Serbia regrets EU’s lack of solidarity with Balkans

european_flag1.jpg [Reuters]

Serbia’s Deputy Prime Minister Božidar Ðeli? said yesterday (24 March) that the EU had gone “a bit too far” by giving five billion euro for the stimulus plan to its member states, and “not a single euro cent to any of the south-east European countries”.

“Of course, charité bien ordonnée commence par soi même,” Ðeli? said in French. “Being a member state of the EU should give some privileges, but we are only talking about a few hundred million euro for ready projects to create additional gas storage.”

Serbia’s deputy prime minister, who is also minister of science and technological development, was speaking at a European Policy Centre (EPC) event on 24 March in Brussels.

Ðeli? stressed the significance of the January gas crisis between Russia and Ukraine. “Without Hungarian and German solidarity, we would have had a lot of trouble,” he said. “In four hours, Serbia and Bosnia could be left without any gas” (EURACTIV 19/03/09).

According to the deputy PM, “there is too much difference between being in or out” of the EU. “If you are in, like Latvia or Hungary, you get 10 billion, but if you are a clear future member but still not formally in, it is very difficult to access resources, to go around the Instrument for Pre-accession Assistance (IPA) limitations, to go around the European Central Bank regulations or even the structural funds in the area of infrastructure and social cohesion,” he said (EURACTIV 10/02/09).

Ðeli? said his country will probably enter recession in 2009. “Because of the weakening of the economic situation, growth should be between -2% and 0% this year, demand from Western markets is suffering and therefore public revenues are going down,” said the Serbian official.

“We expect to conclude the broad terms of this 27-month agreement by the end of the week,” he announced. The money will be used primarily to strengthen the country’s hard currency reserves and stabilise the local currency, the Serbian dinar.

Three billion euro will replace January’s $530 million precautionary agreement (€410m) aimed at safeguarding hard currency reserves offered by the IMF.

‘Burden-sharing’ mechanism

Ðeli? offered the EU a “burden-sharing” mechanism. “Let’s do 50-50,” he said. As the deputy prime minister of a likely future member state, Ðeli? considers that the EU and other international organisations should help countries which are “victims of the crisis” to weather the global economic storm.

“According to IMF estimates, the consolidate deficit would go to 6% of GDP, 1.8 billion euro,” he announced. “The agreement would be that some of the path would be done by the Serbian government, reducing this expected deficit by 3%, by cutting expenditures and adding additional taxes for 900 million euro,” he explained.

“The remaining financial gap for the budget of this year could thus be covered by burden sharing with the international community,” the deputy PM added. Serbia expects that the other 900 million euro would be covered by 120 million euro from IPA transformed into budgetary help, the World Bank and the commercial banks headquartered in the euro zone.

“Any package of recovery or dealing with the financial system within the EU should have a Western Balkan and southern chapter,” said Ðeli?. “We are not still members, but we will be members,” he concluded. 

Many of the Western Balkan countries have already been exposed to the effects of the crisis. Industrial production and foreign direct investment are slowing down, and most countries are resorting to international loans that will put an additional burden on their balances of payments.

A few weeks ago, the Serbian Central Bank (NBS) governor still hoped that growth could reach 1.5 -2% in 2009. But the government of Serbia was last week forced to negotiate a new agreement with the International Monetary Found (IMF) for a loan worth around €3bn ($3.88bn).

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