted and further liberalization in the ield of capital transactions has also been achieved112. European Commissions Progress Report on Serbia states that efforts are needed to pave the way for establishing national treatment in the purchase of real estate, free movement of short-term credits and portfolio investments. A new draft Law on Foreign Investments was adopted by the government in the autumn of 2006113 with the aim to replace the existing federal Foreign Investment Law114. Due to parliaments dissolution and a round of new elections in the meantime, the draft law was not acted upon by the parliament, and has not returned to parliamentary debate since. A novelty is article 18 on environmental protection the article simply reiterates the old principle that a foreign investor is required to comply with Serbian environmental laws. Also, the notion of a one-stop-shop could be an improvement over the existing situation, once more with some limitations a question remains why would this kind of facility handle only foreign investment and not domestic investment as well? If one-stop-shops were to be established at the municipal level, the implementation could be carried out in different ways, involving different procedures by various municipalities. Investment funds are regulated by Law on Investment Funds of May 2006115. It widens the scope of securities which, although indirectly, Serbian residents may invest in. Article 29 enumerates where the locally registered investment fund may invest the capital of its shareholders and it includes securities issued by international inancial institutions, but also all other securities which are issued by the EU or OECD member states or other resident legal entities, as well as the neighbouring countries, provided these are listed at the inancial markets in given countries. Direct deposits can only be made into banks in EU or OECD member states. This law is approximated with number of EU directives116.
Oficial Gazette of the Republic of Serbia, No. 62/06 Commission of the European Communities, Serbia 2007 Progress Report, (Brussels: Commission of the European Communities, 2007) 113 Mihailo Crnobrnja, ed. et al., White Book 2007: Proposals for Improvement of the Investment Climate in Serbia, (Belgrade: Foreign Investors Council, 2007), 30-33. 114 Oficial Gazette of the Federal Republic of Yugoslavia, No. 3/2002 115 Oficial Gazette of the Republic of Serbia, No. 46/06 116 Such as 85/661/EEC, 2001/108/EC.
112 111
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The new constitution recognises private ownership of construction land and by adopting amendments to the Law on Landplaning and Construction117, Serbia has taken irst steps to comply with the Stabilisation and Association Agreement (SAA) provisions on the purchase of real estate. Prior to these modiications, construction land could only be leased for a period of up to 99 years. However, overwhelming majority of needed implementation laws in this area have not been adopted yet or addressed by the legislative. An important, both political and legal issue remains, with still undeined, but yet inevitable de-nationalisation. This might have signiicant repercussions on the ownership of construction land, but also on already built lots. Upcoming restitution is considered to be one of major reasons why investors prefer to build on land which was, prior to World War II, owned by the state, or buy directly from private owner. The judicial system continues to experience slow and ineficient court proceedings, poor case management and very limited administrative capacity. These circumstances discourage economic operators from taking cases to court and undermine effective enforcement of creditor and property rights, including intellectual property.
4.2.3. Environment, consumer protection, labour legislation Environment

