Press conference regarding signing of agreement between company Infostud and Ministry for Diaspora was held on September 2^nd in Ministry for Diaspora facilities. Speakers were Minister for Diaspora, Mr. Srdjan Sreckovic, director of company Infostud, Mrs Branislava Gajic and Minister assistant for economic issues of Diaspora, Mr Djordjo Prstojevic.

Director of company Infostud, Mrs Branislava Gajic said that Infostud as the biggest job search website in Serbia, contributed to employment of 35000 people from Serbia in the last year, and that their goal is to include quality experts from Diaspora in that number .

”We have a will to connect this people with companies that could offer them good working condition, and in that way they return will benefit both sides. First step in that direction is targeting needs of our people in Diaspora, problems that they are facing that is stopping them to come back and meeting those needs with needs of our companies that are looking for employees. In that sense cooperation with Ministry for Diaspora is a natural step and we are expecting good results, ”said Branislava Gajic.

In his speech, Minister Sreckovic said that one of priorities of his Ministry is return of young experts in Serbia who will fill the gap that is left after Brain-drainage in 90’s when 500.000 people left Serbia, and where 100000 of them were graduated.

One of the main reasons for signing this agreement is, said Sreckovic, that company Infostud is most efficient employer in Serbia.

Minister added that Ministry for Diaspora and Government of Serbia are showing in this way that every young expert that is promoting Serbia abroad is important.

According to survey that Strategic marketing conducted in July 2007, 50% of people that participated in survey that are satisfied with their life in Diaspora wants to come back to Serbia and 39% of them consider return in Serbia as a realistic option.

Serbia is good place to return because competitiveness is small, growth of GDP is the biggest compared to the neighboring countries, market is quickly developing and that’s a reason way Ministry for Diaspora will conduct different projects with a goal of returning young experts to Serbia as a way of Improving economic development of country.

Priority of Ministry for Diaspora will be to discourage trend of Brain-drainage and to provide opportunities for our citizens in Diaspora to become real partners in economic development of Serbia by usage of their skills, expertise and resources, said Minister Sreckovic.

Belgrade daily Večernje Novosti writes today that the Italians, who when they first started negotiations with Sebia’s Zastava carmaker insisted they would sell “95 percent of cars produced there in the EU market”, while the rest would be offered to Serbian buyers, “have now changed their mind”.

Serbia has a valid free trade agreement with the Russian Federation, allowing it to place most of the goods produced here to the Russian market custom duty free, that is, with one percent costs, prompting Fiat to deduce that its planned production in Kragujevac could make the company very competitive in Russia.

In the meantime, the strategic partnership contract between Fiat and the Serbian government will be ready for signing by the end of September, both sides are saying.

An MoU on the same subject was signed in early May.

However, vehicles 1600 cc and below are not on the Serbo-Russian trade agreement list of customs exempt products.

Therefore, the daily writes, once parliament ratifies the strategic oil and natural gas agreement with Russia, a mixed working group will meet, “with the sole goal of harmonizing a possible expansion of the existing free trade deal between Russia and Serbia”.

The multibillion-dollar agreement envisages that part of a pan-European gas pipeline will run through Serbia, and that Russia will buy Serbia’s state oil monopoly, NIS.

Serbia and Russia signed the agreement in January, but it must be approved in parliament before it can be fully implemented.

The deal has sparked criticism from some pro-Western officials in Serbia who have said that the price of €400 million (US$580 million) offered by the Russians for the majority stake in NIS is too low.

Government minister Mladjan Dinkic had said he would try to negotiate a better price for NIS but Serbian media have reported that the idea was rejected by the Russians.

Critics have also claimed that the agreement will enable Russia to fully control Serbia’s energy sector and thus make Serbia dependent on Moscow.

Liberal Party leader Cedomir Jovanovic told lawmakers on Friday that terms of the Russia-Serbia agreement were “similar to the colonial era.” He said the deal offered no guarantees that the Russians will honor their part of the deal.

“The government has agreed to a humiliating and unequal position,” Jovanovic said. “We all know why we knelt before Russia, we did it because of Kosovo.”

Russia has backed Serbia in its efforts to maintain its claim on Kosovo, which declared independence in February with the backing of the United States and its key NATO allies. Moscow and Belgrade have refused to endorse the territory’s split.

The energy deal with Russia was signed during the term in office of Serbia’s nationalist Prime Minister Vojislav Kostunica. Kostunica has advocated closer ties with Russia rather than with the West.

On Friday, the deputy prime minister in the new, pro-Western government, Bozidar Djelic, sought to defend the agreement saying it was in “the deepest national interest.” He said the deal will “turn Serbia into an important factor in the energy map of Europe.”

