EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 14.10.2009 
SEC(2009) 1339 
COMMISSION STAFF WORKING DOCUMENT 
 
SERBIA 2009 PROGRESS REPORT  
 
  
accompanying the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
Enlargement Strategy and Main Challenges 2009-2010
 
{COM(2009) 533 final} 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 4 
1.1. Preface................................................................................................................... ....... 4 
1.2. Context ................................................................................................................... ...... 4 
1.3. Relations between the EU and Serbia .......................................................................... 5 2. Political criteria .......................................................................................................... .. 6 
2.1. Democracy and the rule of law .................................................................................... 6 2.2. Human rights and the protection of minorities .......................................................... 13 2.3. Regional issues and international obligations............................................................ 19 3. Economic criteria ....................................................................................................... 23 3.1. The existence of a functioning market economy ....................................................... 23 3.2. The capacity to cope with competitive pre ssure and market forces within the Union
............................................................................................................................... ..... 29 
4. European standards .................................................................................................... 30 4.1. Internal market ........................................................................................................... 30 
4.1.1. Free movement of goods............................................................................................ 30 4.1.2. Movement of persons, services and right of establishment ....................................... 32 
4.1.3. Free movement of capital........................................................................................... 33 4.1.4. Customs and taxation ................................................................................................. 33 4.1.5. Competition............................................................................................................. ... 35 
4.1.6. Public procurement .................................................................................................... 35  
4.1.7. Intellectual property law ............................................................................................ 36 4.1.8. Social policies, employment and public health policy............................................... 36 4.1.9. Education and research .............................................................................................. 39 4.1.10. WTO issues ............................................................................................................. ... 40 
4.2. Sectoral Policies......................................................................................................... 40 
4.2.1. Industry and SMEs..................................................................................................... 40  
4.2.2. Agriculture and fisheries............................................................................................ 41 4.2.3. Environment............................................................................................................. .. 43 
4.2.4. Transport policy ........................................................................................................ . 45 
4.2.5. Energy .................................................................................................................. ...... 46 
EN 3   EN 4.2.6. Information society and media................................................................................... 48 
4.2.7. Financial control....................................................................................................... .. 49 
4.2.8. Statistics .............................................................................................................. ....... 50 
4.3. Justice, freedom and security ..................................................................................... 50 4.3.1. Visa, border management, asylum and migration...................................................... 50 
4.3.2. Money laundering ...................................................................................................... 52  
4.3.3. Drugs................................................................................................................... ....... 53 
4.3.4. Police.................................................................................................................. ........ 53 
4.3.5. Fighting organised crime and terrorism ..................................................................... 54 4.3.6. Protection of personal data......................................................................................... 55 
STATISTICAL ANNEX .......................................................................................................... 56 
EN 4   EN COMMISSION STAFF WORKING DOCUMENT 
Serbia 2009 Progress Report 
1. INTRODUCTION  
1.1. Preface 
Since March 2002, the Commission has reported regularly to th e Council and the Parliament 
on progress made by the countries of the Western Balkans region. 
This progress report largely follows the same stru cture as in the previous years. The report: 
– briefly describes the relations between Serbia and the Union; 
– analyses the situation in Serbia in term s of the political criteria for membership; 
– analyses the situation in Serbia on the basi s of the economic criteria for membership; 
– reviews Serbia's capacity to implement Eur opean standards, that is, to gradually 
approximate its legislation a nd policies with those of the acquis , in line with the 
Stabilisation and Association Agreement a nd the European Partnership priorities. 
The period covered by this report is fr om early October 2008 to mid September 2009. 
Progress is measured on the basis of decisi ons taken, legislation adopted and measures 
implemented. As a rule, legislation or measur es which are under prepar ation or are awaiting 
parliamentary approval have not been taken into account. This approach ensures equal 
treatment across all reports and pe rmits an objective assessment. 
The report is based on information gathered and analysed by the Co mmission. In addition, 
many sources have been used, including contri butions from the government of Serbia, the EU 
Member States, European Parliament reports1 and information from various international and 
non-governmental organisations. 
The Commission draws detailed co nclusions regarding Serbia in its separate communication 
on enlargement2 based on the technical analysis  contained in this report. 
1.2. Context 
Serbia is a potential candidate for EU me mbership. On 29 April 2008 Serbia signed a 
Stabilisation and Association Agreement and an  Interim Agreement on trade related measures 
with the EU. 
                                                 
1 The rapporteur for Serbia is Mr Jelko Kacin.  
2 Enlargement Strategy and Main Challenges 2009-2010 (COM(2009)533 of 14.10.2009). 
EN 5   EN 1.3. Relations between the EU and Serbia 
Serbia is participating in the Stabilisation and Association Process . The Stabilisation and 
Association Agreement (SAA) provides a framew ork of mutual commitments on a wide range 
of political, trade and economic issues. Th e SAA was signed, along with the Interim 
Agreement, in April 2008. EU ministers agreed to submit the SAA to their parliaments for 
ratification and the Community agreed to impl ement the Interim Agreement as soon as the 
Council decides that Serbia is fully cooperating with the International Criminal Tribunal for 
the former Yugoslavia (ICTY). In advance of a decision by the EU and following ratification 
of the SAA by the Serbian parliament, in Ja nuary 2009 Serbia has already started to 
implement provisions of the Interim Agreement. 
The visa facilitation and readmission agreem ents between Serbia and the European 
Community continued to be implemented. In the framework of the visa liberalisation  
dialogue, Serbia has made important progress in th e areas of justice, freedom and security and 
has fulfilled the majority of the roadmap benchmarks. Therefore, the Commission in July 2009 proposed lifting the visa ob ligation for Serbian citizens
3. This proposal is subject to 
Serbia meeting the outstanding criteria before the Council of the EU ta kes its decision, after 
consultation of the European Parliament.  
Serbia has taken first steps to cooperat e with the EU rule of law mission in Kosovo  (EULEX) 
but these efforts need to be further strengt hened. In December 2008 the government adopted a 
decision supporting the UN Secr etary-General’s plan on deployment of EULEX. In 
September 2009 EULEX and Serbia signe d a protocol on police cooperation. 
The EU is providing guidance to the Serbian author ities on reform priorities as part of the 
European Partnership .4 The Serbian government has begun to implement a national 
programme for integration into the EU and ha s established a monitoring mechanism on the 
basis of which quarterly reports are published. Progress on reform priorities is encouraged and 
monitored by the Enhanced Permanent Dialogue (EPD).  The plenary EPD meeting was 
held in May 2009. Several sub-EPD meetings t ook place during the reporting period, covering 
sectors such as energy, transport, the environment,  the internal market, trade, justice, freedom 
and security and agriculture. A political dial ogue at ministerial level took place in January 
2009. 
As a potential candidate for EU  membership, Serbia aligned its elf with 93 CFSP declarations 
from a total of 128 relevant declarations a dopted by the EU during the reporting period. 
Serbia receives pre-accession financial assistance  from the Instrument for Pre-Accession 
Assistance (IPA). IPA assistance continues to  be implemented by the Commission Delegation 
in Belgrade. A decentralised implementation sy stem (DIS) for management of aid remains a 
medium-term objective for Serbia. Preparatory wo rk has started. Extensive further efforts are 
required in order to put Serbia in a position to  take over responsibility for implementation of 
all IPA components and for future manageme nt of Structural a nd Cohesion Funds.  
                                                 