As regards environment legislation, little or no progress has been made in adopting legislation in line with the SAA, while administrative capacity remains the major issue, which is a contrast to other negotiation chapters. Certainly, the landmark of 2007 in environmental legislation is the ratiication of the Kyoto Protocol in September 2007118. However, there has been no progress in the area of air quality, albeit frequent incidents of hazardous air-pollution in industrial city of Panevo119, located only 20km from the capital Belgrade. Low prices of water and the fact that there is little water metering prohibit upgrade of waste water treatment infrastructure throughout the country, while some progress has been made in the ield of water supply infrastructures. Huge legislative gap still persists in the area of control of major-accident hazards involving dangerous substances or radioactive substances, and monitoring, classifying, labelling and packing such substances as well. Strategic plans on waste management are still under consideration by the executive, while there has been some progress regarding hazardous waste management120.
Oficial Gazette of the Republic of Serbia, No. 34/06 Oficial Gazette of the Republic of Serbia, No. 88/07 119 Nevena Popovska and Jasmina Sopova, The Pollution of the Balkans, UNESCO The Courier (2000), http://www.unesco.org/courier/2000_05/uk/planet2.htm 120 Commission of the European Communities, Serbia 2007 Progress Report, (Brussels: Commission of the European Communities, 2007), 33-34.
118 117
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Serbias Law on Environmental Protection121 came into force in December 2004. The law allowed local authorities to independently determine and apply the amount of an environmental tax, which resulted in companies depending on negotiations with municipal authorities. Government followed up by making a signiicant effort to regulate more precisely the calculation method and payment of the pollution and environmental protection tax. Air protection has not been legally deined yet; decrees from 1991 and 1997 are still being applied, however, a series of legal proposals (laws on waste and air) are being prepared for regulating this sector in accordance with the EU acquis. The area of environment and environmental protection in Serbia is de facto governed by two separate ministries newly established Ministry of Environment and Ministry of Agriculture, Forests and Waters. They both lack the administrative capacity needed to conclude the reform process, although some processes, such as fee collection, have been improved over last year. The ministries also need to enhance their coordination. The Environmental Protection Agency continued to carry out a number of tasks in the areas of data collection in cooperation with the European Environment Agency. Overall budget for environment protection is still very low (about 0.4% of GDP). Bodies in charge of enforcement of environmental legislation remain weak.
Consumer protection
Following a series of negative reports by the EU experts, such as one from 2005 which described consumer protection in Serbia as unsatisfactory on account of the high prices and low quality of products and false discounts, Serbia adopted new Law on Consumer Protection122, which replaced only three-year-old federal legislation. Still, results remain scarce. EU technical experts stated that the present Law on consumer protection should be amended and supplemented either with a package of amendments, or a completely new law should be passed123. Serbia is also in need of urgent passage of a law on out-of-court settlements, on consumer credits and on unfair contractual services. Finally, recommendations include a call for improved cooperation between the ministries of trade, inance, state administration and justice. The European Agency for Reconstruction is active in the ield of consumer protection, aiming to advance the consumer rights and to enhance the implementation of the law. The project also envisages the training of members of the Consumer Protection Council and of the market inspection, whose job is to implement the law. Consumer protection is also plagued by a number of state and private monopolies in public services and retail sectors, but also by absence of strong and independent consumer alliance. In addition, the legislation on consumer protection in the ield of electronic commerce is virtually non-existent.
Oficial Gazette of the Republic of Serbia, No. 135/04 Oficial Gazette of the Republic of Serbia, No. 79/05 123 Daily Survey, EU to Finance Consumer Protection Project in Serbia, Ministry of Foreign Affairs of the Republic of Serbia, http://www.mfa.gov.yu/Bilteni/Engleski/b160306_e.html#N3
122 121
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Labour legislation
State of affairs concerning the labour legislation is somewhat unusual. Even though Serbian Labour Law124 of 2005 is in line with the EU acquis (particularly in the ields of information of workers and non-discrimination), neither employers, employees nor the state are entirely satisied by it. Employers take up the issues of laws rigidity in terms of contract termination and further aspects of the law they ind being overprotective of the workers, who, on the other hand, do not protest against the law as much as they protest against employment policies as a whole. The state is also unhappy with persistently high unemployment rates (which, curiously, coincide with relatively high inlation rates) and National Employment Strategy 2005-2010 has yielded limited results. Signiicant number of legal initiatives has been set in place to combat unemployment, including an amendment of the Law on Personal Income Tax125, which introduces a number of incentives to incite job creation among the youth, older unemployed and disabled persons, has been adopted. Also, credits are available for start-up SMEs, as well as inancial support and counselling services for future entrepreneurs. However, Serbia still lacks legislation and policies on gender equality and reconciling work and private life, particularly for women. The Law on Labour Safety and Health126 of 2005 is also in line with the acquis and the appropriate International Labour Organization conventions. Under this Law, the Labour Safety and Health Agency has also been established in late 2005, while hundreds of inspectors completed their training in 2006 and 2007. Concealed costs of running a private business still make it prohibitively expensive for small enterprises to conduct business. Nevertheless, the foremost concern remains heavy involvement of the state sector in the production of private goods, as well as sheer number of employees in state-run public enterprises. Juxtaposing this fact to inlexible labour market regulation and lacking efforts in modernisation and development of managerial and institutional capacities means high unemployment rates will be just as dificult to combat in the future.
4.3. Ocial posions on the future of legal adaptaon

Serbia has adopted two documents concerning EU integration, which are regularly reafirmed by the statements of high state oficials, especially the President, the Deputy Prime Minister for European Integration and the Minister of Foreign Affairs. The documents are Resolution on the EU Association, adopted by the parliament in 2004, and the Serbian National Strategy for the Accession of Serbia and Montenegro to the EU, which now relates only to Serbia.
124 125
Oficial Gazette of the Republic of Serbia, Nos. 24/05, 61/05 Oficial Gazette of the Republic of Serbia, No. 62/06 126 Oficial Gazette of the Republic of Serbia, No. 101/05
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The Resolution on the EU Association contains guidelines for the functioning of legal and executive authorities in Serbia with a view to meeting the Copenhagen criteria. The Resolution, inter alia, states that there is a full agreement about joining the European Union, as the highest and undisputed political authority and imposes the obligation of the parliament to give priority to the process of legal harmonisation with the acquis communautaire and the need to introduce special procedures in order to develop the eficiency of this process. It also stressed the need to create the Serbian National Strategy for the Association of Serbia and Montenegro to the EU, which should establish the current situation in Serbia in the areas relevant for the accession to the EU, analyse conditions for association set by the EU and provide a schedule of the necessary actions. Following the requirements laid out in the Resolution, the Serbian National Strategy for the Accession of Serbia and Montenegro to the EU became the oficial document and the key source of Serbia EU relations, as well as the source of internal reforms and adjustments conditioned by the EU accession process. It represents a synthesis of operational directives for the government, ministries and other public institutions involved in the EU integration process, a basis for the development and implementation of the integration programmes by sectors and activities and a basis for coordination of sectoral priorities in the European integration process.
4.3.1 Programs or road maps of developing the national legal system

The Action plan for harmonisation of legislation, prepared by the European Integration Ofice of the Serbian government, is created annually. It consists of a table with laws which are to be adopted, the explanation of the need for their drafting, the list of ministries competent for their adoption, time frame in which the government shall establish the law proposals, as well as the persons directly responsible for drafting of particular laws. Such action plans have been made since 2004 and they have not always been successful sometimes, a mere quarter of planned legislation is adopted. However, in early 2008 a plan for approximation of the Serbian legislature is expected to become part of a single operative document, which will encompass all activities related to the integration process with the EU127. The working title of the document is National programme for adoption of the EU acquis all the countries which joined the EU in 2004 and 2007, as well as current candidate countries, has been obliged to prepare and adopt such document. It will be the irst time, following the initialling of the SAA, that Serbia will be bound by international contracts to adopt legislation in line with the acquis and moreover, in a speciied timeframe.
127
http://www.seio.sr.gov.yu/code/navigate.asp?Id=140
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4.3.2. Feasibility analysis

