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Serbia (03/08)


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For the most current version of this Note, see Background Notes A-Z.

Flag of Serbia is three equal horizontal stripes of red - top - blue, and white; charged with the coat of arms of Serbia shifted slightly to the hoist side.

PROFILE

OFFICIAL NAME:
Republic of Serbia

Geography
Area: Serbia (77,474 sq. km.) is slightly smaller than Maine.
Cities: Capital--Belgrade. Other cities--Pancevo, Novi Pazar, Uzice, Novi Sad, Subotica, Bor, Nis. Terrain: Varied; in the north, rich fertile plains; in the east, limestone ranges and basins; in the southeast, mountains and hills.
Climate: In the north, continental climate (cold winter and hot, humid summers with well-distributed rainfall); central portion, continental and Mediterranean climate; to the south, hot, dry summers and autumns and relatively cold winters with heavy snowfall inland.

People (2004 est.)
Nationality: Noun--Serb(s); adjective--Serbian.
Population (2002 Republic census): 7,478,820.
Population growth rate: -3.5%.
Ethnic groups (2002 population census): Serbian 83%, Hungarian 4%, Bosnian 2%, Albanian 1%, Montenegrin 1%, other 9%.
Religions (2002 population census): Orthodox 85%, Roman Catholic 5.5%, Muslim 3%, Protestant 1%, other 5.5%.
Languages: Serbian 88%, Hungarian 3.8%, Bosnian 2%, Albanian 1%, others 5%.
Health: Infant mortality rate--8.1 deaths/1,000. Life expectancy--males 72.44 yrs., female 77.86 yrs.

Government
Type: Republic.
Constitution: Adopted in an October 28-29, 2006 referendum.
Independence: April 11, 1992 (Federal Republic of Yugoslavia (F.R.Y.) formed as self-proclaimed successor to the Socialist Federal Republic of Yugoslavia). On February 4, 2003, the F.R.Y. parliament adopted a new Constitutional Charter establishing the state union of Serbia and Montenegro. On May 21, 2006, the Republic of Montenegro held a successful referendum on independence and after Montenegro's declaration of independence on June 3, the parliament of Serbia stated that the Republic of Serbia was the continuity of the state union, rendering the two republics independent and sovereign countries.
Branches: Executive--president (chief of state); prime minister (head of government), Council of Ministers (cabinet). Legislative--Parliament. Judicial--Federal Court (Savezni Sud) and Constitutional Court.
Political parties: Alliance of Vojvodina Hungarians (SVM), Christian Democratic Party of Serbia (DHSS), Civic Alliance of Serbia (GSS), Democratic Alternative (DA), Democratic Center (DC), Democratic Community of Vojvodina Hungarians (DZVM), Democratic Party (DS), Democratic Party of Serbia (DSS), Force of Serbia (PSS), G-17 Plus (G17), League for Sumadija (LS), League of Social Democrats of Vojvodina (LSV), Liberal Democratic Party (LDP), List for Sandzak, New Serbia (NS), Reformist Democratic Party of Vojvodina (LSV), Serbian Radical Party (SRS), Serbian Renewal Movement (SPO), Social Democrat Party (SDP), Socialist Democratic Union (SDU), Socialist Party of Serbia (SPS--former Communist Party), Yugoslav United Left (JUL).
Suffrage: 16 years of age if employed; universal at 18.

Economy 
GDP (2006): $19.9 billion.
GDP growth rate (2006): 5.8%.
GDP per capita (2006): $3,382.
Inflation rate (2006): 6.6%.
Natural resources: Coal, petroleum, natural gas, antimony, copper, lead, zinc, timber, bauxite, gold, silver, navigable rivers.
Agriculture: 12% of GDP.
Industry: 20% of GDP.
Services: 68% of GDP.
Trade (2006 est.): Exports--$6.4 billion. Major markets--Italy, Germany, Bosnia. Imports--$13.2 billion. Major suppliers--Germany, Italy, Russia.

PEOPLE AND HISTORY

Serbia 
The Serbian state as known today was created in 1170 A.D. by Stefan Nemanja, the founder of the Nemanjic dynasty. Serbia's religious foundation came several years later when Stefan's son, canonized as St. Sava, became the first archbishop of a newly autocephalous Serbian Orthodox Church (1219). Thus, at this time, the Serbs enjoyed both temporal and religious independence. After a series of successions, Serbia fell under the rule of King Milutin, who improved Serbia's position among other European countries. Milutin also was responsible for many of the brightest examples of Medieval Serbian architecture. Moreover, Serbia began to expand under Milutin's reign, seizing territory in nearby Macedonia from the Byzantines. Under Milutin's son, Stefan Dusan (1331-55), the Nemanjic dynasty reached its peak, ruling from the Danube to central Greece. However, Serbian power waned after Stefan's death in 1355, and in the Battle of Kosovo (June 15, 1389) the Serbs were catastrophically defeated by the Turks. By 1459, the Turks exerted complete control over all Serb lands.