3 Residents of Kosovo (under UNSCR 1244/99) are not covered by the current proposal. The technical 
requirements for visa liberalisation have not yet b een met on the territory of Kosovo. The Commission 
in this regard will continue to work closely with  both the Serbian and Kosovo authorities and explore 
options for addressing the visa issue in the future. 
4 Council Decision 2008/213/EC. 
EN 6   EN Serbia’s national IPA allocation for 2009 totalled €194.8 million. Financial assistance is 
focusing on areas such as strengthening the rule  of law, human rights, education, transport 
and environmental protection. Serbia participates  in multi-beneficiary programmes. Serbia is 
also participating in cross-bor der cooperation with neighbouri ng countries across a range of 
areas such as infrastructure, environmental issu es, cultural exchanges, research, job creation, 
security and crime prevention. A number of civil society  initiatives are being supported both 
under the national and regional IPA programmes under the Civil Society Facility and by 
thematic financing instruments such as the European Initiative for Democratisation and Human Rights. Support for civil society unde r 2009 programmes totalled over €3 million and 
is focused on civic initiativ es and capacity building, a pe ople to people programmes and 
partnership actions between civil society organisations and the EU. 
In response to the economic crisis , Serbia is receiving €100 million of exceptional budgetary 
support from the 2009 national IPA envelope. Mo reover, an IPA crisis  package has been 
created for the Western Balkans. It amounts to €200 million and is expected to leverage 
investments of at least €1 bil lion, co-financed by the partner fi nancial institutions. Of this 
multi-beneficiary fund, Serbia will  receive a share to finance projects on competitiveness, 
SMEs, energy efficiency and banking sector regulation. Serbia will  also benefit from 
infrastructure projects. €9 million have been co mmitted to the Infrastructure Project Facility 
for projects on water supply infrastructure and reconstruction of urban transport in Belgrade.  
Concerning Community programmes, the EU has co-financed Serbia’s participation in the 
Seventh European Community Research Fram ework Programme, the Culture Programme, the 
Fiscalis 2013 Programme, the Customs 2013 Pr ogramme and the Programme for Employment 
and Social Solidarity (PROGRESS). 
2. P
OLITICAL CRITERIA  
This section examines the progress made by Se rbia towards meeting th e Copenhagen criteria, 
which require stability of institutions guarant eeing democracy, the rule of law, human rights 
and respect for and protection of minorities. It also monitors regional cooperation, good 
neighbourly relations with enla rgement countries and Member States and compliance with 
international obligations, such as cooperation with the ICTY. 
2.1. Democracy and the rule of law 
Constitution The follow-up to the opinion of the Venice Comm ission of the Council of Europe concerning 
the constitutional provisions considered not fully in line with European standards has been only partial. The main concerns remain politic al party control over the mandates of Members 
of Parliament (MPs) and th e role of parliament in judicial appointments.  
The Provincial Assembly of Vojvodina adopted a draft Statute of Vojvodina in October 2008, 
in line with constitutional requirements. Howeve r, the draft Statute has not yet been passed by 
the national parliament as required by the Constitution. The deadline for this expired on 31 December 2008. Nor has parliament adopted the accompanying law on the transfer of 
powers from State to provincial level. The main reasons for this delay are related to political 
and party divisions in the approach  to decentralisation in Serbia.  
EN 7   EN Overall , there has been little progress on adop ting legislation to implement the new 
constitutional framework. The constitutional requ irements regarding the status of Vojvodina 
have not yet been implemented. Further reforms are needed to ensure that the constitutional 
provisions, notably on the judiciar y, are implemented in line with  European standards. This is 
one of the key priorities of  the European Partnership. 
Parliament 
Following a prolonged period of obstruction, am endments to the parl iament's rules of 
procedure were adopted in February 2009, providi ng for more efficient parliamentary debates. 
This has led to improvements in the functioning  of the parliament including the passage of 
laws through the legislature. The conditions for MPs to invoke procedural  violations, the main 
source of the previous practice of obstructi on, were tightened up. The agenda and timing of 
plenary debates have been streamlined. Parlia ment activated the ex isting, but previously 
rarely used, instrument for exercising oversight of the executive, namely the possibility for 
MPs to ask both written and or al questions and for organisi ng debates on specific topics 
proposed by MPs.  
Parliament adopted a new Law on Political Parties in May 2009, a fundamental piece of 
legislation which has establishe d clearer and stricter rules fo r registration a nd which will 
reduce the number of parties, some of which exist only on paper. The law increased the 
number of signatures required in order to register a part y to 10,000 or to 1,000 for parties 
representing minorities. The new regist ration process started in July 2009.  
There has been increased legislative output from  the parliament. There is, however, a need to 
improve ex ante compatibility checks with EU standards before legislation is adopted. There 
has, moreover, been insufficient public consu ltation on content and impact of draft laws. 
The challenges facing operation of the legislat ure are still considerab le. The changes to the 
rules of procedure have been only partial, a nd adoption of an entirely new rulebook is still 
pending. Furthermore, the procedural revisions we re adopted without the full participation of 
the opposition. The practice of obstruction and legi slative delays, such as  submission of large 
numbers of non-substantial amendments to draf t laws has recurred. New election laws and the 
Law on the Assembly have yet to be adopted.  
In February 2009, disputes over the decision by the public broadcasting service to suspend 
live transmission of parliamentary sessions led to  suspension of the work of parliament. A 
temporary solution was found, whereby sessions  would continue to be broadcast until a 
special parliamentary channel is established.  
Parliament and its committees still lack suffi cient numbers of qualified staff. Committees 
remain weak and their work is largely reactive. The practice of law-making by urgent procedure has continued and this has had an impact on the quality of legislation . 
Inflammatory, and at times offensive, langua ge was used by some MPs against political 
opponents and human rights defend ers. Sanctions were applied in some cases but, on the 
whole, the current parliamentary rules have pr oved inadequate and have not prevented such 
behaviour. Parliament still lack s a coherent approach to cons ultations with civil society, 
international organisations and other stakeholders.  
The parliamentary committee for finances has not  ensured adequate cont rol of the funding of 
political parties. Under the current deficien t legislation, the committee lacks powers to 
EN 8   EN investigate reports fully and to sanction parties which fail to abide by their obligation to 
submit reports.  
The electoral framework has not been revised a nd is not in line with European standards. 
Constitutional provisions giving parties control ov er the mandates of MPs continue to hamper 
the work and reform of the legislature. Most parliamentary parties ha ve concluded individual 
agreements with their MPs on bl ank resignations, which can be activated at any time by the 
party leadership. Legislation required by the Constitution has not been adopted. The current 
procedure for signing blank resignations is, ther efore, not legally regulated and triggered a 
major political and legal dispute following the sp lit in the Serbian Radical Party. This split 
resulted in the formation of a new party, the Se rbian Progressive Party, with a separate caucus 
in the Serbian parliament.  
Overall , there have been some improvements on th e functioning of the parliament including 
the passage of laws thro ugh the legislature, such as in th e areas of compet ition, agriculture 
justice, freedom and security. There has also  been some progress on streamlining debates 
following the procedural revisi ons, although a complete re form is still pending. The 
institutional capacity of parliament remains low and, in spite of ch anges to the rules, 
parliament has not sufficiently used its powers of control over the executive branch. The work 
of parliament continues to be  affected by the controversial issue of MPs’ mandates. The 
capacity of parliamentary committees remains li mited. Election legislat ion has not yet been 
revised.  
Government 
The government has proven stable and has dem onstrated a high degree of consensus on EU 
integration as a strategic priority. In Ja nuary 2009, the government started to implement 
provisions of the Interim Agreement of the SAA. Customs duties were lowered with effect from 30 January 2009, and measures were taken in  the areas of competition and State aid. The 
European Integration Council, chaired by the Prim e Minister, met twice since the formation of 
the new government, giving its full political suppor t to government efforts in the field of visa 
liberalisation, implementation of the Interi m Agreement and further harmonisation of 
domestic legislation with the acquis .  
In March 2009 the government approved a ne w organisational struct ure for the Serbian 
European Integration Office with a view to  ensuring more efficient and comprehensive 
coordination of the EU accession process. Th e Serbian European In tegration Office is 
functioning well. Government accountability to parliament has improved and the practice of 
regular hearings in parliament and replies to MPs’ questions was esta blished. The Secretariat-
General of the government was reorganised with a view to strengthening its role in planning, 
monitoring and policy analysis. 
The government has been drafting a large number of bills aimed at further alignment of 
national legislation with  European standards. However, th e quality has vari ed considerably 
across ministries and the Legislative Secretaria t has not been given su fficient time to check 
thoroughly compatibility with existing nati onal legislation. This reflects uneven 
administrative capacity on European integration within line ministries. Regulatory impact 
analysis is not sufficiently thorough and not enough attention has been paid to effective 
implementation of existing legislation and action plans.  
EN 9   EN The government was criticised for withdrawing the draft anti-discrimination law from the 
parliamentary procedure in response to pre ssure exerted by religious communities. The 
reaction to the death threats ag ainst the State Secretary for Hu man and Minority Rights for his 
defence of the rights of the lesbian, gay, bisexual and tr ansgender (LGBT) population was 
insufficient.  
There were cases of interferen ce by government in the work of the judiciary and conflicts of 
interest. In this respect, the government has fa iled to abide by the recommendations made by 
the board for the prevention of  conflicts of interest.  
As regards local government, legi slation regulating transfers of property to municipalities has 
not been adopted. This has hampered decentral isation. Legislation regulating the status of 
local government employees is also pending.  
Overall , stability in the government  has increased, with greate r consensus on European 
integration. The government has prepared a la rge number of laws across a range of areas. 
However, insufficient attention has been paid to impact assessment and to effective implementation of existing laws and strategi es. Insufficient action was taken in cases 
involving conflicts of interest and incompa tible functions. Planning of government work 
needs to be improved, with greater coordination between ministries.  
Public administration  
As part of the public administration reform , the Law on Civil Servants was amended in 
December 2008. The new provisions set clear educa tional requirements for civil servant posts, 
defined the role of the Ombudsman in connec tion with dismissal of civil servants and 
extended the legal deadline for completion of open competitions for the recruitment of civil servants until the end of 2009. As part of an arrangement with the International Monetary 
Fund (IMF) in response to the financial crisis, legislation was adopted to reduce salaries for 
all elected and appointed public servants until the end of 2009. In addition the government is 
taking measures to significantly  reduce the number of employees in the public administration. 
The new Law on Registration Books was adopted  in March 2009 with the aim of introducing 
electronic communication between State bodies and registries, thus facilitating document 
management.  
However, the legislative framework governing p ublic administration is not yet complete. The 
Law on Administrative Procedures , the Law on Administrative Disputes, updated action plans 
for implementation of the public administratio n reform strategy and relevant implementing 
legislation have not yet been adopted. Only initi al steps have been taken to introduce specific 
anti-corruption measures for the public admini stration and there is inadequate follow-up or 
judicial control. 
The Ombudsman’s offices, at both State and provi ncial levels, have been very active. They 
issued a large number of opinions and recomme ndations, visited releva nt institutions and 
proposed amendments to legislat ion. Public awareness of the ex istence and responsibilities of 
the Ombudsman has increased. The Provincia l Ombudsman organised awareness-raising 
campaigns in Vojvodina. However, the State au thorities have not provi ded all the resources 
necessary for the offices to carry out their mandates fully and there has not been sufficient follow-up to the Ombudsman's recommendations . At local level, offices have been 
established in only 11 citi es and municipalities.  
EN 10   EN The commissioner for free access to information of public interest has become more active. 
Following adoption of the Personal Data  Protection Law in November 2008, the 
commissioner’s powers were extended to cove r data protection as well. Training of the 
commissioner’s staff in charge  of data protection began in early 2009. However, insufficient 
staff, especially now that the office has taken on additional tasks and the lack of a mechanism 
for enforcing the commissioner’s decisions are ma jor obstacles to the work of this office.  
Other independent regulatory institutions – th e State Audit Instituti on, the Committee for the 
Suppression of Conflicts of Interest, the An ti-Corruption Council, the Competition Protection 
Commission, the Public Procurement Office and the Commission for the Protection of 
Bidders’ Rights – continued to face difficulties in  carrying out their mandates. These related 
mainly to lack of resources and inadequate  official follow-up to their decisions and 
recommendations. 
Capacity-building and further specialisation within the police have continued, with positive 
steps taken to modernise police work and impr ove international and regional cooperation. 
Better coordination within police structures and with other ministries contributed to adoption 
of several key strategies and laws. Steps were also taken to improve relations with the public 
and civil society, but cooperation needs to be  further developed and established throughout 
the police service.  
Overall , Serbia has good capacity in the area of public administration. However the pace of 
public administration reform has been slow. Th e action plan for implementation of the public 
administration reform strategy ha s yet to be adopted. The mer it system provided for in the 
amended Law on Civil Servants has not been  implemented. Transparency in the public 
administration has to be improved and greater pr iority should be given to fighting corruption 
and effectively supporting the work of indepe ndent bodies. This is a key priority of the 
European Partnership. Greater coordination on implementation of public administration 
reform is needed, including monitoring and evaluation, and good management practices need 
to be developed.  
Civilian oversight of the security forces 
In March 2009 the Serbian government adopted a strategic defence review which provides the 
framework for medium- and long-term defenc e planning. In April 2009 the government 
adopted two key reform documents – the milit ary strategy and the defence strategy. The 
parliamentary committee for security and defence held regular hearings with the civilian and 
military intelligence services. In April and Ma y 2009 the committee carried out the first field 
visits to the premises of the civilian State secu rity agency, the military security agency and the 
military intelligence agency . The Ministry of Defence demonstrated greater openness to 
consultations with civil society on preparing the new military strategies.  
In December 2008 a public dispute broke out between the Army Chief of Staff and the 
Minister of Defence regarding the pace and na ture of defence reforms. In line with his 
constitutional powers, the Serbian President di smissed the Chief of St aff and appointed a new 
one in February 2009.  
The legislative framework, however, is inco mplete. The national se curity and defence 
strategies which were approved by the governme nt in April 2009 have not yet been adopted 
by parliament. Moreover, the Laws on Altern ative Service and Conscientious Objection, 
EN 11   EN Military Intelligence and Military Security Ag encies and the Law regulating Trade in Arms 
and Military Equipment have  not yet been adopted.  
Civilian oversight remains insufficient and the relevant parliamentary committee lacks 
specialised staff. The committee mainly held routine periodic hearings and has only just started field visits to the security agencies. Th ere have been no debates about how the military 
budget is spent or about public procur ement of military equipment.  
Overall , there has been some progress on civilian overs ight of the security forces, with more 
involvement of the parliamentary committee for s ecurity and defence. Reform in this sector 
still has to be completed.  
Judicial system  
There has been progress in the reform of the j udicial system, which is a key priority of the 
European Partnership. In December 2008 a set of  judicial laws were  adopted, introducing a 
broad reform of the judiciary. They included laws on the High Judicial Council, on judges, on 
the organisation of courts, on the State Pros ecutorial Council and on the public prosecution 
service. 
Two new bodies – the High Judi cial Council and the State Pr osecutorial Council – were 
established in April 2009. They will be respons ible for election and promotion of judges and 
prosecutors. This includes defi ning the criteria for and implem enting a general reappointment 
procedure for judges and prosecutors.  
In accordance with the Constitution, the new Hi gh Judicial Council will have eleven 
members. The President of the Supreme Court of Cassation, the Minister of Justice and the 
President of the Parliamentary Committee for Judicial Affairs will be ex officio  members and 
parliament will appoint the remaining eight elec ted members, six of whom will be judges. By 
law, the nominees will be chosen by an election in which all judges in Serbia can participate. 
The fact that judges will hold the majority of s eats in the Council should ensure that they are 
represented more fairly and adequately and redu ce the political influence to which the current 
Council is exposed.  
The autonomy of the prosecuti on service was strengthened by extending the mandate of 
deputy prosecutors to perman ent posts upon appointment by the new State Prosecutorial 
Council. 
The new Law on Seats of Courts introduces ma jor changes to the system, which currently 
consists of some 168 courts. Under this law, the new Serbian court network will consist of 34 
basic courts, 26 higher courts a nd 4 courts of appeal with ge neral jurisdiction. The law also 
provides for specialised commercial and admini strative courts and the Supreme Court of 
Cassation. To secure adequate access to justice, basic courts will maintain court units in the 
former seats of the municipal c ourts and judges will travel to th em on the days designated for 
hearings. The new system is expected to be applied from January 2010.  
However, the new package of judicial laws cont ains major weaknesses. As an exception to the 
general rule, the members representing judges in the first composition of the new High 
Judicial Council were nominated by the prev ious High Judicial Council which was not bound 
by the proposal from the courts. This appoin tment procedure does not provide for sufficient 
participation by the judiciary and leaves room fo r political influence. Th is is of particular 
EN 12   EN concern as the first new High Judicial Council will be fully in charge  of implementing the 
reappointment procedure for all judges.  
The reappointment procedure faces major ch allenges. The criteria adopted for the 
reappointment of both judges a nd prosecutors are not fully in  line with the Council of 
Europe’s Venice Commission's recommendations. The criteria for reappointment leave room 
for political influence over the procedure, as th ey are difficult to assess in practice. The short 
deadline set – by the end of 2009 – ra ises serious concerns as to th e possibility to  carry out an 
objective procedure. This creates a risk of  long-term politicisation of the judiciary. 
Nevertheless, the Serbian Constitutional Cour t confirmed in a judge ment of July 2009 the 
constitutionality of the reappoi ntment procedure, following an appeal filed by the Serbian 
Judges Association. 
Concerns as to the autonomy of the prosecuti on service persist. Despite certain improvements 
under the new legislation, the pr ocedure for the election of public prosecutors and their 
deputies remains subject to in fluence of the parliament.  
The Constitutional Court continued its work w ith a limited staff of ten judges, while the 
appointment of five judges is pending. On top of the already large backlog of cases, 1,787 
new cases were filed in 2008. The Court processed 786 cases.  
Despite attempts to implement a special program me, the significant backlog in civil, criminal, 
commercial and administrative cases remains a cause for concern. Enforcement of judgments 
remains inefficient. There is an important n eed to streamline court procedures and improve 
court management systems.  
Progress on domestic war crime cases has b een slow. The entry into force of the 2006 
Criminal Procedure Code was postponed for the second time, until the end of 2010. 
Overall , Serbia is moderately advanced in the area  of reform of the judiciary. There has been 
progress in the form of adopti on of a new legislative framework and steps to implement it. 
However, the ongoing reform and its partly hasty implementation pose big risks for the 
independence, accountability and e fficiency of the judiciary.  
Anti-corruption policy  
Serbia made progress on improving the inst itutional framework for the fight against 
corruption. Implementation of Group of  States against Corruption (GRECO) 
recommendations and international conventions continued. Parliament elected the executive 
board of the Anti-Corruption Agency in April 2009. The Agency was also  allocated premises, 
budgetary resources and initial technical and administrative assistance. Progress can be 
reported in access to information of public impor tance, where there has been a considerable 
increase in the number of requests. 
The law enforcement authorities have shown a higher level of commitment to fighting 
corruption, leading to the arrests of several susp ects, and a number of high-profile cases have 
been opened. Internal cont rol is operational in all law enforcement agencies.  
However, corruption remains prevalent in many areas and continues to be a serious problem. 
There are major obstacles to r ooting out systemic corruption. The most vulnerable sectors are 
public procurement, privatisation and other la rge budgetary expenditures,  but also taxation, 
customs and licensing. The 2007 action plan has not  yet been implemented. There is no clear 
EN 13   EN plan for the measures needed to implement th e international conventions that have been 
ratified. The overall processing of corruption cases remains ine fficient, with only a few final 
convictions. The short term of office of the sp ecial prosecutor and his deputies (two years) 
limits their effectiveness and autonomy. 
In the absence of an Anti-Corruption Agency, wh ich is only expected to be operational in 
2010, the 2008 provisions on conflicts of interest and financing of political parties have not 
yet been implemented. Moreover, these provisions  contain shortcomings, in particular on 
party financing, which will make effective supe rvision difficult. Further improvements of the 
anti-corruption legislation ar e necessary. In the meantime, application of the old Law on 
Financing Political Parties cont inued, leading to the absence of  sufficient control over this 
area. The electoral commission, which currently acts  as a supervisory body, had neither the 
powers nor the capacity to enforce delivery of fi nancial statements and to assess the accuracy 
of the information provided. The same applies to  control over conflicts  of interest, where a 
large proportion of public officials still fail  to meet their reporting obligations. 
Insufficient protection of whistleblowers is a ffecting the fight against corruption. Public 
procurement and privatisation procedures al ong with budgetary expe nditure are still not 
efficiently monitored by independent bodies. The St ate Audit Institution is still at a very early 
stage and has only started to carry out its first a udits. Due to a serious lack of staff and audit 
capacity, no adequate supervision of  public expenditure is ensured. 
Overall , some progress has been achieved on adopting the new legislative and institutional 
framework for the fight agains t corruption, which is a key priority of the European 
Partnership. However, the eff ectiveness of the law enforcement and judicial authorities 
remains low. The setting-up of the Anti-Corrup tion Agency has been slow and the relevant 
legislation needs further improvement. Political party financing and conflicts of interest 
remain serious causes for concern. 
2.2. Human rights and the protection of minorities 
Observance of international human rights law 
As regards ratification of human rights instruments Serbia has ratified all the major human 
rights instruments. The Revised European Soci al Charter and the European Convention on 
Trans-frontier Television were ratified in May 2009.  
The European Court of Human Rights (ECtHR)  received 1,361 new applications and 
delivered 17 judgments from October 2008 to  September 2009, which found that Serbia had 
violated the European Convention for the Protection of Human Ri ghts and Fundamental 
Freedoms (ECHR). Judgments concerned violation of the right to a fair trial. As of September 
2009, there are almost 3000 eligible cases pending against Serbia.  
In relation to promotion and enforcement of human rights , the Ministry for Human and 
Minority Rights has been raising awareness w ithin the administration about international 
human rights obligations. It also signed a memorandum of cooperation with more than 150 
civil society organisations active in the field of human rights, thus improving the level of 
involvement of civil society or ganisations in policy- and deci sion-making. The Ministry for 
Human and Minority Rights has been promoting tolerance and respect for human rights and 
has used occasions such as the International Day of Tolerance, the International Roma Day 
and Universal Children’s Day to ra ise awareness among the population.  
EN 14   EN The Judicial Training Centre continues to provide training on the ECHR. Awareness among 
judges of international human rights obligati ons has improved. However, courts are still 
reluctant to directly enforce ratified international treaties.  
Overall , the legal and institutional framework for th e observance of human rights is in place 
and some progress has been made on improvi ng observance of international human rights 
law. The new Ministry for Human and Minority  Rights is playing an important role in 
promoting such rights. Further efforts are needed to increase understanding of relevant 
international standards in this area.  
Civil and political rights  
There has been some progress on  prevention of torture and ill-treatment and the  fight 
against impunity. The latest concluding observations by the UN Committee against Torture 
and the report of the Council of Europe’s Committee for the Prevention of Torture and 
Inhuman or Degrading Treatment or Punishme nt were published in January 2009. Serbia 
submitted responses to both reports which outli ned the measures taken by the authorities to 
prevent torture and ill-treatment.  
Greater efforts however are still necessary in order to prevent a ny further cases of torture and 
ill-treatment. In particular, Serbia has not ye t established a national mechanism to prevent 
torture, an obligation deriving from its ratification, in 2006, of the Optional Protocol to the 
Convention against Torture an d other Cruel, Inhuman a nd Degrading Treatment or 
Punishment. Further reports of inhumane treatment by the police suggest that such 
malpractices still have not been eradicated. 
A Deputy Ombudsman for the rights of detainees was appointed to monitor places of 
detention. However police detention procedures re main of concern. In particular, there have 
been violations of detainees’ right to have acce ss to a lawyer, doctor and, where necessary, an 
interpreter. Internal and external inspection of detention centres is irregular. No independent external oversight mechanism exists  
As regards access to justice , no progress has been made  on adopting legislation and 
establishing a comprehensive system of free legal aid.   
Some progress was made with reform of the prison system . Initial steps were taken in 
November 2008 to introduce a system of a lternative sanctions. Progress was made on 
developing programmes and capacity for indivi dual treatment of prisoners and providing 
better medical services. However, the effects of these measures remained limited pending revision of the legislation. The problem of overcrowding in prisons continues, due to 
ineffective implementation of alternative sanctions and the lack of decriminalisation of minor offences or of reintegration programmes. Mo reover, the lack of training is hampering 
prevention of discrimination and protection of hum an rights. Increased levels of drug use and 
corruption in prisons were reported fo llowing independent monitoring by NGOs.  
Freedom of expression  is generally protected under th e Constitution and other laws. New 
anti-discrimination legislation introduced a ru le prohibiting hate speech. A similar prohibition 
also exists in the Public Information Law an d amendments to the Penal Code in August 2009 
have further elaborated provisi ons against hate speech. Howe ver, in spite of the legal 
framework, incidents involving hate  speech, threats and physical attacks against journalists, 
human rights defenders and the lesbian, gay, bisexual and transgender (LGBT) population 
have not been properly investigat ed and perpetrators have not been brought to justice. There 
EN 15   EN has been no progress in the investigations of murders of journalists dating back to the 1990s 
and 2001 and of an attempted murd er of a journalist in 2007.  
As regards the media , changes to the new Broadcasting Law, clarifying the procedure for 
appointment of members of the Broadcasti ng Council, were adopted in May 2009. Progress 
was made in terms of the transparency and a ccountability of the activ ities of the Republican 
Broadcasting Agency. The process of alloca tion of frequencies was completed in 2008. The 
Republican Broadcasting Council issued 467 licen ses to radio and TV stations. In a small 
number of cases, in particular those relating to media using mi nority languages, the decisions 
proved controversial and procedur al irregularities were raised. The appointment of two new 
members of the Broadcasting Council, whose mandates have expired, is still pending. The 
new Law on Media Concentration and the Law on Advertising have not yet been adopted. 
Political interference in the wo rk of media has continued. Breaches of the rules on protection 
of privacy and ethics by some sections of  the media continued. In August 2009 amendments 
to Law on Public Information were adopted unde r urgent procedure. Both the government and 
parliament were criticised by civil society, professional associations and international 
organisations over the lack of transparency an d lack of public consultation prior to the 
adoption of the amendments. Ther e are concerns, moreover, that some of the new provisions, 
such as the severity of pena lties for violating professional norms, may have the effect of 
infringing on media freedom. 
Freedom of assembly  is guaranteed by the Constitution. It is  the direct responsibility of the 
state authorities to guarantee th e effective exercise of this fundamental right. Legislation 
banning gatherings of neo-nazi and fascist orga nisations and prohibiting use of neo-nazi and 
fascist symbols was adopted in May 2009. There have been improvements in cooperation and 
action by the Serbian police to provide protection during pub lic gatherings. However, a 
planned Belgrade Pride Parade had to be cancel led in September 2009 at the last minute as the 
Serbian authorities were unable to guarantee the sa fety of the participan ts. The organisation of 
this event was marred by threats from extremis t and right wing groups against the organisers 
and the participants and a climate of prejudice against the LGBT community.  
Freedom of association  is guaranteed by the Constitution and by new laws on political 
parties and on associations. The Constitutional C ourt received four requests to ban political 
parties or citizen’s associations. One was dismissed and the other three are pending.  
Civil society organisations  play an active part in the soci al, economic and political life of 
Serbia and have provided an invaluable cont ribution to the democratic transition in the 
country. Human rights defenders ha ve played a key role in ra ising awareness of civil and 
political rights, positively influencing public policy and fighting impunity. The new Law on Associations adopted in July 2009 has clarified the legal status  of NGOs. There have been 
some improvements within the Serbian administration to cooperate with civil society. However, cooperation remains mainly ad hoc and selective. NGOs, in part icular human rights 
defenders, were once again victims of threats and verbal abuse for hol ding diverging views on 
issues such as Kosovo and th e fight against impunity.  
Constitutional guarantees provide for freedom of religion  and new anti-discrimination 
legislation prohibits discrimination on relig ious grounds. According to reports by NGOs 
active in this field, there was a decrease in religiously motivated incidents in 2008. However, 
there were reports of attacks against ‘non-tra ditional’ religious communities. The official 
follow-up to these incidents has been insu fficient. Implementation of the 2006 Law on 
Churches and Religious Communities led, in pract ice, to a number of arbitrary decisions 
EN 16   EN concerning registration of non-tr aditional communities. Out of approximately 170 religious 
organisations active in Serbia, only 13 were regi stered in addition to the seven traditional 
communities listed in the law. A number of cas es are pending before the Serbian Supreme 
Court, including the long-standing case of  the Montenegrin Orthodox church. In May 2009 
the UN special rapporteur on freedom of religi on or belief concluded that a number of 
religious communities and groups had been aggrie ved by the law because of its discriminatory 
effects. In April 2009 the State Ombudsman stated  that the Law should be revised and that the 
criteria for registration should be clarified.  
Overall , civil and political rights are largely respected in Serbia. However, existing 
constitutional and legal guarantees need to be fully enforced and violations properly 