Serbia undoubtedly has the institutional capacity to fairly quickly harmonise its legislature with the EU acquis, but the question of political will to do so still remains. It seems that the state is unwilling to give up any of the public enterprises, unless it is absolutely forced to do so, or is lurked into privatisation by a huge cash incentive. State-run monopolies are not only feeding the budget from their proits, but are also a way of postponing social turmoil, which will inevitably follow any restructuring of public sector. Yet, it will take a consensus (or at least, consensus of mainstream political parties) amongst political actors in Serbia in order to draw near with the other Western Balkans candidate countries in terms of legal approximation. EU membership and political relations with the EU need to be stopped exploited as internal political issues. Still, a signiicant shift in the distribution of political power in Serbia is needed for that to happen. If status quo remains, Serbia will not optimally use the administrative capacity at its disposal in order to harmonise its legislation with the EU acquis.
4.3.3. Institutional background

The most eficient institution by far is the European Integration Ofice of the Serbian government. Their action plans are in place for years to come, however, their authority over other government ministries remains in question. The ofice was founded as such, and not as a ministry, in order to coordinate the efforts of all ministries and the government as a whole but the state hierarchy and bureaucracy puts it under other ministries as the ofice director is not a voting member of the government. Serbian government, once again, demonstrated its will to speed up the European integration process by placing the Deputy Prime Minister in charge of European integration, which effectively makes the Deputy PM a super minister, who not only coordinates efforts in cooperation with the EU Integration Ofice, but also issues instruction to ministries concerning new draft laws etc. Finally, the Parliament has already demonstrated that it has the capacity to follow up on draft legislation coming from the government, but it has time and again succumbed to bitter political debates, instead of constructive legislative process. Inevitable conclusion is that the speed of harmonisation will depend on the parliament, i.e. the ruling party/coalitions capability to foster the discussion on EU integration and successfully promote draft legislation which is in line with the EU acquis.
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5. EU PERSPECTIVES, EFFECTS OF CONDITIONALITY AND FORECASTS
For the purpose of a more nuanced analysis, particularly regarding Serbia, it is useful to distinguish between two types of conditionality: the general, applicable to all aspiring countries, Serbia included, and the speciic, applied principally to Serbia at distinct instances in time. The general conditionality, which could be deined as a policy based on reinforcement by reward,128 is contained in the well known Copenhagen criteria.129 As far as Serbia is concerned, it has endeavoured to meet these criteria over the last seven years. On balance, the annual reports of the EU Commission have been positive, relecting many changes in Serbia that have been introduced to meet the set conditions. This aspect of conditionality has never been a political issue either between Serbia and the EU, or within Serbia. It is the other kind of conditionality, the Serbia speciic variety that has led to undesired effects. Serbia, then a part of SFR Yugoslavia, felt the irst effects of EC speciic conditionality as early as the summer of 1990. The Prime Minister of SFRY, Ante Markovic, a recognized reformist, paid an oficial visit to the European Commission at the peak of his Reform programme. His request for inancial assistance for his reforms was politely but irmly rejected until two conditions are met. First, the Federal Government must convince the Republic of Slovenia to participate in new federal elections. Second, the Federal Government must convince the Serbian Government to respect human and political rights of Albanians in Kosovo. Since the Federal Government could not meet either of the conditions, the inancial assistance never came through.130
Frank Schimmelfenning and Ulrich Sedelmeier, Governance by Conditionality: E.U. rule transfer to the candidate countries of Central and Eastern Europe, Journal of European Public Policy 11, no. 4 (2004): 669-687: 671. 129 Membership requires that the candidate country has achieved stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities, the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union. Membership presupposes the candidates ability to take on the obligations of membership including adherence to the aims of political, economic and monetary union. European Council in Copenhagen, 21-22 June 1993: Conclusions of the Presidency, SN 180/1/93, 12. Note: The Madrid E.U. Summit held in December 1995 further emphasised the need for adequate administrative capacity, deemed crucial in effective implementation of E.U. standards and legislation, collectively termed acquis communautaire. 130 Mihailo Crnobrnja, The Yugoslav Drama, McGill-Queens Press, Montreal, 2nd edition, 1996, p.191.
128
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The tacit admission that this irst use of conditionality toward SFRY/Serbia was ill conceived came only ten months later when the President of the European Commission and the President of the European Council paid a visit to Belgrade. They offered the requested inancial assistance with only one condition this time: the leaders of the quarrelling republics should meet and work out a peaceful solution for the Yugoslav crisis. By that time, this offer and this condition were too late to make a difference. As the Yugoslav conlict escalated, EC-Serbian relations focused on the resolution of the conlict rather than Serbias integration into European institutions. The European conditionality policy was part of a wider, principally US-led policy that became relected in economic sanctions and later military intervention by NATO. Serbias European integration resumed only in October 2000, following the change of regime in Belgrade. As explained above, Serbia was asked to apply the Copenhagen criteria and other conditions set out for all new European Union members. In addition, an explicit condition of regional cooperation was added for the region, which was oficially called the Western Balkans. In oficial E.U. jargon, enhanced regional co-operation is recognised as a qualifying indicator of the Western Balkan countries readiness to integrate into the European Union.131 Regional integration is perceived as a precursor to wider European integration. At the Thessalonica Summit in June 2003, the E.U. pronounced its unequivocal support to the European perspective of the Western Balkan countries and enriched the SAP with an array of new instruments, including the drafting of a joint framework for accession titled European Partnership. By reassuring the citizens of Western Balkans of their European prospect, the E.U. bolstered the regions democratic forces. Arguably even more important was to remind the regional leaders of their obligations en route to united Europe. As postulated by the erstwhile Commissioner for External Relations, Christopher Patten: Thessalonica will send two important messages to the Western Balkans: The prospect of membership of the E.U. is real, and we will not regard the map of the Union as complete until you have joined us. We in the European Commission will do all we can to help you succeed. But membership must be earned. It will take the sheer hard work and applied political will of those in power in the region. How far you proceed along the road towards European Integration, and how fast, will be up to you.132 The E.U. launched its conditionality policy toward the former Yugoslav countries (with the exception of Slovenia) in October 1995 and elaborated concrete policy instruments in April 1997, in essence conditioning its political and inancial assistance with the partner countrys progress in areas of democracy, rule of law, higher human rights and minority rights standards, transition to a market economy and greater interregional cooperation.133 The conditionality policy is an integral part
Oficial Internet Presentation of the European Union , http://www.eu.int/comm/enlargement/intro/sap.htm 132 Cited on oficial E.U. presentation, http://www.eu.int/comm/enlargement/see/milestone.htm. 133 General Affairs Council, Conclusions on the application of conditionality with a view to developing a coherent E.U. strategy for its relations with the countries in the region, 29 April 1997, Bulletin of the EU, No 4-1997.
131
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EU PERSPECTIVES, EFFECTS OF CONDITIONALITY AND FORECASTS
of the European Partnership signed with each potential candidate and a critical element of the 2005 Enlargement Strategy Paper.134 Notably, the 2005 Enlargement Strategy Paper also added a new enlargement condition: the EUs absorption capacity. As expounded in this document: Enlargement is about sharing a project based on common principles, policies and institutions. The Union has to ensure it can maintain its capacity to act and decide according to a fair balance within its institutions; respect budgetary limits; and implement common policies that function well and achieve their objectives.135
5.1. The internal effect of non-specific sanctions