For more than 3 centuries--nearly 370 years--the Serbs lived under the yoke of the Ottoman sultans. As a result of this oppression, Serbs began to migrate out of their native land (present-day Kosovo and southern Serbia) into other areas within the Balkan Peninsula, including what is now Vojvodina and Croatia. When the Austrian Hapsburg armies pushed the Ottoman Turks south of the Danube in 1699, many Serbs were "liberated," but their native land was still under Ottoman rule.

Movements for Serbian independence began more than 100 years later with uprisings under the Serbian patriots Karageorge (1804-13) and Milos Obrenovic (1815-17). After the Russo-Turkish War of 1828-29, Serbia became an internationally recognized principality under Turkish suzerainty and Russian protection, and the state expanded steadily southward. After an insurrection in Bosnia and Herzegovina in 1875, Serbia and Montenegro went to war against Turkey in 1876-78 in support of the Bosnian rebels. With Russian assistance, Serbs gained more territory as well as formal independence in 1878, though Bosnia was placed under Austrian administration.

In 1908, Austria-Hungary directly annexed Bosnia, inciting the Serbs to seek the aid of Montenegro, Bulgaria, and Greece in seizing the last Ottoman-ruled lands in Europe. In the ensuing Balkan Wars of 1912-13, Serbia obtained northern and central Macedonia, but Austria compelled it to yield Albanian lands that would have given it access to the sea. Serb animosity against the Habsburgs reached a climax on June 28, 1914, when the Austrian archduke Franz Ferdinand was assassinated in Sarajevo by a Bosnian Serb, Gavrilo Princip, setting off a series of diplomatic and military initiatives among the great powers that culminated in World War I.

Soon after the war began, Austro-Hungarian and Bulgarian forces occupied Serbia. Upon the collapse of Austria-Hungary at the war's end in 1918, Vojvodina and Montenegro united with Serbia, and former south Slav subjects of the Habsburgs sought the protection of the Serbian crown within a kingdom of Serbs, Croats, and Slovenes. Serbia was the dominant partner in this state, which in 1929 adopted the name Yugoslavia.

The kingdom soon encountered resistance when Croatians began to resent control from Belgrade. This pressure prompted King Alexander I to split the traditional regions into nine administrative provinces. During World War II, Yugoslavia was divided between the Axis powers and their allies. Royal army soldiers, calling themselves Cetnici (Chetniks), formed a Serbian resistance movement, but a more determined communist resistance under the Partisans, with Soviet and Anglo-American help, liberated all of Yugoslavia by 1944. In an effort to avoid Serbian domination during the postwar years, Bosnia and Herzegovina, Macedonia, and Montenegro were given separate and equal republican status within the new socialist federation of Yugoslavia; Kosovo and Vojvodina were made autonomous provinces within Yugoslavia.

Despite the attempts at a federal system of government for Yugoslavia, Serbian communists played the leading role in Yugoslavia's political life for the next 4 decades. As the Germans were defeated at the end of World War II, Josip Broz Tito, a former Bolshevik and committed communist, began to garner support from both within Yugoslavia as well as from the Allies. Yugoslavia remained independent of the U.S.S.R., as Tito broke with Stalin and asserted Yugoslav independence. Tito went on to control Yugoslavia for 35 years. Under communist rule, Serbia was transformed from an agrarian to an industrial society. In the 1980s, however, Yugoslavia's economy began to fail. With the death of Tito in 1980, separatist and nationalist tensions emerged in Yugoslavia.

In the late 1980s, Slobodan Milosevic propelled himself to power in Belgrade by exploiting the fears of the small Serbian minority in Kosovo. In 1989, he arranged the elimination of Kosovo's autonomy in favor of more direct rule from Belgrade. Belgrade ordered the firing of large numbers of Albanian state employees, whose jobs were then taken by Serbs.

As a result of this oppression, Kosovo Albanian leaders led a peaceful resistance movement in the early 1990s and established a parallel government funded mainly by the Albanian diaspora.

Between 1991 and 1992, Slovenia, Croatia, Bosnia and Herzegovina, and Macedonia all seceded from Yugoslavia. On April 27, 1992 in Belgrade, Serbia and Montenegro joined in passing the Constitution of the Federal Republic of Yugoslavia.