investigated. Relevant legislation needs to be further brought into line with European 
standards. Greater efforts need to be made by the Serbian authorities to fight impunity at all 
levels.  
Economic and social rights 
As regards women’s rights , the national strategy to impr ove the position of women and 
promote gender equality was adopted in Februa ry 2009, identifying the six most critical areas: 
improvement of the economic position, health, representation in public and political life, 
equality in education, suppressi on of violence and elimination of gender stereotypes in the 
media. Legislation prohibits discrimination based on gender. However, no specific gender 
equality law has yet been adopted. The level of violence against women, including domestic 
violence remains a serious concern. Violati on of women's rights often goes unreported. NGOs 
have played a key role in raising awaren ess of this problem. At provincial level, 
implementation of the strategy for protection ag ainst domestic violence  and other forms of 
gender-based violence in Voj vodina started in January 2009. 
Concerning children’s rights , the national strategy for the protection of children from 
violence was adopted in December 2008 but has not yet been implemented. The Ministry of 
Justice has adopted a protocol aimed at protec ting children from abuse. In June 2009 Serbia 
signed the European Convention on the Exerci se of Children's Rights, and the revised 
European Convention on the Adoption of Children. The ongoing reform of residential 
institutions for children has resulted in fewe r children being placed in such institutions. 
However, this process, toge ther with deve lopment of alternativ e measures, should be 
accelerated. 
More concerted efforts need to be made to raise awareness of the situation of vulnerable 
groups of children and ensure th at their rights are protected. Th e rate of school attendance by 
Roma children, especially girls, is still very low. Due to their insufficient knowledge of the 
Serbian language, many children, particularly Roma refugees from abroad, are placed in 
special schools for children with disabilities. Inclusive educati on should be developed, as the 
right to education, particularly of children with  disabilities, has been  continuously violated. 
Violence against children rema ins a persistent problem. 
As regards socially vulnerable persons and persons with disabilities , some progress was 
made with the adoption, in May 2009, of th e Law on Vocational Rehabilitation and 
Employment of Disabled Persons, which regulat es several areas relate d to the employment, 
including incentives for equal pa rticipation by persons with disa bilities in the labour market, 
vocational rehabilitation and compulsory recrui tment of persons with disabilities. The UN 
Convention on Rights of Persons wi th Disabilities and the Optiona l Protocol were  ratified in 
EN 17   EN May 2009. Implementation of the strategy on improvi ng the situation of disabled persons is 
continuing.  
In the area of mental health, the government  continued to take measures aiming at de-
institutionalisation of mental healthcare and at developing and building the capacity of 
community-based services. However, this reform  is proceeding at a slow pace. The related 
community-based services rema in insufficiently developed.  
In the area of labour rights and trade unions , the government signed an extended general 
collective agreement with the trade unions and the employers’ association in November 2008 
covering various rights  of employees, such as remunerati on, fringe benefits and safety at 
work. This became binding on all employers, including the State. However, this new agreement has been temporarily suspended due to the economic crisis. Social dialogue remains weak and consultations between social partners are irregular. The capacity of the 
Socio-Economic Council remains w eak, also due to lack  of resources. It should play a more 
active consultative ro le in law-making. Local councils have  been established in only a limited 
number of municipalities and their role remains marginal. 
The Law on Prohibition of Discrimination  was adopted in March 2009. This law marks a 
step forward in protection of human rights. It  provides for appointment of an independent 
commissioner for the protection of equality . Court protection is also envisaged. The 
commissioner will deal with all cases of di scrimination, except those already processed in 
court. The commissioner is expected to be  operational from January 2010 on. In practice, 
there is ongoing discrimination, in  particular against vulnerable groups such as Roma, persons 
with disabilities, and the LGBT population. A ll these groups are frequently victims of 
intolerance and hate speech. Ther e is little support for victims of discrimination and there is a 
need for greater commitment on the part of all involved – the police, the prosecution service and the judiciary – to make sure that  the legislation is fully enforced.  (See Section 4.1.8. 
Social policies, employment  and public health policy). 
With regard to property rights , Serbia has adopted a new law regulating private ownership of 
urban construction land. However, the contin ued lack of a legal basis prevents proper 
launching of the restitution process. Privatisati on of some of the properties in dispute has 
continued with the risk of de facto  prejudging future decisions on the return of property . The 
restitution process faces greater unc ertainty, as a result of the economic crisis and consequent 
limited budgetary resources.  
Overall , the legal provisions on prot ection of economic and social rights are largely in place 
in Serbia. Enforcement of the existing legisla tion needs to be fully ensured. More sustained 
efforts are needed to improve the social incl usion of children, persons with disabilities and 
other vulnerable groups. Protec tion of women against all forms of violence needs to be 
strengthened.  
Minority rights, cultural right s and protection of minorities 
In addition to constitutional provisions, new legislation explicitly prohibits discrimination 
against ethnic minorities . The Law on Political Parties provides for affirmative action in 
favour of ethnic minority parties, by allowing a lower number of signatures for registration. 
The national parliament and the Provincial As sembly of Vojvodina have laid down the 
conditions under which minority representatives can use their mother tongue. A total of 16 
minority national councils have been es tablished. In August 2009 the Law on Minority 
EN 18   EN National Councils was adopted. This Law regulates  competencies and th e election of national 
minority councils in line with internati onal standards. In May 2009 the Committee of 
Ministers of the Council of Eu rope issued a set of recomm endations in connection with 
application of the European Charter for Regi onal and Minority Languages in Serbia. These 
call for promotion of tolerance and better re gulation of use of mi nority languages in 
education. The Inter-State Comm ission provided for in the bila teral agreement with Hungary 
on the protection of national minorities met in  May 2009. Similar agreements signed with 
Croatia, Romania and the former Yugoslav Republic of Macedonia are not being fully 
implemented and the Inter-State Co mmissions are not fully operational. 
The Republican Council for National Minorities has not yet met.  The status of different 
minorities varies in practice from one region to another. In particular, the position of the 
Vlachs and Bunjevci is uncertain and their status  has not been clarified, as highlighted by the 
recommendations made by the Council of Euro pe’s Committee of Ministers in May 2009. 
The Bulgarian national minority has been having problems with exercisi ng its right to have 
access to information in its language and the right to official use of the Bulgarian language in 
municipal administrations.  
The political situation in Vojvodina has been a ffected by the debate ov er adoption of the new 
Statute. Cooperation and coordina tion between the provincial instit utions and the Ministry of 
the Interior have improved. The Provincial Assembly and Executive Council conducted a 
campaign to promote tolerance and multi-cult uralism. The 2008 report by the Provincial 
Ombudsman noted that 24 of the 597 complaints received (4%) related to national minority 
rights. According to the Ministry of Justice, a number of legal proceedings have been initiated 
in connection with ethni cally-motivated incidents. On the w hole, ethnically-based incidents in 
the province decreased in 2008. However, in  the first half of 2009 incidents involving 
physical assaults and offensive graffiti occurred in three towns in Vojvodina.  
The situation in southern Serbia deteriorated  following a number of  attacks on the Serbian 
gendarmerie in July 2009. In March 2009 an ag reement on restructuring of the government’s 
coordination body was signed. In li ne with the agreement, a re presentative of the ethnic 
Albanian community was appointed as Deputy President of the coordination body. An initial 
boycott by some Albanians has been resolved an d key Albanian leaders are now participating 
in the coordination body. In October 2008 the Serbian government agreed to recognise 
degrees awarded by Pristina University and stampe d with UNMIK seals, in line with previous 
practice which had been interrupted in Augus t 2008. However, a long-term solution to the 
issue of recognition of degrees awarded by Pr istina University still has to be found. The 
government has issued licences for bilingual br anches of the Economic and Law Faculties of 
the Nis University in Medvedja to be established.  Problems persist with regard to integration 
of Albanians into the public administration and integration of Serbs into local governments in 
Presevo and Bujanovac.  
The situation in Sandžak  has deteriorated. Divisions with in the Muslim community have 
continued and there have been several outbrea ks of violence. In April 2009 the incidents 
spilled over from Sandžak to Vojvodina, tr iggering clashes betwee n supporters of the 
opposing Muslim religious factions. Municipal structures lack the capacity to enforce 
minority rights fully in  Sandžak . 
According to the UNHCR there are approximately 86,000 refugees  and 205,000 internally 
displaced persons  (IDPs) in Serbia. The number of refugees living in collective centres has 
decreased. However, more than 5500 people are still living in these ce ntres, enduring very 
EN 19   EN poor conditions. Both the national strategy on ref ugees and the law regulating this issue still 
have to be revised. There ha ve been very limited improveme nts in the housing situation. 
Poverty is widespread and is  particularly acute  among refugees. Unemployment is high. The 
situation for IDPs continues to be very diffi cult. They are faced with many obstacles in 
exercising their basic social  rights. Very few IDPs ha ve returned to Kosovo.  
During the Serbian Presidency of the Decade of Roma  inclusion, Serbia adopted the national 
strategy for improvement of the status of the Roma in April 2009. An action plan to 
implement the strategy was adopted in July 2009. A limited number of scholarships were 
provided by the State and Voj vodina budgets to Roma students.  The quality of national and 
local media reporting on Roma issues has im proved. The League for the Roma Decade, an 
alliance of 60 Roma and non Roma NGOs, has b ecome a respected partner to the state and 
local institutions. The initiative on legalisation of Roma settlements wh ich started in 2007 is 
still in progress. At the end of 2008 the rele vant ministries signed agreements with eight 
municipalities on preparation of legal documenta tion for legalisation and relocation of Roma 
settlements. Affirmative action introduced seve ral years ago in the area of education is 
producing results, but is still insufficient. An additional 45 health mediators and 26 teaching 
assistants have been employed by the ministries concerned.  
However, the Roma population, especially Ro ma children and women, remains one of the 
most vulnerable groups in the country. There is  no organised and systematic approach to 
resolving the issue of housing including the relocation of Roma settlements, but instead ad hoc and often inadequate solutions , which in some cases have le d to fundamental rights being 
violated. The Roma population is  subject to discrimination, prej udice and intolerance and has 
been victim of a number of indivi dual attacks. There is still a problem with civil registration, 
particularly for Roma IDPs. A special law to regulate the procedure fo r recognition of legal 
subjectivity and allow subsequent  inclusion in citizens’ registries has not been adopted. Low 
school attendance by Roma children and high unemployment are widespread.  
Overall , the framework for protection of minority ri ghts in Serbia is in place and minority 
rights are broadly respected. Insufficient attenti on has been paid to resolving the status of 
refugees and IDPs. The Roma population contin ues to endure very difficult living conditions 
and frequent discrimination, particularly rega rding access to education, social protection, 
health care, employment  and adequate housing.  
2.3. Regional issues and international obligations 
There are no major outstanding issues in c onnection with Serbia’s compliance with the 
Dayton/Paris peace agreement . In May 2009 the High Representative and EU Special 
Representative to Bosnia and Herzegovina  visited Belgrade, following his appointment in 
March 2009. Serbian officials reiterated their sup port for the stability and territorial integrity 
of Bosnia and Herzegovina. The Serbian President also stressed that constitutional changes in Bosnia and Herzegovina are possible only with th e agreement of legitimate representatives of 
the three constituting nations.  
Cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY)  
has further improved . In his address to the UN Security  Council in June 2009, the ICTY Chief 
Prosecutor, stated that the Serbian authorities  have responded adequately and in a timely 
manner to specific requests for assistance and that cooperation must continue and lead to 
further specific and positive results. However,  in spite of the improved cooperation and the 
searches that have taken place, the ICTY indictees Ratko Mladi ć and Goran Hadži ć are still at 
EN 20   EN large. The ICTY Chief Prosecutor expressed co ncern regarding negative statements made by 
senior government officials about the Tribunal’s judicial decisions which he stated "seemed to 
be in contradiction with th e level of cooperation on the gr ound". Full cooperation with the 
ICTY remains an international obligation and a key priority of the European Partnership.  
The status of the former State Union Law on the Freezing of Assets of  ICTY Fugitives has 
still not been clarified. Procedures for freezi ng assets remain highly complex and the current 
legal framework contains potenti al loopholes and shortcomings.  
As regards domestic processing of war crimes, there  were a number of first-instance rulings 
in cases concerning crimes committed in Kosovo and Croatia.  The War Crimes Prosecutor is 
currently investigating over 100 suspects. He has been work ing efficiently, in a difficult 
political context and with limited res ources. Twelve trials are underway.  
At operational level, the police have demonstrated improved professionalism. However, in 
cases related to Kosovo, there have been allega tions of intimidation of witnesses, and law 
enforcement authorities have been reluctant full y to investigate allegations within their own 
ranks. Final verdicts in some high-profile cases  were criticised by NGOs and members of the 
public, citing legal grounds, mild sentencing and denial of justice to victims and families. 
Trials relating to domestic war crimes  have continued at a slow pace.  
There has been improved cooperation regarding th e exchange of evidence and the transfer of 
some war crimes cases between the prosecutors from Croatia, Bosnia and Herzegovina and Serbia. Obstacles to the extradition of suspect s in cases of war crimes and crimes against 
humanity between th e countries of the region co ntinue to exist, however. Serbia, together with 
its neighbours, should address th e regional impunity gap, incl uding by taking steps towards 
extradition agreements covering war crimes cases.  
Serbia’s policy regarding the International Criminal Court (ICC)  remains aligned with the 
EU guiding principles and the EU Common Positi ons on the integrity of the Rome Statute. A 
Law on Cooperation with the ICC was adopted in August 2009.   
Serbia continues to be covered by the pro cedure of the Parliament ary Assembly of the 
Council of Europe  to monitor its fulfilment of obligati ons and commitments arising from its 
membership. The Parliamentary Assembly adopt ed a resolution in Ap ril 2009 stating that 
Serbia has been steadily implementing its obligations and commitments. However, the 
resolution highlighted a number of steps that need to be taken in the field of international obligations, democracy, rule of law and human rights.  
The Serbian government continued to contest Kosovo's  declaration of independence and 
pursued legal and diplomatic measures to this effect, including via the International Court of 
Justice (ICJ). The ICJ received 36 written stat ements in connection with the UN General 
Assembly’s initiative on the IC J advisory opinion on the legality of Kosovo’s declaration of 
independence.  
In December 2008 the Serbian government adopted  a decision supporting the UN Secretary-
General’s plan to deploy EULEX over the enti re territory of Kosovo. In March 2009 the Head 
of EULEX officially visited Belgrade for the first time and had several meetings with the Serbian authorities. In September 2009 EULE X and Serbia signed a protocol on police 
cooperation. The Serbian government does not have official contact  with the Kosovo 
authorities, insisting on dealing only with UNMIK and EULEX.  
EN 21   EN As regards trade, the Serbian government does not recognise Kosovo's customs stamps that 
have been notified to the European Commi ssion and which are, according to UNMIK, in 
accordance with UNSCR 1244. Serbia insists that the stamps be labelled "UNMIK customs" 
or alternatively "EULEX customs". Serbia's refusal to recognise Kosovo's customs stamps 
raises serious concerns regarding the impact  on trade and regional cooperation. Serbia and 
Kosovo need to reach pragmatic solutions enabling key regional fora to continue fulfilling 
their role in advancing regional cooperation and development. Cooperating constructively on 
matters relating to Kosovo is a key European Partnership priority.  
Serbia maintained parallel institutions in Kosovo. The Serbian authorities have organised 
local by-elections in Kosovo, which is not cons istent with UNSCR 1244. At the same time, 
Serbia has discouraged Kosovo Serbs from pa rticipating in the mu nicipalities elections 
organised by the Kosovo authorities for November 2009.  
The Serbian authorities protested against the es tablishment of the Kosovo security force and 
stated that it is an illegal body. The Serbian government introduced mo re stringent rules to 
control use of State funds in Kosovo. The Serb ian Ministry for Kosovo released a working 
draft of a comprehensive strategy for sustainable stay and return of Serbs to Kosovo for public 
debate. This draft strategy e nvisages cooperation with the in ternational community but not 
with Kosovo institutions.  
In May 2009, a total of 1,911 persons were sti ll missing in connection with the c onflict in 
Kosovo. In 2008 only 43 cases were resolved. A working group between Pristina and Belgrade meets regularly under th e auspices of the International Committee of the Red Cross 
(ICRC). However, there are insufficient exchange s of information to solve cases of missing 
persons at a faster pace.  
There has been little progress in the Sarajevo declaration  process, which aimed to finalise 
the regional refugee return process by the end of 2006. While Serbia con tinued to work to a 
greater or lesser extent on its  roadmap, there has been limited discussion on implementation 
issues either at bilateral or regional basis. The Serbian authorities pa rticipated in the high-
level meeting on protracted refugee cris es organised by the United Nations High 
Commissioner for Refugees (UNHCR)  in Geneva in December 2008. Also  in December 2008 
the Serbian authorities distributed a non-paper which identified outstanding issues relating to 
the Sarajevo Declaration process. Ho wever, there has been limited follow-up.  
Regional cooperation  and good neighbourly relations  form an essential part of the process 
of integrating with the European Union.  
Serbia continued to participate actively in regional initiatives, including the South-East 
European Cooperation Process (SEECP) and the Regional Cooperation Council (RCC), the 
Central European Free Trade Agreement (CEF TA), the Energy Community Treaty and the 
European Common Aviation Area Agreement (E CAAA). Serbia’s partic ipation in regional 
cooperation has, however, been affected by its approach to participation by Kosovo in the 
regional initiatives and other fora.  
As regards  bilateral relations with other en largement countries and neighbouring 
Member States,  there was no progress in the demarcation of borders  with the former 
Yugoslav republics, notably with Croatia on the River Danube and with Bosnia and Herzegovina as regards several disputed border crossings. De marcation of the border with 
Montenegro is still pending.  
EN 22   EN Political relations with Albania remained stable, although they  were affected by Albania’s 
recognition of the independence of Kosovo. There were no bilateral politi cal visits, but there 
were senior-level meetings on the fringe  of regional and international events.  There have been 
ongoing contacts regarding judicial cooperati on. Economic cooperation progressed and in 
March 2009 a memorandum on cooperation was signed between the Serbian and Albanian 
Chambers of Commerce.  
Relations with Bosnia and Herzegovina  remained stable. There were several high-level visits 
by Serbian officials. Serbia also provided as sistance to Bosnia and Herzegovina during the 
gas crisis. As part of the implementation of the 2008 Protocol on inter-parliamentary 
cooperation, a delegation from the Serbian Parl iament visited Republika Srpska in April 2009. 
No meetings of the In terstate Cooperati on Council have taken place  and there was no progress 
on addressing issues related to property. A bor der agreement between Serbia and Bosnia and 
Herzegovina has not yet been signed. Building on the existing agreement on special parallel 
relations with Republika Srpska, an agreemen t on economic cooperation was signed in June 
2009.  
Progress has been made  in relations with Croatia, in particular following the visit of the 
Croatian Prime Minister to Belgrade in Marc h 2009. The Serbian Amba ssador, recalled after 
Croatia recognised the indepe ndence of Kosovo, returned in  November 2008. The visa-free 
arrangement between the two countries is co ntinuing to function well. There has been 
progress on cooperation on war crimes prosecutions . Croatia and Serbia signed agreements on 
police cooperation, on readmission of illegal mi grants and on cooperation in the field of 
European integration. There has been some  progress on cooperation on the 2,000 cases of 
missing persons from the war. However, there has been no progress towards a border agreement nor has the bilateral commission met.  Other open matters include property-related 
issues, in particular claims fo r compensation for lost occupancy and tenancy rights, return of 
refugees and the genocide lawsuits before the IC J. Relations were particularly strained amid 
harsh rhetoric from both sides concerni ng the ICJ case at the end of 2008. Economic 
cooperation is growing although there are limited Se rbian investments in Croatia compared to 
the level of Croatian investments in Serbia, possibly due in part to reluctance in Croatia to accept Serbian investments.  
Serbia’s relations with the  former Yugoslav Re public of Macedonia  improved. After a cooling 
of relations in 2008 after the former Yugoslav Republic of Macedonia recognised Kosovo’s independence, Serbian authorities agreed to the appointment of a new ambassador in April 
2009. There have been a number of high-level b ilateral visits between  the two countries. 
Economic cooperation is continuing to improve . Unresolved issues concerning relations 
between the Orthodox churches in the two count ries had no major political implications.  
Relations with Montenegro  continue to be affected by the Montenegrin decisi on to recognise 
Kosovo’s independence. The Montenegrin Ambassador was declared persona non grata  in 
October 2008. A new Ambassador was accredited in September 2009 . There was good 
cooperation in the defence sector  and the Serbian Minister for Defence visited Podgorica in 
February 2009. The Montenegrin President visite d Belgrade in May 200 9. There continues to 
be good economic cooperation. On the basis of a bilateral agreement, Se rbian diplomatic and 
consular missions in some countries continue to provide services to Montenegrin citizens. 
Regarding the issue of dual ci tizenship, little progress wa s made towards concluding a 
bilateral agreement with Mont enegro. Agreements on judicial cooperation and joint border 
patrols  
were signed. Police cooperation in the fight against organised cross-border crime was 
strengthened. Talks on border demarcation are proceeding.  
EN 23   EN Relations with Turkey  are, on the whole, good. An agre ement on military cooperation was 
signed in May 2009. In June 2009 Serbia signed a free trade agreement with Turkey in line 
with SAA requirements.  
Serbia continues to maintain good relations with Romania.  The Serbian President visited 
Romania in March 2009. Preparations are being ma de for establishment of a joint inter-state 
commission to implement the agreement on protection of national minorities. Problems 
regarding the legal status of the Romanian Or thodox church in Serbia are being addressed.  
Relations with Bulgaria and Hungary  are improving, after having been affected after both 
these countries recognised the independence of Kosovo. Several high-level bilateral meetings 
with Bulgaria and Hungary took place. Hungary  provided emergency assistance to Serbia 
during the gas crisis.  
Overall , Serbia has continued to be active in regional coope ration initiatives. Bilateral 
cooperation with the neighbouring and enlarg ement countries has improved. However, 
regional cooperation has been affected by deve lopments related to Kosovo. Cooperation with 
the ICTY has further improved, howev er ICTY indictees Ratko Mladi ć and Goran Hadži ć are 
still at large. Significant challenges remain  regarding the domestic prosecution of war 
criminals. 
3. ECONOMIC CRITERIA  
In examining economic developments in Serbia, the Commission’s approach was guided by 
the conclusions of the European Council in Copenhagen in June 1993, which stated that 
membership of the Union requires the existe nce of a functioning market economy and the 
capacity to cope with competitive pressure  and market forces within the Union. 
3.1. The existence of a functioning market economy 
Economic policy essentials In January 2009, the government submitted to the European Commission an Economic and 
Fiscal Programme (EFP), covering the y ears 2009-2011. The programme builds on the budget 
memorandum of May and the December 2008 upda te thereof and presented a generally 
coherent and ambitious macroeconomic and fis cal framework together with an ambitious 
agenda for structural reforms. In the light of  the deteriorating economic  situation in autumn 
2008 and beginning of 2009, the EFP rapidly became outdated and it retains only limited relevance as a core document for economic policy making. In June 2009, the Serbian government adopted a new budget memorandum, in the context of a budget revision. 
In December 2008, the Serbian authorities reque sted a Stand-by Arrangement (SBA) for over 
€420 million from the International Monetary Fund (IMF), which was approved in January 
2009. As the impact of the global economic crisis tu rned into a domestic fi scal crisis, in April 
2009, the Serbian government agreed with the IMF on a revision of the programme 
assumptions, an increase of the available loan to €2.9 billion and an extension of the agreement to April 2011. A first tranche of th is assistance, worth €788 million, was drawn in 
May 2009. A set of fiscal measures has been im plemented in the context of the revised IMF 
programme, with the obj ective to ease the fiscal  crisis. However, the underlying structural 
weaknesses of Serbian public fina nces, in particular as regards the unreformed welfare state, 
EN 24   EN have not been addressed in depth. Overall , consensus on the fundamentals of a market 
economy has been maintained, but the governme nt lacks a medium-term reform strategy. 
Macroeconomic stability 
In 2008, GDP growth decelerated to 5.4% compar ed to 6.9% in 2007 as the country started 
being affected by the global economic crisis. Grow th in the last quarter  of 2008 declined to 
2.8% year-on-year as compared to an average growth rate of 6.5% in the previous three 
quarters. During the first qua rter of 2009, GDP declined by 3.5% year-on-year. In 2008, 
industrial output was 1% higher than in the pr evious year, mainly due to good results during 
the first half of the year.  
The declining trend that started in the second quarter of the year accelera ted sharply towards 
the end of 2008 and further inte nsified in early 2 009. Industrial production declined by 17.4% 
in the first half of 2009 compared to the sa me period of the previous year. In 2008, export 
growth slowed to 15.5%, compared to 26.1% a y ear earlier. During the first quarter of 2009, 
exports contracted by 23.8% year-on-year. As a result, growth projections for 2009 were 
revised downwards from an initial 6.5% to 3.5%  and to -2% in March. Growth projections 
were further reduced to -6% mid-2009 on the b ack of the strongly deteriorating economic 
indicators during the first half of the year. In 2008, average per capita income in purchasing 
power standards rose to 37% of th e EU-27 average, up from 33% in 2007. Overall , the 
Serbian economy was substantially affected by the global economic crisis and has been in 
recession during the first half of 2009. 
The international financial crisis strongly imp acted Serbia’s economy an d its financial sector. 
External imbalances rendered the Serbian eco nomy vulnerable to po ssible disruptions in 
capital flows and the risks of a sudden stop or reversal of capital flows started growing. As 
this disruption occurred during the last quarter  of 2008, the Serbian au thorities approached 
international financial institutions to secure ac cess to fresh loans. With the aim to inject 
liquidity in the financial sector , the authorities also adopted tw o packages in February and in 
May 2009, comprising loans at a pref erential interest rates subs idised by the Government. The 
latter loans were aimed at addressing the ne eds of local companies faced with serious 
problems in financing their activities. 
In 2008, the current account deficit widened to  17.6% of GDP from 15.6% a year earlier, 
driven by a growing deficit in  the trade balance and a declin e in current transfers. Strong 
domestic demand, fuelled by a relaxa tion of fiscal and wage policie s, and a drop in exports of 
some of the major export items — notably steel — contributed to the dete rioration in external 
accounts. Capital inflows remained  substantial at 16% of GDP. Ho wever, they fell short of the 
financing needs. Foreign direct investment re mained stable at €1.81 bi llion or 5.3% of GDP. 
Long-term borrowing by the corporate sector continued to grow by €2.5 billion albeit at a 
slower pace than in 2007. Short-term borrowing rose from almost zero to about € 500 million. 
Capital inflows practically stalled, however, to wards the end of the year and in the first 
months of 2009. Foreign exchange  reserves declined by €1.8 b illion to €8.2 billion by the end 
of 2008. However, as the first tranche of th e IMF loan was disbursed and inflows of 
remittances picked up in early 2009, foreign excha nge reserves of the National Bank of Serbia 
(NBS) grew again to € 8.9 bil lion at end-May, reaching a comf ortable 9 months worth of 
imports or 27% of GDP. External  debt grew to € 21.7 billion or 70% of GDP at end-June 
2009 from €18.6 billion or 58% of GDP in June 2008. Overall , the Serbian economy is going 
through a process of substantial external adjustment, as reflect ed in a rapidly contracting 
EN 25   EN current account deficit, while foreign exchange reserves have been secured at a comfortable 
level. Consequentially, th e level of external debt has been increasing.  
In 2008, labour market conditions improved sli ghtly. The employment rate rose to 53.3%, 
compared to 51.5% a year earlier, but then again fell to 50.8% in April 20095. The registered 
unemployment rate fell to 14.8% compared to 18.3%  in 2007. This rate also rose in April 
2009 to 16.4%. Nominal wages grew by 17.9% ye ar-on-year in 2008, compared to 27.9% a 
year earlier. However, real wage growth slow ed to 3.9% year-on-year, substantially less than 
in 2007 when real wages grew by a strong 19.5%  year-on-year. Nominal wages grew by 8.9% 
year-on-year in May 2009 and, as inflation re mained relatively high during the first few 
months of the year, in real terms by 0.6% for the same period. Overall , despite strong 
economic growth rates in recent years, unemployment remains persistently high.   
The monetary policy framework that had been introduced in September 2006 was adjusted in 
January 2009, when the National Ba nk of Serbia (NBS) switched fr om targeting core inflation 
to a target of consumer pric e inflation. For 2009, the annual consumer price index (CPI) 
inflation target band was announced at a ba nd between 11% and 15% year-on-year. In 
January 2009, CPI inflation accelerated back to 10.4%, driven by increases in regulated prices, such as for oil deriva tives, medications, communal serv ices and fixed line telephone 
service, but thereafter declin ed again to 7.5% in June. At end-October 2008 the NBS 
increased its policy rate by 200 basis points to 17.75% to stem rising inflationary pressures 
but also to help support the local currency, which had come under growing pressure on the foreign exchange market in late 2008. In earl y 2009, the NBS reversed course and reduced its 
policy rate in several steps by 5.75 percentage poi nts to 12.0% at end-July, in an attempt to 
boost dinar liquidity and support the collapsing domestic economy. Overall , inflation 
remained relatively high in Serbia, despite the economic recession, due to strong increases in 
administered prices and persistently high inflation expectations. The monetary policy 
framework of inflation targeting remain ed difficult to implement successfully . 
As far as the foreign exchange rate policy is concerned, the NBS was forced to intervene in 
the inter-bank market in late 2008 and early 2009, following the strong and rapid depreciation 
of the dinar that star ted in October. In the last qua rter of 2008, the dinar nominally 
depreciated against the euro by 15.7%. The Serbian currency kept losing value during 
October, November and early December when it reached 91.63 dinar against the euro when 
the NBS intervened. After a month of stabilisa tion, the dinar fell to an  all-time low of 96.33 
dinar against the euro, in spite of a total of €480 million in interventions in January and 
February. Since then, the exchange rate has stabilised between 92 and 95 dinar against the euro, and the NBS has ab stained from intervening. Overall , the dinar has lost some 23% 
against the euro since September 2008, but  has stabilised since February 2009. 
The expansionary fiscal policy of 2007 and ea rly 2008, further intensifie d in the second half 
of 2008 as election promises were being delive red. The consolidated fiscal deficit stood at 
6.5% of GDP during the last quarter of the year. For the whole of  2008, the consolidated 
fiscal deficit rose to 2.4% of GDP from 1.9% a y ear earlier. The rise of current expenditure 
was particularly large due to labour costs and pensions, which together continued to account for 54% of total public spending. Among all expe nditures, those for pensions saw the highest 
growth in 2008 (overall 35% increase in no minal terms). On the other hand, capital 
expenditures declined to 3.9% of GDP in 2008  compared to 4.9% a year earlier. On the 
                                                
