COMMISSION STAFF WORKING DOCUMENT SERBIA 2015 REPORT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS EU Enlargement Strategy
Date: 2015-11-10
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Serbia, accession criteria, accession negotiations, pre-accession strategy

EUROPEAN 
COMMISSION 

Brussels, 10.11.2015  
SWD(2015) 211 final 

COMMISSION STAFF WORKING DOCUMENT 

SERBIA 
2015 REPORT  

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

EU Enlargement Strategy 

{COM(2015) 611 final} 
{SWD(2015) 210 final} 
{SWD(2015) 212 final} 
{SWD(2015) 213 final} 
{SWD(2015) 214 final} 
{SWD(2015) 215 final} 
{SWD(2015) 216 final} 

EN 

   EN 

 
 
 
 
  
 
Table of Contents 

1. 

INTRODUCTION....................................................................................................... 4 

1.1.  Context .............................................................................................................. 4 
1.2.  Summary of the report....................................................................................... 4 

2.  POLITICAL CRITERIA............................................................................................. 6 

2.1.  Democracy ........................................................................................................ 6 
2.2.  Public administration reform............................................................................. 8 
2.3.  Rule of law ...................................................................................................... 11 
2.4.  Human rights and the protection of minorities................................................ 17 
2.5.  Regional issues and international obligations ................................................. 19 

3.  NORMALISATION OF RELATIONS BETWEEN SERBIA AND KOSOVO...... 22 

4.  ECONOMIC CRITERIA .......................................................................................... 23 

4.1.  The existence of a functioning market economy............................................. 24 
4.2.  The  capacity  to  cope  with  competitive  pressure  and  market  forces  within 

the Union ......................................................................................................... 28 

5.  ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP...................... 31 

5.1.  Chapter 1: Free movement of goods ............................................................... 31 
5.2.  Chapter 2: Freedom of movement for workers ............................................... 32 
5.3.  Chapter 3: Right of establishment and freedom to provide services............... 32 
5.4.  Chapter 4: Free movement of capital .............................................................. 33 
5.5.  Chapter 5: Public procurement........................................................................ 33 
5.6.  Chapter 6: Company law................................................................................. 35 
5.7.  Chapter 7: Intellectual property law................................................................ 35 
5.8.  Chapter 8: Competition policy ........................................................................ 36 
5.9.  Chapter 9: Financial services .......................................................................... 37 
5.10.  Chapter 10: Information society and media .................................................... 37 
5.11.  Chapter 11: Agriculture and rural development.............................................. 38 
5.12.  Chapter 12: Food safety, veterinary and phytosanitary policy........................ 39 
5.13.  Chapter 13: Fisheries....................................................................................... 40 
5.14.  Chapter 14: Transport policy........................................................................... 40 
5.15.  Chapter 15: Energy.......................................................................................... 41 
5.16.  Chapter 16: Taxation....................................................................................... 43 
5.17.  Chapter 17: Economic and monetary policy ................................................... 44 
5.18.  Chapter 18: Statistics....................................................................................... 44 
5.19.  Chapter 19: Social policy and employment .................................................... 45 
5.20.  Chapter 20: Enterprise and industrial policy................................................... 47 
5.21.  Chapter 21: Trans-European networks............................................................ 47 
5.22.  Chapter 22: Regional policy and coordination of structural instruments........ 48 
5.23.  Chapter 23- Judiciary and fundamental rights ................................................ 49 

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5.24.  Chapter 24: Justice, freedom and security ...................................................... 59 
5.25.  Chapter 25: Science and research.................................................................... 64 
5.26.  Chapter 26: Education and culture .................................................................. 65 
5.27.  Chapter 27: Environment and climate change ................................................ 65 
5.28.  Chapter 28: Consumer and health protection .................................................. 67 
5.29.  Chapter 29: Customs union ............................................................................. 68 
5.30.  Chapter 30: External relations......................................................................... 69 
5.31.  Chapter 31: Foreign, security and defence policy........................................... 70 
5.32.  Chapter 32: Financial control .......................................................................... 71 
5.33.  Chapter 33: Financial and budgetary provisions............................................. 73 

Annex I - Relations between the EU and Serbia ............................................................... 74 

Annex II – Statistical Annex ............................................................................................. 76 

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1. 

INTRODUCTION

1

1.1.  Context 

The  European  Council  granted  Serbia  the  status  of  candidate  country  in  2012.  Accession 
negotiations  were  launched  in  January  2014.  The  analytical  examination  of  the  EU  acquis 
(screening  process)  was  completed  in  March  2015.  The  Stabilisation  and  Association 
Agreement (SAA) between Serbia and the EU entered into force in September 2013. 

Serbia remained committed to its strategic goal of EU accession and continued to build a track 
record in implementing the obligations of the SAA. It is implementing an ambitious political 
and  economic  reform  agenda  and  successfully  finalised  the  action  plans  required  for  the 
opening  of  the  rule  of  law  negotiating  chapters.  Serbia  played  a  constructive  role  in  the 
region. It remained committed to the normalisation of its relations with Kosovo∗ and came to 
key agreements with Kosovo within that process. It has also had a very constructive role in 
managing the migration crisis. 

1.2.  Summary of the report 

As  regards  the  political  criteria,  stakeholders,  including  civil  society,  were  increasingly 
involved  in  the  accession  process.  Though  co-operation  between  the  authorities  and  the 
independent  regulatory  bodies  and  the  Ombudsman  has  recently  increased,  it  should  be 
further  improved.  The  use  of  urgent  procedures  in  parliament  should  be  curtailed. 
Constitutional reforms will be needed for alignment with EU standards in some areas. 

Serbia is moderately prepared in the area of public administration reform. Good progress has 
been  achieved  with  the  adoption  of  a  comprehensive  action  plan.  Serbia  needs  to  remain 
committed  and  implement  its  reform  targets.  Strong  political  will  remains  essential  to 
professionalise  and  depoliticise  the  administration  and  make  recruitment  and  dismissal 
procedures more transparent, especially for senior management positions. 

The judicial system has  reached some level of preparation. New rules for evaluating  judges 
and prosecutors were adopted in May. Most Court Presidents have now been appointed on a 
permanent  basis.  Further  steps  are  needed  to  tackle  political  influence.  The  quality  and 
efficiency  of  the  judiciary  and  access  to  justice  are  hampered  by  an  uneven  distribution  of 
workload, a burdensome case backlog and the lack of a free legal aid system.  