When Kosovo's peaceful resistance movement failed to yield results, an armed resistance emerged in 1997 in the form of the Kosovo Liberation Army (KLA). The KLA's main goal was to secure the independence of Kosovo.

In late 1998, Milosevic unleashed a brutal police and military campaign against the separatist KLA, which included atrocities against civilian noncombatants. For the duration of Milosevic's campaign, large numbers of ethnic Albanians were either displaced from their homes in Kosovo or killed by Serbian troops or police. These acts, and Serbia's refusal to sign the Rambouillet Accords, provoked a military response from NATO, which consisted primarily of aerial bombing. The campaign continued from March through June 1999. After 79 days of bombing, Milosevic capitulated and international forces, led by NATO, moved into Kosovo. The international security presence, which is known as Kosovo Force (KFOR), works closely with the UN Mission in Kosovo (UNMIK) to ensure protection for all of Kosovo's communities.

In March 2002, the Belgrade Agreement was signed by the heads of the federal and republican governments, setting forth the parameters for a redefinition of Montenegro's relationship with Serbia within a joint state. On February 4, 2003, the F.R.Y. parliament ratified the Constitutional Charter, establishing a new state union and changing the name of the country from Yugoslavia to Serbia and Montenegro.

On May 21, 2006, the Republic of Montenegro held a successful referendum on independence and declared independence on June 3. Thereafter, the parliament of Serbia stated that the Republic of Serbia was the continuity of the state union, changing the name of the country from Serbia and Montenegro to the Republic of Serbia, with Serbia retaining Serbia and Montenegro's membership in all international organizations and bodies.

On February 17, 2008, the UN-administered province of Kosovo declared its independence. The United States officially recognized Kosovo's independence the following day.

GOVERNMENT AND POLITICAL CONDITIONS

Republic of Serbia 
Even as opposition to his regime grew in the late 1990s, Yugoslav President Milosevic continued to dominate the organs of the F.R.Y. Government. Although his political party, the Socialist Party of Serbia (SPS), did not enjoy a majority in either the federal or Serbian parliaments, it dominated the governing coalitions and held all the key administrative posts. An essential element of Milosevic's grasp on power was his control of the Serbian police, a heavily armed force of some 100,000 that was responsible for internal security and which committed serious human rights abuses. Routine federal elections in September 2000 resulted in a narrow official victory for Milosevic and his coalition. Immediately, street protests and rallies filled cities across the country as Serbs rallied around Vojislav Kostunica, the recently formed Democratic Opposition of Serbia (DOS, a broad coalition of anti-Milosevic parties) candidate for F.R.Y. president. Cries of fraud and calls for Milosevic's removal echoed across city squares from Subotica to Nis.

On October 5, 2000, Slobodan Milosevic was forced to concede defeat after days of mass protests all across Serbia. New F.R.Y. President Vojislav Kostunica was soon joined at the top of the domestic Serbian political scene by the Democratic Party's (DS) Zoran Djindjic, who was elected Prime Minister of Serbia at the head of the DOS ticket in December's republican elections. After an initial honeymoon period in the wake of October 5, DSS and the rest of DOS, led by Djindjic and his DS, found themselves increasingly at odds over the nature and pace of the governments' reform programs. Although initial reform efforts were highly successful, especially in the economic and fiscal sectors, by the middle of 2002, the nationalist Kostunica and the pragmatic Djindjic were openly at odds. Kostunica's party, having informally withdrawn from all DOS decision making bodies, was agitating for early elections to the Serbian parliament in an effort to force Djindjic from the scene.

After the initial euphoria of replacing Milosevic's autocratic regime, the Serbian population, in reaction to this political maneuvering, slid into apathy and disillusionment with its leading politicians by mid-2002. This political stalemate continued for much of 2002, and reform initiatives stalled. Two rounds of elections for the republic presidency in late 2002 failed because of insufficient voter turnout (Serbian law required participation by more than 50% of registered voters).

On March 12, 2003, Serbian Prime Minister Djindjic was assassinated. The Serbian Government and the newly formed union government of Serbia and Montenegro reacted swiftly by calling a state of emergency and undertaking an unprecedented crackdown on organized crime which led to the arrest of more than 4,000 people. Zoran Zivkovic, a vice-president of Djindjic's DS party, was elected Prime Minister in March 2003. A series of scandals plagued the Zivkovic government through the second half of 2003, ultimately leading the Prime Minister to call early elections.