“This project is both Russian and European,” he said. “It is important that Serbia be part of it.”

Djelic added that the deal will provide a “powerful energy partner” for Serbia. He suggested that Serbia could not win a different arrangement, saying that terms of the agreement were “the result of a reality.”

Nationalist deputy Tomislav Nikolic also praised the agreement, saying it was “Russia’s present to Serbia.”

“We should take what is offered, because Russia can offer it to someone else,” he said.

A vote on the deal in the 250-member parliament is expected next week.

According to the Kosovar daily “Express”, a delegation from the International Monetary Fund (IMF) has been visiting Kosovo for a week now to learn about preparations that Kosovo is making to join the Fund.

The delegation met the Minister of Economy and Finance, Ahmet Shala, and according to officials from the Ministry, the delegation briefed Kosovo Government on the procedures for membership into the IMF.

The head of the delegation, Robert Hagemman, is quoted as saying that he is very pleased with Kosovo’s progress and the work done towards gaining IMF membership.

In 2005, with the previous USAID program, following farmers’ initiative, 23,000 blueberry seedlings were purchased and disitributed enabling production on 10 hectars in the area of municipality of Arilje, Western Serbia. Today, five times more American blueberries seedlings are being grown in Serbia.

Partnership with berry growers continues via the USAID Agribusiness Project, with the goal of entering new domestic and international markets.

British financiers are backing a new playground for the rich in a Balkan port

Recognizing Serbia’s potential, the USAID decided to invest $14.7 million in the Serbia Competitiveness Project to increase the position of Serbia and its SME’s in the competitive landscape of Europe and beyond.

The last World Economic Forum’s Global Competitiveness Report ranked Serbia on 91st place, out of 131 countries.  Of the countries in the region which are better ranked than Serbia are Slovenia (39th), Hungary (47th), Croatia (57th), Romania (74th), Bulgaria (79th), and Montenegro (82nd).  Serbia is ranked higher than Macedonia (94th), Bosnia and Herzegovina (106th), and Albania (109th).

In general terms, competitiveness is the ability of a firm, sub-sector or country to sell and supply goods and/or services in a given market.  It is about the awareness of both the limitations and challenges posed by global competition.

Serbia being ranked 91st does not depict what Serbia has to offer.  In apparel, Serbia has some excellent producers and many successful designers.  We have excellent engineering services firms with a long history of projects in Europe, Asia and Africa.  Tourist events, such as Exit and Guča, have been bringing visitors from around Europe for years.

The Financial Times for 2006/07 awarded Belgrade the name City of the Future in Southern Europe.  Serbia and Belgrade have or will host several major events including Eurovision Song Contest, International Press Institute (IPI) World Congress, European City Marketing General Assembly and City Break Market, UN World Trade Organization (WTO) Regional Investment Conference, Universiade 2009, and others.

In the IT sector, Microsoft has opened one of its four international research centers in Belgrade, reflecting the strength of Serbia’s IT professionals.  Serbia is advantageously positioned in the heart of Central European Free Trade Agreement (CEFTA) zone and enjoys a free-trade agreement with Russia.  English is widely spoken.  Despite these positives, Serbia is lagging behind in competitiveness.  In other words, Serbia’s image does not reflect all the positive things that it rightfully should, and Serbian products and services are not as well positioned as they might be.

Recognizing this potential, the Unites States Agency for International Development (USAID) decided to invest $14.7 million in the Serbia Competitiveness Project to increase the position of Serbia and its small and medium enterprises in the competitive landscape of Europe and beyond.  The four year project begun in October 2007, implemented by Booz Allen Hamilton, undertook a comprehensive study of twelve Serbian industry and service sectors to assess the potential of Serbia.  As such, a key part of the study was to benchmark where Serbian sectors were in relation to international competitors.

While conducting the study we met with representatives of over 90 and interviewed additional 500 companies.  They frequently asked quite precise questions, such as: “How do I advertise on a foreign market?”, “How do I present my product at the Moscow fair when I’ve never been there myself?”, “How do I establish contacts with international media in order to advertise my product?”, and similar.  The study revealed that many things have changed for the better since 2001.  Serbian companies are much more competitive, more skilled in marketing, and more competent to undertake market research.  They have adopted sophisticated promotion strategies for entering new markets and are more efficiently using available technologies to improve their products and services offer.  Serbia’s business climate is also more favorable, despite legal and administrative barriers to further development in some sectors.