Serbia  has  some  level  of  preparation  in  preventing  and  fighting  corruption,  which  remains 
widespread. The anti-corruption effort has yet to yield significant results. The institutional set-
up  is  not  yet  functioning  as  a  credible  deterrent.  A  track  record  of  effective  investigations, 
prosecutions and convictions in corruption cases is required, including at high level. 

Serbia has some level of preparation as regards the fight against organised crime. New DNA 
and  drug  chemistry  laboratories  became  operational.  The  country  is  actively  contributing  to 
international and regional cooperation. Serbia adopted strategies for the fight against money 
laundering and terrorism financing as well as a financial investigation strategy but it still lacks 
an overall strategic picture of the organised crime situation on its territory. A credible track 
record in the fight against organised crime needs to be established. 

1  This  report  covers  the  period  from  October  2014  to  September  2015.  It  is  based  on  input  from  a  variety  of 
sources,  including  contributions  from  the  government  of  Serbia,  the  EU  Member  States,  European  Parliament 
reports and information from various international and non-governmental organisations. As a rule, legislation or 
measures which are under preparation or awaiting parliamentary approval have not been taken into account. 

∗ This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the ICJ 
Opinion on the Kosovo declaration of independence. 

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The  legal  and  institutional  framework  for  the  respect  of  fundamental  rights  is  in  place. 
Consistent  implementation  across  the  country  needs  to  be  ensured,  including  as  regards 
protection of minorities. More needs to be done to ensure conditions for the full exercise of 
media  freedom  and  the  freedom  of  expression,  where  Serbia  has  achieved  some  level  of 
preparation.  Further  sustained  efforts  are  needed  to  improve  the  situation  of  Roma  and  of 
refugees and displaced persons. The authorities took steps to strengthen the protection of the 
rights  of  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons,  and  again 
facilitated  a  pride  parade  in  Belgrade.  However,  a  stronger  culture  of  respect  for  LGBTI 
persons is still needed. 

Serbia  participated  constructively  in  regional  initiatives  and  worked  to  improve  its  bilateral 
relations  in  a  spirit  of  reconciliation  and  good  neighbourly  relations.  The  Prime  Minister's 
attendance at the Srebrenica genocide commemoration in July sent a positive message.  

Regarding  the  normalisation  of  relations  with  Kosovo,  Serbia  remained  committed  to  the 
implementation of the April 2013 'First agreement of principles governing the normalisation 
of  relations'  and  other  agreements  reached  in  the  EU-  facilitated  dialogue.  Key  agreements 
were finalised in August on energy, telecoms, establishment of the Association/Community of 
Serb majority municipalities as well as the Mitrovica Bridge. The dialogue achieved further 
concrete results in the fields of justice, civil protection integration, vehicle insurance, customs 
collection  and  IBM.  There  were  also  constructive  discussions  to  improve  cooperation  in 
tackling  migratory  flows  from  Kosovo.  The  steps  taken  gave  fresh  momentum  to  the 
normalisation of relations and should have a positive and concrete impact on the everyday life 
of citizens in both Kosovo and Serbia.  

As regards the economic criteria, Serbia is moderately prepared in developing a functioning 
market economy. Good progress has been made to address some of the policy weaknesses and 
the  positive  momentum  for  advancing  structural  reforms  needs  to  be  preserved.  Serbia's 
economy  is  recovering  from  a  recession.  Thanks  to  significant  consolidation  measures  and 
better  tax  collection,  the  budget  deficit  has  fallen  sharply.  Fiscal  consolidation  should  be 
sustained and underpinned by implementing reforms as planned. Inflation remains very low, 
allowing the central bank to reduce interest rates. Unemployment, though very high, has fallen 
below  20%.  Progress  has  been  made  with  restructuring  of  publicly  owned  companies  and 
main  utilities,  but  it  needs  to  advance  further.  The  private  sector  is  underdeveloped  and 
hampered  by  weaknesses  in  the  rule  of  law  and  difficult  access  to  finance.  The  process  of 
economic  reforms  needs  to  continue  with  particular  emphasis  on  restructuring  state  owned 
enterprises and public utilities. 

Serbia  is  moderately  prepared  in  terms  of  capacity  to  cope  with  competitive  pressure  and 
market  forces  within  the  Union.  The  education  system  has  remained  inefficient,  physical 
infrastructure  underdeveloped  and  the  informal  sector  and  state  aid  are  substantial.  Serbia 
needs to improve the quality of the education system, gearing it towards labour market needs, 
stimulate  private  investments  and  speed  up  the  implementation  of  public  infrastructure 
projects. It needs to better regulate para-fiscal charges and provide a transparent framework of 
state  support  to  the  private  sector,  redirecting  it  towards  efficient  and  horizontal  objectives, 
such as support to SMEs and research and development. 

As  regards  its  ability  to  take  on  the  obligations  of  membership,  Serbia  has  continued  to 
align  its  legislation  with  the  EU  acquis  across  the  board.  Adequate  financial  and  human 
resources,  and  sound  strategic  frameworks  will  be  crucial  to  maintain  the  pace  of  reforms. 
Serbian legislation is now largely aligned in areas such as intellectual property, anti-trust and 
mergers,  and  monetary  policy.  Serbia  set  up  a  National  Investment  Committee,  bringing 
together  national  authorities,  donors  and  international  financial  institutions  (IFIs)  to 

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coordinate  Serbian  investment  policy  in  key  sectors  of  the  single  project  pipeline  (energy, 
transport,  environment  and  business-related  infrastructure),  which  sets  an  example  in  the 
region.  In  the  areas  of  public  procurement,  statistics  and  financial  control,  Serbia  is 
moderately  prepared.  Serbia  will  need  to  align  its  foreign  and  security  policy  progressively 
with the European Union's Common Foreign and Security Policy in period up to accession. 

Mixed-migration  flows  increased  dramatically,  creating  a  substantial  burden  on  the  Serbian 
asylum and migration framework. Serbia made a substantial effort to ensure that third country 
nationals transiting through the country received shelter and humanitarian supplies, with EU 
support as well as the support of others. At the same time, Serbia should continue efforts to 
address the increase of unfounded asylum applications lodged by Serbian nationals in EU and 
Schengen countries, with a view to preserving the visa free regime.  