Serbia has, to some extent, implemented provisions of the SAA which is not yet in force, meaning that the potential for faster integration clearly exists, especially in economic area, where Serbia is considered to be one of the fastest and most successful transition countries. The government is encountering dificulty with social regulations, particularly in the ield of social dialogue and labour issues. However, these issues are not yet in the focus of the EU and it seems that additional time is given to Serbia to commence the enormous process of restructuring of public enterprises, which employ hundreds of thousands of people; this is still a massive political problem, as many are expected to be ired in the process. Internal political regulations are in line with the EU conditions the rule of law is improving; democracy and fair elections are starting to be taken for granted, media are more or less available to all political parties, NGOs and other stakeholders, while corruption remains an issue. Seven years after the fall of virtually dictatorial regime, Serbia has come a long way. However, external political situation is grim. Three major issues which hold the key to further advancement of Serbia to a politically and socially mature and modern society the Kosovo issue, and the ICTY issue and, when the time comes, relations with NATO are still far from being settled. Kosovo and the ICTY still remain the front-page news on a daily basis, and other tasks, including EU standards and legal approximation, are rendered secondary issues. Disengagement trend is unfortunate and potentially as costly for the EU as it is for all the Western Balkans countries, including Serbia. Leaving a blank spot amidst the expanded Union, even for a limited amount of time, coupled with the deterioration of the political situation in Serbia would inevitably backire. The failure to decide on the Western Balkans place in the future architecture of Europe leaves a vacuum that is likely to pose paramount challenges the spread of organised crime, increased migration, illegal traficking etc. Yet, while criminal networks are the more unsavoury face of interdependence between the EU and the Balkans, there is clearly much more to the relationship. The region is already highly integrated into the EU in
134 135
2005 Enlargement Strategy Paper, 3. Ibid.
77
economic terms (e.g. trade lows, labour migration, monetary arrangements etc). Its political marginalisation thus seems all the more senseless.136 Restrictive visa regime with the EU, in contrast to the one that the EU has with number of Latin American and Far East nations, but also neighbouring Croatia, also creates animosity towards the EU, while the Union offers no concrete dates on liberalisation of the visa regime upon fulilment of the terms set out by the Schengen acquis. When combined with the always sensitive ICTY issue, it does not help create a sense of being part of a European political, cultural or social integration; it rather makes EU membership a national interest out of a single reason higher standard of living. Visa facilitation agreement, when concluded in 2007, was not received as positively as it would have been in 2001 nowadays, Serbian public expects nothing less than visa-free travel to the EU. It might have seemed at irst that a number of social issues, which have arisen as a consequence of economic criteria, could pose a signiicant threat not only to political parties in the government, but also to EU integration process as a whole. Yet, the reality turned out to be quite the opposite people who lost their underpaid jobs in many cases turned out to beneit from their dismissal, either through social programme or possibility of new employment and/or training. Privatisation has caused similar effects. Serbian political elite has not taken any risks with internalising the ICTY issue by taking any signiicant number of suspected war criminals to the national courts apart from a couple of high-proile cases which have been subject to investigation and indictment by the special prosecutor for war crimes, regular criminal courts have not addressed this issue at all. The real trouble with Serbia is that there is no consensus either from the elite or the general public that this kind of reform has to be sustained, which is easily seen in daily demoting of EU-related issues to a mere political squabble or in numerous votes for conservative and/or nationalist political parties. Furthermore, the issue of Kosovos future status has allowed the non-reformist parties to openly advocate for a closer alliance with Russia rather than for the acceleration of the EU accession process. Russia is gaining an increasing importance in the region as a major political power and key source of energy. In fact Russia appears to be exploiting its political role in Kosovo in order to secure an even stronger energy dependence from Serbia as seen in the negotiated bilateral energy deal in late 2007. This is also linked to security considerations since Serbia continues to be wary of NATO and unenthused about NATO membership. In fact, even if the Kosovo issue is resolved in a way that is acceptable to Serbia the next potential stumbling block on the path to EU membership, besides ICTY, would be NATO membership. While this is not a formal condition, Serbia is likely to be pressured to join NATO in order to accede to the EU and this will be met with strong resistance from Serbias citizens. Serbias special relationship with Russia may motivate the United States to get more actively involved and insist on Serbias NATO membership, which would further complicate matters. An increasingly polarised Serbian internal politics is
136
http://www.imo.hr/europa/conf/eupolicy/12E_anastasakis-en.pdf
78
certainly a challenge for the European Union, especially since EU is aware that its actions could play a critical role in Serbias inal choice.
5.2. Serbia specific conditionality

