Select Committee on Foreign Affairs Written Evidence

Written evidence submitted by HE Dr Vladeta Jankovic, Ambassador of Serbia and Montenegro

  Four years after the democratic opposition's election victory in Serbia and the dramatic turn of events which put an end to the wretched 13-year period of Milosevic rule, the Federal Republic of Yugoslavia is replaced by the state union of Serbia and Montenegro; the changes which have taken place are however deeper and more far-reaching than just a change of name would suggest. The most important factor here is the irreversible nature of this change, in the sense that any return to a crypto-communist dictatorship and the aggressive nationalism which characterised the Milosevic era is now unthinkable. There remain, however, many difficulties, not of fundamental significance but nevertheless obstacles, which are impeding and slowing down progress for the country as a whole and are, for the man in the street, reflected in the poor standard of living. These hardships are, primarily the consequence of the wars and of sanctions, but are in part also typical for any society in post-communist transition. Serbia & Montenegro, as a state union, has proved its determination to follow the path of reform and Euro-Atlantic integration and this applies equally to each of the two member-states. It does not mean however that such elements as oppose this trend do not exist or that they do not have some electoral support (sometimes even as much as 25%-30%) but their influence remains limited. Even the desperate attempt to foil development with the assassination of the energetic and dynamic Premier Dindic failed to achieve that desired result—the country continued, even after this tragic event, to move in the direction of reform. Here is a short summary of the results so far achieved and of the stumbling blocks, which still have to be overcome.

  1.  Relations between Serbia and Montenegro have, after a lengthy hiatus, been constructed afresh on new foundations and, insofar as important institutions are concerned (such as the Army, Parliament and the Council of Ministers), have actually started to function. In February 2006 at the latest it is anticipated that a referendum will be conducted whereby the citizens of both member republics will decide whether to continue to live together in a single state. The difficulties which existed regarding the divergencies in economic, trade and customs systems have recently been overcome by the EU decision to advance towards European integrations on the principle of a twin-track system. In practice this means that the unbridgeable differences in the economic systems of the two republics have been recognised while, in their aspirations to join Europe, they remain politically united. In other words, when the time comes to sign the Stabilisation Association Agreement, there will be the one contract with two separate economic annexes. International opinion is overwhelmingly in favour of the survival of the State Union, the general view being that it is both possible to achieve and desirable from the standpoint of stability in the Balkans and that, therefore, every effort should be made to give it a fair chance. But ultimately, the will of the people (as expressed through a referendum) will prevail and should be respected. Whatever the final outcome, one can say with confidence that there is no danger of violence erupting over this, least of all the kind that accompanied the break up of the former Yugoslavia.

  2.  The situation in Kosovo and Metohija is far from promising. Five years after the arrival of KFOR and UNMIK, the Serbian and other non-Albanian population has been deprived of all basic human rights, starting with elementary physical security. There is no freedom of movement, the return of the displaced population has been totally abandoned, while the eruption of violence from 17 March this year has seen the systematic destruction of Serbian religious monuments, houses and property, which has put any proclaimed principle of multi-ethnicity of Kosovo in jeopardy. The Serbian Government has, with the unanimous approval of Parliament, put forward a plan for the safeguarding of institutional guarantees and of local self governing bodies for the non-Albanian populations, without any mention of a division of Kosovo or territorial autonomy for the Serbs. The plan is in total accord with the Security Council Resolution 1244 and intended merely as a talking ground, where every idea is open to discussion and change. The Albanian side, however, rejects this initiative in its entirety, as it rejects every suggestion to serious debate with Belgrade, but insists exclusively on independence. If such independent status were to come about before democratic standards had been fulfilled and the elementary human rights criteria secured for minorities, it would lead to an ethnically pure Albanian Kosovo, with dire and far reaching destabilising consequences for the whole region.

  3.  Cooperation with the ICTY in the Hague has for years been the chief condition (and has, at the same time, represented the chief obstacle) for the advancement of Serbia and Montenegro towards the Euro-Atlantic integrations. Although, in addition to Milosevic practically the whole of the political and military summit of his regime has been delivered to the International Court, there is still continuing insistence on the extradition of Mladic, Karadzic, the group of four generals, as well as of 10 or so minor inductees. In spite of there being real risk of internal destabilisation (because about 75% of the population declares its opposition to the extraditions), the Government is doing all it can to prove that Mladic and Karadzic are not within their reach. It has also allowed open access to its state archives, and has provided the witnesses which ICTY has requested. Fully aware of the seriousness of the situation, the Government has undertaken to fulfil, in the shortest possible time, all the demands which the Hague and the International Community have placed upon it, wherever it is physically possible and even at the expence of jeopardising the internal democratic reforms. It would, however, be of inestimable value if in this extremely risky undertaking they were to receive some support, by allowing for at least some of the less important cases to be dealt with by the local courts.