2.  POLITICAL CRITERIA 

2.1.  Democracy 

Elections 

Serbia has not yet addressed all of the recommendations of the OSCE’s Office for Democratic 
Institutions and Human Rights (OSCE/ODIHR), in particular those on ensuring that campaign 
financing  and  the  electoral  process  are  transparent.  Certain  local  municipality  elections  and 
other local events have been marred by violence and claims of intimidation and irregularities 
that have not yet been properly investigated. Those responsible should be brought to justice. 

Parliament 

Parliament’s  legislative  activity  was  intensive  and  reflected  increased  involvement  in  the 
accession  negotiation  process.  Consultation  and  transparency  to  some  extent  improved. 
However,  the  use  of  urgent  procedures,  including  on  draft  legislation  linked  to  the  EU 
accession  process,  remained  extensive.  Oversight  of  the  executive  needs  to  be  further 
enhanced.  Parliament  needs  to  increase  its  support  for  the  institutional  role  of  independent 
regulatory  bodies  and  the  Ombudsman's  office  and  promote  implementation  of  their 
recommendations. 

Parliament  engaged  in  intensive  legislative  activity.  Consultation  processes  improved,  in 
particular through frequent use of public hearings, including on EU accession-related issues, 
and parliamentary sessions on specific topics held locally. Parliament is increasingly involved 
by the government in the accession negotiations process. Parliament also has regular meetings 
and  consultations  with  other  stakeholders,  including  the  National  Convent  on  European 
Integration  which  brings  together  civil  society  organisations  involved  in  the  accession 
negotiations process. Parliament has yet to adopt an annual work plan and a code of ethics. 
The  use  of  urgent  procedures  remains  extensive,  including  for  major  pieces  of  legislation. 
This  limits  the  time  allowed  for  scrutiny  of  draft  legislation,  and  is  not  always  strictly 
necessary. More democratic and open cross-party political dialogue needs to be promoted. 

Parliament remained engaged in its oversight activity through questions and regular debates 
on government reports. It did not, however, regularly hold monthly sessions or oral questions 
to the government. Independent regulatory bodies’ reports are discussed but parliament needs 
to take a more proactive approach to promoting and monitoring the implementation of their 
findings  and  recommendations.  Parliamentary  debates  should  not  be  used  to  undermine 
independent regulatory bodies and the Ombudsman’s role. 

6 

 
 
 
Governance 

The Serbian government remained actively engaged towards its EU accession priority goal. A 
core negotiating team was formed  in September 2015. Involvement of parliament  and other 
stakeholders, including civil society, needs to be further strengthened and streamlined. While 
recent  steps  to  increase  dialogue  are  welcome,  the  Serbian  government  needs  to  cooperate 
fully  with  independent  regulatory  bodies  and  the  Ombudsman's  office  and  to  respect  their 
remit. The legal framework for local self-government still needs to be improved and further 
implemented.  Constitutional  changes  are  needed  to  address  issues  of  importance  for  the 
accession negotiations. 

The  Serbian  government  improved  consistency  in  implementing  its  programme  of  priority 
reforms.  It  remained  committed  to  EU  integration  and  to  the  EU-facilitated  dialogue  with 
Kosovo. With political direction from the Minister for EU Integration, leadership by its Chief 
Negotiator, and effective support from the Serbian European Integration Office, the Serbian 
administration demonstrated a high level of preparedness and professionalism in the screening 
process. A core negotiating team was formed in September 2015. The government addressed 
the findings of the 2014 Progress Report by acting on the National Plan for the Adoption of 
the Acquis for the period 2014-2018. Further systematic involvement of parliament and civil 
society  in  the  accession  process  is  needed.  Greater  coordination  of  sectoral  policies  and 
anticipation of their financial implications remain crucial for the negotiations. Further efforts 
are needed to communicate more effectively the benefits of joining the EU to Serbian citizens.  

Public  consultations  need  to  be  wider  and  deadlines  more  realistic  to  enable  all  interested 
parties to provide qualitative input. This is especially needed for draft legislation with major 
economic  and  social  impacts.  More  effective  monitoring  of  the  implementation  of  enacted 
legislation  and  strategic  documents  is  needed.  Independent  regulatory  bodies  and  the 
Ombudsman play an essential role in ensuring that the executive is accountable. It is a matter 
of concern if members of the government act in such a way as to undermine their work. The 
Prime Minister's initiative to hold regular meetings with them is a welcome step.  

As regards local self-government, the law on Vojvodina’s resources still needs to be adopted 
as prescribed by the Constitution. Local administrative and management capacity is weak and 
significant disparities between municipalities persist. Responsibilities continue to be exercised 
at  local  level  without  proper  analysis  of  the  capacity  and  resources  required.  Transfers 
earmarked by line ministries need to be allocated in line with the law on municipal finance. 
Local authorities should be consulted more on new legislation that has local implications. 

The  Constitution  has  yet  to  be  revised  to  reflect  fully  the  recommendations  of  the  Venice 
Commission, particularly on parliament’s role in judicial appointments, the political parties’ 
control  of  parliamentary  office,  the  independence  of  key  institutions  and  the  protection  of 
fundamental  rights,  including  data  protection.  A  parliamentary  action  team  was  formed  in 
April for this purpose. 

Civil society 

Some progress was made in improving cooperation between the government and civil society 
organisations  (CSOs).  However,  additional  measures  should  be  taken  to  ensure  transparent 
dialogue between CSOs and other state institutions. 

An empowered civil society is a crucial component of any democratic system and should be 
recognised and treated as such by the state institutions. Civil society organisations and human 
rights defenders play a key role in raising awareness of civil and political rights in a climate 
that  is  often  hostile  to  criticism.  Civil  society  continued  to  grow,  especially  at  local  level. 

7 

 
Since May, the Prime Minister took the initiative to call regular meetings with representatives 
of  leading  CSOs.  Cooperation  between  the  government  and  civil  society  still  needs  to  be 
improved  and  a  mechanism  ensuring  transparent  dialogue  with  CSOs  is  needed.  The 
authorities  included  civil  society  organisations  in  the  accession  negotiations  process. 
However, civil sector's participation in policy making is still to a large extent ad hoc which 
prevents the use of the full potential of the sector.  