The international powers have set speciic and in some cases erroneous conditions for the integration of Serbia into the European Union. Three will be dealt with in this study: 1. Chronologically, the irst one was the Milosevic-extradition-tied-to-inancial-aid and the Donors Conference situation. In 2001, the inancial incentives offered by the US and the Europeans, by way of inancial aid and then later the Donors Conference held in Brussels, were key catalysts that led to the decisions to irst arrest and subsequently extradite Slobodan Milosevic to ICTY. Seemingly, a great success for conditionality. However, soon after and largely because of this extradition, the Democratic Party of Serbia (Kostunica) stepped out of the Government of Prime Minister ini, thus weakening the pro-European group of parties and helping contribute to the subsequent slow-down in economic and social reforms. 2. The second instance of EU conditionality relates to the maintenance of a state comprising Serbia and Montenegro. The EU, for reasons yet insuficiently explained, insisted that Serbia and Montenegro had a European future only if they stayed together. That particular conditionality has failed to preclude Montenegros separation from Serbia in 2006. Keeping Serbia and Montenegro in a single country, as they could only expect EU membership as a single entity, and the ensuing insistence on creating a customs union within Serbia and Montenegro, brought about two undesired and negative effects. On the one hand, the negotiations on the SAA were stalled by almost a year, because the EU insisted on seeing the emergence of state union institutions that the EU could communicate with. They never materialized. Then, suddenly, a change of mind within the EU and talks were resumed by the twin tracks deal, which separated SAA negotiations with Serbia and Montenegro, and was effectively terminated following the positive outcome of the referendum on independence in Montenegro in 2006. Instead of encouraging Serbia and Montenegro to create a common market, or at least a customs union, the EU pressure to synchronize trade regimes may well have helped exacerbate the already strained relations between the leadership of the two republics. In addition, Montenegrin politicians who agitated for independence, such as erstwhile Montenegrin Foreign Minister Miodrag Vlahovic further argued that Montenegro did not wish to remain a hostage of Serbias reluctance to cooperate with the Hague-based war crimes tribunal,137 overlooking the frequently voiced suspicion that one of the most wanted ICTY fugitives may be hiding in Montenegro, not Serbia. When the EU abruptly changed its policy, allowing for a double-track approach that catered to two trade regimes that co-existed in the state union of Ser137
RFE/RL Balkan Report 9, No. 6, 11 February 2005.
79
bia and Montenegro, it was too late to stop the unleashed referendum process that ultimately resulted in another state partition. But the two big questions related to this speciic conditionality remain: 1. Why did the EU spend so much political energy and its credibility on creating and then keeping the state union alive for three years, only to let it disintegrate with only a statement of regret?; 2. Why was the progress on SAA talks conditioned on creating a customs union, and then suddenly resumed even though this condition was not met? 3. But by far the most pressing and most persistent conditionality was, and remains the requirement for full cooperation with ICTY.138 The purpose of this conditionality is clear and beyond dispute. This condition, other then protecting international law, was intended to help Serbia and other former Yugoslav countries overcome the legacy of their recent violent past.139 Though the end objective is nondisputable, the way in which this conditionality has been applied leaves something to be desired. The insistence on the ICTY conditionality has led to yet another undesired effect. It diminished the importance of other issues, frequently ignoring them altogether. In the course of seven years of political transition in Serbia, rarely has this cooperation been judged as suficient or satisfactory the irst high proile indictee from Serbia which was transferred to the Hague, Slobodan Miloevi, in June 2001 and the voluntary surrender of 14 indictees were the only two exceptions. EU conditionality has interpreted narrowly the Copenhagen political criteria in the SAP, focusing exclusively on full cooperation with the ICTY while ignoring domestic mechanisms of transitional justice.140 Insistence on ICTY conditionality springs from the conviction that the Tribunal is key factor in rebuilding the rule of law in the wake of armed conlict in the Western Balkans, by ending impunity for international crimes and facilitating reconciliation across the region.141 By excluding a range of local processes which should deal with acknowledgement of mass atrocities committed in the course of Yugoslav wars from its SAP conditionality, the EU has missed an important opportunity to encourage governments and the public in the region to move from ethnic ideologies and denial of responsibility towards reconciliation and rebuilding the rule of law. As countries move closer to the Union, and its inluence in the negotiations increases, learning from this experience could be crucial to maximising the impact of EU conditionality as a positive factor in the regions transition. The initial success in conditioning the behaviour of Serbia was in contrast to the fall and winter of 2003, where the US and EU failed to provide the Chief Prosecutor
True, this is not only a Serbia speciic conditionality. It applies to Croatia and Bosnia & Hercegovina as well 139 For a critical view of ICTY, see Alfred P. Rubin, Dayton, Bosnia, and the limits of law, The National Interest, no. 46 (Winter 1996): 41(6). Accessed 25 December 2005. Available from Expanded Academic ASAP. 140 Iavor Rangelov, EU Accession Conditionality and Transitional Justice in the Former Yugoslavia (paper presented at the European Foreign Policy Conference 2006, London June 31 July 1 2006) 141 Report from the Commission on the SAP in South East Europe, COM (2004) 202/2 of 30 March 2004
138
80
Carla Del Ponte with a similar quantity and quality of incentives. 2005, on the other hand, bears resemblance to 2001, where the EUs link between a positive feasibility study (green light to open negotiations on associate EU status for Serbia) and ICTY cooperation was followed by an intense and expeditious effort toward compliance, leading to the voluntary surrender of 14 indictees by the end of April 2005.142 Serbias pull-back to non-compliance in the fall of 2003 can be explained in rational choice terms: the domestic political costs of compliance outweighed the international incentives. Yet, although conditionality works when incentives are high, one should stress that this policy has not yielded the intended results. When the E.U. conditioned a positive answer to Serbias feasibility study on preparedness for SAA negotiations with further compliance with ICTY, the Serbian government encouraged voluntary surrender of indictees, but also hailed these individuals as national heroes.143 A Canadian scholar Nikolas Rajkovic thus urges caution: if the fundamental purpose of political conditionality is the socialization of target states in democratic values, then more attention has to be paid to how the means impact upon the ends.144 Seven years after the change of regime, the extreme nationalist parties such as the Radical party are still strong in Serbia because the citizens do not see many palpable beneits of European integration while enduring the social costs of transition, chiely relected in high unemployment. One could therefore argue that the EU should have used at least as many carrots as sticks in its policy toward Serbia. The EU took the same course as it had with Croatia the closer a country gets to opening accession negotiations, the greater the pressure becomes to transfer indicted war criminals to The Hague, facing ever more serious consequences for failure to comply. This kind of approach produced results all across the region Serbia intensiied efforts for compliance with the ICTY conditionality and by June 2005, Belgrade had transferred to The Hague or persuaded to surrender most of its indictees at large, including generals Luki and Pavkovi it had previously insisted on prosecuting in Serbian courts. However, former Bosnian Serb war commander Ratko Mladi still eludes Serbian authorities, making his arrest the primary EU condition for further progress in stabilisation and association process (SAP). This state of affairs creates unusual outcome cooperation with the ICTY is very high on countrys political agenda, and is frequently a subject of bitter political and public debate. The results are improving as the pressure from the EU is rising, but nevertheless, valuable time is being lost in the process. However, as ICTY takes the centre stage in the EU conditionality, other signiicant issues are being ignored by the public (but also political actors!) in terms that those particular conditions are being accepted and internalized almost automatically. That is why signiicant advancement can be seen in ields of legal adaptation, i.e. copyright issues, labour legislation, foreign investments and real-estate development, etc.
EU to recommend talks on closer ties with Serbia, Reuters, April 12, 2005 <www.balkanpeace.org/hed/archive/apr05/hed6983.shtml > (April 12, 2005). 143 Each of the indicted war criminals was escorted to the Hague by a Cabinet Member! 144 Nikolas Milan Rajkovic, Conditionality and the Public Sphere: A Synthetic Explanation of Hague Conditionality and (Non)Compliance in Serbia, Master Thesis, Central European University, 2 June 2005, 1-72: 66.
142
81
The arrest and transfer of Ratko Mladi to the Hague ought to terminate the EU conditionality on cooperation with the ICTY, as the arrest of Ante Gotovina did for Croatia, as he is the last high-proile indictee that is believed to be hiding in Serbia. Inevitable conclusion is that policy of pressure and suspension of SAA negotiations at different stages (and possibly the delay of accession negotiations, which are to follow) yielded results. It would also be safe to assume that other issues will be much easier to handle internally, except for Kosovo, which is still not part of EU conditionality and is probably to remain outside of scope of SAA and accession negotiations. The trouble with ICTY in Serbia is that it is perceived as an instrument of collective punishment of Serbs since their numbers at ICTY proceedings is signiicantly larger than the total number of Croats, Bosnian Muslims and Kosovo Albanians. Beyond this ethnic calculus, ICTY is also seen as an attempt to distort the historical record of the last decade and to put all the blame on the Serbian side. Instead of facilitating the political transition and the process of rebuilding the rule of law through dealing with the past, ICTY trials have been utilized by nationalist forces for the purpose of further victimization and radicalisation of Serbian politics145. While the general electorate does not seem to perceive the EU conditionality beyond the ICTY (or it still seems to abstract and distant for an average voter), political actors do not seem to engage in any kind of substantial debate over other conditions set by the EU in the course of SAP. This might be either a consequence of more or less pro-EU orientation of all ruling coalitions since 2001 and irm belief that internalizing such issues can only beneit the country, but could also be a result of Croatian experience given that this country shares much of Serbias political and legal issues, and also EUs desire to treat all potential candidates equally, a signiicant number of issues has already been debated on and discussed by the EU, and further demands for negotiation from Serbia could be futile.
5.3. Likely accession of Serbia to the EU