However, there are common areas emerging across sectors where targeted support should have a positive impact in boosting Serbian competitiveness.  Many of the companies lack competent staff in management, finance and marketing, or human resources and project management specialists.  Therefore, although primarily focused on building private sector competitiveness, the project also deals with issues common to all sectors, such as activities aimed to build human and institutional capacity, improve the business climate, and better inform the wider public on Serbian products and services.  The project is addressing these common themes in eleven promising areas: ICT, tourism, education, film and production, construction, building materials, wood processing, apparel, logistics and transport, renewable energy, and auto parts.

The project has strong partners in Serbia, such as Serbian Investment and Export Promotion Agency (SIEPA), Tourism Organization of Serbia and Belgrade (TOS and TOB), the Serbian Wood Agency, the Serbia and Belgrade Convention Bureaus, and others.  We have so far supported Serbian companies and students in a number of trade fairs in Europe, including the International Building and Interiors Exhibition “MosBuild” in Moscow, the young talents design fair “Saloni Satellite”, held as a part of the Milan Design Week, the International Meetings and Exhibitions Fair (IMEX) in Frankfurt, and the Cannes Producers Network.  In all these events Serbian participants presented themselves as professional and reliable.

From Moscow they came back with signed deals for building materials worth approximately 85,000 Euros and advanced negotiations on a 500,000 Euro deal.  Serbian firms made close to 200 individual contacts of which about 70 represent potential buyers.  Overall, 1 million Euros in sales are expected to be produced through the Moscow B2B contacts.

In Milan, Serbia presented students from the University of Belgrade Forestry Faculty who were selected from hundreds of universities worldwide to participate in this major international fair for furniture design.  They were visited by over 3,000 people from media, furniture companies, design studios, and other universities across the world.  The Italian national TV - RAI had coverage from the Serbian booth, and the students had contacts with other media outlets such as Elle, Casa E Jardim, Brava Casa, Archidom, BBC Radio 4, and others.  Nowadays, their designs are on some of the most famous design web portals: Design in Central and Eastern Europe, Design Addict, Dexigner, Inhabitat, Designboom, and Moco Loco.

In Frankfurt, Serbia was presented as a new European M.I.C.E. (Meeting, Incentive, Convention and Events) destination.  Over 80 individual meetings were held with Hosted Buyers from Finland, Russia, Italy, Germany, UK, Malta, Poland, and Bulgaria.

Finally, by far the biggest success was the participation of Serbian film production companies at the Cannes Producers Network, which is expected to bring investments of more than 16 million Euros to Serbia in the next few months.

As we continue such activities in the future, we will be placing more emphasis on international media relations and promotion in order to proactively enhance the positive image of Serbia abroad.  Serbia’s strengths, its competitive advantages and its successes need to be promoted in leading media such as the Financial Times, Economist, Time, International Herald Tribune, and others, as well as sector specific media, such as Variety for the film industry, or Design Diffusion for furniture.  Almost as important is to link those “innovators” who are launching their successes through web portals, and increasingly popular blogs.  This is exactly what we aim to do in the future.  A positive perception of Serbia is a prerequisite of its economic success.

Finally, there is one sentence which is, in the project, kept as first lesson in competitiveness and which is good to leave our readers with: “Develop a good and quality product, package it attractively, arm yourselves with information on your target markets, and of course, constantly invest and reinvest in your employees.“

Mirov will meet with Prime Minister Mirko Cvetković and some cabinet ministers.

This is the first official visit the new EBRD president will pay to one of the member countries of this international financial institution.

The meeting, which will be held at the government building, will also be attended by Minister of Finance Diana Dragutinović, Minister of Infrastructure Milutin Mrkonjić and Minister of Mining and Energy Petar Škundrić.

Later in the day, Mirov will talk to Deputy Prime Minister and Minister of Economy and Regional Development, Mlađan Dinkić.

Since April 2001, EBRD has financed important infrastructure projects from the field of energy and finances in worth some EUR 1.3bn.

Mirow will visit Serbia and follow up with a trip to Bosnia and Herzegovina. In Belgrade he will meet government officials, business partners and international envoys, as well as sign a 10 million euro loan to RZB Leasing to finance the expansion and growth of small and medium-sized enterprises in all regions of Serbia.

In Sarajevo, Mirow will sign a three-million-euro loan to micro-credit organisation MI Bospo and a six-million-euro loan to local agribusiness firm Bimal.

The Bank signed its first project in Serbia in 2001 and has to date invested almost 1.3 billion euro in 105 projects in the country. In Bosnia-Herzegovina, total investments are 762 million euro in 69 projects.

The EBRD is the largest institutional investor in the region, having given loans of more than 4.9 billion euro in sectors including infrastructure, energy, the financial sector and the private corporate sector, especially small and medium-sized enterprises.

