Serbia Country Brief
General
Serbia is a country of 7,498,001 people (2002 census) occupying 77,474 km2 in the Western Balkans. It is bordered in the north by Hungary, to the east by Romania and Bulgaria, to the south by the Former Yugoslav Republic of Macedonia and by Kosovo, to the south-west by Montenegro, and to the west by Bosnia and Herzegovina and by Croatia. The capital of Serbia is Belgrade.
Bilateral Relations
The relationship between Australia and the Republic of Serbia (formerly a part of the state union of Serbia and Montenegro) has its basis in strong community links. In the 2006 Australian Census, 95,364 people identified themselves as having Serbian heritage. Australia has maintained an embassy in Belgrade since 1967.
According to Serbian Ministry of Trade figures, the value of Australia’s merchandise exports to Serbia in 2008 was US$ 9.588 million. This was a 17.5 per cent decrease compared to 2007. Exports consisted primarily of toys, games and sporting goods. In the same period, the value of imports was US$ 7.111 million, an 18.8 per cent increase compared to 2007, consisting mainly of preserved food products.
Political
The National Assembly of the Republic of Serbia is a 250-seat unicameral legislative body. Deputies are elected for four-year terms under a ‘party list’ system. The last Serbian Parliamentary elections were held on 11 May 2008 with a turnout of 61.35 per cent. Final results from Serbia’s Electoral Commission show 38.4 per cent of the vote was won by the ‘For a European Serbia’ coalition, 29.45 per cent by the nationalist Serbian Radical Party (SRS), 11.61 per cent by Democratic Party of Serbia (DSS) and 7.58 per cent by the Socialist Party of Serbia (SPS). The most pro-Western Liberal Democratic Party (LDP) polled almost the same as in the previous election with 5.24 per cent of the vote.
The President of Serbia is directly elected for a five-year term, and nominates the prime minister in consultation with the National Assembly. The current President, Mr Boris Tadic, has been in office since 11 July 2004.
Serbia’s current government was sworn into office on 7 July 2008 and is led by the Prime Minister, Mr Mirko Cvetkovic. The government is dominated by the pro-European Democratic Party (whose leader is President Tadic) in coalition with the Serbian Socialist Party of former Yugoslav President, the late Slobodan Milosevic. Prime Minister Cvetkovic has stated that the government’s priorities are EU membership, non-acceptance of Kosovo’s independence, strengthening the economy, increasing the social responsibility of the Government, improving the fight against crime and corruption and enhancing respect for international law. Serbia’s next elections are scheduled to be held in May 2012
The former state union of Serbia and Montenegro
The origins of the former state union of Serbia and Montenegro came about when the Federal Republic of Yugoslavia (FRY) was officially dissolved on 4 February 2003. At this time, the Federal Parliament adopted a new Constitutional Charter and proclaimed the establishment of the state of ‘Serbia and Montenegro’. Under the terms of the 2003 Belgrade Agreement, both Serbia and Montenegro had the right to hold a referendum regarding their membership of the state union. Montenegro held such a referendum on 21 May 2006. The Republic Referendum Commission released official results on 23 May which showed 55.5 per cent voted in favour of independence, just above the 55 per cent mandate required by the European Union. The Montenegrin Parliament declared independence on 3 June 2006, followed two days later by the Serbian Parliament, which declared Serbia the successor state to the union of Serbia and Montenegro. This led to the dissolution of the state union of Serbia and Montenegro.
Australia acknowledges the Republic of Serbia as the continuing entity of the former state union, and officially recognised the independent state of the Republic of Montenegro on 27 June 2006.
Republic of Kosovo
On 17 February 2008, Kosovo, formerly an autonomous province within the Republic of Serbia, declared independence. Australia recognised the Republic of Kosovo as an independent state on 19 February 2008. To date, 57 United Nations members have recognised Kosovo’s independence, including the United States, the United Kingdom, France and Germany. The situation remains fluid. Since 10 June 1999, Kosovo has been under an interim international administration, with the NATO-led Kosovo Force (KFOR) responsible for security and the United Nations Mission in Kosovo (UNMIK) performing civilian administration. Their mandates are established by UN Security Council Resolution 1244.
On 8 October 2008, the United Nations General Assembly adopted a resolution requesting the International Court of Justice to render an advisory opinion on the question, “Is the unilateral declaration of independence by the Provisional Institutions of Self-Government of Kosovo in accordance with international law?” The Court accepted written statements on the question during April 2009 and has reserved subsequent procedure for further decision.
Progress Towards European Union Membership
The European Commission approved a positive Feasibility Study (FS) for the former Serbia and Montenegro in 2005, the first step towards possible future EU accession. The next stage, a Stabilisation and Association Agreement (SAA), was signed with Serbia on 28 April 2008. The agreement was ratified by the Serbian Assembly on 9 September 2008, however the SAA has not yet come into force as some EU Members have refused to ratify it in their own parliaments until Serbia ‘fully cooperates’ with the International Criminal Tribunal for the Former Yugoslavia (ICTY). For these EU Members, ‘full cooperation’ means the capture and extradition of the remaining (two) ICTY fugitives, including indictee General Ratko Mladic.
Economic
Serbia has been making a gradual transformation into a market economy since 1990. However, Serbia is recovering from a low base following significant mismanagement of the Yugoslav economy by the Milosevic regime. International sanctions introduced in May 1992 against the regime also exacerbated economic problems. A substantial portion of the country's heavy industry and economic infrastructure was also damaged or destroyed during NATO military action in 1999. By 2000, GDP had dropped to 50 per cent of 1989 levels and more than 60 per cent of the population was living in poverty.
In recent years, the pace of economic reform has been slow and the rate of economic recovery has been gradual. Serbia’s annual GDP growth has been positive since 2000, with a growth rate of 6.1 per cent in 2008. This has been offset by inflation though, with a 6.8% annual rate for 2008. Inflation rates for 2009 are projected at between 6 and 10 per cent. Registered unemployment fell from 21.6 per cent in 2007 to 18.9 per cent in 2008, though it is estimated that total unemployment may be as high as 31 per cent.
Serbia’s foreign trade volume in 2008 totalled EUR 23 billion, 15.4 per cent higher than in 2007. Exports increased 15.5 per cent on 2007 levels to EUR 7.4 billion, and imports increased 15.3 per cent to EUR 15.5 billion. Serbia’s foreign trade deficit also rose 15.2 per cent though, to EUR 8.15 billion. The volume of Serbia’s foreign trade slowed in the last quarter of 2008, with exports falling on reduced foreign orders and imports on weaker domestic economic activity.
In October 2008, Serbia’s foreign debt stood at over EUR 20.5 billion. The Dinar fell 10.6 per cent against the Euro in 2008, and at the end of 2008, Serbia’s foreign currency reserves stood at EUR 9.12 billion. It is likely that Serbia will require new foreign direct investment and loans in order to finance its foreign debt. The Government’s 2009 budget deficit is officially projected to be 1.5 per cent of GDP, though some economists have projected that it may rise to 2.5 per cent.
Economists expect that Serbia will feel the strongest impact of the global economic crisis during the second quarter of 2009, with the IMF forecasting a 2% contraction of GDP this year and a modest recovery in 2010. In early 2009, the Serbian Government announced a series of measures designed to ease the impact of the crisis on Serbia, including agreements with the IMF and the implementation of trade liberalisation measures. Separately, the Serbian Government is preparing some remaining state owned enterprises in the mining, energy, telecommunications and insurance for sale. Progress in these areas, along with domestic fiscal adjustment, will be fundamental to ensuring continuing economic recovery.
Last updated: 13/05/2009