For Serbia, EU accession is likely to occur between 2013 and 2015, provided that the condition of cooperation with ICTY is met and that the resolution of Kosovos future status is not encompassed by the conditionality policy. This is the time period that other CEE countries required to reform and align with the acquis communautaire. While Serbia has taken advantage of a delayed start to learn many of their lessons and achieve progress in numerous reform areas (particularly in market transformation), unresolved political issues stemming from the Yugoslav crisis have impeded Serbia from shortening the accession period. EU conditionality, if perceived as a means of reaching a higher standard of living, is likely to play a positive role in promoting social, political and economic development in Serbia in the next ten years. Nonetheless, it should be noted that Serbia has already reached an awareness that it needs to become more competitive and
145
Iavor Rangelov, International Law and Local Ideology in Serbia, 16 Peace Review 331,
331-334 .
82
that the economic sphere must be based on market rather then planned economy. Therefore conditionality plays a minor role in the economic sphere. The importance of conditionality here is relected in creating a more moderate political scene and ensuring application of an advanced human and minority rights regime in practice. Serbia is not likely to change its behaviour regarding the adherence to EUnorms once it has acceded into the EU, in part because the EU system has a myriad of checks and balances, but also because Serbia realises that it is in its interests to adhere to these norms and be recognized as a country that is politically stable with a predictable, consistent economic policy. Observance of the EUs democratic criteria (human rights, rights of political opposition, freedom of the press, etc) is likely to continue with similar intensity after accession, since accession standards have been set especially high for the Western Balkans as a post-conlict European region. Serbia is already a signatory to the most important human rights conventions and relatively progressive in minority rights practice; paradoxically, partly as a result of a relatively liberal minority rights regime of the former Yugoslavia. The only remaining hurdle for Serbia at present is the reportedly insuficient cooperation with the International Criminal Tribunal for the Former Yugoslavia, which must be overcome for accession to proceed. As stressed earlier, a new obstacle to membership in the future may also be created if EU insists on Serbias adhesion to NATO. Politically, Kosovo issue remains the most dividing issue and one where EUs actions could lead to greater cooperation or, on the contrary, create increasing animosity and enhance the role of Russia, stalling Serbias EU accession. On the other hand, Serbias adherence to economic criteria (Maastricht criteria, security of foreign investments, implementation of single market acts, etc.) has shown great progress and would further strengthen after accession into the EU as a result of increased conidence of Serbian market actors and development of regulatory institutions that foster fair competition. Many of these institutions are in embryonic stage in Serbia today, including important areas such as competition and consumer protection. Since 2000, Serbia has shown excellent results in macroeconomic policy, regularly commended in EBRD Transition Reports. Serbia is close to stable single digit inlation and its economic growth has averaged over 7% in the last four years. In 2006, foreign direct investment surpassed 4 billion USD or 13.7% of GDP.
Serbian Economic Growth and Inlation Rate 83
Serbian Current Account and Trade Deicits
The key problem of Serbia today is high public expenditure, resulting partly from slow restructuring of public enterprises and high social costs of transition. This issue may continue to hurt Serbias application of Maastricht criteria and delay its entrance to the Euro zone even following EU accession. Another problem area are the high current account and trade deicits, relecting lack of Serbias competitiveness that may not improve at a suficiently high pace by the time of accession to create a sound market that can endure stringent convergence criteria. It may also adversely affect the countrys public debt, which is one of principal Euro zone indicators.146 Although Paris Club debt restructuring helped to reduce Serbias external indebtThe convergence (or Maastricht) criteria deined in Article 121(1) of the Treaty establishing the European Community and in the Protocol on Convergence Criteria cited in Article 121 of the Treaty relate to the achievement of: a) A low inlation rate; b) Sound public inances; c) Low interest rates; d) Stable exchange rates.
146
84
Convergence Expectations
edness (under 60% of GDP in 2007), external imbalances remain a medium-term threat. Steady economic growth, supported by increasing FDI inlow is required to offset this threat. For this to occur, Serbias business climate should be additionally improved (for instance in issuing permits and licenses) and skills set further developed to enhance countrys competitiveness. As stressed above, public expenditure should decrease, with investments focusing on infrastructure. In December 2006 the government submitted to the European Commission its irst economic and iscal programme (EFP), covering 2007-2008. The European Commission evaluated the document as a generally coherent macroeconomic and iscal framework together with an ambitious agenda for structural reforms [which], if implemented in full, ... will contribute to sustainable growth and real convergence.147 Serbias development should be matched with increased EU inancial assistance and the current Serbian government has requested that the EU reconsiders its 2007-13 budget since Serbias absorptive capacity is signiicantly higher than that of the 2004 EU entrants, such as the Czech Republic, who are not able to eficiently spend all of the allotted assistance. Part of this assistance should be devoted to a more comprehensive pubCommission of the European Communities, Serbia 2007 Progress Report accompanying the Communication from the Commission to the European Parliament and the Council Enlargement Strategy and Main Challenges 2007-2008 {COM(2007) 663 inal}, Brussels, 6 November 2007, SEC(2007) 1435.
147
85
lic administration reform to enable better compliance with complex EU legislation, especially with regards to implementation. Experience of 2004 and 2007 EU entrants has shown that the gap between the adoption and practical application of acquis communautaire causes delays in alignment with the convergence criteria, which is why the bar is likely to be set higher for Serbia prior to accession in terms of implementation of the acquis. For Serbia a likely later entry to the EU (longer accession period) would then also imply superior regulatory practice and economic results and therefore a greater facility to reach the Maastricht criteria. In conclusion, Serbias accession to the EU, while exhibiting extraordinary progress in the economic sphere after a delayed start, continues to be marred by politics of the past, requiring special attention by the European Union, especially when having in mind the increasing importance of security considerations. The sensitivity of the Kosovo issue is such that Serbias democratic forces could be bolstered or weakened by EU actions, requiring more sophistication from European policymakers, coupled with enhanced inancial assistance and full visa liberalisation. Serbias successful reform also necessitates stronger leadership on the part of Serbian democrats, which includes a more robust suppression of corruption that is currently assisting the non-reformist forces rise in popularity.
86
ANNEX: THE HISTORY OF RELATIONS OF SERBIA AND THE EU
A. Relations until the year 2000.