Following an announcement that the Serbian government was ready to list the company’s shares at the Belgrade and London stock exchanges, the German partners “hinted they were ready to purchase 15 percent,” Miroslav Jokcimovic, the head of Telekom Srbije’s trade union said as quoted by local media.

“We are not opposed to that but unions would prefer if the state could retain its majority stake,” he said.

The German company already owns 5 percent of Telekom Srbije as a partner in Greece’s OTE or the Hellenic Telecommunications Organisation SA which is a co-owner, with a 20 percent stake.

According to the Economy Ministry’s official “the government is now awaiting bids from Morgan Stanley and Merrill Lynch over who will complete plans for the sale of Telekom Srbije’s 15 percent stake.”

“What we want is to keep a 51% stake in the company, or at least a controlling package of shares and the rest may go to various strategic partners,” the official said on condition of anonymity.

To accumulate funds for the overhaul of the economy, the Serbian government led by Mirko Cvetkovic invited bids for the flag carrier JAT Airways and JAT Tehnika aircraft maintenance firm.

The €440 million sale of the country’s oil company Naftna Industrija Srbije or NIS is a matter of further talks with Russia’s oil and gas giant, Gazprom.

The country also plans to sell electricity utility Elektroprivreda Srbije, Belgrade’s Nikola Tesla Airport, Galenika pharmaceuticals and the RTB Bor copper mine and smelting complex.

The state also wants to distribute up to 15 percent of stakes in its main enterprises to as many as 4 million people in Serbia for free.

Minister of Economy and Regional Development Mlađan Dinkić said earlier that the contract would finally be signed in mid-September.

However, this deadline may also be missed if Serbian MPs fail to show good will and continue to complain on breaches of the Rule of Procedure, Politika daily writes today.

The state is supposed to invest approximately EUR 300mn to renew infrastructure in Kragujevac, which is also a part of the announced cooperation contract.

But, since this big a figure can only come with the rebalancing of the budget, which is approved by parliament, this could also “postpone ceremonies at the Kragujevac factory”.

It is still uncertain when parliament will decide on this issue, and in the meantime, the newspaper has learned, the Italian corporation insists that the future contract determines exact deadlines and investments for the Kragujvac –Batočina highway, railroad to Lapovo and a bypass around the town.

However, lawmakers’ mood is not the only factor, but the FIAT investments as well, which are supposed to reach the sum of EUR 800mn.

The daily writes that the money will not come directly from the Turin company, but via EU funds, where Fiat has applied for the money.

What this means in that the potential Italian partner will also lose if the Serbian parliament fails to ratify the SAA.

Experts also say that even with the growth of sales figures and rise of profits, Fiat is still not doing particularly well.

In May, the Serbian government signed a Memorandum of Understanding with Fiat, after it signed the SAA with Brussels. The latter document was immediately suspended until Serbia achieves full cooperation with the Hague Tribunal, but is also awaiting ratification in the Serbian parliament.

Privatization in Kosovo and Metohija continues even though there were plans to end it by the end of the year.In spite of strong objections from Belgrade, and under UNMIK auspices, so far over half of the socially owned companies have been sold.

The Kosovo Trust Agency is planning the sale of public enterprises, which are considered the most valuable capital in the province.

UNMIK and Albanians in institutions of interim self-govenrment have not responded to any of the appeals of the Serbian government that at issue is the illegal sale of its property in Kosovo and Metohija.

Serbia was not allowed access to tenders for the sale of companies in Kosovo and Metohija, even though authorities in Belgrade asked to be included in this process.

UNMIK suspended all laws and ownership transformations that took place before June 10th 1999.

The damaged owners and creditors were told to apply for court settlement of their rights, which is slow and uncertain, underlines former head of the economic team of the Serbian government for Kosovo and Metohija and southern Serbia and owner of the company ABC, Nenad Popovic.

According to him, about 17 thousand claims had been filed with the Kosovo Special Court for illegally usurped or seized property, but not a single case has been solved, says Popovic.

Director of the Forum for Ethnic Relations Dusan Janjic believes that no serious international company wants to invest in Kosovo and Metohija, as it does not know who the real owners of the property in the southern Serbian province are.

According to him, authorities in Belgrade should have enabled large Serbian companies such as Delta, and others to invest in Kosovo and Metohija.

Albania has been very present in the province in recent months and plans through World Bank loans to begin the realization of certain projects with investors from the region.

The economic expansion of Serbia to Kosovo and Metohija is the only way of keeping the province as its integral part, assesses Janjic.

Privatization in Kosovo and Metohija began in May 2003, without the consent of official Belgrade. At work is the ‘spin off method’ or the sale of what remains of companies – land, premises, machines and other equipment.