 
5 However, the drop in unemployment between 2007 and 2008 was mainly due to methodological 
changes. 
EN 26   EN revenue side, there was a decrease in real revenues from indirect taxes in the fourth quarter of 
2008. Given this negative trend, the 2009 budget,  adopted on 29 December 2009, was based 
on a growth assumption that was too optimi stic, therefore render ing the revenue and 
expenditure projections for 2009 unrealistic. This was confirmed as budget revenues in 
January and February were well be low projections. In view of th e need to agree on a revised 
macroeconomic framework with the IMF, a revised budget was a dopted on 29 April 2009, 
aimed at keeping the fiscal deficit at 3.0% of GDP. However, by end-June it was clear that the 
mid-year target of the IMF programme would not be met amid growing expenditures and 
declining revenues. The IMF prog ramme had to be revised. The public deficit for 2009 is now 
predicted to be higher, at about 4.5% of GDP . Serbia and IMF agreed to postpone final 
discussions until end-October allowing Serbia to suggest further adjustments in view of the 
2010 budget. Overall , fiscal policy remained expans ionary in 2008, leaving Serbia 
particularly vulnerable to the fallout of the global economic crisis. As it became clear that 
public finances were deteriorating fast in early 2009, the Serbian authorities committed to 
budget adjustments that, in the context of the crisis, so far have turned out to be insufficient to 
stabilise public finances. 
Expansionary fiscal policy and current account defi cits made Serbia particularly vulnerable to 
the global crisis. The situation further deteri orated throughout 2008 and in early 2009 as the 
impact of the global economic crisis was in creasingly being felt domestically. The fiscal 
reform measures agreed in the IMF programme appear to be insufficient to fully address adjustment needs over the short-term and furthe r structural improvement s of public finances 
will be needed in the medium-term. At the sa me time, structural reforms, in particular 
enterprise restructuring and privatisation, woul d contribute to cutting wasteful subsidies to 
unviable enterprises and to fostering the esta blishment of a competitive and dynamic private 
sector. A review of the social security policies and systems, in  particular pension and health 
reform as well as the education system, with a view to ensuring medium-term sustainability of 
the systems and of public finan ces is still missing. Th is would also contri bute to lowering 
labour costs and help increasing employment. Overall , further efforts are needed to address 
short-term fiscal adjustment n eeds and fully re-establish medium-term fiscal sustainability.  
Interplay of market forces 
The share of the private sector remains sma ll at between 55% and 60% of total output. The 
private sector employs about 60% of the total number of employees. 
The privatisation of socially -owned companies continued in 2008 and about 560 socially-
owned companies were sold (15 tenders, 226 auctions and about 320 companies sold through 
the sale of state-owned stak es on the capital market). This  brought revenues amounting to 
about €330 million. By the end of 2008, the total number of companies privatised through 
tenders or auctions since the beginning of th e process in 2002 had risen to over 1,800 and has 
brought about €2.3 billion in privatisation revenues . The number of firms that still need to be 
sold declined substantially in 2008. Overall , progress in selling state-owned companies was 
hampered by reduced interest in  acquiring such companies due to  the global economic crisis.  
According to earlier plans, four large state- owned companies (the electricity company EPS, 
Telekom, Belgrade airport and the pharmaceutical company Galenika) were to be offered for 
sale in the form of initial public offerings. This plan has been postponed for the time being. 
However, the government is still considering the possibility to offer Galenika and Telekom 
for sale in 2010 when market conditions related to the global crisis improve. On the other 
hand, the state oil company NIS was sold (a 51% majority stake for €400 million) as part of a 
EN 27   EN wider framework agreement for supply of gas and oil with Russia. The agreement was 
finalised in December 2008 and the new owner Gazprom took over the company in February 
2009. With regard to the long-standing issue of pr ivatisation of national car producer Zastava, 
a joint venture agreement has been signed with  Italian car manufactur er Fiat in early 2009. 
The question of privatisation of about 500 utilit ies at the level of local communities remains 
open. Their restructuring and reorganisation have not yet begun and the plan for their 
privatisation remains undefined. After the legi slation on the free distribution of minority 
shares in six state-owned companies to all adult citizens was adopted in December 2007, no 
new developments took place in 2008 and early 2009 as shares have not been distributed yet. 
This is a reflection of the fact that non-privat ised state-owned companie s still generate a large 
part of Serbia's output. Private companies rema in relatively weak and have a major share in 
trade, but less so in production. This prevents the development of competitive domestic production and burdens public fina nces. Finalising the process of privatisation or, when 
necessary, liquidation of socially- and state-owned enterprises is one of the key priorities of 
the European Partnership. Overall , some progress was made, as th e privatisation of socially-
owned companies has been almost finalised. Ho wever, state-owned companies remain mainly 
non-restructured, therefore, a competitive and dynamic private sector has not been established. The private sector has been furthe r weakened by the ongoing liquidity crisis.  
Market entry and exit 
With regard to market entry and exit, some progress was made. In Ap ril 2009 the number of 
registered companies slightly increase d reaching 106,000 compared to 100,000 of the 
previous year. At the same time, about 220, 000 entrepreneurs were registered with the 
Serbian Business Registry Agency. The process of  registration has been further simplified as 
registration with the tax authorit ies is no longer done separately. With regard to market exit, 
implementation of the 2005 Bankruptcy Law has c ontinued and a draft of the new legislation 
on bankruptcy was finalised in March 2009. The nu mber of pending cases was still very high 
at the end of 2008. Further efforts are needed to  improve the business environment such as in 
the area of construction permits. Overall , although some progress wa s registered, excessive 
bureaucratic requirements and complex legisl ation continue to hamper the business 
environment. 
Legal system 
With regard to the legal system, some progress can be reported in a number of acquis -related 
areas. However, a number of reform-related laws  have been held up and implementation of 
the existing laws is sometimes weak. The courts  and administrative bodies sometimes lack the 
technical capacity and personnel to perform their activities properly and promptly, and 
corruption remains prevalent in many areas. This  has led to inconsistent implementation and 
very lengthy procedures, which frequently exceed the deadlines set by law. Overall , 
weaknesses in the judiciary continued to limit le gal predictability and to undermine trust in 
the legal system among economic operators, in pa rticular as regards effective enforcement of 
property rights.  
Financial sector development 
The lending activity of banks increased by 35% in 2008. The shar e of total loans granted to 
enterprises and households stood at 61.5% and 35 .5% respectively. Deposit activities of banks 
grew by 7% (after 44% during the previous yea r). The largest share of deposits was accounted 
EN 28   EN for by the household sector (46% ), followed by the enterprise se ctor (31%) and bank deposits 
(15%). Foreign currency deposits made up 69% of total deposits.  
These deposits were particularly affected by the start of the crisis. In October 2008 over EUR 
1 billion was withdrawn from local banks. Howeve r, fears related to ba nking sector stability 
turned out to be unfounded. Deposits stabilised  quickly. The banking system has weathered 
the crisis well so far. The large share of FX or FX-indexed loans in the portfolios of Serbian 
banks remains a concern (about 69% of all loans)  as it is a source of credit risk from un-
hedged beneficiaries. Non-performing loans increas ed to 7.2% in June 2009 from 4.0% a year 
earlier. However, the risks have been tempered  somewhat by the banking system’s large share 
of liquid assets (23.6% as of February 2009) a nd substantial capital bu ffers (capital adequacy 
ratio of 21.9% at fourth quarter).  Foreign banks agreed to main tain their expos ure in Serbia 
unchanged at the level of end-2008. Overall , financial intermediation continued to grow, 
though at a slower rate than in the past and from a still relatively low level. Substantial 
balance-sheet risks for banks exist due to  large share of foreign nominated loan. 
The number of majority state- owned banks remained unchanged at 4 out of a total of 34. 
However, the National Bank and the Government of Serbia adopted a st rategy to reduce state 
ownership in the banking sector . There are 20 banks that are now majority-owned by foreign 
shareholders. Six banks were under majority owne rship of domestic natural persons or legal 
entities. The five largest banks in terms of  assets accounted for 46.2% of the total banking 
sector. Overall , competition between banks  is well established and privatisation of the 
remaining state-owned banks has advanced slowly. 
At end-December 2008, the share of total credits  in default (non performing loans) in total 
outstanding debt stood at 4.7% (fro m 3.7% a year earlier). The fore ign exchange risk ratio of 
banks stood at 8%. The average capital adequa cy ratio of the banking system stood at 21.9% 
(from 27.7% a year earlier) and, consequently, remained well a bove the required minimum of 
12% of risk-weighted assets for each bank. The pr ofitability of the banki ng sector deteriorated 
in the last quarter of 2008 and the return on equity fell to 9.3% from 12.7% in 2007. Overall , 
the banking sector remains profitable and ge nerally sound. However, the high share of high-
risk assets indicates substantial financial vulnerabilities. 
The Belgrade stock exchange registered nega tive performance in 2008. Both indexes fell 
sharply: BELEX15 (of the 15 largest companies) by 75.6%, and BelexLine by 68.7%. This negative trend continued in the first four months of 2009, followe d by a recovery in May. In 
February 2009, the government started to issue on a large scale T-bills with 3 and 6 months 
maturity, to help finance the growing deficits in the public budgets. The total amount outstanding was € 634 million by June 2009. At the end of 2008, there were 24 insurance 
companies operating in Serbia (from 20 a year earlier) with an increase in staff to 11,700 
(+21%). The structure of the insurance sector is continuing to change with the privatisation of 
the socially-owned insurance companies and the arrival of new foreign investments. Privately 
owned insurance companies increased their pr eviously noted preval ent share in non-life 
premiums from 59.1% in 2007 to 61% in 2008, as  well as in total assets from 58.6% to 
61.2%. In the five years from 2004 to 2008, the premium income more than doubled, at an 
annual growth rate of 16.5%. However, the insu rance sector’s share of capital in the total 
financial sector has decreased to 5.6%. Overall , progress continued in the development of the 
non-banking financial sector, but its size remains limited. 
EN 29   EN 3.2. The capacity to cope with competitiv e pressure and market forces within the 
Union 
Existence of a functioning market economy Sharply deteriorating macroeconom ic stability towards the end of  2008, and in particular in 
early 2009, contributed to creating a less stable and less predictable climate for decision-
making by economic operators. The functioning of market mechanisms remained hampered 
by distortions, legal uncertaint y, heavy state involvement in the production of private goods 
and insufficient competition. 
Human and physical capital  
Little progress can be reported on the reform of  the education system in relation to labour 
market demand. The gap between demand and suppl y of skilled employees continues to be an 
obstacle to increasing foreign direct investment  and developing new branches of the economy. 
Therefore, companies are responding to the gr owing shortages by becomi ng more proactive in 
offering personal/professional development and training incentives to new recruits. Attitudes towards lifelong learning and mobility continue d to change. Public education expenditure 
accounts for a relatively small 3.4% of  GDP, well below average EU levels. Overall , the 
economy has been suffering from a shortage of skilled employees, while supply has only 
gradually been building up in response. 
Net FDI grew by 12.5% to €1.9 bi llion in 2008, bringi ng the cumulative net FDI inflow to 
€13.3 billion since 2000. 50% of the totals foreign direct investme nt originated from Austria, 
Greece, Norway and Germany. The three sectors receiving most foreign direct investment 
were financial intermediation, transpor tation and telecommuni cation as well as 
manufacturing. Funds from the National Investment Plan have been used for various 
infrastructure projects such as the Belgrade ri ng road and motorways in southern Serbia, but 
also in order to stimulate fo reign investment and job creati on. The policy has lately changed 
into the financing of only a limited number of la rger projects. Continua tion of the construction 
of Corridor X, development of infrastructure fo r the car centre in Kragujevac, and investment 
in the 40 least developed municipalities are prio rities for Serbia in 2009. The total budget for 
expenditure under the National Investment Pl an fell to €210 million for 2009 (in 2008 it stood 
at €600 million). Overall , investment activity from domestic  sources has been declining, and 
foreign investors have become more hesitant , primarily due to grow ing the global economic 
downturn. 
Sectoral and enterprise structure 
Progress in selling state-owned companies wa s hampered by the global economic crisis, 
which significantly reduced interest in for acquiring such companies. Restructuring and privatisation on the other hand have been slow . The shift of economic  activity towards the 
service sector is continuing, w ith services currently accounti ng for more than 60% of GDP. 
About 40% of all employees are working in  state-owned enterprises or the public 
administration. The large informal sector is fuelled by weaknesses in tax and expenditure 
policies, as well as in law enforcement, incl uding the fight against corruption and organised 
crime. The informal sector remains an important  challenge, as it reduces  the tax base and the 
efficiency of economic policies. Overall , the pace of structural adjustment of the economy is 
being held back by slow reforms, and has la tely been aggravated by the economic crisis. 
State influence on competitiveness 
EN 30   EN Subsidies from the consolidated state budget re mained high (at 1.8% of GDP) and they even 
rose by 36% in real terms in 2008. While relevant  legislation on state aid control was adopted 
in July 2009, the appropriate monitoring mech anism and authority are still missing. State-
controlled monopolistic structures remain in place. Overall , state influence on 
competitiveness remained substantial. 
Economic integration with the EU 
In January 2009, Serbia started im plementing the Interim Agreement. 
The EU remained Serbia’s main trading partner.  Exports and imports of goods to and from the 
EU increased by 11.8% and 11%, respective ly, in 2008 compared to the 2007 figures, 
accounting for 53% of Serbia’s ove rall trading volumes. However,  as economic activity in the 
country slowed down due to the global financial crisis, a significant decrease was noted in the 
first quarter of 2009, with both exports and imports of goods from Serbia to the EU 
decreasing considerably, by 25.3% and 26.8% respectively.  
Standard indicators suggest that the deteriorat ion in export price competitiveness of recent 
years stopped in 2008. Real gross wages grew by  4.1% less than average labour productivity 
(estimated at 6.1%), resulting in a 1.8% decrea se in real unit labou r costs. In 2008, the 
nominal effective exchange rate of the dinar depreciated  by 11.4%. In real effective terms, the 
dinar depreciated by 4.9%, desp ite consumer prices growing faster on the domestic market 
than abroad. Overall , trade integration with the EU remained high and export competitiveness 
has slightly improved. 
4. EUROPEAN STANDARDS  
This section examines Serbia’s capacity gradua lly to approximate its legislation and policies 
to the acquis related to the internal market, sectoral policies and justice, freedom and security, 
in line with a Stabilisation and Associatio n Agreement and the European Partnership 
priorities. It also analyses Serbia’s administ rative capacity. In each  sector, Commission's 
assessment covers progress achieved during the reporting period, and summarises the 
country's overall level of preparations. 
4.1. Internal market 
4.1.1.  Free movement of goods 
Good progress can be reported in th e field of free movement of goods. 
As regards standardisation , the Law on Standardisati on and the Law on Technical 
Requirements for Products and Conformity Asse ssment were adopted. The latter establishes a 
legal basis for transposit ion of all the relevant acquis.  Moreover, in June 2009 all mandatory 
standards were repealed, while a number of re levant technical regula tions were kept. The 
action plan for preparation of technical regulations, complete with measures to apply them, 
was approved at the end of 2008 and is being implemented.  
The Ministry of Economic Affair s and Regional Development conti nued to play a central role 
in coordinating all institutions and ministries for transposition of the acquis . Cooperation 
between the ministry and the Serbian Standa rdisation Institute, the Serbian Accreditation 
Board and the Directorate for Measures  and Precious Metals has improved.  
EN 31   EN The Serbian Standardisation Institute represen ts Serbia in international and European 
standardisation organisations. It  is also the national enquiry point for standards. In March 
2009 the government approved the annual work programme and the stan dards adopted by the 
institute. The director of the institute was appointed by the government and the three expert 
councils were set up. However, the chairman an d members of the supervisory board have not 
yet been appointed. The overall administrative capacity of th e institute needs to be further 
improved.  
By September 2009 the Standardis ation Institute had adopted 5,072 European standards. It is 
no longer in charge of mandatory certifica tion of products, which is now under the 
responsibility of relevant accr edited certification bodies and testing laboratories. It will 
remain responsible for type-app roval of vehicles until the rele vant line ministry has the 
administrative and technical capacity to take over this task.  
At the end of September 2009 the number of accredited conformity assessment  bodies stood 
at 347. A new procedure for designating conform ity assessment bodies has been established.   
There has been progress on accreditation . The Serbian Accreditation Board became an 
associate member of International Laboratory A ccreditation Cooperation. The new statutes of 
the Accreditation Board have been approved by the Serbian government. In February 2009 
the Accreditation Board applied to European  Cooperation for Accr editation to sign the 
multilateral agreement on testing laboratories, calibration laboratories and inspection bodies. 
The Accreditation Board applied new accred itation systems for assessing medical 
laboratories. It provided traini ng and seminars for assessors a nd its own staff and carried out 
awareness-raising activities. It has further im proved its IT capacity. However, an adequate 
legal framework is missing, as the new legisl ation on accreditation has yet to be adopted. 
Human resources remain limited.  
In the area of metrology , progress can be reported on upgrading specific metrology 
equipment and with new laboratories for acoustics,  length, time, frequency, road traffic, mass, 
electricity, thermometry, humidity and type-a pproval. The Directorate for Measures and 
Precious Metals participates in the activities of internat ional and European metrology 
organisations. However, further efforts are still needed on th e legislative front, as the new 
Law on Metrology has yet to be  adopted. The institutional se t-up of the Directorate for 
Measures and Precious Metals has still to be clarified and the limited administrative capacity upgraded. 
There has been little progress on market surveillance . Preparations for es tablishment of an 
appropriate market surveillanc e structure in line with the acquis  have begun. A trade 
development strategy designating a special body consisting of repr esentatives of all 
inspectorates responsible for ha rmonisation and coordination of  inspections has been adopted. 
However, the capacity of the market inspectorate remains weak. Coordination between the market surveillance author ities is still lacking.  
There has been further legal alignment in the field of consumer protection,  with the adoption 
of a new Law on General Product Safety and a Law on Electronic Trade. The annual consumer protection plan was adopted. Trai ning activities for professional staff have 
continued. The selection criteria for awarding grants from the mi nistry to consumer protection 
organisations have improved. The administrative and IT capacity of the consumer protection 
unit within the Ministry of Trade has been  improved, but the human resources remain 
insufficient. The new structure of the mini stry’s Council for Consumer Protection was 
EN 32   EN established and a working group wa s set up with the task of pr otecting customers of financial 
services, primarily consumer loans and leasi ng products. Public awaren ess-raising activities 
have been stepped up to some extent. Howeve r, new legislation on consumer protection – on 
which establishment of advisory centres for consumer protection an d out-of-court dispute 
resolution bodies are contingent  – has yet to be adopted. C onsumer organisations remain 
fragmented and lack adequate resources. This has hampered their overall effectiveness. 
Implementation of the national consumer protection programme continues to be weak and 
public awareness-raising activities are not yet sufficient.  
Overall , Serbia is moderately advanced on free m ovement of goods and the requirements of 
the SAA. The legal framework for accreditation a nd metrology has still to be adopted. Serbia 
needs to pay greater attention to consumer protection as a matter of priority for EU 
integration. The administrative cap acity and cooperation between St ate institutions need to be 
further strengthened. Further efforts are requir ed to start transposi ng the product-specific 
acquis  into Serbian legislation. 
4.1.2.  Movement of persons, services  and right of establishment 
There has been some progress on movement of persons . With regard to the coordination of  
social security schemes an agreement on social insurance was signed by Slovenia and Serbia 
in September 2009. This agreement primarily aims to solve the problems relating to pensions, invalidity and health insurance rights of about 10,000 pensioners living in Serbia  who - in the 
former Yugoslavia – worked for Slovenian companies.  
The administrative capacity of the Ministry of  Economic Affairs, which is in charge of 
movement of workers, remains limited. No pr ogress has been made towards recognition of  
professional qualifications and its differentiation from the recognition of academic 
qualifications.  As concerns the right of establishment no progress can be reported. 
Little progress was made in the area of company law . The Company Act and the Company 
Registration Act have still to be amended. 
The legislation on accounting and auditi ng is not fully harmonised with the acquis . The 
strategy and action plan on cor porate financial reporting sti ll have to be prepared.  
There has been some progress on financial services. The National Bank of Serbia is 
responsible for supervision of the banking, in surance and voluntary pension fund sectors and 
is committed to actively using its supervisor y powers (on-site inspections, reporting and 
regulatory powers). However, the Securities Co mmission, which is in charge of supervising 
the capital market, is still not sufficiently indepe ndent and still not operating fully in line with 
international standards. Serbia prepared a roadmap for implementation of the Basel II 
framework, which was introduced in the EU  by the Capital Requirements Directive . The 
supervisory capacity, particularly relating to employment and training of qualified personnel, 
needs to be further strengthened in order to comply with the Capital Requirements Directive 
and the requirements for risk-based supervision.  
Serbia has yet to sign memoranda of understandi ng with all home supervisory authorities of 
foreign banks operating on its territory. 
In the field of postal services, new legislation ratifying the Acts of the Universal Postal Union 
has been adopted . However, the Postal Services Agen cy established in 2005 does not fully 
EN 33   EN meet the conditions to work independently, as the members of the Postal Services Agency 
Council have not yet been approved by parliament.  
Overall , Serbia is moderately adva nced towards meeting its SAA obligations in the areas of 
movement of persons, services, right of establishment and comp any law. A number of pieces 
of legislation are still awa iting parliamentary approval. 
4.1.3.  Free movement of capital 
Progress was made on free movement of capital during the reporting period.  
In March 2009, the National Bank of Serbia liberal ised all personal transf ers, via banks, of up 
to €10,000. With regard to capital flows, the Na tional Bank of Serbia continued cooperating 
with neighbouring countries. The National Banks  of Serbia and of Bosnia and Herzegovina 
continued to implement a clea ring arrangement that includes a number of banks (in 2008, a 
total of over €44 million worth of  payments were made and about €10 million in the first 
quarter of 2009). This has increased  efficiency, as transactions ar e carried out in a single day.  
Serbia still has fully to liberalise outward payments  and current account transactions and to 
lift restrictions on short-term credit and portfolio  investments. Movement  of capital to foreign 
countries, both from individuals and from le gal entities, is subjec t to rigorous and time-
consuming checks by the National Bank of Serbia, ev en in cases where the legal origin of the 
funds is proven.  
Under the Law on Foreign Exchange Operati ons, non-residents are free to make direct 
investments. Restrictions in the arms sector and in other areas are laid down by the law. 
However, EU investors are still having problems, due to the unclear status of acquisition of real estate rights, along with the very large number of licences required and the numerous 
granting agencies and authorities involved.  
Overall , Serbia remains moderately advanced in th e area of capital movements. Non-residents 
are free to make direct investme nts (with certain restrictions), but are hampered by the large 
number of licences required for acquiring proper ty. Serbia needs to continue its efforts to 
meet the gradual liberalisation re quirements laid down in the SAA. 
4.1.4.  Customs and taxation 
Serbia has made good pr ogress in the area of customs . A set of legal acts were adopted in 
order to allow voluntary implementation of the Interim Agreement with the EU. The amended 
customs tariff nomenclature was published in Febr uary 2009 and is fully in line with the 2007 
World Customs Organisation Harmonised System  and the 2009 EU Comb ined Nomenclature. 
Simplified procedures for imports and exports, based on accounting documents, have been introduced. However, further alignment with th e EU Customs Code is  still required, in 
particular with regard to transit and risk analys is. There is also a need  to strengthen customs 
operating procedures in order to reduce the discretionary powers of customs officers. 
The administrative capacity  of the Serbian customs administration has been further 
strengthened by stepping up tr aining activities. The World Cu stoms Organisation’s (WCO) e-
learning Programme has been incorporated into the regular customs training curriculum. As a 
result, post-clearance controls have been strengthened. Implementation of the Code of 
Conduct led to initiation of a high number of  disciplinary procedures  based on internal 
controls (27 cases concer ning 73 customs staff).  
EN 34   EN A risk management strategy is being implemented, based on an improved IT system with 
more risk parameters. In the fields of enfo rcement and trade facil itation, progres s was also 
made on international cooperation and systematic  exchanges of pre-arrival information with 
neighbouring countries. The Serbia n customs administration led its  first operation as part of 
its cooperation with the South-East European Cooperative In itiative Centre wi th the aim of 
revealing channels for smuggling textile goods.  
Implementation of the integrated border manage ment strategy and action plan has continued. 
In cooperation with neighbouring co untries, Serbia has also con tinued to work on simplifying 
controls on goods and passenger ra ilway traffic with the aim of  reducing transit times at 
border crossings. Furthermore, the country ha s applied for membership of the Customs 
Transit Convention. In April 2009 Serbia  joined the Customs 2013 Programme. 
Overall , Serbia is already well on the way to meeting the SAA requirements and remains 
committed to reforms in the area of customs. However, Serbia’s customs and IT infrastructure and procedures, risk-analysis system, post-clear ance controls and human capital in this area 
need to be further strengthened.  
In the area of taxation , some progress has been observed. In January 2009 parliament adopted 
a set of budget laws, including amendments to the Laws on excises, administrative taxes, 
property tax, social security contributions and pension and in validity insurance. The customs 
duties on imported cars decreased from 20% to 12.5%, whereas excise duties on oil 
derivatives, especially car fu els, and on beer and cigarett es and the tax on luxury goods 
increased. Parliament also adopted new taxes on mobile telephony. There was little progress 
on approximation of tax legislation to the acquis  regarding direct taxation.  
The tax administration stepped up its efforts to  improve tax collection. Tax revenue had been 
rising constantly since 2003. However, in early 2009 the tide turned, due to the decline in 
overall economic activity. Progress has been ma de on enforcement. In 2008 some 58% of the 
registered debts were collect ed, as opposed to 50% and 54% in the two previous years . In 
addition, the tax administration ha s continued to identify ‘ghost ’ companies and successfully 
implement its audit programme. It has also co ntinued work on introduc tion of e-government.  
The administrative capacity  of the Serbian tax administra tion has improved as a result of 
training and education. At th e beginning of 2009 about 500 out of its 6,800 employees were 
on various training courses. The tax administrati on also needs to recrui t more staff with the 
qualifications sought, especially in the IT sector.  
International cooperation between the Serb ian tax administration and its counterparts 
continued to improve. Implementation of the bi lateral agreements ratified has continued, in 
particular on issues such as avoidance of  double taxation and on cooperation and mutual 
assistance. 
Overall , in the area of taxation, Serb ia is well on the way to meeting the requirements of the 
SAA. The enforcement capacity of the tax ad ministration and tax collection has further 
improved. However, the problem of the informal  economy has not been tackled. Serbia needs 
to continue improving collection of registered tax debts. The tax legislation remains partly 
aligned with the acquis  and certain provisions, most notably on excise duties and VAT, 
require further alignment. Serbia needs to take follow-up action to ensure that its tax 
legislation complies with the Code  of Conduct for business taxation. 
EN 35   EN 4.1.5.  Competition 
There has been good progr ess in the area of anti-trust . The new Law on Competition 
Protection was adopted in July 2009, following a wide and transparen t public debate. It 
revised the notification threshold for merg ers and introduced the possibility for the 
competition authority to impose fines. These legi slative developments mark a step forward in 
alignment with the SAA and the Interim Agreem ent. A number of implementing laws need to 
be adopted. 
In 2008 the Commission for the Protection of Co mpetition dealt with about the same number 
of cases as in 2007, further building its track recor d. As in previous years, the majority of the 
competition cases in 2008 (around 84%) related to merger control. The number of cases concerning agreements which considerably preven t, restrict or distort competition more than 
doubled in 2008, compared with the previous year . The number of cases of abuse of dominant 
positions decreased to two in the same period . Work on competition advocacy among 
government officials, regulators, judges, the business community and th e general public has 
continued. However, the Commission for the Pr otection of Competition needs to strengthen 
its capacity to carry out economic analyses when dealing with cases. The enforcement 
capacity of the judiciary remains weak  for lack of specialised knowledge. 
There has been progress in the area of State aid . The Law on State Aid Control was adopted 
in July 2009. It provides for establishment of an  operationally independe nt State aid authority, 
as required by the SAA and the Interim Agreem ent. Moreover, in September 2009 the Serbian 
government adopted the State aid inventory for 2008. However,  Serbia’s monitoring and 
administrative capacity in the ar ea of State aid is still weak. 
Overall , Serbia remains moderately advanced in  meeting the SAA requirements the area of 
anti-trust, including mergers. Th e new legislative framework needs to be completed and fully 
enforced. The new legislation on State ai d needs to be followed up by adoption of 
implementing legislation and establishment of an operationally independent State aid 
authority. 
4.1.6.  Public procurement 
Good progress has been made in the area of public procurement. 
Serbia adopted a new Law on Public Proc urement in December 2008 and implementing 
legislation in July 2009. The law paved the way for a major overhaul of the Serbian procurement framework and is a positive step towards alignment with the acquis . It has 
brought about several changes, such as cer tification of professional public procurement 
officials, introduction of e-procurement and esta blishment of an electronic public procurement 
portal, the possibility of court review in public procur ement cases, introduction of anti-
corruption clauses and institutional independenc e of the public procurement bodies, notably 
the Public Procurement Office and the Commi ssion for the Protection of Rights in public 
procurement matters. There are nevertheless ce rtain shortcomings in  the new legislation 
regarding the definition of public  bodies, the scope of exempti ons and excluded contracts and 
the conditions for use of the restricted procedure.  There is still a need for further efforts to 
prepare an appropriate regulator y framework on concessions.  
Serbia needs to ensure the full implementati on of the new Law by electing members of the 
new Commission for the Protection of Bidders' Rights and by ensuring sufficient financial 
resources for the public procurement bodies . The strategy for upgrading the public 
EN 36   EN procurement system in Serbia needs to be finalised. The weaknesses in the public 
administration’s internal and external audits are undermining the effectiveness of the public 
procurement system as a whole. Administrativ e capacity and coordination mechanisms of the 
main stakeholders in the public procurement system still need further strengthening, in 
particular to reduce the scope for corruption. 
Overall , Serbia is moderately advanced towards establishing an effective and fully 
independent public procurement system with  streamlined award procedures. Additional 
efforts remain necessary on strengthening the ca pacity to implement the requirements of the 
SAA in this field. 
4.1.7.  Intellectual property law 
Progress has been made in the area of intellectual property rights . The Intellectual Property 
Office continues to play the role  of national coordinator for in tellectual property rights and a 
new management team was appointed. The Intellectual Property Office has started 
preparations for drafting a national intellectual pr operty rights strategy an d establishing an in-
house education and information centre. Following the changes in the General Administrative 
Fees Act, the fees of the office have been subs tantially increased. However, the office is still 
under the State financing rules a nd has not yet been establishe d as a financially autonomous 
agency. No new legislation, notably on optical disks has been adopted. 
In relation to industrial property rights , Serbia is preparing for full membership of the 