The Office for Cooperation with Civil Society has taken a number of initiatives. The director 
of the office resigned in March and a successor has not yet been appointed. The 2015-2019 
national strategy for an enabling environment for CSOs was drafted with wide participation 
by civil society. Mechanisms to ensure transparent funding of CSOs need to be put in place. 
Serbian  laws,  e.g.  tax  rules,  do  not  encourage  private  donations  to  CSOs.  The  law  on 
volunteering has not significantly expanded voluntary work and the law on social protection 
has yet to be fully implemented as regards CSOs providing social services. 

Civilian oversight of the security forces 

Parliament has continued to perform its oversight role. The remit of the Ombudsman’s  office 
in this field needs to be better understood and defended. Serbia’s legislative framework needs 
to be strengthened. 

The parliamentary committee for oversight of the security forces continued to review the 
activities  and  reports  on  the  Security-Information  Agency  (BIA),  the  Military  Intelligence 
Services  and  the  Inspector  General  of  the  Ministry  of  Defence  on  a  regular  basis.  The 
committee held a debate on the Ombudsman’s office's investigation into incidents involving 
military  officers  during  the  2014  Pride  parade,  and  on  the  Ombudsman's  assertions  that  the 
Military Security Agency had illegally intercepted communications. The comments made on 
this occasion denigrating the Ombudsman, who was acting within his prerogative with regard 
to civilian control of the security forces, hamper effective oversight. The potential for abuse 
of  interception  of  communications  needs  to  be  addressed.  A  law  on  access  to  state  security 
files still needs to be adopted. A new law on the BIA, reviewing the current regulations giving 
the security services responsibilities for criminal proceedings and the use of special measures, 
has not yet been adopted. 

2.2.  Public administration reform  

Serbia is moderately prepared with the reform of its public administration. Good progress 
has been achieved with the adoption of a comprehensive public administration reform action 
plan, a law on inspection oversight, a national training strategy for local government, and the 
law on maximum number of public sector employees. However, Serbia now needs to ensure 
that  the  ambitious  reform  plans  and  the  legal  framework  are  implemented.  Strong  political 
will  remains  essential  to  professionalise  and  depoliticise  the  administration  and  make 
recruitment  and  dismissal  procedures  more  transparent,  especially  for  senior  management 
positions. In the coming year, Serbia should, in particular: 

→ streamline the roles and responsibilities of leading institutions in charge of policy making 
and coordination and develop a consolidated planning and monitoring system; 

→ amend the current civil service framework to fully guarantee neutrality and continuity of 
the  public  administration  and  ensure  merit-based  recruitment,  promotion  and  dismissal 
procedures by eradicating exceptions and transitional arrangements in appointments; 

→ adopt a comprehensive multi-annual public financial management reform programme. 

8 

 
 
Public service and human resources management 

The legal framework for the central government civil service is in place, but it does not apply 
to many public employees exercising key state functions. The legal separation of political and 
public  service  positions  is  not  clearly  enforced.  The  civil  service  law  provides  for  merit-
based  recruitment,  promotion  and  dismissal  procedures.  Several  provisions,  however, 
leave  space  for  wide  discretionary  powers  and  are  regularly  used  in  practise.  Turnover  of 
senior civil servants is an area of particular concern. Nearly 60 % of senior civil servants are 
still appointed on the basis of exceptions or transitional arrangements. Also reorganisation can 
be  used  unfairly  to  dismiss  or  reassign  staff.  Disciplinary  procedures  are  in  line  with  civil 
service  principles  and  an  appeals  mechanism  is  in  place.  A  civil  service  law  for  local 
government employees has not yet been adopted. 

The Ministry of Public Administration and Local Self-Government is responsible for central 
coordination of human resources management. The Human Resources Management Service 
(HRMS),  not  directly  accountable  to  the  ministry,  is  in  charge  of  maintaining  the  HRM 
information system. The system is not used to support human resources policy planning and 
monitoring.  Human  resources  units  in  public  administration  bodies  are  weak  and  mainly 
compliance-oriented. 

The  civil  service  remuneration  system  is  based  on  standard  job  classifications,  but  in 
practice  it  does  not  achieve  equal  pay  for  equal  work  across  the  public  administration.  A 
performance  bonus  scheme  allows  some  discretionary  awards,  which  are  not  in  line  with  a 
transparent and fair salary system. A centralised payroll system is needed.  

The civil service professional training strategy has envisaged a new system for professional 
development but it has not been fully implemented. The number of civil servants receiving 
training, through HRMS, remains low, including those at senior management posts. There are 
no  synergies  with  training  programmes  provided  for  local  government  civil  servants.  The 
design of the performance appraisal system is appropriate but appraisal grades are inflated in 
practice, entitling staff to advance through salary steps in ways that the current budget cannot 
support.  There  is  also  no  link  between  the  performance  appraisal  system  and  training. 
Integrity  in  public  service  is  promoted  in  line  with  the  anti-corruption  strategy;  relevant 
measures to prevent corruption in public service are being implemented. 

Policy development and coordination 

The  legal  basis  and  institutions  for  a  coherent  policy-making  system  including  European 
integration are in place. In practice policy coordination focuses on formal, procedural issues 
rather  than  on  substance,  and  a  clearer  division  of  responsibilities  between  the  General 
Secretariat,  the  Public  Policy  Secretariat  and the  new  delivery  units  in  the  Prime  Minister’s 
Office  is  essential.  Policy  planning  is  not  systematically  linked  with  medium-term  fiscal 
planning.  This  jeopardises  the  sustainability  of  strategies  and  reform  programmes.  The 
hierarchy among strategies is needed to reduce the number of overlapping strategies. 

Inclusive and evidence-based policy and legislative development is only partially ensured. 
The administration has limited number of staff and capacity to develop policy and legislative 
proposals,  including  on  the  acquis.  This  is  due  to  the  fact  that  the  administration  has  large 
implementation and inspection departments due to traditional focus on ensuring compliance. 
Public  and  inter-ministerial  consultations  on  proposals  are  required  but  often  conducted 
formalistically and too late in the process. Regulatory impact assessments are usually carried 
out, but their quality varies considerably. The introduction in March of compulsory financial 
impact assessments for all legislation is a positive step, but the Ministry of Finance will have 
to allocate necessary resources.  

9 

 
The  government  publishes  annual  monitoring  reports  on  key  strategic  documents.  This 
enables  public  scrutiny  of  government  work.  However,  the  reports  do  not  measure 
achievements against objectives. Parliamentary scrutiny is conducted by specialist legislative 
committees, without assessing the implementation of laws or strategies. 