Assets from sales go to a special Fund, controlled by the Kosovo Trust Agency, and are officially intended for settling debts towards creditors, owners and workers. However, so far not a single euro from that Fund has been disbursed.

By a UNMIK decision, this Agency has acquired the right to lease the property for 99 years, and even to take it away, though avoiding property rights of owners.

The Serbian Orthodox Church could thus permanently lose its church lands, which due to incomplete denationalization is still regarded as socially owned property.

At issue is about 70 thousand hectares of arable land and forests and over a thousand various buildings.

Companies in Serbia dispose with about 1,218 buildings in Kosovo and Metohija, of which nearly a half was built with their own funds.

It is estimated that Serbia’s claims on the basis of the Development Fund are about five and a half billion USD, or a third of the total amount of funds invested in the development of the southern Serbian province during the former Yugoslavia.

The current concept of privatization in Kosovo and Metohija is completely unacceptable for official Belgrade, as it does not solve any of the basic issues of the Kosovo economy. Besides this, there is no mention of a social program, as an integral part of the principles of a market economy.

The sale of companies in Kosovo and Metohija is still going on in the sphere of grey economy, but under the auspices of the international community.

Biljana Hroneos Krasovac told Voice of America that Serbia needed EUR 1.7bn to complete construction of Corridor 10, and that Serbia had so far secured EUR 250mn of that figure.

“We expect the World Bank to help us with a significant contribution for this project,” she said, adding that Serbia needed to complete Corridor 10 because neighboring countries were rapidly developing their own infrastructure projects, including construction of roads and railway networks.

“We have to keep an eye on the competition. Bulgaria and Romania are preparing Corridor 4, so Serbia needs to finish construction of its section of Corridor 10 as soon as possible,” explained Hroneos Krasavac.

Kragujevac Deputy Mayor Nebojša Zdravković, who is also a member of the negotiating team with Fiat, stresses that by the end of the year the possibility of building an airport in Kragujevac will be looked at.

A number of other foreign investors aside from the Fiat are also interested in what the city has to offer. They insist on good infrastructure and technical conditions.

Zdravković claims that the joint investment between Fiat and the state will be worth closer to EUR 1.1bn, as opposed to EUR 700mn.

“Rather than the originally planned EUR 100mn, the state will invest EUR 300mn over the next three years in the construction of a motorway, a northern bypass, wireless internet throughout the city, a new water system for industrial water around Zastava, reconstruction of the Kragujevac-Lapovo railway line… Big investment is also necessary for construction of new sub-stations, as Fiat wants to have a factory of the highest international standards in Kragujevac.

Owing to frequent visits to Kragujevac, Fiat managers have requested the introduction of a direct airline link between Turin and Belgrade, while the city authorities are already considering the possibility of building an airport.

“IVECO is also interested in buying the truck factory, and even taking a further 200ha of land. The standard of living is increasing in Kragujevac, as well as the price of residential and commercial property. In an economic sense, Kragujevac meets all the criteria to receive an airport, because right now that is something that’s necessary,” stresses Zdravković.

The idea of building in Kragujevac was first floated in 1977 by then student Aleksandar Nenković. A site in Ravni Gaj, 15 kilometers from Kragujevac was then earmarked for the purpose. That site is still available today.

“My plan took into account wind directions and the number of days with fog. So that is a realistic option for Kragujevac, but whether it will come to fruition is another matter. What’s clear is that an international airport requires a 150ha of land for a runway, buildings and facilities,” says Nenković.

He believes that the airport would have enough passengers.

“The airport’s location would definitely serve the central zone with Kraljevo, Čačak, Vrnjačka Banja, Trstenik, Jagodina…So, in my opinion, there is a critical mass of passengers that would gravitate towards the airport,” says the architect.

The Kragujevac deputy mayor says a feasibility study will be carried out by the end of the year to see whether the region requires an airport.

The daily also writes that talks with financial institutions regarding the reconstruction of Corridor 10 will begin in the fall.

Along with the EUR 1.7bn that will be allocated for finishing the infrastructure on Corridor 10, EUR 4.14bn will be invested in the railway, Politika states, citing sources in the government.

The money will be needed for major work with a view to increasing the speed of trains traveling in Serbia to 160 kilometers per hour.

Other countries around the region have already addressed this matter, with trains in Hungary traveling up to 200 kilometers per hour, the same as trains traveling between Athens and Thessaloniki, and Sofia and Plovdiv.

Croatian trains have reached the 160 mark, while Turkey is building a line between Istanbul and Ankara that will enable travel of 200 kilometers per hour.