European Patent Office. A number of inte rnational conventions (including the Vienna 
Agreement, the Strasbourg Agreement and the Ge neva Act) were ratified by parliament in 
May 2009. No progress has been made on copyrights and related rights  in the reporting 
period. Although Serbia's copyright legisl ation is largely aligned with the acquis , 
shortcomings persist, in particular wi th respect to rental and lending rights. 
In the field of enforcement, some progress can be  reported. As part of th eir daily controls, tax 
inspectors have been taking increasing action agai nst pirated software an d databases. Seizures 
by market inspectors have further improve d, thanks to new technical equipment and 
additional training. The customs administration, although short-st affed, has continued to make 
progress on enforcing intellectua l property rights, both in response to requests by companies 
and ex officio . For this purpose, an elec tronic database of custom s offences in intellectual 
property rights matters has been set up. Howeve r, the issue of inadequate storage space for 
counterfeited and pirated goods that infringe co pyright and related right s or other industrial 
property rights has not been addr essed. Also, there is still a shortage of judges specialising in 
this area, which leads to inefficiency in the system for protection of  intellectual property 
rights as a whole.  
Overall , Serbia’s preparations in the area of intellectual property law are moderately 
advanced. The legislative alignment required by the SAA is well advanced but administrative 
capacity and enforcement, especially in relation  to training for judges, remain weak. Public 
awareness-raising activities also need to be  sustained in the fight against piracy and 
counterfeiting. An overall national strategy on intellectual property rights is missing.  
4.1.8.  Social policies, employment  and public health policy 
Regarding social policies , an amendment to the Labour Law  adopted in July 2009 extended 
employers’ possibility to grant paid leave for over 45 days. 
EN 37   EN Good progress has been made in the area of health and safety at work  in the form of new 
legislation. The Regulation on Oc cupational Safety and Health at Work at Temporary or 
Mobile Construction Sites, based on the acquis,  was adopted in February 2009. In March 
2009 two by-laws were adopted with the aim of aligning with the acquis on temporary and 
mobile construction sites, health and safety  requirements at the workplace, use of work 
equipment and use of personal protective equipm ent. Also, the strategy on occupational safety 
and health for 2009-2012 was adopted in Ap ril 2009. Within the National Social and 
Economic Council, a permanent working party has been established to de al with occupational 
health and safety. However, the number of accidents at work remains high.  
As regards social dialogue,  the Social and Economic Council has met more frequently and all 
four specialised bodies (on le gislation, the economy, collectiv e bargaining and health and 
safety at work) are now operati onal. Social and economic councils  have also been established 
at local level (16 in all), but only a few of them  are operational. The input  of social partners 
into decision making process remains quite li mited and the operations of the Council still 
need to be improved. Moreover, bipartite social dialogue is still rather weak. 
Regarding social inclusion , the Serbian poverty reduction strate gy has continued to contribute 
to reducing the number of people living in ab solute poverty. However, with the economic 
crisis, poverty levels are likely to rise. Fighting poverty and soci al exclusion of vulnerable 
categories of the population, with particular reference to the Roma population, IDPs and some 
pensioners, remains a key challenge.  Promoting social inclusion pl ays an important role in 
contributing to national cohesion. The UN Convention on the Rights of Persons with 
Disabilities and the Optional Pr otocol was ratified by the Se rbian Parliament in May 2009. 
Concerning anti-discrimination , the new Law on Prohibition of Discrimination is a welcome 
step towards the implementation of the European standards in this field. However, certain definitions relating to discrimination still need to be better formulated. A number of exceptions are wider than allowed under Europ ean standards and the rights of NGOs and 
associations to pursue discrimination before the courts still need to be clarified.  Vulnerable 
groups, such as Roma, persons and children with  disabilities and th e lesbian, gay, bisexual 
and transgender (LGBT) population, remain the most exposed to discrimination.  
As regards gender equality, the Government a dopted the National Strategy for the Improved 
Status of Women and Promotion of Gender Equa lity. The Gender Equality Act still needs to 
be adopted and women continue to f ace discrimination in the labour market. 
In the area of social protection  the process of de-institutionalization of parentless children has 
continued with the number of children in in stitutions decreasing a nd the number of those 
children staying with families increasing. The Cent re for Family Care started providing help 
and support to host families in Belgrade in December 2008. Significant amounts were invested in social protection inst itutions providing care for persons  with special needs. In line 
with the national strategy, local strategies for social protection were la unched in 122 Serbian 
municipalities. Training program mes for employees in social protection institutions have 
continued with more than 600 participants in January and February 2009 alone. 
Good progress has been made on employment policy . In March 2009, the government 
adopted the national acti on plan for employment for 2009 as part of the employment strategy. 
Active policy measures aimed at boosting employ ment, particularly in SMEs, were provided 
for in the 2009 budget and implemented in the c ourse of the year. The government continued 
EN 38   EN with the start-up loans aimed at  generating new jobs. All these measures have been used to 
counter the impact of the economic crisis and maintain the level of employment.  
In 2008, the employment rate rose to 53.3%, compar ed to 51.5% a year ea rlier, but then again 
fell to 50.8% in April 2009. The registered unem ployment rate fell to 14.8% compared to 
18.3% in 2007. This rate also rose in April 2009 to 16.4%. However, the drop in unemployment between 2007 and 2 008 was mainly due to met hodological changes. Without 
these changes the rate would have stood at around 17.5%. 
In May 2009 two laws were adopted: the La w on Employment and Unemployment Insurance 
and the Law on Vocational Rehabilitation and Em ployment of Disabled  Persons. The aim of 
the new Law on Employment is to establish an efficient and flex ible legal framework in order 
to achieve the highest possible level of empl oyment. The Law on Vocational Rehabilitation 
and Employment of Disabled Persons bette r regulates several areas related to the 
employability of disabled people. The Ministry of Economy and the National Employment Service have increased their organisati onal capacity. Work has also continued on 
development of regional training  centres under the National Em ployment Service. This has 
helped to create new jobs. In March 2009 the government adopted two action plans for, respectively, the implementation of the strategy for the development of vocational education and training in Serbia and the implemen tation of the adult education strategy. 
However, reforms of the employment services  have also been delayed and, although some 
progress has been made, the effectiveness and administrative capacity of the National 
Employment Service are not yet sufficient. Furt her efforts are needed to improve coordination 
and collaboration between the Ministry of Economy and the National Employment Service. 
Further progress was made in the field of public health  policy,  although more efforts must be 
made towards alignment with and implementation of the acquis . The Law on Public Health, 
along with the laws on organ transplantation, on ti ssues and cells transplantation, on infertility 
treatment by biomedical assisted fertilis ation and on blood transfusion were adopted. 
Cooperation with the European Centre for Disease Prevention and Control has begun. The 
National Health Council was constituted in Ap ril 2009, consisting of 15 members with a five-
year mandate. This professional and consultative institution is, inter alia , in charge of 
developing the quality of the healthcare system, the organisation of health services and the 
health insurance system and bringing them in to line with European and international 
standards. The Health Insurance Fund has 
introduced a functioning IT system and developed a 
database of insured persons. There has been progress in the reform of primary healthcare. 
Awareness-raising campaigns, such as on the harmful effects of smoking and exposure to second-hand smoke, have been stepped up to  boost preventive healthcare. A number of 
strategy papers were adopted, notably on public health, the fi ght against drugs and alcohol 
abuse, tobacco control, preven tion of breast and colorectal cancer, mental healthcare for 
young people, healthcare quality and patient safety. In the field of communicable diseases, a national focal point was appoint ed within the framework of  the international health 
regulations. A waste management system has been established at health institutions 
throughout the country and administrative capacit y has been strengthened in this area. 
However, the administrative capacity within the Public Health Institute is still very limited. 
Furthermore, funding in the public health sector is  still low. In the area of mental health, the 
government continued to take measures aimed at  de-institutionalisation of mental healthcare 
and at developing and building up the capacity of community-based services. However, the 
related community-based services are still in sufficiently developed and continued focus is 
EN 39   EN needed on mental health care for children and young people. Further efforts are needed in the 
area of public health in  order to strengthen th e administrative capacity and implement a more 
patient-oriented system based on the national strategy for impr ovement of health service 
quality and patient safety that was adopted in February 2009.  
Overall , Serbia’s capacity to implement employm ent policies effectively has improved, but 
unemployment remains a cause for concern. C oordination and harmonisation with other 
policies remain insufficient to reduce unemploym ent. With regard to social policies and 
public health policy, the legislative framework n eeds to be developed and existing legislation 
needs to be properly implemented. 
4.1.9.  Education and research 
Some progress has been made with regard to European standards on education . 
Serbia is largely meeting the EU Education and Training 2010 benchm arks concerning early 
school leavers and upper secondary attainment. Th ere has been an increase in the proportion 
of tertiary graduates in mathem atics, science and technology. Howe ver, participation of adults 
in lifelong learning is well below the EU average and has not increased since 2001. 
Reforms aimed at adapting the higher educati on system to the Bologna requirements are 
continuing. The process of accreditation of high er education institutions is on-going. The 
ministry has established a depa rtment that will be responsible for implementation of EU-
funded projects in this area. 
An action plan was adopted for the implementa tion of the strategy for the development of 
vocational education and traini ng, and another one for the implementation of the adult 
education strategy. Adult training has been deve loped in five regional  training centres in 
Serbia but needs to be put in place more system atically. Limited administrative capacity and 
weak coordination between the in stitutions concerned are still causes for concern. The agency 
for vocational education and training and a dult education needs to be established. 
Future challenges include adopting a Nationa l Qualification Framew ork, making the higher 
education system more flexible  and responsive to the needs of  the labour market, improving 
links between university education and vocat ional education and tr aining, facilitating 
enrolment in higher education institutions and improving reco gnition of informal learning. 
Financing of education is still low, on 3.4 % of GDP, and there has been limited investment in 
infrastructure. Moreover, there is insuffici ent funding from local governments and limited 
involvement of the business sector.  
Good progress has been made in the field of culture . Serbia has continued to participate in the 
Community's Culture Programme. A contact point has been established within the Institute 
for Cultural Development Research to provide in formation and encourage participation in the 
programme. The UNESCO Convention on the Prot ection and Promotion of the Diversity of 
Cultural Expressions was ratified in May 2009. A new Law on Culture was adopted in August 
2009. 
In the area of science and research,  Serbia has been very active and successful in obtaining 
research projects under the Seve nth EC Research Framework Pr ogramme (FP7). A promotion 
bureau for research cooperation with internatio nal partners has been set up. However, further 
efforts on research cooperation under FP7 remain necessary in particular  with respect to the 
EN 40   EN involvement of SMEs and the mobility of scie ntists. The fact that Serbia also became 
associated with the Competition and Innovation Programme (CIP) is a positive step towards 
engaging the private sector in research and i nnovation. The procedure to associate Serbia with 
the Seventh Euratom Research Framework Pr ogramme (2007-2011), as requested by Serbia, 
is proceeding well and the aim is to make the association effective in  the course of 2010. 
Possibilities for increased cooperation between Serbia and the Joint Research Centre (JRC) 
are under discussion. 
With respect to designing an integrated res earch policy aiming inter alia at increasing 
investment in research and ensuring a sufficient number of scientists, Serbia proposed a draft 
national strategy in August 2009. Adoption and im plementation need to follow as part of 
Serbia's integration into the European Resear ch Area. National funding of research is still 
very low.  
The national EURAXESS Jobs Portal as well  as the EURAXESS Services Network, which 
aims to facilitate the mobility of researchers, has been established in a fully satisfactory way. 
Overall , Serbia needs to continue its efforts to imp rove the education syst em, particularly as 
regards funding mechanisms, development of vocational training and adult education, and 
recognition of informal learning.  Substantial efforts are need ed to facilita te Serbia’s 
integration into the European Research Area and strengthen its national research capacity. 
Good progress has been made in the field of culture. 
4.1.10.  WTO issues 
Serbia’s preparations to join the World Tr ade Organisation (WTO) are well advanced. A big 
step forward has been taken on the bilateral track of negotia tions. Progress has also been 
made on the multilateral track, with the adoption of WTO-compatible laws (such as the Law 
on Standardisation). However, finalisation of the process will depend on the pace of further legislative reforms. Serbia is well-placed to m eet its objective of joining the WTO in the near 
future. 
4.2. Sectoral Policies 
4.2.1.  Industry and SMEs 
Serbia has made some progress in the SME  sector. 
It has moved from the phase of formulatin g policy and defining strategic objectives to 
implementing policy in areas such as innovativ e companies, start-ups , provision of business 
services and dissemination of information.  
A new strategy for the development of competitive and innovative SMEs was adopted in 
October 2008. The SME Council took it as the ba sis for adoption of the 2009 action plan. The 
performance of the institutional framework fo r SMEs has further improved. In particular, 
cooperation and coordination between the various stakeholders have been strengthened. The 
SME Council, which is made up of  representatives of various mi nistries and entrepreneurs, 
meets regularly and is effective. The Agen cy for SME Development, one of the key 
stakeholders, has developed a network of regi onal agencies and lo cal offices providing non-
financial support. A one-stop shop for business re gistration has been established within the 
Serbian Business Registration Agency. Appli cation of the new legislation on electronic 
signatures has also started.  New legislation on the chamber of commerce system has been 
EN 41   EN adopted introducing affiliation on a voluntary basis. However, the law will not enter into force 
until 2013. Serbia remains fully committed to th e European Charter for Small and Medium-
sized Enterprises, to which it provided high-quality input. Inte rnal coordination is efficient 
and all the relevant bodies are partic ipating actively in the process.  
As regards the programme for the development of  business incubators a nd clusters, about 20 
incubators are operating. In addition, 20 clusters  are at various stages of development, 14 of 
which have obtained direct fi nancial support from the Ministry of Economic Affairs. 
Regarding the regulatory burden on businesse s, the Council for Regulatory Reform is 
continuing its work on the plan to reduce existi ng laws and regulations by one quarter by the 
end of 2011. However, so far the effects of  the reform have been very limited. 
In November 2008, Serbia signed a Memorandum of  Understanding for its participation in the 
Entrepreneurship and Innovation Programme (E IP) the first pillar of the community 
programme Competitiveness and Innovation Comm unity Programme (CIP ). Within this 
programme, Serbia is an active member  of the Enterprise Europe Network. 
Serbia has still not made any progress on developing and implementing a modern industrial 
policy . 
Overall , Serbia’s preparations in the area of indu stry and SMEs are well advanced and fulfil 
the relevant SAA requirements  
4.2.2.  Agriculture and fisheries 
Progress has been made in the area of agriculture and rural development, where efforts are 
ongoing on alignment with the acquis .  
The National Agricultural Programme for 2009- 2011 has been prepared but now needs to be 
adopted. Moreover, budgetary cons traints have affected the admi nistrative capacity of the 
Ministry of Agriculture, Fore stry and Water Management.  
The Law on Agriculture and Rural Devel opment was adopted in May 2009 providing the 
legal basis for the establishment of a paying agen cy and a managing authority in line with EU 
requirements. They will serve as the managing authority and IPARD agency in the future. The 
government adopted a Decree on the use of s ubsidies for rural deve lopment through support 
measures for the improvement of economi c activities of rural inhabitants in 2009 . The Serbian 
authorities already have some experience with channelling financial support to farmers from 
the national budget. The national rural development network has expanded and now has 14 regional rural developm ent centres and 140 sub-regional offices. 
The National Strategic Plan for Rural Developm ent, on which a public consultation was held, 
and the National Programme for Rural Developmen t still need to be adopted. Furthermore, an 
inter-ministerial mechanism for coordination of policies related to rural development still has not been established. The rural development unit w ithin the Ministry of Agriculture, Forestry 
and Water Management is understaffed and the National Agency for Rural Payments (Directorate for Agrarian Payments) and the managing authority are yet to be established. 
Progress has been made in the wine sector. The new Law on Wi ne was adopted. The vineyard 
and wine sector registers required by the law have been partially established. However, a 
sustainable system for vineyard and wine management and inspections has yet to be 
EN 42   EN established. The capacity of the relevant uni t within the ministry needs to be further 
strengthened. A national networ k of oenology laboratories ha s yet to be established.  
Support for the development of organic produc tion continues. The number of accredited 
certifying organisations for or ganic production slightly increased in 2009 and progress has 
been made in terms of alignment with the acquis . 
Some progress can be reported in the area of food safety . The new Law on Food Safety was 
adopted in May 2009 . It clarifies  the responsibilities of a nd cooperation between the 
ministries responsible for food chain safety. Ve terinary inspection - fo rmerly transferred to 
the newly established General Inspectorate - has been reorganised. A new allocation of 
responsibilities for inspections has been intr oduced which improves the framework for the 
control activities.  
Serbia is still at an  initial stage with re gard to the upgradi ng of food and by-product 
establishments. No establishments  have yet been appr oved for export of m ilk or milk-based 
products to the EU. Implementing legislation on the qual ity of raw milk has been published. 
There are still a number of deficiencies in th e food chain safety. Further improvements are 
needed in implementation of the hazard analysis  critical control points (HACCP) principles.  
Some progress can be reported in the veterinary area. The Law on Animal Welfare was 
adopted in May 2009. Action plans for improvem ent and extension of the system for the 
identification of bovine animals and for the re gistration of their movements were adopted. A 
strategy for exchanges of data from the animal identification and registration IT systems with 
other IT systems was endorse d by the Ministry of Agricu lture, Forestry and Water 
Management. The rulebook on bovine animal iden tification and registration development was 
adopted in July 2009 together with three rule books for the eradicati on of bovine diseases. 
However, Serbia still needs to  adopt the amended version of the Framework Veterinary Law 
and the relevant rulebooks for implementation of the action plans. The IT systems of the 
Veterinary Directorate (including the system  for the identification of animals and the 
registration of their movements) need furt her upgrading and streng thening in terms of 
staffing. The Veterinary Direct orate still needs training activ ities, notably on implementation 
of official controls of regist ration of holdings and animals.  
Progress towards upgrading laboratories for the control of food chain safety has been 
limited. According to the Law of Food Safety a national reference laboratory has been 
established with defined respons ibilities. An information management system for veterinary 
laboratories has not yet been integrated with the veterinary information system because of 
lack of funding. 
There has been some progress in the phytosanitary area. The Law on Plant Health, the Law 
on Plant Protection Products and the Law on Protection of Plant Breeders' Rights were 
adopted in May 2009. There is st ill no annual programme on plant health measures for 2009. 
A phytosanitary laboratory info rmation management system has not yet been developed. 
In the area of fisheries , the Law on Sustainable Use of Fi sh Funds and the Law on Livestock 
Breeding have been adopted. The Regulation on th e closed season for certain fish species and 
the minimum landing size was adopted to comply  with international conventions. However, 
the new Law on Sustainable Use of Fish Funds  does not cover all fishing activities. The 
distribution of powers between the Ministry of the Environment and the Ministry of 
EN 43   EN Agriculture needs to be clarified. No progre ss has been made on marketing standards for 
fisheries products or on structural policy. 
Overall , in the area of agriculture Serbia is ad vancing in fulfilling the SAA requirements and 
its European Partnership priorities. The administ rative capacity of the Mi nistry of Agriculture, 
Forestry and Water Management needs to be strengthened. Serbia needs to improve even 
further its record on implementa tion of food safety, veterinar y, phytosanitary and agricultural 
and rural development policies. Institutional coor dination of the food chain safety needs to be 
ensured. Veterinary, phytosanitary , wine and sanitary laboratorie s, inspectorates and controls 
need to be upgraded. Further efforts are still need ed in the fisheries sector in order to comply 
with the relevant parts of the acquis.  
4.2.3.  Environment 
Good progress can be reported in the area of the environment, notably with the adoption of a 
large package of laws and the ratification of several international conventions.  
As regards horizontal legislation , the Law on Environmental Impact Assessment (EIA) and 
the Law on Environmental Prot ection were amended. The Aarhus Convention on Access to 
Information, Public Participation in Decisi on-Making and Access to Justice was ratified.  
The cleaner production strategy wa s adopted to implement part of the national strategy for 
sustainable development. There has been an in crease in the number of  awareness-raising and 
environmental clean-up activities, notably for cleaning up large waste tips, thus preventing 
further pollution and strengt hening the green industry. 
The Serbian Environmental Protection Agency  has maintained a good level of cooperation 
with the European Environment Agency on the European environment information and observation network. However, the rules on envi ronmental impact assessment and strategic 
impact assessment are not fully enforced. The e nvironmental departments at local level still 
lack the necessary capacity, awareness and specialist knowledge in these fields. 
Serbia has taken further steps in approximating to the Europ ean Eco-Management and Audit 
Scheme (EMAS) by adopting the rulebook on conditi ons, procedures for acquiring the right to 
use the eco-label.  
In the area of air quality, progress can be reported, with the adoption of the Law on Air 
Protection. A National Ozone Office was established within the Mi nistry of the Environment. 
The capacity for monitoring and managing air qua lity has been strengthened. Concerning 
climate change, the administrative structures to implement the Kyoto Protocol are being 
established. The inter-ministerial body for the clean development mechanism (CDM) is now operational and a rulebook regulatin g criteria for approval of CD M projects and of procedure 
for designated national authority operations ha s been adopted. However, the national strategy 
for inclusion in the CDM under the Kyoto Protoc ol and the greenhouse ga s inventory need to 
be finalised. 
Progress can be reported on waste management, with the adoption of the Law on Waste 
Management and the Law on Packaging and Pack aging Waste. Implementing legislation has 
been adopted, transposing the relevant acquis . However, the waste management strategy and 
the national plan for waste management at both na tional and local levels need to be finalised.  
EN 44   EN There has been li ttle progress on water quality. Serbia signed  the Protocol on prevention of 
water pollution of the Sava River. Howe ver, the new Law on Water introducing new 
instruments for financing the water sector, in cluding appropriate tariffs, has not yet been 
adopted. There is no system to monitor nitr ates concentrations and contamination in 
groundwater. The wastewater treatment infr astructure throughout the country needs 
upgrading. 
Progress can be reported on nature protection, with the adoption of the Law on Nature 
Protection, along with several by-laws. A network was established to identify areas of special 
conservation interest. However, the national strategy for biodiversity conservation and the 
related action plan need to be finalised.  
On industrial pollution cont rol and risk management , a number of by-la ws were adopted, 
notably on submission of integrated permit app lications. The first integrated permits are 
scheduled to be issued in 2009 to 2010. The list of installations which will have to comply 
with the Integrated Pollution Pr evention and Control Directive before 2015 is being revised. 
Progress can be reported on chemicals, with the adoption of the La w on Chemicals and of the 
Law regulating the placing on the market of bi ocidal products and the ratification of the 
Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade. Steps have been taken to implement the Stockholm Convention on Persistent Organic Pollu tants. The national pr ofile for chemical 
management, a preliminary inventory of  discarded persistent orga nic pollutants, has been 
created. . The decision on establishing a Chemi cal Agency, a regulatory and implementation 
body dealing with biocidal products and ch emicals was adopted by the government.  
Serbia has adopted a new Law on genetically modified organisms  (GMOs). The law bans 
imports of genetically modified reproductive mate rial but allows imports of soya bean meal 
with a certain degree of modification. 
Progress can be reported on noise,  with the adoption of the Law on Noise Protection which, 
notably, establishes the powers of the various inspectorates. 
Positive steps have been taken towards strengthening the administrative capacity . The 
environmental protection inspectorates c ontinued to receive specific training.  
The Environmental Protection Fund is active, es pecially in the field of waste and hazardous 
waste management, sanitation, soil reme diation and air quality monitoring. 
However, the institutional capacity and technica l and human resources remain insufficient, 
especially at local level. Better coordination with the central level is needed and greater 
attention will have to be paid to enforcement.  The Water Directorate within the Ministry of 
Agriculture, Forestry and Water Manageme nt remains understaffed and its institutional 
capacity inadequate. The division of res ponsibilities for water management remains 
fragmented . Overall, the capacity for wa ter management remains weak. 
The Environmental Protection Agency remains fully operational  and its performance is 
improving. However, it still lacks the capacit y to ensure proper implementation of the 
integrated monitoring strategy. Budgetary resources  for environmental protection remain low.  
Overall , Serbia is moderately advanced in the area of environmental protection, and has 
continued to adopt a number of important la ws thereby advancing well in fulfilling the 
EN 45   EN requirements of the SAA. However, enforcement of  the legislation needs to be improved at all 
levels. In this regard, further efforts ar e needed to build up administrative capacity. 
4.2.4.  Transport policy 
Serbia has made some progre ss in the area of transport. 
The government has approved the 2009 annual pr ogramme for implementation of the strategy 
on the development of rail, roa d, water, air and inter-modal transport for the period from 2008 
to 2015, which lays down the financial resources and an implementation schedule. 
Some progress has been made in the area of trans-European transport networks . Serbia has 
continued to participate act ively in the implementation of the 2004 Memorandum of 
Understanding on the development of the Sout h East Europe Core Regional Transport 
Network, and in the South East Europe Tran sport Observatory (SEETO) particularly by 
updating and implementing the Multi-annual Plan 2009-2013 . The National Council for 
Infrastructure adopted the national plan for the c onstruction of road and rail infrastructure for 
the period 2008-2012 and the action plan for the c onstruction of road and rail infrastructure 
for corridor X for 2009, which lists the infrastruc ture projects to be undertaken along corridor 
X and the national and international resources to  be secured. Work has started on some of the 
rail and road infrastructure proj ects provided for in the action pl an for corridor X. The general 
master plan covering infrastructu re projects for all modes of tr ansport up to 2027 needs to be 
finalised. The Corridor X Company was set up as a subsidiary of the pub lic entity ‘Roads of 
Serbia’ with the task of implemen ting the action plan for corridor X. 
In the case of road transport , some progress can be reported. The Law on Road Safety, 
imposing an obligation to conduct a road safety audit and inspection and impact assessments, was adopted in May 2009. However, the necessary legislation transposing the acquis  on road 
haulage, transport of dangerous goods and pass enger transport has stil l not been adopted. In 
December 2008 bilateral and tran sit road transport with Bosnia and Herzegovina was 
liberalised. The government adopted a decision establishing a single tariff for domestic and 
foreign vehicles with effect from February  2009, harmonising the road tolls and thereby 
meeting one of the main requirements in the provisions of the Interim Agreement on road 
transit traffic.  
There has been limited progress on rail transport . There has been no progress towards 
gradual opening of the rail trans port market. Amendments to the Railways Law have yet to be 
adopted and this is preventing a number of refo rms. The Directorate fo r Railways is still not 
fully carrying out its role as a regulatory body. Separation of in frastructure management from 
provision of transport services  is still pending, as is se paration of the accounts between 
operations and services. The conditions for market  opening are not in pl ace. The sector still 
needs major restructuring, though staff of the in cumbent railways has been reduced. Work on 
the network statement has advanc ed, but with the decision on th e infrastructure charges still 
pending, the network statement has not been finalised.  
In the field of inland waterways , in May 2009 Serbia has ratifi ed the Protocol on combined 
transport on inland waterways to the Euro pean Agreement on Impor tant International 
Combined Transport Lines and Related Installa tions. The Law on Inland  Waterway Transport 
has yet to be adopted and Serbia still needs to ra tify further European agreements in this field. 
Development of infrastructure, particularly along  the Danube and Sava, and of inland ports as 
intermodal terminals, including port facilities and security requirement , still requires special 
EN 46   EN attention and earmarked resources . Consideration should also be given to potential security 
requirements for inland port facilities and ports. 
There was little progress in the area of combined transport and inter-modality. The limited 
liability company set up as a subsidiary of the Serbian railways for combined transport is still 
not operational.  
In the area of air transport,  the Agreement on a European Common Aviation Area (ECAA), 
the Montreal Convention and the Horizontal Ag reement on Certain Aspects of Air Services 
were ratified in May 2009. Impl ementation of the first tran sitional phase of the ECAA 
remains to be completed. Some progress wa s made towards harmonisation of national 
legislation with the acquis  in fields such as aviation safety  and air traffic management. Serbia 
has made good progress in the area of air tra ffic management but furt her approximation to 
European standards is still required . Serbia has made use of the ISIS6 Programme set up by 
the European Commission to assist States of  the South East Europe to transpose Single 
European Sky legislation. In addition, it Serb ia has participated actively to the Single 
European Sky Committee. In the field of safe ty, relations with EASA have been put on a 
formal footing by a working arrangement signed in July 2009. 
However, the provisions on market access have not been applied by Serbia in line with the 
ECAA Agreement . Some issues are still pendi ng before Serbia can move on to the second 
transitional phase, which includes implementa tion of the legislation on ground handling, 
accident investigation, search and rescue a nd a number of ECAA air traffic management 
commitments and the participati on of Serbia in a functional ai rspace block. The Law on Civil 
Aviation, which should be in compliance wi th the ECAA Agreement, has not yet been 
adopted. Privatisation of the national carrier – JAT Company – was declared unsuccessful.  
The administrative capacity of the Ministry of In frastructure still needs to be reinforced in 
order to be able to fulfil the obligations as regards alignment of the national legislation with 
the acquis . The distribution of tasks between the mini stry and the Civil Aviation Directorate is 
unclear. 
Overall , Serbia is relatively advanced in the area of transport and has progressed well in the 
implementation of the requirements of the SAA and the interim agreement. However in the area of air transport problems with the impl ementation of the ECAA Agreement have arisen 
and must be resolved to allow for ma rket access. Further alignment with the acquis is still 
necessary. The administrative and structural re form of the relevant departments is still 
pending. 
4.2.5.  Energy 
Some progress was made in the ener gy field during the reporting period.  
Security of supply is progressing moderately, with a slight increase in gas reserves. A 
memorandum of understanding was signed with Russia on development of an underground 
gas storage facility in Banatski Dvor on17 June 2009 ].Construction of the facility is almost 
complete, with a view to securing gas supplies in the event of unexpected cuts from current 
sources. A joint stock company for the storage faci lity is due to be esta blished by the end of 
2009. Natural gas interconnections between Serbia and other coun tries in the region remain 
                                                