  4.  When speaking of the state of the economy in Serbia and Montenegro, we must keep in mind that the economic systems of the two republics, independently of their potential, significantly differ. Amongst other things: there are two central banks; two different currencies are in use; the systems of privatisation are different, so are foreign trade, protection and custom and excise systems, as is general taxation (so, for instance, VAT has already been introduced in Montenegro, while in Serbia it comes into effect from 1 January.) Following unsuccessful attempts to harmonise these diverging systems, the EU has recently accepted the twin-track approach in economic matters. In the political sphere, of course, the State Union is obliged to act together.

    —  While in Montenegro the currency is the Euro, in Serbia the Dinar is a stable currency and depends on supply and demand. Currency reserves are constantly on the rise and, according to latest data from Serbia, amount to a total of around 4.5 billion dollars.

    —  Inflation has been under control for the past four years and, in 2004 is planned to stand at 8.5%, with smaller variations depending on a possible rise in the price of oil on the world markets.

    —  The growth of GDP in Serbia this year will be double the projected 4.3%. This upward trend is mainly due to the remarkable increase in agricultural production (12%), general trade (10.5%) and the building trade (between 10 and 15%). In Montenegro, industrial output for the first half of this year, relative to the same period last year, was higher by 14.4%.

    —  Privatisation has, up to date, comprised around 55% of the total capital in Montenegro and slightly less in Serbia, which has benefited the country as a whole by some 570 million Euro. Both governments are firmly commited to the path of privatisation, which is the most effective tool for transformation into a market economy.

    —  Serbia and Montenegro have already concluded agreements with the IMF, the World Bank and EBRD, who are assisting the projects for reform in the country.

    —  The fundamental problems of the country's economy are a traditionally high deficit in the exchange of trade, a high degree of unemployment (31.9%) and still a very high percentage of "grey economy".

  5.  The state of human rights and the position of minorities in Serbia & Montenegro have, up until now, received favourable assessment/evaluation from the competent European bodies. The recent rise in tension over an incident involving the Hungarian minority in Vojvodina seems to be resolved to universal satisfaction and had most likely been provoked and caused for propaganda-based partisan reasons on both sides of the border.

  6.  Serious reforms of the judicial system are in train and it is there among other things, that the roots of corruption are to be found. This process (particularly complicated, as in all other post-communist societies) has already started to bring results, which will undoubtedly create a favourable climate for privatisation and encourage the flow of foreign investment into the country.

  7.  Frequent election cycles, particularly in Serbia, are basically a reflection of a steady stabilisation of democratic institutions. The ratio of power in Parliament is 2:1 in favour of the democratic and reformist parties, while the main opposition is constituted by the ultra-nationalist Radical party. Relations between the leading democratic parties, once venomous, are recently much improved, owing to the growing awareness that only together can they restrain and control the isolationist and even irredentist opposition. The present government of Vojislav Kostunica is a somewhat loose coalition, which has for the last eight months been functioning well and, all things considered, producing quite impressive results: Parliament is carrying out its business in a much more conducive atmosphere than before, after two years of futile attempts a President has been elected, important new reform legislation is being implemented and a new Constitution may well be in place in a few months time (to supplant the still current Constitution from Milosevic's time). There are no scandals and the rule of law is increasingly felt to be in force. Corruption is on the decrease and the general economic output is showing marked improvement. If, in spite of all this, the present government were to fall owing to the pressures from aforementioned problems relating to Kosovo and the Hague, it would mean holding new elections. However, the eventual hand-over of power would be conducted according to the highest democratic standards. Renewed upheavals or crises of a serious nature need not be anticipated.

  8.  This holds true even more because the country's foreign policy and its priorities are widely accepted by the political factors and the population alike. Over 80% of the population has declared itself in favour of joining the EU (the number of those in favour of joining NATO is significantly smaller—only about 30%), relations with neighbouring countries have improved substantially, particularly those between the former Yugoslav republics, and the general inclination is towards a better balanced relationship with the great powers. Immediate goals include the signing of the SAA and the joining of the Partnership for Peace. With internal conditions now unquestionably stabilising, the economy continuing to recover and outside pressures from the international community (sometimes unjustifiable and excessive, particularly with regard to ICTY and Kosovo) easing a little, Serbia and Montenegro could very shortly find itself promoted from the lower end of the table to be in the front ranks of candidates for joining the European Union.

HE Dr Vladeta Jankovic

Ambassador of Serbia and Montenegro

30 September 2004

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