Until then, Serbian Railway will continue having to pay fines for trains transiting through Serbia and arriving late at their destinations. The fines for such tardiness amount to some EUR 20mn a year.

The agreement will be signed in December during a Serbian delegation’s visit to Beijing, according to a statement released by the office of Serbian Deputy Prime Minister Bozidar Djelic.

Djelic, who also is the Serbian minister for science and technological development, told Chinese Ambassador to Serbia Wei Jinghua that the “attraction of Chinese investments, particularly in the field of telecommunications, IT and automotive industry is a priority in the economic cooperation between the two countries,” said the statement.

Djelic said that Serbia wants to be for China what Ireland was for America in winning the European market in the domain of technology, according to the statement.

Wei said that China strongly supported a speedy implementation of the Stabilization and Association Agreement between Serbia and the European Union, since this was one of the key preconditions for attracting Chinese investments in Serbia.

Serbia’s export to China last year was worth only 2 million U.S. dollars, while imports of Chinese goods amounted to nearly 1.8 billion dollars, said the statement.

“Serbia has full support for the Italian government to become in the very near future a fully fledged member of the European community,” said Frattini (photo).

He was speaking to journalists after meeting with Serbian president Boris Tadic in the Chinese capital, Beijing, on the sidelines of the opening of the 29th Olympic Games.

Of western nations, Italy has been the most stalwart supporter of Serbia’s drive to join the EU.

Italy was among over 40 countries worldwide which have recognised Kosovo, whose independence was declared unilaterally in February by majority ethnic Albanians.

Serbs remain strongly opposed to Kosovo’s independence, arguing that United Nations Security Council Resolution 1244 defined Kosovo as part of Serbia.

As well as continuing to support Serbia’s EU bid, Rome will back visa and trade liberalisation with Belgrade as initial steps towards full EU membership, Frattini said, cited by Serbia’s Tanjung news agency.

Tadic said Frattini had demonstrated “full political will to expand relations with our country, primarily in the sphere of transport, automobile and energy industry”.

He said Frattini promised to attend in September the signing between Italy’s FIAT and Serbia’s automobile producer Zastava of a joint car manufacturing deal.

In a preliminary agreement in April FIAT pledged to invest 700 million euros in joint automobile production with Zastava. In 2006, Italian bank, ‘Banca Intesa’ bought Serbian Delta Bank and Italian investments in Serbia have been steadily rising.

Italy is Serbia’s leading trade partner and the total trade turnover topped 2.1 billion euros last year. Italy netted a 493 million euros bilateral trade surplus but is the biggest European importer of Serbian goods.

Serbia in February withdrew its ambassadors from some 40 countries which recognised Kosovo. But the new pro-European government led by Prime Minister Mirko Cvetkovic has decided to re-establish normal diplomatic relations.

Serbian ambassador to Rome Sanda Raskovic Ivic returned to her post in Rome on 28 July and ambassadors have been returning to other EU countries.

Tadic said he told US president George W. Bush and French president Nicolas Sarkozy in Beijing that Serbia would never recognise Kosovo’s independence.

Serbia will also continue its diplomatic battle to keep Kosovo within its state borders, Tadic added.

“There are two parallel events going on in Beijing – a sporting one and a political one. I’m taking every opportunity to establish new contacts to promote cooperation on all levels,” Tadic concluded.

BELGRADE, Aug 7 (Reuters) - Optimism over Serbia’s new government and its cooperation with the West should bring the country $5.0 billion in foreign investment this year, its investment agency said on Thursday, the largest amount to date.

Serbia’s Investment and Export Promotion Agency (SIEPA) said events including the forming of a pro-Western coalition and the arrest of Bosnian Serb wartime President Radovan Karadzic had improved its European Union accession chances and boosted its attractiveness for foreign firms.

“Based on investor interest and optimistic forecasts, we are counting on $5 billion worth of investment (FDI) this year,” said the agency’s spokesman Aleksandar Miloradovic.
“We are riding a wave of strong optimism.”

Analysts say Serbia needs between 3 and 5 billion euros ($4.5-$7.75 billion) in foreign direct investment and borrowing to cover its current account deficit — an estimated 16 percent of gross domestic product (GDP) — and to ensure steady economic growth.

It attracted $3 billion in foreign direct and portfolio investment in 2007.

Earlier this year, officials were cautious about giving FDI estimates, as political turmoil following the Western-backed secession of Kosovo and the fall of the government in March clouded the country’s international alignment.

But in July, a new coalition of pro-Western parties led by President Boris Tadic and the Socialists of late autocrat Slobodan Milosevic took office, declaring EU membership a top priority and ending months of uncertainty.