 
6 Implementation of Single European Sky In South Eastern Europe. 
EN 47   EN limited. The necessary investment in gas infrastr ucture still needs to be secured. As regards 
electricity interconnections, construction of  a 400 kV overhead line between Niš and 
Leskovac has been  completed and the section from Leskov ac to the border with the former 
Yugoslav Republic of Macedonia is under constr uction. Preparatory work is under way on the 
feasibility of improving interconnections with  Romania and with Bo snia and Herzegovina. 
Oil stocks  remain far below European requirements.  
Serbia continued to make good progress in the context of the internal energy market . The 
electricity sector has separate d transmission from other costs.  The electricity transmission 
system operator has, to a larg e extent, become financially su stainable. Formal opening-up of 
the electricity and gas markets to non-house hold consumers has been completed. The Energy 
Agency has been working well, in line with Energy Community Treaty requirements. In the 
gas sector, the State-owned public enterprise  Srbijagas has fulfilled the requirements for 
unbundling of its accounts, but further restru cturing of the company is still pending. 
Amendments to the Energy Law, concerning th e supply function in both the electricity and 
gas sectors, have not been adopted. No progre ss has been made on sepa rating distribution and 
supply in the electricity sector . The deadlines set by the Energy Treaty have not been met. 
Further efforts are needed to  achieve unbundling and real mark et opening together with a 
pricing policy offering a sustai nable tariff reflecting costs. 
As a result of the agreement on cooperation in the energy sector with Russia, a contract was 
signed for the sale of the Serbian oil co mpany NIS to the Russian Gazprom Neft. 
Construction of the South Stream gas pipeline  through Serbia and establishment of a joint 
company for the gas storage facility in Banats ki Dvor are covered by a framework agreement. 
In May 2009 Srbijagas and Gazprom signed a cooperation agreement paving the way for 
establishment of a joint company that will build the South Stream section of the gas pipeline through Serbia.  
Little progress was made in the area of energy efficiency and renewable energy . The 
Serbian power generation sector  needs to comply with the acquis  before 2015, involving 
significant investments in specific projects. 
Serbia has made good progress in the areas of nuclear safety  and radiation protection . The 
Law on Ionising Radiation Protection and Nucl ear Safety Waste was adopted in May 2009. 
The provisions of the Law stipulate the next establishment of a nuclear regulatory agency. 
This agency is expected to be fully operationa l during the first half of 2010. Decommissioning 
of the Vin ča RA research reactor, preparation for the repatriation of spent nuclear fuel to the 
Russian Federation, and management of radio active waste on-site are progressing well. All 
the decommissioning activities at Vin ča are now being performed under a new Public 
Company for Nuclear Facilities of Serbia.  
Serbia has not ratified the Convention on Nucl ear Safety and the Joint Convention on the 
Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management.  
Significant progress was achieved. However, consid erable efforts still need to be made in 
order to align nuclear safety a nd radiation protection with the acquis  and best EU practices.  
Overall , Serbia is moderately advanced in terms of alignment with European standards in the 
energy sector. However, progress remains uneven. Environmental issues in the energy sector, 
remain to be addressed in order to comply with the Energy Community Treaty. 
EN 48   EN 4.2.6.  Information society and media 
Progress can be reported in the areas of the information society and electronic 
communications , notably with the adoption of the Law on Electronic Commerce which 
completes the legal framework for electronic bus iness in Serbia and the new Law on Public 
Procurement which allows electronic procur ement. The Law on Personal Data Protection 
entered into force in January 2009 and has star ted to be implemented. Action plans for the 
electronic South-East Europe Agenda Plus  and the Law on Electronic Documents were 
adopted. Concerning digital signatures, the by-laws necessary for qualified electronic 
signature were adopted and the first certif ication service provider was certified. 
Implementation of paperless government meeti ngs (electronic government) began in June 
2009. However, the digital divide  in electronic access and digi tal inclusion needs to be 
addressed and a broadband strategy needs to be finalised. IT capacity needs to be 
strengthened, especially  at local level, with a view to  e-government. Admi nistrative capacity 
for implementation of the legislation in this area is insufficient.  
The government finally included timelines in the action plan for the telecommunications 
strategy (2006 - 2010). Th e basic principles of the strate gy for switchover from analogue to 
digital broadcasting of radio and television programmes were approved in January 2009 and 
the digital switchover strategy was adopted in July 2009. The switchover date is set for 4 
April 2012. The Ministry adopted implementing legi slation on determination of the initial set 
of services of the universal  service in July 2009. An am endment of the Law on Urban 
Planning shortened the deadlines for the granti ng of building permits for the communications 
sector. 
The fixed telephony sector is not yet liberalised  in practice and there is still a lack of 
competition on this market. To supplement the fi xed-line network, in June 2009 two new code 
division multiple access (CDMA) technology licences were awarded (one to the fixed line incumbent operator, one to a new entrant ope rator) to provide CDMA-based internet and 
fixed wireless telephony services to the parts of  southern Serbia with  no access to landline 
telephony.  
Following the adoption of rules on the provision of Voice over Internet Protocol (VoIP) 
services and on intern ational connectivity in  2008 twenty-three VoIP authorisations were 
awarded, along with licences for internationa l connectivity. However, only few of the 
operators have yet become  active in the market. 
Rules on application of the cost-accounting princi ple, of separate accounts and of reporting 
were adopted and are in the process of bei ng applied to dominant companies on the market . 
The Regulatory Agency approve d new prices for fixed tele phony services and for cable 
services. It also adopted by-laws on radio-st ation permits and equipment, numbering plans 
and regulation of fees. However,  the October 2008 decision re garding tariff rebalancing was 
not put into effect.  
There is still no competition on the fixed telephony market. As tariffs have not been 
rebalanced and as other competitive safeguards such as number portability, carrier (pre-) selection and local loop unbundlin g have not been introduced, only few market players are 
interested in investing in the Serbian market . The Serbian State has an 80% share in the 
incumbent operator. However, the Ministry of Telecommunications has announced that it will 
organise a tender for a second na tional fixed telephony operator.  
EN 49   EN In June 2009 a 10% tax on mobile communicati ons was introduced as a temporary measure 
for the duration of the global economic crisis to help fill the current budget deficit. This tax 
could weigh heavily on the mobile telephony sector. 
In terms of administrative capacity, the Ministry  of Telecommunications still lacks sufficient 
human resources. The Regulatory Agency is in operation and financially autonomous. 
However, its independence needs to be streng thened and it lacks sufficient expertise to 
regulate a liberalised market. The nomination pr ocedure for those members of its management 
board whose mandates have expired has not yet started. 
Progress can be reported in the area of audiovisual policy. In May 2009 Serb ia ratified the 
European Convention on Transfrontier Te levision and the UNESCO Convention on the 
Protection and Promotion of the Diversity of Cultural Expressions. Amendments to the Law 
on Broadcasting were also adopted. This w ill allow election of the members of the 
Broadcasting Council, a process which has been delayed due to lack of  agreement on the final 
shortlist. The Law on Public Information was adopted, but not the new Law on Media 
Concentration or the Law on Advertising. The process of allocation of frequencies was 
completed in 2008.  
Progress can also be reported on the transpar ency, accountability and efficiency of the 
Broadcasting Agency. Since 2008 all the deci sions of the agency are published on the 
internet. In December 2 008 the Broadcasting Council  awarded 63 licences for broadcasting 
radio and TV programmes in regions, local area s and the city of Belgrade. After completion 
of the last tender, a total of  467 licences for broadcasting radio and TV programmes will have 
been issued. The agency opened a new branch of  its monitoring service in Novi Sad. Branches 
in Niš and Kragujevac are pla nned. The capacity of the agency  was reinforced by acquiring 
new equipment allowing more effici ent monitoring of broadcasters. 
Under the Broadcasting Law, privatisation of the broadcast media in Serbia was due by the 
end of 2007. However, this process was bloc ked by certain provisions of the Law on Local 
Self-Government and the Law on the Capita l City. The problem remains unresolved. 
Overall , preparations in the area of the informa tion society and media have continued. The 
relevant authorities have organi sed a number of awareness-raisi ng activities, training sessions, 
conferences and events. However, the inadequa te institutional and regulatory capacity needs 
to be addressed and real progr ess remains contingent on impl ementation of the legislation. 
4.2.7.  Financial control 
Progress has been made in the area of financia l control. A working gr oup led by the Ministry 
of Financial Affairs has prepared  a comprehensive policy paper on public internal financial 
control  (PIFC), which was adopted by government  in July 2009. The Budget System Law, 
which also includes the legal basis for PIFC, wa s adopted and entered into force in July 2009.  
The internal audit department of the Ministry of Financial Affairs will perform the function of 
central harmonisation of internal audits until a se parate unit is established. In ministries where 
internal audit units have been established, auditors generally lack experience and training. Managerial accountability and s ubsequent development of financial management control 
systems are still embryonic.  
With regard to external audit , the State Audit Instituti on has not yet become fully 
operational. Delays in allocati ng appropriate premises for th e office are continuing and only 
eight additional staff has been recruited in the past year.  
EN 50   EN Overall , Serbia is still at an earl y stage in its preparations for introducing public internal 
financial control and a new system of external audit. 
4.2.8.  Statistics 
There has been some progress on statistical infrastructure . Cooperation and coordination 
between the statistical office and other offici al producers of statistics have improved, in 
particular with the National Bank of Serbia and with the Ministry  of Finance. In January 2009 
the government adopted the development stra tegy for official statistics for 2009-2012. The 
new Law on Statistics, as well as laws regul ating the agriculture and population censuses, 
have not yet been adopted. The Statistical Offi ce has recruited a small number of new staff. 
However, budgetary allocations are not yet suffi cient to cover all the activities planned and 
additional staff is still needed. Metadata have  been prepared for all statistical domains.  
Little progress was made on classifications and registers. Development of the statistical 
business register is progressing very slowly . Introduction of the cl assification of the 
nomenclature of economic activities (NACE rev. 2) is pending, awaiting adoption of the 
legislation on the classification of business activities. The Stat istical Office still needs to 
create tools to convert codes from the old NACE version to th e new one. There has been no 
progress towards harmonisation of the Serbian re gional statistical classification with the 
NUTS Regulation of the EU. 
There has been progress on sector statistics . A pilot census on population and housing was 
carried out in April 2009. Preparations are bein g made for an agricultural census, one of the 
short-term priorities of the European Partnership. A pilot census will be conducted in December 2009. Pilot surveys on energy, innovati on and industrial waste have been carried 
out. A new method for air trans port statistics and the new cu stoms tariff based on the 2009 
Combined Nomenclature were introduced. A fu ll labour cost survey was conducted for the 
first time in 2008. The structural business statis tics were expanded to cover additional items 
from the EU Regulation on the subject. 
Overall , Serbia has made progress on statistics, but has advanced only moderately towards 
meeting the requirements of the SAA and the European Partnership. Further progress is 
needed on the business register. Additional efforts are needed to strengthen administrative capacity. 
4.3. Justice, freedom and security 
4.3.1.  Visa, border management, asylum and migration 
Good progress has been made in the area of visa policy  and in the wider framework of the 
visa liberalisation dialogue.  
In particular, Serbia has taken important steps towards the benchmarks set in the road-map for 
visa liberalisation and met the majority of conditions, allowing the Commission to include 
Serbia in its proposal of July 2009 for visa fr ee travel. Serbia issued more than 1.2 million 
biometric passports by September 2009. The admi nistrative infrastructure was amended and 
now provides for overall secure personalisation and distribution procedures with concrete 
measures having been taken to minimise the risk of corruption.  
The visa facilitation and readmission agreem ents between Serbia and the European 
Community continued to be implemented. Serbia exempts the citizens of all EU Member 
EN 51   EN States from visa requirements and maintains a visa-free regime for citizens of Croatia, Bosnia 
and Herzegovina, the former Yugoslav Republ ic of Macedonia, Montenegro and Turkey. 
Serbia's diplomatic and consular representations  continue to provide most types of visas for 
Montenegro on the basis of an agreement.  
However, Serbia has not yet fully aligned its le gislation with the EU negative list. Concerns 
over the integrity a nd security of national registers for pe rsons residing in Kosovo persist. The 
new Law on Registry Books, which was adopted in March 2009, is expected to improve this 
situation, but has not yet entered into force. A bilateral agreement on dual citizenship with 
Montenegro could not yet be concluded.  
Overall , Serbia is moderately advanced in terms of alignment to European standards in the 
area of visa policy. 
Progress has been achieved in the area of border management . The new Law on State 
Border Protection entered into force in Nove mber 2008 and a one-year deadline was set for 
adoption of the implementing legislation. Risk an alysis capacities have been increased and are 
being applied in carrying out border surveill ance. Some 1000 biometric travel document 
readers have been set up at  border crossing points.  
Regarding inter-agency cooperation, a coopera tion agreement between the main ministries 
involved in border management was signed in  February 2009. Coope ration between border 
police and other law enforcement authorities is satisfactory. Cross-border cooperation is 
improving. Bilateral protocols for the regular mee tings of the heads of border services have 
been concluded with Montenegro and the form er Yugoslav Republic of Macedonia. In March 
2009, a joint declaration on border security cooperati on in south-east Europe was signed by 
Serbia, Albania, Bosnia and Herzegovina, a nd the former Yugoslav Republic of Macedonia. 
A working agreement with Frontex was signed in February 2009. The signing of a police cooperation agreement with EULEX was comple ted in September 2009. Capacity-building 
activities, initial training and provision of equipment for the border police continued.  
However, important differences persist between  the 82 border crossing points. Infrastructure 
at long-established border cros sing points is generally accep table. Newer border crossing 
points, in particular with Montenegro, and th e control of the boundary line with Kosovo still 
show significant weaknesses. Not all border cros sing points are fully connected to the Single 
Information System. Further upgrading of equipm ent and an increase in staffing levels is 
needed. Basic and specialised training courses should be improved in line with the Common 
Core Curriculum for border guards.  
Overall , Serbia has started to address its priorities in the area of border control. However, it 
needs to step-up its efforts to address impor tant differences betw een individual border 
crossings. 
Little progress was made in the area of asylum . Implementation of the Law on Asylum 
continued. As the Asylum Office foreseen by the law has not yet been formally created, 
asylum claims are processed by an asylum un it within the Border Police. From September 
2008 to September 2009, 190 applications were rece ived; four of these applications received 
positive decisions in the first instance. The significant increase in asylum applications is due to larger numbers of applican ts from Afghanistan. First inst ance appeals are processed by the 
Asylum Commission, which is an indepe ndent administrative body, composed of 
governmental experts appointed by the Prime Mini ster. Judicial appeals against decisions of 
EN 52   EN the Asylum Commission may be lodged to the Supreme Court. The centre for asylum-seekers 
in Banja Koviljaca can accommodate 80 a pplicants in adequate conditions.  
However, there has been no forward-planning to address the potential increase in the number 
of applications and there is no coordination body responsible for in tegration of asylum-
seekers in Serbia. Serbia has still not acceded to th e UN Convention on Reduction of 
Statelessness. 
Overall , Serbia is moderately advanced in the area of asylum. 
There has been good progress on migration  management with the a doption of the migration 
management strategy in July 2009. A national stra tegy to fight illegal migration was adopted 
in March and the national strate gy for the reintegrati on of returnees was a dopted in February 
2009. Implementation of the EC readmission ag reement continued. The Law on Foreigners 
entered into force in April 2009 and is largely in  compliance with EU sta ndards. It establishes 
separate systems for issuing residence and wo rk permits. Provisions on carriers' obligations 
and sanctions for infringements are also provide d for. At the end of 2008 Albania, Bosnia and 
Herzegovina, Croatia, Montenegro, the former Yugoslav Republic of Macedonia and Serbia 
signed a memorandum of understanding on setting up a system for shari ng statistical data on 
illegal migration and particip ating in the regional syst em of advance notification. 
However, further efforts are needed to effec tively implement the newl y adopted strategies. 
Resources for the integration of  returnees remain very limited. A more proactive approach is 
required in order to ensure effective integra tion of migrants and returnees based on reliable 
statistical information on their number a nd socio-economic profile. Certain problems of 
obtaining documents, particularly for children bo rn in foreign countries  and those from mixed 
marriages, persist. 
There has been an increase in the numbers of visa denials, illegal border crossings and illegal 
women and children migrants. There is no overal l strategy on data collection in order to 
follow trends and carry out detailed analys is. Police and border police access to existing 
databases related to illegal migration is not clearly regulated. Staffi ng needs to be further 
improved and codes of ethics are properly enforced. Conditions in detention centres remain a matter of concern.  
Overall , Serbia continues to be moderately a dvanced in the area of migration policy. 
4.3.2.  Money laundering 
There has been some progress on fighting m oney-laundering. The Law on the Prevention of 
and Fight against Money-Laundering and Terro rist Financing was adopted in March 2009, 
with further amendments in August 2009. The Fi nancial Intelligence Unit has stepped up its 
efforts to raise awareness on re porting of suspicious transactions amongst reporting entities.  
However, a new action plan has not yet been ad opted. Reports on suspicious transactions are 
mostly limited to the banking sector. The number of investigations and convictions in money-
laundering cases remained low. The expertise a nd capacity of the crim inal investigators, 
public prosecutors and judges still need to be improved. There are considerable challenges in 
the areas of privatisation and real esta te and financial market transactions.  
Overall , Serbia has started to address its prioriti es in the area of fighting money laundering. 
Money-laundering continues to be  a serious cause for concern. 
EN 53   EN 4.3.3.  Drugs 
Progress was made in the fight against drugs, with  the adoption of the national strategy for the 
fight against drugs in February 2009 and the re lated action plan. The ba sic legislation is in 
place. Special investigative techniques, such as  secret surveillance measures and controlled 
deliveries, have been used increasingly by th e law enforcement authorities. Significant drug 
seizures and dismantling of organised criminal  groups have continued as a result of good 
inter-agency and international police cooperation at operational level. In the period from 
January to August 2009, 530 kg of drugs were se ized and 3450 criminal charges have been 
filed. The department for suppression of drug sm uggling within the Ministry of the Interior 
has established a database containing basic in formation on drug-related offences and criminal 
groups. The Ministry of Health continued its activities to prev ent drug abuse and its negative 
effects. 
However, serious weaknesses remain in surv eillance and control of  the administrative 
boundary with Kosovo, allowing major drug-smuggling activities in this area. Control of the 
border with Montenegro also needs urgent impr ovement in this respect. The newly established 
database is not linked to othe r databases and border police at border crossing points do not 
have access. Currently, seized drugs are not de stroyed, but are stored in a drugs warehouse. 
This practice, which is allegedly due to environmental considerations, raises serious security concerns.  
While preparations in the fight against drugs are moderately advanced, Serbia remains a key 
transit country for smuggling drugs  to Europe, which is a serious cause for concern. 
4.3.4.  Police 
Some progress has been made in the area of police reform. Capacity -building and further 
specialisation within the police force has continued and positive steps have been taken to modernise police work and impr ove international and regiona l cooperation Provision of 
modern equipment continued and some good resu lts were achieved on investigating serious 
crime. There have been improvements in basic training for the police, and overall professional 
development. The Ministry of th e Interior has taken a proactive approach to reforms and there 
is now better coordination between police structures at all levels.  
However, a strategy for further reform of th e police and an analysis  to define longer-term 
priorities and needs are missing. The decision -making process remains highly centralised, 
leading to inefficient management of human resources. More open and transparent recruitment and career development are needed. Th e internal control sector continues to lack 
support, in terms of staff and training, for improving mechanisms and for more proactive 
investigation. This remains a concern in view of the increase in the number of criminal charges brought against police officers, mostly for abuse of office and disciplinary measures. 
Corruption within the police remains a serious problem.  
The private security sector continues to be inadequately regulated. Small arms and light 
weapons remain widespread and their illicit possession among the general public continues to 
be very high. Small arms and light weapons pose a significant challenge to  security in Serbia 
and are subject to illegal trafficking by organised crime groups in the region. 
Overall , the Serbian police system is moderately advanced.  
EN 54   EN 4.3.5.  Fighting organised crime and terrorism 
Progress has been made in the fight against  organised crime .  
Serbia adopted a national strategy for the fight  against organised cr ime in March 2009. The 
Law on Organisation and Competen ces of the State Instituti ons in Suppressing Organised 
Crime was adopted in August 2009, giving br oader competencies to the Specialised 
Prosecutor for Organised Crime, along with th e Law on Enforcement of Prison Sanctions for 
Criminal Offences of Organised Crime. Chan ges to the Criminal C ode, adopted also in 
August 2009, introduced new criminal offences, in particular in the area of financial crime. 
Police actions led to the arrest of a number of  suspects of organised crime activities. Police 
capacity for investigating financial crimes  was improved by setting up a financial 
investigation unit within the Mi nistry of the Interior, which became operational in June 2009. 
Specialisation within the criminal police contin ued, with the creation of special units fighting 
cybercrime and drug-smuggling. A directorate for the management of seized assets has been 
in operation since March 2009. A Commission for In ter-ministerial Coordination in the field 
of Justice and Home Affairs was establishe d in December 2008, with the aim of improving 
inter-ministerial coordination in the fight against organised crime. A number of suspected members of organised crime groups were arrested. 
However, a comprehensive threat analysis and an action plan for implementation of the new 
organised crime strategy are missing. The adopti on and entry into forc e of a substantially 
revised Criminal Procedure Code  was further postponed, as pr osecution services  still lack 
adequate premises, infrastructure and the training to carry out the new task of leading criminal 
investigations. The newly estab lished bodies, such as the financ ial investigation unit and the 
directorate for the management of seized assets , face serious staff shortages and are therefore 
only partially operational.  
International police cooperation is mostly ba sed on informal contacts, while official 
cooperation and implementation of cooperation agr eements still faces problems. The lack of 
adequate surveillance and c ontrol of the admini strative boundary with Kosovo and the 
insufficient cooperation with EULEX make th e whole area vulnerable to organised crime 
activities. 
Coordination between individual police departments needs to be improved. Despite a series of 
police investigations into organised crime cases, the number of final convictions remains low. 
A common database on orga nised crime has not yet been set up. The availability of reliable 
statistics remains insufficient. The witne ss protection system n eeds further upgrading.  
Overall , there has been progress in the fight against organised cr ime, but tangible results are 
still rare. Organised crime remains a serious ca use for concern, in part icular in the region 
adjacent to the administrative boundary line with Kosovo.  
Serbia made some progress in the fight against trafficking of human beings . The Council of 
Europe Convention against Trafficking in Huma n Beings was ratified in March 2009 and an 
action plan for the period 2009-2011 was adopted in April 2009. Amendments to the Criminal 
Code, adopted in August 2009, increase pena lties for human trafficking offences. 
The national coordinator was a ppointed and a ministerial-leve l National Council established. 
This should lead to better cooperation between the various stakeholders. Awareness raising 
EN 55   EN activities continued and a telephone helpline for victims ha s been set up. Cooperation between 
social centres, the police, NGOs and the judiciary has improved. 
From January to August 2009, 78 victims of human trafficking were identified, which 
constitutes a significant increase compared to 55 victims in 2008. 
However, the number of final convictions in this area remains low. The number of under-age 
victims continued to rise, wh ich is a matter of concern.  
Overall , Serbia’s preparations fo r fighting trafficking in hu man beings are moderately 
advanced. 
There was limited progress in the fight against terrorism . The new Law on Money-
Laundering, adopted in March 2009 , introduced new provisions agai nst financing of terrorist 
groups. Police investigations have resulted in seizures of illegal arms. However, ratification of 
key international conventions remains pending.  Cooperation and exchanges of information 
between the police and the security agency are s till insufficient. There is no specific database 
on terrorist suspects. Overall , Serbia’s framework for the fight against terrorism is still at an 
early stage. 
4.3.6.  Protection of personal data 
Some progress has been made on protection of  personal data. The Law on the Protection of 
Personal Data entered into force in January 2009 and implementing legislation was adopted. 
The Commissioner for Information of Public Importance took over supervisory powers for enforcing it and was renamed Commissioner for Information of Public Importance and 
Personal Data Protection. 
However, the Law on the Protection of Personal Data is not fully in line with EU standards. 
The office of the commissioner lacks staff and f unding, which prevents effective supervision. 
At the same time, there is a potential conflict of interest between the commissioner’s two roles of securing public access to documents on th e one hand and protecting personal data on 
the other. 
Overall , Serbia is moderately advanced in the area of protection of personal data.
 