4 July 1990. 18 December 1990 EC Ministers include Yugoslavia in the reconstruction aid program for Central and Eastern Europe - PHARE The ninth (and the last) meeting of the Council for Cooperation of EEC and SFRY at the ministerial level was held Third inancial protocol and the Agreement between EEC and SFRY regarding transport were signed (but never took effect). EC ministers decided to introduce restrictive measures towards SFRY, which were later transformed into negative measures exclusively applied to Serbia and Montenegro EC Declaration on the recognition of the new states in Eastern Europe and former Soviet Union and Yugoslavia. EU Member States recognise the independence of Slovenia and Croatia. EEC introduced sanctions to FRY under the Resolution of the UN Security Council. Council adopted conclusions on the EU actions in former Yugoslavia. U regulation on the suspension of sanctions towards FRY was adopted (in force as of 22.11.1995). EU Declaration on the recognition of FRY by the EU Member States. Council adopted the regulation on the assistance programme for the reconstruction of countries on the territory of former Yugoslavia 87
24 June 1991
8 November 1991
16 December 1991
15 January 1992 31 May 1992 27 October 1995 4 December 1995 9 April 1996 25 July 1996
9 December 1996 1997
U sanctions towards FRY were abolished A new, regional approach is envisaged. EU Council sets political and economic conditions for the development of bilateral relations. The EU proposes a new Process of Stabilization and Association (PSA) for ive countries of Southeast Europe, including Serbia (at the time within FR Yugoslavia). First year of the new CARDS program specially created for PSA countries. Serbia joins at the end of 2000. European Council declares that all countries PSP are potential candidates for membership. Fall of Milosevics regime. Signing of a General Agreement between FRY and the EU for help and support for FRY. Serbia enjoys autonomous trade preferences, approved by the EU. Beginning of the work of the Joint EU-FRY Consultative Task Force Signing of the EU sponsored Belgrade treaty on the reconstruction of the Federal Republic of Serbian and Montenegro into the State Union of Serbia and Montenegro The coming into effect of the Constitution charter of the new state The Summit of Thessalonica. EU membership perspective for these countries of Western Balkans are conirmed. The Consultative Task Force is replaced by Enhanced Permanent Dialogue The new format of EU with Serbia and Montenegro for pre-accession negotiations. The EU Council takes the decision on European partnership for Serbia and Montenegro, revised in January 2006. The Commission presents the Feasibility study, concluding that Serbia and Montenegro are ready to start negotiations of the Stabilization and Association Agreement. Negotiations on the SAA begin. 88
1999
1999 June 2000 October 2000 November 2000
July 2001 March 2002
February 2003 June 2003
July 2003
June 2004
April 2005
October 2005
ANNEX: THE HISTORY OF RELATIONS OF SERBIA AND THE EU
3 May 2006
Negotiations suspended by EU due to Serbias non-compliance with the Copenhagen criteria. Speciically, the issue was the honouring of international obligations, i.e. the obligation to cooperate with the Hague Tribunal. Montenegro announces independence and separation from the state union on June 5th 2006. The Serbian Parliament conirms the continuity of Serbia as the legal successor of the dissolved State Union. EU and its member states conirm Montenegro as an autonomous state recognising Serbia as the legal successor of the State Union. After the election of the new Parliament in Serbia and the forming of the Government in May, the SAA negotiations are resumed. The Stabilization and Association Agreement is initialled by the EU Commission and the Serbian Government. The signing of the SAA is expected to take place in January 2008.
June 2006
June 2006
13 June 2007
7 November 2007
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RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