Accountability of the administration 

The  way  the  state  administration  is  organised  does  not  ensure  effective  lines  of 
accountability. Many agencies decide on public policies and report to the Prime Minister and 
even  to  parliament  rather  than  to  the  minister  responsible  for  their  area.  Agencies  have 
proliferated,  making  oversight  difficult.  Rationalisation  is  one  of  the  priorities  of  the  public 
administration  reform  (PAR)  strategy,  but  the  financial  resources,  capacity  and  political 
backing to carry out this process are a concern. Within institutions managerial accountability 
is not systematic and responsibilities are not delegated to middle management (see Chapter 32 
- Financial control). 

The relevant internal and external oversight mechanisms are in place to enforce the citizens' 
right to good administration. The Ombudsman plays a key role, and the public authorities 
are obliged to report on implementation of his recommendations (see under Governance). The 
right to access public information is governed by the law on free access to information of 
public importance. The scope of the exemptions allowed does not meet European standards. 
The Commissioner for Information of Public Importance lacks resources, and this has resulted 
in  a  backlog  of  complaints.  The  law  needs  to  be  further  strengthened  to  ensure  the 
Commissioner’s decisions are carried out.  

The general administrative procedures law governs the right to administrative justice, but a 
large number of special administrative procedures hinder overall transparency. The continuing 
backlog in administrative courts has also damaged public confidence. As regards the right to 
seek  compensation,  there  are  neither  clear  rules  for  compensation  in  cases  of  wrongdoing, 
nor available data on implementation of court cases.  

Public financial management 

Serbia  has  a  medium-term  budgetary  framework,  but  strategies  are  not  consistent  with  it. 
Programme budgeting has recently been introduced, but managerial accountability is needed 
to make it effective. Institutional coverage, in-year monitoring and reporting are weak and the 
budget  is  less  reliable  over  the  medium  term.  Until  now,  Serbia  has  focused  on  reforming 
certain parts of its public finance system, without explicitly linking different areas and reform 
measures.  A  public  financial  management  reform  programme  for  2015-17  is  under 
finalisation  and  should  address  identified  weaknesses,  link  all  public  finance  areas  together 
and sequence reform actions among them. Budget transparency is not sufficiently ensured in 
practice. The 2014 deadline for submitting the budget to parliament was not met. 

Service delivery to citizens and businesses 

The PAR strategy aims at creating a more user-oriented administration. However, so far e-
government projects and one-stop-shops have only been introduced on a case-by-case basis. 
Public satisfaction with government services is  not  measured  regularly.  There  are  too  many 
special administrative procedures, which make it difficult to improve the level of service and 
introduce  e-services.  The  recently  adopted  law  on  inspection  supervision  aims  to  simplify 
administrative procedures, improve law enforcement, tackle the grey economy and reduce 
administrative burdens. The new law on administrative procedures has yet to be adopted.  

10 

 
 
 
Strategic framework for public administration reform 

Serbia  has  a  PAR  strategy  and  an  action  plan  for  2015-2017.  It  sets  clear  targets  and 
indicators  and  a  good  monitoring  framework  for  measuring  progress.  Its  effectiveness  will 
need to be further assessed. A separate e-government strategy has not yet been adopted. The 
PAR  Council,  chaired  by  the  Prime  Minister,  ensures  political  support.  The  Ministry  of 
Public Administration and Local Self-Government coordinates implementation, via the inter-
ministerial  PAR  group  consisting  of  relevant  state  administration  bodies,  civil  society  and 
local government representatives. Financial sustainability of the reforms is not yet ensured. 
PAR measures have been budgeted as specific projects in individual institutions in the 2015 
budget. The government will need to ensure funding in the 2016 budget and in the medium-
term expenditure framework. 

2.3.  Rule of law 

Functioning of the judiciary 

Serbia’s judicial system has some level of preparation. Some progress has been made in the 
last year in promoting merit-based requirements for career progression, e.g. by adopting rules 
for  evaluating  judges  and  prosecutors.  However,  judicial  independence  is  not  assured  in 
practice. There is scope for political interference in the recruitment and appointment of judges 
and  prosecutors.  Administration  of  justice  is  slow,  with  a  significant  backlog  of  cases. 
Frequent  changes  of  legislation  and  insufficient  training  make  the  legal  environment 
challenging. In addressing the shortcomings outlined below in the coming year, Serbia should 
in particular: 

→ establish and implement a fair and transparent merit-based recruitment system and career 
management to better guarantee the operational independence of the justice system; 

→ adopt a new law on free legal aid and enable smooth implementation in cooperation with 
main stakeholders; 

→ reduce the case backlog and harmonise case law. 

Strategic documents 

In 2013 Serbia adopted a new 5 years National Judicial Reform strategy (NJRS) and action 
plan.    The  latter  will  need  to  be  revised  so  as  to  reflect  the  main  recommendations  of  the 
functional review of the justice system conducted by the World Bank.  

Management bodies 

The  High  Judicial  Council  (HJC)  and  the  State  Prosecutorial  Council  (SPC)  submit  
proposals  to  parliament  on  judicial  appointments  and  dismissals.  They  are  chaired  by  the 
Supreme  Court  President  and  the  State  Prosecutor  respectively.  The  HJC  has  11  members. 
The  SPC  has  11  members.  Responsibility  for  court  and  prosecution  budgets  is  divided 
between  the  Councils  (which  are  responsible  for  the  budget  for  judges/prosecutors  and 
operational  costs)  and  the  Ministry  of  Justice,  which  is  responsible  for  court/prosecution 
office staff including judicial/prosecution assistants, infrastructure, IT equipment and capital 
investments.  Efficiency  in  financial  management  is  hampered  by  this  shared  responsibility 
and accountability. 

Independence and impartiality 

The independence of judges and prosecutors is laid down in the Constitution and framework 
legislation. However, the Constitution and laws allow political influence. Parliament appoints 
the Supreme Court President and all court presidents, the State Prosecutor and all prosecutors. 