EN 56   EN STATISTICAL ANNEX  
STATISTICAL DATA (as of 14 September 2009)            
Serbia            
       
Basic data Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Population (thousand)  7 553 7 528 7 505 7 502 7 491 7 470 7 456 7 425 7 398 7 366 
Total area of the country (km²)  77 474 77 474 77 474 77 474 77 474 77 474 77 474 77 474 77 474 77 474 
            
National accounts Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Gross domestic product (GDP) (million national currency)  205 624 384 225 762 178 972 901 1 133 027 1 384 253 1 687 832 1 980 237 2 36 2 850 : 
GDP (million euro)  17 522 25 539 12 821 16 034 17 416 19 075 20 358 23 521 29 543 : 
GDP (euro per capita)  2 324 3 398 1 709 2 138 2 328 2 556 2 736 3 174 4 002 : 
GDP (in Purchasing Power Standards (PPS) per capita)  : : : : : : : : 8 500.0 : 
SI: GDP (in PPS per capita, EU-27=100)  : : : : : : 32.0 33.0 33.0 : 
SI: Growth rate of GDP (national currency, at constant prices , % change on previous year)  -11.2 5.3 5.6 3.9 2.4 8.3 5.6 5.2 6. 9 : 
SI: Employment growth (national accounts, % change on prev ious year)  : : 2.0 -0.4 -4.4 1.1 -5.5 7.2 2.3 : 
Labour productivity growth: GDP growth per person employed (% change on previous year)  -10.1 5.6 3.5 4.3 7.1 7.1 11.8 -1.8 4.5  : 
SI: Unit labour cost growth (national accounts, % change on previous year)  : : : : : : : : : : 
SI: Labour productivity (GDP in PPS per person employed, EU-27=100)  : : : : : : : : : : 
Gross value added by main sectors (%)                      
Agriculture  19.0 20.2 20.1 15.3 13.5 14.0 12.2 11.3 10.2 : 
Industry  23.3 26.4 24.7 24.3 23.0 24.0 23.6 24.4 23.7 : 
Construction  3.6 3.6 3.2 3.5 4.3 4.8 4.6 4.8 5.1 : 
Services  54.1 49.8 52.0 56.9 59.3 57.2 59.6 59.4 60.9 : 
Final consumption expenditure, as  a share of GDP (%)  96.3 97.2 104.0 106.9 102.4 96.8 95.6 95.1 93.4 : 
Gross fixed capital formation, as a share of GDP (%)  11.0 12.7 10.7 12.4 16.7 19.2 19.0 20.8 23.4 : 
Changes in inventories, as a share of GDP (%)  -0.5 -3.9 3.2 0.5 1.8 11.8 6.2 4.8 7.1 : 
Exports of goods and services, relative to GDP (%)  11.4 10.9 24.6 22.9 22.9 24.6 28.7 31.7 30.6 : 
Imports of goods and services, relative to GDP (%)  18.2 16.8 42.5 42.7 43.7 52.5 49.4 52.4 54.4 : 
            