4.3.3. Institutional background ............................................................................................... 74

Mihailo Crnobrnja, Jugoslavija i Evropska zajednica, Ekonomska politika, Belgrade, 1991.

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

1. GOVERNMENTAL ORGANISATION AND INSTITUTIONAL STRUCTURE OF EURELATIONS

1.1. Governmental organisaon and instuonal structure of EU-relaons

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

1.1.2. The EU Integration Office of the Republic of Serbia

GOVERNMENTAL ORGANISATION AND INSTITUTIONAL

Graph 1: The organisational structure of SEIO7

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

1.1.3. The Serbian Government Council for European Integration

GOVERNMENTAL ORGANISATION AND INSTITUTIONAL

1.1.4. Intergovernmental Commission for EU Accession Coordination

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

1.1.5. EU related organisational units within ministries

1.1.6. The EU Negotiating team

GOVERNMENTAL ORGANISATION AND INSTITUTIONAL

1.2 The Parliament

1.2.1. The Parliament of Serbia - European Integration Committee12

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

GOVERNMENTAL ORGANISATION AND INSTITUTIONAL

1.3. Changes in instuonal arrangements

2.1. Ocial posions on EU relaons

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

The issue of conditionality is discussed later in this paper.

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

2.2 Major events marking EU-Serbia relaons

Up from 12% ive years ago, when the polling started

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

Council Conclusion on Western Balkans of 18 June 2007..

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

2.3 Negoaons, EU level agreements

The full text can be found at http://www.seio.sr.gov.yu/code/navigate.asp?Id=54.

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

2809th Council meeting conclusions.

2.4 Posions of EU Member States

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

3.1. Trade with the European Union

RELATIONS BETWEEN SERBIA AND THE EUROPEAN UNION

2002 10215 3847 6768 7622 1983

2003 12993 4473 7461 8229 2380

2004 16945 6733 12902 12451

2005 17050 7416 13705 13069

2006 15152 7474 27747 14312

10654 48576 8323 18835 36169

15518 58712 8912 15010 42001

20362 84680 11684 18198 3158 60928

19430 73298 10552 17959 3085 60978

22968 83354 13357 20392 4199 73319

932 479 2224

5143 2571 11075

6705 3961 8771

7154 6695 7718

9841 10361 11790

9294 10674 18417

9235 14906 29192

2000 602 141 372 280 28 12

2001 2208 1979 1915 1116 221 53