Republic of Serbia presidential elections were again held on November 16, 2003. These elections were also declared invalid because of insufficient voter turnout. Following the December 2003 parliamentary elections, a new minority government was formed with the Democratic Party of Serbia (DSS), G17+, and the Serbian Renewal Movement/New Serbia (SPO/NS) coalition and the tacit support of the Socialist Party of Serbia (SPS) and former F.R.Y. president Vojislav Kostunica was named Prime Minister. On June 27, 2004 after changes to the election law to allow for a valid election with turnout of less than 50% of registered voters, Boris Tadic (DS) defeated Radical Party candidate Tomislav Nikolic by a slim margin and was elected President of Serbia. President Tadic's Democratic Party (DS) did not join the governing coalition but worked with Serbia's democratic forces to advance the reform agenda.

Following the adoption of a new Constitution in October 2006, Serbia held parliamentary elections on January 21, 2007. These elections yielded the following results:

Party

Seats

Percentage

SRS

81

28.3%

DS

64

22.7%

DSS/NS

47

16.4%

G-17

19

6.8%

SPS

16

5.6%

LDP

15

5.3%

Ethnic Parties

8

N/A

After the elections, a new government was formed with a coalition of Democratic Party (DS), the Democratic Party of Serbia (DSS), and the G17+. Prime Minister Kostunica was chosen to continue in his position.

On Febrary 3, 2008, Boris Tadic again defeated Radical Party candidate Tomislav Nikolic by a slim margin and was re-elected President of Serbia.

Following the collapse of the governing coalition in March 2008, new Parliamentary elections have been scheduled to be held on May 11, 2008 in conjunction with previously scheduled Municipal elections.

Legislature
The Serbian parliament is the lawmaking body of the Republic of Serbia.

Principal Government Officials

Republic of Serbia
President--Boris Tadic
Prime Minister--Vojislav Kostunica
Deputy Prime Minister--Bozidar Djelic
Ambassador to the U.S.--Ivan Vujacic

Serbia maintains an embassy in the United States at 2134 Kalorama Rd., NW, Washington, DC 20008 (tel. 202-332-0333).

DEFENSE
Military branches include the Army of Serbia, which includes ground forces with internal and border troops, and air and air defense forces, and Civil Defense. Civilians fit for military service were estimated at about 2,088,595 for 2001. The 2002 estimate for military expenditures as percentage of GDP was 3.6%. The Ministry of Defense has undertaken significant reform initiatives, which if continued, will help move Serbia closer to full Euro-Atlantic integration.

ECONOMY 
Serbia's economic progress since the fall of Milosevic has been substantial, with output up nearly 46% since 2000. The stable dinar, a budget surplus, and a restructured financial sector all demonstrate the success of stabilization policies. The short-term economic outlook for Serbia is positive, but enterprise restructuring and unemployment remain major challenges.

Growth in 2007 was a healthy 7%, but this pace slowed during the first quarter of 2008. Through September of 2007, due to continued central bank policy to target inflation, the inflation rate averaged 7.4%. The increase in industrial production of 3.7% in 2007 followed a strong 2006 performance. The current account deficit was 16.6% of GDP in 2007, despite continued growth in exports. Foreign exchange reserves held by Serbia's central bank totaled $14.593 billion at the end of 2007, or an amount covering about 10 months of imports. In March 2007, the National Bank of Serbia completed pre-payment of its debt to the International Monetary Fund (IMF) with a payment of $232 million, which followed a June 2006 payment of $978 million.

In 2006, Serbia recorded its best year yet with respect to foreign direct investment (FDI), but greenfield investment is still rare. A large part of the record U.S. $5.4 billion in FDI for 2006 was realized from the sale of the leading mobile telephone company to Norwegian company Telenor for Euro 1.5 billion. The Government of Serbia has also adopted a strategy for oil company NIS that calls for gradual privatization, with initial sale of a 25% stake and management control to a strategic investor. During the first eight months of 2007, FDI totaled $1.047 billion.

The privatization of the banking sector has been completed, with over 70% of assets owned by foreigners. In the last major deal, National Bank of Greece signed a deal in September 2006 to buy Vojvodjanska Banka, Serbia's sixth-largest bank by assets, for Euro 385 million.

While economic reform has been moving forward in many areas, enterprise sector reform is still halting. Over 26% of all persons employed in Serbia work for state owned enterprises or the central and local governments. Privatization of the least attractive socially-owned companies, which still employ about 235,000 workers, has been left for the very last. They still place a drag on the economy via substantial fiscal and quasi-fiscal subsidies. Even successful privatization of socially-owned enterprises often means jobs losses, and this, together with the overall lack of greenfield investment, has driven unemployment to 19%.

While economic growth in Serbia continues at a healthy clip, this indicator alone may be misleading. Serbia is still far behind its neighbors, with GDP still only 65% of the level in 1989; production volumes have reached only 45% of that recorded when Serbia was part of the Yugoslav economy. Sectors such as textiles, motor vehicles, and electronic equipment have never recovered from the depression of the 1990s.