Industry Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Industrial production volume index (2000=100)  89.8 100.0 100.1 101.9 98.8 105.9 106.7 111.7 115.8 117.1 
            
Inflation rate Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
SI: Consumer price index (CPI), (tot al, % change on previous year)  43.5 79.6 93.3 16.6 9.9 11.4 16.2 11.7 7.0 13.5 
            
Balance of payments Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Balance of payments: current account total (million euro)  -427 -166 -318 -1 319 -1 255 -2 306 -1 788 -3 157 -4 615 -5 876 
Balance of payments current account: trade balance (million euro)  -1 167 -1 713 -2 577 -3 414 -3 555 -5 201 -4 252 -4 992 -6 6 38 -7 633 
 
EN 57   EN Balance of payments current account: net services (million euro)  109 153 272 137 179 141 -5 -41 -254 -171 
Balance of payments current account: net income (m illion euro)  8 -1 7 -77 -120 -174 -260 -330 -599 -929 
Balance of payments current account: net current transfers  (million euro)  624 1 396 1 980 2 035 2 241 2 927 2 730 2 207 2 876 2 857 
of which government transfers (million euro)  0 293 660 525 421 382 264 186 166 210 
Net foreign direct investment (FDI) (million euro)  : 55 185 505 1 205 778 1 247 3 399 1 821 1 812 
Foreign direct investment (FDI) abroad (milli on euro)  : -2 -14 -21 3 2 -18 -68 -692 -192 
of which FDI of the reporting economy in EU-27 countries (million euro)  : : : : 1 2 4 4 -45 -76 
Foreign direct investment (FDI) in the reporting economy (million euro)  : 56 198 526 1 202 775 1 265 3 467 2 513 2 004 
of which FDI of EU-27 countries in the reporting economy (million euro)  : : : : 850 397 932 3 335 1 820 1 488 
            
Public finance Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
General government deficit/surplus, relative to  GDP (%)  : : : : : : 1.0 -1.6 -1.9 -2.4 
SI: General government debt, relative to GDP (%)  : : 104.8 71.9 63.3 50.7 50.5 39.8 30.0 25.3 
            
Financial indicators Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Gross foreign debt of the whole economy, relative to GDP (%)  :   98.3 67.2 62.3 54.3 64.2 63.3 60.2 64.7 
Gross foreign debt of the whole economy, relative to total exports (%)  : : 464.2 343.6 281.6 231.7 245.9 213.5 204.8 214.7 
Money supply: M1 (banknotes, coins, overnight deposits, mi llion euro)  1 259 544 974 1 546 1 526 1 533 1 748 2 378 3 112 2 721 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro)  1 591 662 1 139 1 828 1 920 2 015 2 318 3 315 4 882 4 463 
Money supply: M3 (M2 plus marketable instruments, mill ion euro)  2 125 1 313 2 098 3 156 3 762 4 449 5 535 7 539 11 302 11 205 
Total credit by monetary financial institutions to resi dents (consolidated) (million euro)  : : : : : : : : : : 
Interest rates: day-to-day money rate, per annum (%)  : : : : : : : : : : 
Lending interest rate (one year), per annum (%)  : : : : : : : : : : 
Deposit interest rate (one year), per annum (%)  : : : : : : : : : : 
euro exchange rates: average of period - 1 euro = … nati onal currency  11.740 49.670 59.770 60.680 65.060 72.570 82.910 84.160 79.980 81.470 
Effective exchange rate index (2000=100)  : : : : : : : : : : 
Value of reserve assets (includi ng gold) (million euro)  659 958 2 050 2 937 3 548 3 780 5 525 9 593 10 897 8 148 
            
External trade Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Value of imports: all goods, all partners (million euro) 1) 2 694 3 606 4 758 5 919 6 589 8 623b 8 439 10 463 13 507 15 589 
Value of exports: all goods, all partners (million euro) 1) 1 270 1 680 1 896 2 192 2 442 2 832b 3 608 5 102 6 432 7 428 
Trade balance: all goods, all partners (million euro) 1) -1 423 -1 926 -2 862 -3 727 -4 147 -5 792b -4 831 -5 360 -7 075 -8 161  
Terms of trade (export price index / import price index, 199 8=100) 1) 92.5 100.2 103.1 98.0 101.6 108.4b 98.4 104.5 102.6 97.5 
Share of exports to EU-27 countries in value of total exports (%) 1) 50.5 54.3 58.2 59.5 53.9 56.6b 58.7 57.5 56.0 54.2 
Share of imports from EU-27 countries in value of total imports (%) 1) 59.9 61.6 57.6 59.6 58.3 58.0b 54.2 54.4 55.1 53.0 
            
Demography Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Natural growth rate: natural change (births minus deaths) (per 1000 i nhabitants)  -3.9 -4.0 -2.7 -3.3 -3.3 -3.5 -4.6 -4.3 -4.7 : 
Infant mortality rate: deaths of children under one year of age per 1000 live births  11.1 10.6 10.2 10.1 9.0 8.1 8.0 7.4 7.1 6 .7 
 
EN 58   EN Life expectancy at birth: male (years)  69.7 69.7 69.6 69.7 69.9 69.9 70.0 70.6 70.7 71.1 
Life expectancy at birth: female (years)  74.8 74.8 74.8 75.0 75.1 75.4 75.4 75.9 76.2 76.3 
            
Labour market Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Economic activity rate (15-64): share of population aged 15-64 that is economically active (%)  68.2 68.2 68.9 68.4 68.9 66.4 6 5.2 63.6 63.4 62.7 
SI: Employment rate (15-64): share of population aged 15-64 that  is in employment (%)  58.3 59.2 59.7 58.5 57.9 53.4 51.0 49.9 51.5 53.7 
Share of male population aged 15-64 that is in employment (%)  67.1 68.2 68.6 67.1 67.0 63.1 61.2 59.2 60.0 62.3 
Share of female population aged 15-64 that is in employment (%)  49.8 50.4 50.8 50.0 48.7 44.0 40.8 40.6 43.0 45.3 
SI: Employment rate of older workers (55-64): share of population aged 55-64 that is in 
employment (%)  42.3 43.3 42.1 42.0 44.3 37.3 35.4 32.6 33.5 36.7 
Employment by main sectors (%)                      
Agriculture  : : : : : 24.0 23.3 20.5 20.8 25.1 
Industry  : : : : : 21.7 21.5 23.2 23.4 19.9 
Construction  : : : : : 5.2 6.1 6.1 6.1 6.3 
Services  : : : : : 49.1 49.1 50.2 49.7 48.6 
SI: Unemployment rate: share of labour force that is unemployed (%)  14.5 13.3 13.3 14.5 16.0 18.7 21.1 21.0 18.3 13.6 
Share of male labour force that is unemployed (%)  12.5 11.1 11.5 12.9 15.1 15.3 17.0 18.1 16.0 11.9 
Share of female labour force that is unemployed (%)  16.9 15.9 15.7 16.5 17.2 23.1 26.5 24.9 21.2 15.8 
Unemployment rate of persons < 25 years: shar e of labour force aged <25 that is unemployed 
(%)  53.2 50.2 46.4 45.3 44.8 48.1 47.7 47.8 43.7 35.2 
SI: Long-term unemployment rate: share of labour force that is long-term unemployed (%)  10.5 9.9 9.0 9.9 11.0 14.5 16.7 17.0 1 4.8 9.7 
            
Social cohesion Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Average nominal monthly wages and salaries  (national currency)  1 992.0 3 799.0 8 691.0 13 260.0 16 612.0 20 555.0 25 514.0 31 745.0 3 8 744.0 45 674.0 
Index of real wages and salaries (index of nom inal wages and salaries divided by the CPI) 
(2000=100)  
94.2 100.0 118.4 154.9 176.5 196.1 209.5 233.3 266.1 275.7 
SI: Early school-leavers: share of popul ation aged 18-24 having not completed upper 
secondary education and not currently in education or training (%)  : : : : : 11.5 11.4 12.6 10.7 : 
            
Standard of living Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Number of passenger cars per 1000 population 2) 208.3 169.2 184.2 179.1 185.3 194.8 198.6 203.6 199.7 201.8 
Number of subscriptions to cellular mobile telephone se rvices per 1000 population  : 155.1 251.1 322.5 399.3 578.8 700.4 894.7 1 142.6 1 194.2 
            
Infrastructure Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Density of railway network (lines in operation, per 1000 km²)  49.2 49.2 49.2 49.2 49.2 49.2 49.2 49.2 49.2 49.2 
Length of motorways (thousand km)  0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 
            
Innovation and research Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
SI: Spending on human resources (public expenditure on education) relative to GDP (%)  2.7 2.5 2.5 3.0 3.8 3.5e : : : : 
SI: Gross domestic expenditure on research & development, relative to GDP (%)  : : : : : : : : : : 
SI: Percentage of households who have Internet access at home (%)  : : : : : : : 18.5 26.3 33.2 
            
Environment Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
SI: Total greenhouse gases emissions, CO2 equi valent (tons, 1990=100)  : : : : : : : : : : 
 
EN 59   EN  
SI = Structural indicators 
: = not available 
e = estimated value 
b = break in series All data from 1999 to 2008 refer to the territory of the Republic of Serbia excluding Kosovo under UNSCR 1244/99. 
1) Break in series: from 2004 onwards the data are not comparabl e with the previous years bec ause since January 2004 Uniform Cu stoms Document harmonized with EU regulations has been 
used. 2) Ministry of Internal Affaires ex cluded the vehicles that were not regist ered before the given deadline (1 month). 
3) Since 2006, the reference date is 1 Decem ber (instead 15 January as it was before). 
4) In million litres, includes cow and sheep milk. 5) Without triticale, buckwheat and millet, which are minor; rice production does not exist in Serbia. SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP 2004)  : : : : : : 413.1 413.6 : : 
SI: Share of renewable energy in electricity consum ption (%)  52.2 42.1 43.3 41.2 36.5 44.9 46.9 41.8 37.9 : 
SI: Road freight transport as a share of total in land freight transport (modal split of freight 
transport) (%)  49.8 : : : : : : : : : 
            
Energy Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Primary production of all energy products (thousand TOE)  : : : : : : 7 729 7 907 8 797 : 
Primary production of crude oil (thousand TOE)  : : : : : : : : 654 : 
Primary production of hard coal and lignite (thousand TOE)  : : : : : : 6 696 6 966 7 073 : 
Primary production of natural gas (thousand TOE)  : : : : : : : : 198 : 
Net imports of all energy products (thousand TOE)  : : : : : : 1 431 1 686 : : 
Gross inland energy consumption (thousand TOE)  : : : : : : 8 322 8 765 : : 
Electricity generation (thousand GWh)  31.0 32.0 31.0 31.0 32.0 34.0 36.0 36.0 37.0 : 
            
Agriculture Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Agricultural production volume index of goods  and services (produc er prices, previous 
year=100)  100.0 87.0 118.0 97.0 93.0 120.0 95.0 100.0 92.0e 108.0 
Total utilised agricultural area (thousand hectare)  5 086 5 074 5 077 5 071 5 079 5 075 5 075 5 066 5 053 5 055 
Livestock: cattle (thousand heads, end of period) 3) 1 246 1 162 1 128 1 112 1 102 1 079 1 096 1 106 1 087 1 057 
Livestock: pigs (thousand heads, end of period) 3) 4 066 3 615 3 587 3 634 3 439 3 165 3 212 3 999 3 832 3 594 
Livestock: sheep and goats (thousand heads, end of period) 3) 1 794 1 670 1 612 1 685 1 741 1 728 1 748 1 718 1 756 1 760 
Production and utilisation of milk on the farm (total wh ole milk, thousand tonnes) 4) 1 665 1 585 1 594 1 596 1 590 1 593 1 616  1 602 1 562 1 548 
Crop production: cereals (including ri ce) (thousand tonnes, harvested production) 5) 8 584 5 213 9 001 8 298 5 453 9 867 9 510 8 268 6 115 8 707 
Crop production: sugar beet (thousand tonnes, harvested produc tion)  2 428 1 070 1 806 2 098 1 738 2 814 3 101 3 189 3 206 2 30 0 
Crop production: vegetables (thousand t onnes, harvested production)  1 145 1 043 1 283 1 340 1 172 1 340 1 289 1 348 1 128 1 27 7