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Serbia Sees Investment, EU Aid Flows Continuing After UN Setback on Kosovo
Serbia expects foreign investment and European Union aid flows to continue after the government opposed a ruling by the International Court of Justice that Kosovo’s declaration of independence in 2008 was legal.
The government expects about $2 billion in foreign direct investment this year after inflows of about $590 million in the first four months, Aleksandar Miloradovic, a spokesman for the Serbian Investment and Export Promotion Agency, said in a phone interview today.
“We don’t see that this in any way affects investor sentiment,” Miloradovic said. “The pace of foreign direct investment is roughly the same as last year.”
The country’s EU entry may be determined by further negotiations about Kosovo, Deputy Prime Minister Bozidar Djelic told the newspaper Blic yesterday. Parliament backed the government’s decision to not accept the region’s independence, calling for talks and a solution leading to “historical reconciliation between Serbian and Albanian people.”
Foreign investment and borrowing helped Serbia’s economy grow at an average 5.4 percent a year until 2008. As capital flows dried up, the dinar lost 11 percent against the euro this year, the second-worst performance among the more than 170 currencies tracked by Bloomberg, behind the Venezuelan bolivar.
The dinar traded at 105.67 per euro at 11:12 a.m. in Belgrade from 105.77 yesterday.
Balancing Act
The ruling coalition of pro-Western parties and the Socialists of former President Slobodan Milosevic, in the third year of its term, is trying balance efforts to join the EU and keep Kosovo, traditionally seen by many Serbs as the cradle of the nation, in its fold.
The EU has granted 1.4 billion euros ($1.8 billion) for various projects in Serbia through 2013. That excludes 200 million euros in budget aid. Serbia is also entitled to a share in a 1.1 billion euros worth of aid for regional projects.
Some EU countries have criticized Serbia for not doing enough to find Bosnian Serb war time commander Ratko Mladic, indicted by the Hague-based UN War Crimes Tribunal for the Srebrenica massacre. Arresting and handing him over remains Serbia’s key obstacle to faster EU integration. Mladic’s family wants him declared dead.
“Even when the situation was very tense because of Mladic, pre-accession aid was arriving,” Ongjen Miric, an adviser to the foreign minister, said in a phone interview.
Serbia is “not banging the drums of war” and has to pursue a “sober policy,” President Boris Tadic told parliament yesterday. Fifty-five countries are “a step away” from recognizing Kosovo, which the government wants to keep to a minimum, Foreign Minister Vuk Jeremic told deputies.
A total of 69 states have recognized Kosovo’s independence, including the United States and the majority of EU members, unlike China and Russia.
To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net
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