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Serbia

Situation and cooperation


Visit of Federal Minister Müller to Kosovo and Serbia: Arrival at Pristina Airport
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Visit of Federal Minister Müller to Kosovo and Serbia: Arrival at Pristina Airport

A coal power station in Pristina. One of the priority areas of German-Kosovar cooperation is the modernisation of the energy supply infrastructure.

Federal Minister for Development Gerd Müller in a meeting with the Prime Minister of Kosovo, Isa Mustafa

New houses on the outskirts of Pristina. Germany supports a programme for migrants returning to Kosovo.

Federal Minister Müller at a press conference with the Kosovar Minister of Finance, Avdullah Hoti

Sign in the vocational school Shtjefen Gjecovi in Pristina. Improving vocational training and creating employment are important issues in German-Kosovar cooperation.

In the vocational school Shtjefen Gjecovi future car mechanics are being trained with German support.

The BMZ supports small and medium-sized enterprises and practical vocational training to improve the chances of young people facing high rates of youth unemployment.

Minister Müller at a reception at the German embassy

A visit to KFOR in Pristina: Minister Müller in discussions with Lt Gen Hans-Werner Fritz, commander of the operations command of the German army.

Together with the Kosovar Minister of Labour, Arban Abrashi, Minister Müller opens a centre for migration and information in Pristina.

A member of staff of the German Information Centre on Migration, Vocational Training and Careers is giving advice to a young Kosovar in the newly opened centre in Pristina.

Federal Minister Gerd Müller is greeted by the German Ambassador to Serbia at his arrival in Belgrade.

Federal Minister Müller is welcomed by students of the vocational school in Pecinci, Serbia in the local branch of the Bosch Company.

Minister Müller visits a Roma camp in Belgrad and is shocked by the situation. "A slum settlement in the middle of Europe - circumstances worse than in an African refugee camp, that is not acceptable."

During a visit to a childrens' and youth centre Federal Minister Müller is briefed on the situation of the Roma in Serbia.

Together with the Serbian Prime Minister Aleksandar Vučić Federal Minister Müller opens a conference on 15 years of German-Serbian development cooperation.

Minister for Development Gerd Müller speaking at a conference on 15 years of German-Serbian development cooperation and the initiative for sustainable growth and employment

At the end of his visit to Belgrade, Minister Müller meets Ružica Djindjić and alumni of the Zoran Djindjić Internship Programme of German Business in the West Balkans.

Serbia's close integration into international structures is an important prerequisite for peaceful and sustainable development in the Balkan region. German and European support is guided by the goals being pursued by the EU: the rule of law and promotion of human and minority rights, a stable democracy and a market economy, legislation aligned with EU standards, establishment of efficient and transparent administration, and a willingness to pursue unrestricted regional cooperation.

However, before Serbia can join the EU, it is vital that relations with Kosovo are normalised and the process of reconciliation with the other countries of the former Yugoslavia is continued. Although Serbia still rejects Kosovo's independence, in April 2013 an agreement on the normalisation of relations between Serbia and Kosovo was concluded, brokered by the EU. On 21 January 2014, accession negotiations were opened in Brussels – an important milestone on Serbia's road to the EU.

Serbia is an active member of the world's major international organisations and also wants to join WTO. In 2015, Serbia is chairing the Organization for Security and Co-operation in Europe (OSCE). In 2012, former Serbian Foreign Minister Vuk Jeremić was elected president of the 67th session of the United Nations General Assembly.

Difficult economic conditions

Houses in Belgrade

The political upheavals of the last two decades have had a dramatic impact on Serbia's economy. After many years of isolation as a result of UN sanctions, Serbia is still in the process of rebuilding its economy. The country has also been grappling with an economic crisis that began in 2008. And the economic problems of the euro area are taking their toll on Serbia, too.

The agricultural sector is particularly important for Serbia's economic development. The good harvest in 2013 had a positive impact on growth. However, the floods in May 2014 resulted in a dramatic decline in yields compared with the previous year. After economic growth reached 2.5 per cent in 2013, it is estimated that gross domestic product (GDP) declined by 2 per cent in 2014, not least because of the flood. It is expected that GDP will again decline slightly in 2015.

One important growth industry is the service sector. The industrial sector, by contrast, having once been well set up, is now struggling to compete on the international markets. In order to improve prospects for the sale of industrial products on western markets, a massive injection of foreign expertise and capital would be required.

The decline of the industrial sector has had a devastating effect on employment and incomes. According to official figures, some 17 per cent of the population are without work; however, it is likely that the real unemployment rate is even higher. The situation is particularly dramatic for young people, over 50 per cent of whom do not have a proper job. The average income, which is about 380 euros a month, has hardly changed in the past few years. Poverty remains a pressing social problem, with almost 25 per cent of the population living below the national poverty line according to World Bank (2011) figures. Poverty is most severe in rural areas and among socially deprived groups such as refugees and Roma communities.