Then authorities then arrested and handed over Karadzic to the Hague tribunal to face war crimes charges, thus removing a major obstacle to closer EU ties.

Brussels has signalled the arrest could open the door to candidate status by mid-2009, but it is waiting for U.N. war crimes prosecutor Serge Brammertz to report on whether Belgrade is fully cooperating with the Hague tribunal.

Companies from Europe, the United States and Japan were among the first following the government’s formation to ask about investment opportunities in heavy industry, machine building, biofuels, and trade, Miloradovic said.

“One of them has definitely ditched Romania and will base its business in Serbia,” he said, without elaborating.

Many investors are expected in the retail sector, he said, although SIEPA’s main activity was to accommodate contractors for Italy’s Fiat, which pledged in April to invest 700 million euros ($1.08 billion) to start production with Serb carmaker Zastava.

“We are talking about nearly 100 contractors and an investment of up to 400 million euros in total on top of Fiat’s,” he said. “This will be the most important investment because it will ensure 10,000 jobs and a great deal of exports.” (Editing by Michael Winfrey and Ruth Pitchford)

Having conducted failed negotiations with Italy’s near-bankrupt airline Alitalia, the Russian flagship carrier Aeroflot will now try to enter the European air passenger market by taking part in a tender announced on Thursday for the privatization of Serbia’s cash-strapped JAT Airways.

The Serbian Privatization Agency on Tuesday publicized the privatization leaflet and called on potential investors to send their declarations of interest during the next few days. At the end of 2007, JAT was worth 162.6 million euros and had debts amounting to 247 million euros. According to the tender documentation, the minimum price for a 51-percent stake is 51 million euros, with the possibility of buying up to 70 percent of the company. Offers must be made no later than October 24.

The Serbian government considers Russia’s Aeroflot and Iceland’s Air of Iceland to be the most serious companies ready to make bids.

Some analysts are dubious whether or not Aeroflot will take part in the JAT tender since the Russian company is also holding serious talks to gain control of the Czech flagship carrier, which is preparing a tender for the near future.

“We’ll see if we are going to participate in the tenders, but most probably we will. The picture is clearer with Czech Airlines,” Aeroflot’s deputy financial director, Mikhail Poluboyarinov, was quoted as saying last month.

“As far as Czech Airlines is concerned, we are getting ready for the tender by preparing valuations and a joint plan for a period from eight to ten years that would enable us to withstand a five- or six-year crisis,” Poluboyarinov said.

Serbian observers say that this may be the last opportunity for JAT to find a strategic partner.

The world’s airline industry is currently facing a large-scale crisis due to massive increases in fuel prices, and experts predict that only the most successful companies will survive. In Moscow, kerosene jet fuel is five to six percent more expensive than in other European capitals, though the vast majority of European countries do not have their own deposits of crude oil.

“If fuel prices go up another 20 percent, then bankruptcy will really become imminent for many airline companies,” Vedomosti newspaper quoted Yelena Sakhnova, an aviation analyst at Moscow-based Vneshtorgbank, as saying last week.

There has been speculation that these challenges explain why Aeroflot is reconsidering its investments in Europe.

Valery Okurov, Aeroflot’s general director, recently wrote a letter stating the company’s position on acquiring part of the Serbian airline. The St. Petersburg Times obtained a copy of the letter, which was sent to several Belgrade addresses, including the office of Mladjan Dinkic, Serbia’s economic minister.

“Aeroflot has prepared a positive business plan for the future development of JAT, but due to the negative market condition, the current air transportation crises and higher fuel prices, the business plan would be less efficient. Bearing in mind these facts, Aeroflot reserves the right not to take part in the bidding,” Okurov wrote in the letter.

The Russian carrier’s prospects of entering JAT looked brighter earlier this year. After Serbian president Boris Tadic’s meeting in January with Vladimir Putin, who was then his Russian counterpart, Poluboyarinov announced that Aeroflot would take part in the tender for the upcoming privatization of JAT together with a European Union partner.

Aeroflot’s deputy general director, Lev Koshlyakov, said earlier this year that Aeroflot was seriously considering taking part in the tender.

“Notwithstanding EU objections, Aeroflot has received a positive preliminary reaction from the Serbian government,” Koshlyakov said.

According an EU regulation, Aeroflot cannot obtain 51 percent of JAT due to the company’s non-EU origination, as JAT would not be able to obtain flight licenses for flights to EU member states.

Regulation 2407/92 grants flight licenses only to companies owned and directly controlled by EU member states, to carriers whose majority stake is owned by an EU member stake, and carriers controlled by EU member states or EU citizens.