FOREIGN RELATIONS 
From the breakup of the Socialist Republic of Yugoslavia in 1989, the foreign policy of the F.R.Y. was characterized primarily by a desire to secure its political and geopolitical position and the solidarity of ethnic Serbs in the Balkan region through a strong nationalist campaign. The F.R.Y. supported and exploited the expansion of violent conflicts--in Bosnia and Herzegovina, Croatia, and its own province, Kosovo--in order to advance its policies. Since October 2000, Serbia has all but eliminated its nationalist rhetoric and has worked to stabilize and strengthen its bilateral relationships with neighboring countries. In 2002, F.R.Y. resolved its longstanding border dispute with Macedonia and established full diplomatic relations with its neighbor and former adversary Croatia.

Also in 2002, the F.R.Y. Government established a commission to coordinate cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) and began serving warrants for the arrest of persons indicted for war crimes who sought refuge in the country. The crackdown on organized crime following the assassination of Serbian Prime Minister Djindjic also resulted in the apprehension and transfer to The Hague of several persons indicted for war crimes. In 2004 and 2005, a significant number of ICTY indictees surrendered to the Tribunal, but six persons indicted for war crimes--most notably Bosnian Serb General Ratko Mladic--remain at large and most are believed to be in Serbia and/or the Republika Srpska. Until they are all in The Hague, Serbia will not have met all of its ICTY obligations.

Immediately preceding the NATO bombing campaign of the F.R.Y. in spring 1999, the U.S. and most European countries severed relations with the F.R.Y., and the U.S. Embassy was closed. Since October 5, 2000, foreign embassies, including that of the U.S., have reopened, and Serbia, as the successor state to the F.R.Y., regained its seat in such international organizations as the Organization for Security and Cooperation in Europe (OSCE) and the UN and is actively participating in International Monetary Fund (IMF) and World Bank projects. In 2003, Serbia was admitted to the Council of Europe. Serbia has also indicated its desire to join the EU and NATO's Partnership for Peace. Both NATO and the EU have made full ICTY cooperation a prerequisite for Serbia's increased cooperation with these organizations. Negotiations with the EU on a Stabilization and Association Agreement (SAA)--the first step toward eventual accession--began after a positive feasibility study in April 2005. Despite two rounds of successful technical talks, the EU suspended talks in May 2006, citing a lack of movement by Serbia on apprehending Mladic and other indictees. In November 2006, NATO invited Serbia into Partnership for Peace, but made further progress toward NATO membership conditional on better ICTY cooperation. In June 2007, the EU resumed talks on an SAA with Serbia in the wake of improved cooperation on war crimes issues.

Serbia's bilateral relationship with many countries was chilled following Kosovo's independence in February 2008. Serbia has called back its Ambassadors for consultations from all countries that have formally recognized Kosovo. In the days following Kosovo's independence, rioters in Belgrade attacked Embassies from several countries, including the United States, causing severe property damage.

Foreign Aid
Prior to 1999, Belgrade received no foreign aid from the United States or western European countries. Since the fall of Milosevic in October 2000, however, European Union aid has steadily increased, and the U.S. also gives aid to Serbia, though there are congressional restrictions based on Serbia's need to meet its international obligations to the International Criminal Tribunal for the former Yugoslavia (ICTY). In June 2007, Secretary Rice certified that Serbia was cooperating with the ICTY.

U.S.-SERBIA RELATIONS
At the outset of hostilities between NATO and the Federal Republic of Yugoslavia in the spring of 1999, the United States and the F.R.Y. severed diplomatic relations. In response to the events of October 2000, the following month the United States reestablished a diplomatic presence. The U.S. Embassy formally reopened in May 2001. The Serbia Embassy in Washington and the U.S. Embassy in Belgrade have reestablished bilateral relations and provide a full range of consular services. Serbia currently enjoys good diplomatic relations with all of its neighbors except Kosovo.

Principal U.S. Embassy Officials 
Ambassador--Cameron Munter
Deputy Chief of Mission--Jennifer Brush
Public Affairs Counselor--Rian Harris (acting)
Political Counselor--Nancy Cohen
Economic Counselor--Troy Pederson
Consul General--Carolyn Gorman
Defense Attache--Lt. Col. Eric Von Tersch
Foreign Commercial Service--Cameron Werker
USAID--Michael Harvey
Management Officer--Thatcher Scharpf

The U.S. Embassy in Serbia is located at Kneza Milo´┐Ża 50, 11000 Belgrade (tel. 381-11-361-9344).



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