11 

 
The composition and method of election of the HJC and SPC need to be amended to exclude 
political  interference.  Both  councils  have  failed  to  react  publicly  in  protection  of  judicial 
independence in cases of political interference in the work of judges and prosecutors. Court 
rules of procedure provide for random allocation of cases, but in practice not all courts use 
this  procedure  and  exceptions  are  relatively  frequent.  There  is  no  corresponding  technology 
for  allocating  files  randomly  in  prosecution  offices.  There  is  a  legal  framework  in  place  on 
preventing judges from being removed and on withdrawing cases from judges. However, 
Court  presidents  retain  extensive  powers  to  remove  judges  from  cases  or  reassign  cases. 
Courts  are  not  obliged  to  inform  the  HJC  of  the  number  of  court  cases  withdrawn  from 
judges. 

Accountability 

Codes of ethics are in place for judges, prosecutors and lawyers, but there is little training. 
There is an ethical committee in the SPC, but the HJC does not have such a body. There are 
no integrity plans in place for the judiciary. Integrity is not a standard criterion in the selection 
and  nomination  process.  Disciplinary  procedures  are  in  place  for  both  judges  and 
prosecutors. The HJC and SPC are responsible for launching proceedings and for decisions on 
disciplinary and ethical matters. Where wrongdoing has been proven, the sanctions applied in 
disciplinary cases so far have not been deterrent. There are few cases against prosecutors. The 
HJC  faced  obstruction  in  concluding  one  landmark  disciplinary  case  concerning  judicial 
independence.  Judges  and  prosecutors  must  declare  their  assets  to  the  Anti-Corruption 
Agency every year and report possible conflicts of interest. A criminal case was filed against 
one judge, but it was rejected. Fourteen cases were brought against judges who failed to report 
significant changes in property ownership on time. 

Professionalism and competence 

Appointments,  evaluation  and  dismissals  are  in  the  hands  of  the  HJC  and  SPC.  Both 
councils have adopted criteria and guidelines on appointments and evaluation. Application of 
the  rules  for  judges  has  been  delayed.  Serbia  lacks  a  comprehensive  system  of  periodic 
individual  evaluation  of  judges  and  prosecutors.  There  is  a  need  to  set  out  a  systematic 
approach to career development, including training needs. 

Quality of justice 

The Judicial Academy is an independent institution with a mandate for initial and continuous 
training of the judiciary. Its current annual budget is EUR 1.496 million. It has 30 staff. The 
High Judicial Council and State Prosecutorial Council determine the number of initial trainees 
each year. Continuous training is voluntary, except where it is required by law or by a council 
decision. Initial training so far does not guarantee the standards needed by people entering the 
profession. The offered continuous training is insufficient to help practitioners overcome the 
serious challenges posed by numerous changes in the law and the poor overall quality of the 
laws. Judicial and prosecution assistants so far do not receive training.  

In 2015, the total budget for the judicial system represented EUR 26 per inhabitant. There are 
38 judges, 11 prosecutors and 116 practising lawyers per 100 000 inhabitants. There are 209 
private bailiffs (enforcement agents). The judicial system is adequately resourced compared to 
the  EU  average  and  in  relation  to  GDP,  but  resources  are  not  always  allocated  efficiently. 
Courts  are  partly  funded  by  court  fees  (43 %),  but  collection  rates  are  low  and  a  further 
decline is expected as services are transferred to public notaries and private bailiffs. Budget 
planning and resource allocation are rarely adjusted. Automated information exchange is rare 
and 
largely  underdeveloped. 
Meaningful,  accurate  and  timely  statistics  are  missing.  There  is  not  a  consistent  or  easily 

information  and  communication  technology  remains 

12 

 
accessible body of case law. There is no case-weighting system able to address the issue of 
significant differences in workload. A new law on mediation has been in force since January 
but awareness of mediation is limited and training among professionals is required. Serbia has 
observer status in the European Judicial Training Network (EJTN). 

Efficiency 

The overall length of proceedings and the number of old cases recorded as a backlog remain 
a serious concern. A national backlog reduction programme is in place but the courts did not 
meet  the  targets  set  for  2014,  partially  owing  to  a  four-month  strike  by  lawyers.  The  court 
system  remains  clogged  by  bureaucracy  and  extra-judicial  duties,  such  as  certification  of 
documents,  and  especially  by  1.6  million  enforcement  cases,  mostly  related  to  civil  claims 
and utility bills. In 2014, the backlog increased further in the Supreme Court with a clearance 
rate, i.e. ratio of solved cases to newly received cases, of 80.7 %, whereas the basic courts, 
administrative courts and higher courts had clearance rates of 110 %, 103.74 % and 108.47 % 
respectively. Human resources policy is challenged by the need to manage a relatively high 
number of judges and the lack of skills among support staff. 

Fight against corruption 

Serbia has some level of preparation in the fight against corruption. Some progress has been 
achieved in the past year, especially in implementing existing legislation and adopting a new 
law  on  whistle-blower  protection.  However,  corruption  remains  widespread  and  strong 
political  impetus  has  yet  to  translate  into  sustained  results.  In  addressing  the  shortcomings 
outlined below in the coming year, Serbia should pay particular attention to: 

→  establishing  a  track  record  on  investigations,  indictments  and  final  convictions  in  high-
level corruption cases, 

→  creating  a  robust  system  to  coordinate  and  monitor  implementation  of  the  national  anti-
corruption strategy and action plan, ensuring that all key institutions have adequate capacity 
and resources to fulfil their remits effectively; 

→  urgently  amending  and  implementing  the  economic  and  corruption  crimes  section  of  the 
Criminal Code (in particular Article 234 on abuse of position of a responsible person) with a 
view to providing a credible and predictable criminal law framework;  

→ swiftly adopting a new Law on the Anti-Corruption Agency to strengthen its role as a key 
institution in a more effective fight against corruption. 

Track record 

There  is  some  initial  track  record  of  investigation,  prosecution  and  convictions  in 
corruption  cases  which  are  not  considered  high  level.  So  far  there  has  been  no  final 
conviction  for  high-level  corruption.  Policy-makers  should  ensure  law  enforcement  bodies 
are  fully  empowered  to  act  effectively  and  impartially  when  investigating  corruption 
allegations.  Healthcare,  education,  construction  and  spatial  planning,  infrastructure  projects 
and  the  privatisation  of  public  enterprises  are  particularly  vulnerable  to  corruption. 
Independent  supervision  and  capacity  for  early  detection  of  wrongdoing  and  conflicts  of 
interest  in  the  management  of  state-owned  companies,  in  privatisation  procedures,  public-
private  partnerships  and  in  relation  to  public  procurement  procedures,  are  underdeveloped. 
There  should  be  greater  accountability  and  transparency  in  the  management  of  public 
enterprises.  Internal  control  departments  lack  equipment,  resources  and  competent  staff. 
Financial investigations are not yet being launched systematically in cases of corruption and 
organised crime. In a few corruption cases, assets have been confiscated. 