If Aeroflot enters as a minority holder with less than 50 percent of the shares, it would have direct access to the European aviation market, since Serbia signed the Open Skies Agreement with Brussels in 2006. Some observers suggest that this is one of the main reasons for Aeroflot to take part in the tender — because Russia still hasn’t signed such an agreement with the EU.

The Serbian company might not be so attractive to Aeroflot as a package, but for certain assets it includes. Experts calculate that the authorized landing and take-off slots that JAT possesses at several major European airports are worth more than $200 million.

In addition, JAT owns company buildings in major foreign cities such as London, Milan, Amsterdam and Athens. JAT’s fleet is old and requires significant investment, but in spite of this the company has seen permanent traffic growth during the last few years. In 2008, JAT plans to transport 1.5 million passengers.

According to the memorandum of understanding signed between Aeroflot and JAT Airways in June 2007 in Sochi, Aeroflot’s goal is to transform the Serbian airline into a leading transnational Balkan airline company. Aeroflot has a fleet of 120 planes flying to 130 destinations in Russia and worldwide. Last year, the company carried nine million passengers and had a total income of almost $3 billion.

The invitation for ‘the participation in a public tender for the sale of 51 percent with a possibility to acquire up to 70 percent of the total registered capital of JAT Airways’ was published by the agency’s website.

To qualify for the tender, which closes on Sept 26, interested airlines were required to have carried at least 1.3 million passengers in 2007 and to have a balance sheet value of 200 million euros.

JAT, whose debts amounted to 247 million euros at the end of 2007, says it carried almost 580,000 passengers in the first six months of 2008, a 9 percent increase compared with the same year-ago period.

The Serbian Privatisation Agency is being advised in the tender by Rothschild, Citadel Financial Advisory, Clyde & Co, and Dekonta.

JAT Airways has come on hard times since its heyday as the national airline of the former communist Yugoslavia in the 1980s, when it had more than 40 planes and carried more than five million passengers a year.

But the Balkan wars, international sanctions against the ousted regime of Slobodan Milosevic and the NATO bombing of rump Yugoslavia in 1999 took a heavy toll on the carrier.

Nowadays it has a fleet of 17 planes, but experts say JAT still employs at least 40 percent more staff than it needs.

Thus far 71,617 residents have registered in the province, a decent number of which are ethnic Albanians, according to Postal Service, PTT, in Kosovo Director Ranđel Nojkić.

Nojkić told the Tanjug news agency that according to regions, most of the people who registered – some 25,000 – are from northern Kosovo.

24 post offices, 36 registration locations and with three mobile teams are at their disposal.

In Sirinićka Župa 12,500 have registered, 13,000 in Kosovsko Pomoravlja, 17,100 in central Kosovo and 3,500 in Metohija.

The government decided earlier this year to make all Serbian citizens over the age of 18 eligible to receive shares and cash from the sale of the largest public enterprises, including Jat Airways, EPS, NIS, and Telekom Serbia.

Chief adviser to Gazpromneft’s CEO Dmitry Malishev told Belgrade daily Biznis that it is impossible to change an international agreement such as this one, and added that the Serbian and Russian sides can only confirm details of the draft in the coming negotiations regarding the sale of the Serbian oil monopoly, NIS.

The agreement, signed in Moscow on Jan. 25, includes the sale of the company, and construction of a part of South Stream pipeline through Serbia.

Malishev told the newspaper that the protocol for buying the oil company is part of the energy agreement, which is obligatory and cannot be altered.

He stated that he expects Serbian parliament to ratify the deal very soon, “because Serbia is only losing money and time with every day that this is being postponed, since NIS must be modernized by 2010, when it will enter the European market”.

The agreed price for the purchase of a 51 percent stake in NIS, EUR 400mn, with investments of at least EUR 500mn, is fair, according to the Russian official.

“That price was determined based on estimates which were made by financial experts on both sides and independent ones. We did not only agree to buy 51 percent of NIS, we also took on all the risks of the company and guaranteed investments of at least EUR 500mn in a full reconstruction,” Malishev said.

Cvetković spoke to Tanjug news agency on Tuesday in Belgrade when he assessed that Serbia “will not have any problems in securing EUR 1.1bn to complete two roads of the southern section of Corridor 10″.

The prime minister said that the above goal is not unrealistic, underscoring that during a recent meeting of southeastern Europe heads of government in Salzburg, Austria, he had bilateral talks with representatives of investors, who showed increased interest in investing in Serbia.

According to Cvetković’s estimate, Serbia has a chance to attract foreign investors now, after getting the new coalition government he leads. He also said that “one of the major contracts, that with Italian Fiat, is in the final stages”.