Investment to create jobs and income is therefore desperately needed. However, bureaucratic obstacles, widespread corruption, a still ineffective legal system, inadequate protection of competition and a lack of skilled workers mean that foreign investment in Serbia is limited.


Development potential in Serbia

One of Serbia's most important goals is sustainable economic development. In order to attain that goal – and also with a view to achieving EU accession – the government is willing, in principle, to reform its economic and financial policies as well as its governance and justice systems.

This commitment to reform is an important basis for the cooperation between Germany and Serbia, and a source of great potential. If success is achieved in noticeably improving people's living conditions through economic reforms, this may contribute to political stabilisation in the entire region and thus also help revive economic and cultural exchange among the former Yugoslav republics.


Priority areas of German cooperation with Serbia

Since it began in 2000, Germany's cooperation with Serbia has undergone a gradual change. Whereas, after the wars in the region, the main emphasis was initially on emergency aid measures, cooperation is now focused on long-term stabilisation and efforts to prepare for EU integration. Donor coordination through the Regional Cooperation Council (RCC) for South-Eastern Europe has played an important role here. The purpose of the RCC is to encourage regional development, among other things by enhancing regional ownership and by fostering European and Euro-Atlantic integration.

In November 2014, government negotiations were held between Serbia and Germany, at which Germany committed up to 157 million euros in new funding.

The two governments have agreed three priority areas for their future development cooperation:

  • Environmental policy and sustainable use of natural resources (environmentally friendly infrastructure)
  • Sustainable economic development and employment promotion
  • Democracy, civil society and public administration (administrative and legal reform)

Germany's engagement is complemented by programmes to assist young people, including exchange programmes. Serbia also receives funding from Germany channelled via regional funds, which is used for cross-border measures. Money from these funds is used to finance projects in the Western Balkans aimed, for example, at promoting foreign trade and improving energy efficiency.

In addition to Germany's programme of bilateral development cooperation with Serbia, there are numerous activities by non-governmental organisations and private agencies from Germany. In view of the high level of youth unemployment (more than 50 per cent), one programme of outstanding importance, for example, is the Zoran Djindjic Internship Programme of German Business.


Environmentally friendly infrastructure

Control room of the waterworks in Sombor, Serbia

The infrastructure in Serbia is obsolete, having suffered greatly from war and a lack of investment. That is why energy and water supply are priority areas of Germany's cooperation with Serbia. Germany is one of Serbia's most important donors in both areas.

In the energy sector, cooperation initially focused on infrastructure rehabilitation, with the modernisation of older thermal power stations. The focus has since shifted to environmentally sound power generation in accordance with EU standards, and the promotion of energy efficiency. This involves making use of renewable energy sources, and supporting energy-saving measures.

In addition, the water supply and sanitation systems are being modernised and expanded. Measures are designed to provide people with improved access to safe drinking water. In its turn, Serbia is to introduce cost-covering charges in order to ensure that municipal utilities have the funds they need for further modernisation and are able to recover their costs.

Moreover, by modernising water treatment plants and improving sanitation, the two sides want to improve hygiene in towns and villages and at the same time help protect the environment. For instance, most Serbian towns and cities along the Danube do not have wastewater treatment plants yet. Untreated wastewater flows into the river – which is used as a source of drinking water.


Sustainable economic development and employment promotion

Enterprise in Kragujevac, Serbia

Small and medium-sized enterprises (SMEs) play an important role in the creation of jobs. However, in Serbia they have so far had hardly any opportunity to finance their investments through loans. This has severely limited their room for manoeuvre. Via KfW Development Bank, the BMZ and other donors have set up the European Fund for Southeast Europe, which is active in the entire region. The purpose of the Fund is to make small and micro loans available to SMEs at preferential rates through local partner institutions.

In addition, the Green for Growth Fund Southeast Europe is being used to give targeted support to SMEs as they invest in energy efficiency and renewable energy. The BMZ is also working to improve the competitiveness and EU compatibility of Serbian SMEs and to foster the development of quality infrastructure through technical cooperation – for instance in the area of calibration and with regard to the improvement of certification and accreditation standards.

Another important component of the programme is the development of training opportunities for young Serbs in order to prepare them well for the world of work. The BMZ is therefore supporting the development of new recognised occupations and efforts to improve the learning environment in existing vocational training institutions.

Through the establishment of the Danube Competence Centre, Germany is also supporting the cross-border promotion of tourism and business in the region. This programme covers Croatia, Serbia, Romania, Bulgaria, Ukraine and Moldova.


Democracy, civil society and public administration

Students at the University of Belgrade

Cooperation in this priority area is aimed at developing efficient administrative structures in Serbia at all levels, with a special focus on decentralisation at the local level. This also includes developing a corresponding legal framework and well-functioning institutions.

By providing advice on legal reform, the BMZ is actively contributing towards improving the rule of law and, thus, to Serbia's EU integration process.


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