13 

 
As  regards  political  influence  on  the  police,  judges  and  prosecutors,  Ministers  (and 
MPs/party members) continue to criticise ongoing corruption investigations and court rulings. 
Preventing  corruption  in  local  administration  requires  more  attention.  Repeated  leaks  to  the 
media about ongoing investigations, in breach of the presumption of innocence, are an issue 
of  serious  concern.  A  number  of  high-profile  cases,  including  where  evidence  of  alleged 
wrongdoing has been presented by the media, have not been seriously investigated. 

The  Anti-Corruption  Agency  monitors  the  funding  of  political  activities,  including  the 
municipal election campaigns in 2014, and issued a report in November. It also files requests 
for  misdemeanour  proceedings  relating  to  asset  declarations  and  conflict  of  interest. 
However, there is no track record of judicial follow-up to the Anti-Corruption Agency’s work, 
e.g. through in-depth checks on party funding, conflicts of interest and asset declarations. As 
regards free access to information, an analysis of refused requests for access to information 
shows  that  they  mainly  concern  privatisation,  concessions,  public-private  partnerships  and 
other related issues that have an impact on the budget. 

Institutional framework 

Serbia’s  independent  Anti-Corruption  Agency  has  had  a  mandate  to  collect,  analyse  and, 
where necessary, to launch administrative investigations on data related to assets, conflicts of 
interest,  political  party  financing  and  electoral  campaigns,  as  a  means  of  preventing 
corruption. However, the Agency lacks adequate financial, material and human resources to 
play its role effectively. The Anti-Corruption Council analyses cases of systemic corruption 
and  provides  the  government  with  policy  advice.  However,  the  Council  is  under-resourced 
and the government does not follow up and act on its recommendations often enough. Laws 
on  access  to  information  are  in  place,  but  they  do  not  ensure  that  the  decisions  of  the 
Commissioner  for  Free  Access  to  Information  of  Public  Importance  and  Personal  Data 
Protection are followed up. The Commissioner is unable to monitor outcomes. 

As regards law enforcement, prosecutors, judges and police do not have sufficient means to 
fight  corruption.  The  prosecution  service  leads  criminal  investigations  but  cooperation  with 
the  police  suffers  from  the  lack  of  a  common  approach.  Police  and  prosecutors  are  not 
proactive enough. There is no safe and secure platform for exchanging sensitive information 
between  them,  which  hampers  investigations.  Capacity  to  carry  out  financial  investigations 
and confiscate assets in corruption cases is limited. 

Legal framework 

The  legal  framework  for  the  fight  against  corruption  is  broadly  in  place.  The  excessive 
recourse  to  the  provision  on  abuse  of  office  in  the  private  sector  in  the  Criminal  Code  is 
harmful  to  the  business  climate  and  legal  certainty.  Amendments  to  the  Criminal  Code  are 
still  under  consideration  to  provide  for  a  sustainable  legal  solution  to  effectively  prosecute 
cases of criminal economic offences. There has been a significant delay in amending the Law 
on  the  Anti-Corruption  Agency  to  enhance  its  role  as  a  key  institution  in  the  fight  against 
corruption. 

Serbia  has  ratified  all  major  international  instruments  against  corruption  and  is  party  to  the 
UN Convention against Corruption, but has chosen not to criminalise illicit enrichment. It 
has  signed  and  ratified  the  Council  of  Europe  anti-corruption  conventions.  Procedures  for 
investigating corruption cases, especially cases of high-level corruption, are often prolonged 
due  to  lack  of  capacity  and  an  inadequate  legal  framework  for  financial  investigations  and 
asset recovery. Resources are inadequate and the relevant action plan has not been adopted. 
The law on access to information does not ensure adequate enforcement of the decisions of 

14 

 
the  Commissioner  for  Free  Access  to  Information  of  Public  Importance  and  Personal  Data 
Protection. Lobbying is not regulated. Laws on conflict of interest need to be amended. 

Strategic framework 

The  anti-corruption  strategy  and  action  plan  for  2013-2018  is  being  implemented  but 
several measures have been delayed. The inter-ministerial group to coordinate action, set up 
in 2014, has only met once and hence has not had the intended impact. 

Fight against organised crime 

Serbia  has  some  level  of  preparation  in  the  fight  against  organised  crime.  Some  progress 
has been made in reorganising the Ministry of Interior and in increasing capacity for border 
control.  However,  the number of final  convictions remains  low. Efforts to investigate  wider 
criminal  networks  and  to  process  money  laundering  cases  need  to  be  stepped  up.  Financial 
investigations  and  the  concept  of  intelligence-led  policing  remain  underused.  Precautionary 
freezing of assets is rarely applied and the level of assets confiscated is low. Independent and 
transparent  oversight  of  the  police  is  not  in  place.  In  addressing  the  shortcomings  outlined 
below in the coming year, Serbia should pay particular attention to: 

→  stepping  up  intelligence-led  investigations  with  a  view  to  developing  a  sustainable  track 
record  of  final  convictions  and  dismantling  networks  involved  in  organised  crime,  money 
laundering, people smuggling and trafficking in human beings; 

→ establishing a secure platform to exchange intelligence between law enforcement agencies, 
devoting more attention to sharing data on cases with prosecutors and with the asset recovery 
directorate; 

→  adopting  a  new  law  on  the  organisation  of  the  police,  and  reinforcing  the  functions  and 
independence of the internal control sector of the police. 

Track record 

The number of final convictions for organised crime remains low compared to the estimated 
value of the criminal market of the region. Very few cases have been brought for trafficking 
in  human  beings,  despite  Serbia  being  a  source,  transit  and  destination  country  for  human 
trafficking. Labour exploitation of men, mainly Serbian nationals abroad, is increasing. There 
is  a  need  to  better  identify  victims,  particularly  asylum  seekers  and  unaccompanied  foreign 
minors.  

