U.S.-Serbia and Montenegro Relations

(As prepared for delivery)

Thank you Mr. Djunic. Good morning ladies and gentlemen. It is a pleasure to be here in Belgrade, and I thank the members of AmCham for having me here so bright and early this morning.

I have come to Belgrade to underscore a simple message: The United States is, and wants to continue to be, a strong partner for Serbia and Montenegro. We are eager to expand and strengthen our relationship, especially in the area of economic cooperation. But to do this, it is essential that Serbia emerge from this period of political uncertainty with a clear, firm recommitment to this partnership.

This is a pivotal time for Serbia, and for our bilateral economic relationship. The United States’ overall policy is to support the ambition of those who seek to build a peaceful and more prosperous future in cooperation with the Euro-Atlantic community. Economic cooperation is part of this overall policy.

In December, Secretary Powell formally restored Normal Trade Relations (NTR) between our two countries. This was an important step, and one on which he and I worked hard with our Congress. Our countries are now in a position to build on this foundation. Restoration of NTR was only the first of what we hope will be many steps in forging greater economic cooperation.

The normalization of our bilateral trade relationship opens the door to new agreements, and to additional measures that we can take together. Serbia and Montenegro has requested designation as a beneficiary developing country under the Generalized System of Preferences (GSP) program. The United States is now taking the steps necessary to initiate a formal review of Serbia and Montenegro's possible eligibility for even greater trade benefits through our Generalized System of Preferences program. GSP could extend duty-free treatment in designated product categories to goods imported from Serbia and Montenegro. This would enhance your companies' competitiveness on the 1.3 trillion dollar U.S. market.

Today I will be meeting with political leaders here in Serbia to learn about the challenges they face. I will also be exploring how we can work together to develop a bilateral framework that will both facilitate and stimulate commercial activity, thereby creating opportunities for companies in both of our countries.

An essential part of embracing and realizing a more prosperous future is moving past the past. For too long, the people of Serbia have suffered and fallen behind those elsewhere in the region due to the misguided policies of a few, and the legacy of their actions. The people of Serbia are well aware of the need for full cooperation with the International Criminal Tribunal for the former Yugoslavia in The Hague. The United States expects this from all of our partners in the former Yugoslavia. The reason is not to keep our friends back, but to push them forward. In any relationship -- whether political, economic, or business -- it is vital to be able to trust that your partners will fulfill their obligations. Serbia has international obligations. It must meet them.

During the last 3 years, the United States has committed substantial assistance to Serbia and Montenegro. Since October 5, 2000, Americans have been working every day in Belgrade, Podgorica and in towns and villages all over this country to improve people's lives and to give them the tools to build a peaceful and prosperous future.

The United States has already invested $622 million in supporting Serbia and Montenegro's development. $123 million of this has been devoted to facilitating economic reform, with the aim of igniting growth and creating jobs. It is a priority policy goal of the United States to help Serbia and Montenegro develop and prosper. We are pursuing this goal in partnership with the talented people of this country through a wide variety of programs of USAID and other U.S. Government agencies.

We offer this assistance, and a program for deepening our economic cooperation, not simply out of altruism. We believe it is in the interest of the United States that Serbia and Montenegro, and all of our other partners in the world, should develop so that their citizens may enjoy richer lives.

Globalization is a word that takes on many meanings for different people. No one can deny, however, that we are all linked in a single global economy. Exchange rate policies in China affect the U.S. economy. Decisions in the U.S. affect Europe. And trade policies and consumer confidence in the EU have an effect on the ability of Serbia and Montenegro to export and grow.

The United States remains an engine for global economic growth. Countries that have adopted an export-driven economic model can best benefit from the pull of our economic engine. We hope that further domestic economic reform and the restoration of NTR will move Serbia and Montenegro toward greater export-driven growth.

The United States, however, cannot, and should not, drive the global economy alone. We and the other developed economies, particularly the EU and Japan, share a responsibility to promote economic reform, improve investment climates, and promote good governance to spur the growth that is essential to maintain the health of the global economy.

We understand the message the Serbian people were sending in the recent election loud and clear. As was a favorite slogan in one of our presidential campaigns: "it's the economy, stupid." We understand the concern of Serbs about slow growth and high unemployment. As I mentioned, through our assistance programs we are working every day to help turn this situation around. But again, it takes time, a common effort, and perseverance to shake off the legacy of the past and seize the opportunity of the future. This is not the time to look back or to falter. It is the time to press forward.

Serbia faces special challenges in its economic transition. Unlike your neighbors to the north, you must struggle from under the legacy of over a decade of destructive economic policies. Unfortunately, Serbia has been making its transition at a time of slower global growth and generally higher unemployment, particularly in Europe. These factors mean that Serbia must work harder, and has less room for error, than those who went before her. However, you also have the benefit of being able to learn from the successes and failures of the other transition countries. In the face of tremendous challenges, Serbia's economic reformers deserve credit for substantial achievements.

My experience leads me to agree with your local economic experts, and the international financial institutions, that increasing foreign direct investment is the key to economic recovery and growth in Serbia and Montenegro. The capital, new ideas, management techniques, and market experience that companies such as those represented in AmCham bring have been the driver behind the success of other transition countries.

It is clear that there is great potential and opportunity in Serbia and Montenegro. I am very pleased to see that U.S. commercial interest is steadily increasing in Serbia, as evidenced by the U.S. becoming the largest source of foreign direct investment in Serbia. The AmCham's very existence, its rapid growth, and the composition of your membership are testimony that there is strong interest by companies in both countries to expand our relationship.

The United States continues to support U.S. investment and other commercial activity in Serbia and Montenegro. We believe that both republics have taken positive steps toward creating a business environment in which foreign and domestic private companies can compete and grow. As you are aware, however, challenges remain.

The competition for investment globally, and in this region, is intense. Unfortunately, the legacy of Serbia's recent past leaves pre-conceptions in the minds of people unfamiliar with recent changes. This means that Serbia has to be that much more attractive, and work harder, to lure investment.

There is no reason why Serbia and Montenegro cannot achieve the same success we have seen in other countries, such as the Czech Republic, Poland, and Hungary. This will, however, require that political leaders overcome the divisiveness that has inhibited the pace of badly needed economic reforms.

As businesspeople, you know that the major inhibitors to both foreign and domestic investment are outdated and ineffective commercial laws, lack of a reliable court system to enforce the laws, a weak financial system, corruption, and political uncertainty. I urge AmCham to work with other business groups to press the incoming Serbian Government for quick action to improve the business environment, so that business can give the people the jobs and economic growth they want and deserve.

In conclusion, I must say a word about the tremendous work someone else in this room has done for relations between the United States and Serbia and Montenegro. Ambassador Bill Montgomery is wrapping up a highly successful 30-year diplomatic career in a few weeks and moving on to enjoy retirement. I hope that you will all join me in a round of applause to thank Ambassador Montgomery for all that he has done. There is a lot more that we can do together. The United States is ready. Now, let's get moving.