Serbia faces 'tough' reforms but remains on track for EU membership

A key figure in Serbia's bid to join the European Union has admitted that the country faces 'tough challenges' before it is ready for membership.

By Martin Banks

Martin Banks is a senior reporter at the Parliament Magazine

20 Nov 2014

Speaking at a high level event in Brussels, Tanja Miščević, who is head of the negotiating team for Serbia's EU accession, also promised that Serbia would be a "good student" in meeting the strict conditions for EU accession.

Miščević said, "Not only will Serbia be the best student in school but I want us to be an 'over achiever' in meeting the membership criteria."

She was speaking in a debate in the European parliament on Wednesday on Serbia's path to EU membership. The lively debate was particularly timely as it comes during Serbia's preparations for opening of the first negotiating chapters.

A number of high profile, senior speakers, including Serbia's minister of economy Željko Sertić and head of Serbia's mission to the EU Duško Lopandić, spoke of the challenges and opportunities facing the country as it moves ever closer to EU membership.

The discussion was hosted by Slovakian MEP Eduard Kukan, who chairs parliament's delegation to the EU-Serbia stabilisation and association parliamentary committee (SAPC) and is a former UN special envoy to the Balkans.

The conference addressed topics such as regional security and relations, anti-corruption initiatives, investment/foreign direct investment and improving the country's business climate, and a variety of social and human rights issues.

Serbia is one of seven countries which are currently waiting to become part of the EU. The others are Macedonia, Albania, Turkey, Montenegro, Iceland, and Kosovo.

Leaders of Serbia, a nation of 7.2 million, began talks in January on accession to the 28-member bloc, in which it agreed to gradually bring its policies into line with EU norms, membership is not expected until 2020.


On track

A recent report by the European commission shows that the country is more than on track to become part of the EU and that implementing tough reforms are paying off.

In her address, Miščević conceded that the reforms which must be implemented presented a "demanding" challenge for Serbia and its people but that there was a "great preparedness" for this.

While overhauling Serbia's economy was the biggest challenge, she said there are other key issues, such as the rule of law, including the judiciary, police and public administration.

Aligning Serbian legislation in these and other areas with the EU's acquis communautaire was necessary not only for eventual EU membership but also for the "development" of Serbia itself, she told the packed audience.

"The reform process started back in 2004 and is designed to build a strong Serbia," she said.

Outlining recent economic developments in Serbia, Sertić, a former chair of the country's chamber of commerce, pledged that Belgrade would "not compromise" on the "tough" series of policies and reforms designed to strengthen the Serbian economy.

Measures include a new "flexible" labour law, a "one stop shop" for formerly hard-to-get administration permits and a revised bankruptcy code and "generous" tax exemptions for businesses hiring new workers.


Economic overhaul

Another recently introduced measure is a fund worth €1.2bn of subsidised loans for SMEs, of which €460bn had been loaned in recent months.

Data shows that Serbia's economy grew 2.5 per cent in 2013 as exports rose and The Economist intelligence unit forecasts an average annual economic growth of 3.6 per cent in 2014 to 2018. But Serbia still has a bloated budget deficit and poor domestic demand is holding back further growth.

Sertić, though, pointed out that over the last year, the country had "radically" overhauled its economy by cracking down on corruption, tax evasion, the imbalance of the private sector, as well as cutting down public sector salaries and pensions.

Tackling the budget deficit was the "first priority", said Sertić, pointing out that the "complex" measures in order to achieve this had included cutting public sector pay and state aid.

The EU is Serbia's biggest trading partner and figures show that over the last two years, the EU accounted for more than 61 per cent of Serbia's exports and imports. This compares with 7.3 per cent (exports) and 9.2 per cent (imports) with Russia.

On aim of economic reforms, said Sertić was to ensure that trade between the two sides continues to grow.

But he said that improving the country's business climate and stimulating foreign investment would need "political will" and the participation of "all relevant actors".

He also said that the fight against corruption, another area of concern regarding Serbia's accession credentials, had been "at the heart" of Serbia's reform process and includes the national anti-corruption strategy which is designed to dictate the conduct of public officials.

In response to a question from Slovenian EPP deputy Franc Bogovič on how Serbia will convince its citizens on the need for the sometimes painful reforms, Sertić pointed to a recent opinion poll showing that some 64 per cent of the public supporting the government changes, as well as closer EU integration.

"These reforms are vitally important and we will not compromise on them. The ambition is to change the industrial picture of Serbia," he said.


A pro-European course

Further comment came from Kukan, an EPP member and twice foreign minister of Slovakia.

He said, "The Serbian people have confirmed their support for a pro-European course for the country. Thus, in facing this new reality, we have a responsibility to deliver. We have a same goal and I hope we also share the same determination to fulfil the promise."

Kukan said the launch of Serbia's accession negotiations had marked a "turning point" in the EU's relations with the Balkan state.

"At the same time this is the road where Serbia will have to deal with new responsibilities. Starting the negotiating process needs vast preparations, commitment to reforms and delivering.

"Therefore, we expect that Serbia will continue delivering on its reform priorities such as the rule of law and economic governance."

Some EU figures have reminded Serbia of the importance of good relations with Kosovo and, on this, Kukan cautioned, "It will be equally important [for Serbia] to continue its commitment to regional cooperation and normalisation of relations with Kosovo."

He said, "Once Serbia has chosen to proceed on its European path it will have to also align with our policies and values in external relations."

His comments were largely echoed by Lopandić, Serbia's ambassador to the EU, who said the parliamentary event was particularly timely as it came on the eve of a meeting next week of the SAPC.

He told the 90-minute conference that his country "shares the same values and objectives" as the EU and the large turnout at the conference "shows the constant interest in Serbia and the EU enlargement process".

Stating that Serbia's passage towards EU membership was on track, he said, "My fervent hope is that we will eventually become a fully-fledged EU member."

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