Serbia  established  good  international  and  regional  cooperation  in  the  field  of  drugs,  in 
particular  with  the  2014  seizure  of  168 kg  of  marijuana  jointly  with  the  former  Yugoslav 
Republic of Macedonia. In many cases there has been no serious effort to investigate wider 
criminal  networks.  This  also  applies  to  money  laundering  cases  (6  indictments  in  2014). 
Effective  implementation  of  anti-money  laundering  legislation  by  all  relevant  institutions, 
including  banks,  is  still  needed.  Criminal  investigations  are  often  narrow  in  scope  and 
companies or organisations are very rarely investigated. There is no policy of systematically 
running serious financial investigations. The concept of financial investigation does not go 
beyond  the  seizure  and  confiscation  of  criminal  assets  of  individuals.  Serbia  is  not  yet  in  a 
investigations. 
position 
Precautionary  freezing  of  assets  is  rarely  applied  early  in  the  investigation.  So  assets  often 
disappear,  which  results  in  a  poor  track  record  of  confiscating  criminal  assets  on  final 
conviction.  Sanctions  applied  by  judges  are  not  sufficiently  deterrent.  There  are  frequent 
leaks to the press, violating the secrecy of the investigation. 

investigations  alongside  criminal 

to  run  complex  financial 

15 

 
 
Institutional and operational capacity 

Serbia  has  33 387  police  officers,  or  464  per  100 000  inhabitants.  In  October  2014,  the 
Ministry  of  Interior  started  reforming  human  resources  departments  to  create  a  centralised 
service. There are no clear criteria for the recruitment, promotion, career path and evaluation 
of staff in the police, who remain vulnerable to politically motivated decisions. Serbia needs 
to  take  steps  to  exclude  any  political  influence  in  police  work.  Command  structures  are 
complex,  with  overlapping  responsibilities.  The  Ministry  of  Interior  currently  has  three 
training centres, to be integrated into a new sector for human resources. The police academy 
is funded by the Ministry of Interior, but not part of it. Negotiations on cooperation with the 
European Police College (CEPOL) were concluded in April. 

Specialised units are in place on anti-terrorism, trafficking in human beings, synthetic drugs, 
cybercrime  and  financial  investigations.  All  these  units  are  in  need  of  further  staffing  and 
specialised  training.  The  general  level  of  equipment  varies  across  the  ministry.  Independent 
and  transparent  oversight  of  the  police  is  not  in  place.  The  internal  control  section  of  the 
police is not independent or able to take special investigative actions without resorting to the 
intelligence agencies. There is a lack of resources, legal powers and overall political support 
from government, parliament and police leadership. 

The operational capacity of prosecutors and the police is weakened by the lack of a secure 
platform  for  storing  and  exchanging  information.  Getting  the  various  law  enforcement 
agencies  such  as  the  police  and  the  tax  and  customs  administrations  to  work  together  on 
operations is hampered by the lack of smooth data exchange. An operational agreement with 
Europol  is  in  place  but  the  ministry  has  not  yet  appointed  a  liaison  officer  to  The  Hague. 
International  cooperation  is  well  established.  The  witness  protection  unit  in  the  ministry 
lacks adequate staff, equipment and premises. The level of cooperation between the Serbian 
Witness Protection Unit and prosecutors needs to be improved. As regards crime statistics, a 
DNA  database  and  profiling  capacity  are  in  place.  A  comprehensive,  multidisciplinary  and 
victim-oriented approach to human trafficking is needed. Capacity for anti-money laundering 
action is weak. Delays at the financial investigation stage increase the risk that assets will be 
taken  out  of  the  country.  The  courts  and  the  Directorate  for  the  Management  of  Seized 
Assets  in  the  Ministry  of  Justice  are  under-equipped  to  carry  out  their  remit  to  seize  and 
confiscate  property.  The  secure  database  of  the  Serbian  police  does  not  allow  cases  to  be 
classified  as  international  or  domestic.  It  does  not  provide  information  from  asset  recovery 
activities. There is no standard measure on criminal statistics. 

Legal framework 

The law on the confiscation of criminal assets needs to be aligned with EU rules, notably as 
regards  third  party  confiscation,  extended  confiscation  and  precautionary  freezing  of  assets. 
Alignment  is  still  required  as  regards  the  Swedish  Initiative2  and  the  Prüm  Decision, 
eliminating violence at sports events, protecting public figures and prosecuting motor vehicle 
crime  with  trans-border  implications.  Criminal  legislation  on  issues  such  as  trafficking  in 
human beings, online child pornography and cybercrime needs to be aligned with EU rules. A 
number of shortcomings in the investigation phase need to be addressed, notably as regards 
the  timeframe  and  arrangements  for  using  special  investigative  measures.  The  police’s 
dependence on the security and intelligence agencies to carry out certain special investigative 
measures  in  criminal  investigations  remains  a  matter  of  serious  concern.  The  investigative 
powers of the border police and customs remain limited. 

2 The Swedish Initiative provides a common legal framework for effective and speedy exchange of information 
and intelligence between EU States’ law enforcement authorities. 

16 

 
                                                            
Strategic framework 

Serbia has national strategies on anti-money laundering, financial investigation and terrorism 
financing.  Serbia  still  needs  to  establish  a  strategic  picture  of  the  organised  crime  situation 
inspired  by  the  EU  SOCTA  methodology  (serious  and  organised  crime  threat  assessment). 
Serbia needs to adopt strategies on cybercrime and trafficking of human beings.  

Fight against terrorism 

Serbia amended its Criminal Code to criminalise the organisation of and participation in war 
or  armed  conflict  in  a  foreign  country.  A  coordination  group  for  the  fight  against  terrorism 
and  the  prevention  of  radicalisation  and  extremism  has  been  set  up.  Serbia  is  also  actively 
involved  in  international  and  regional  police  and  judicial  cooperation.  The  phenomenon  of 
foreign  terrorist  fighters  needs  a  tailor-made  approach  by  the  intelligence  and  law 
enforcement  community  and  a  coherent  judicial  policy  on  offenders.  For  developments  in 
these areas, see Chapter 24 — Justice, freedom and security 

2.4.  Human rights and the protection of minorities 

Overall situation 

The legislation and institutions needed to uphold international human rights law are in place. 
Legislation  to  protect  minorities  and  cultural  rights  is  also  broadly  in  place.  However, 
sustained  efforts  are  needed  to  ensure  effective  and  consistent  implementation  across  the 
country. Shortcomings particularly affect the following areas: 

•   Conditions  for  the  full  exercise  of  freedom  of  expression  are  still  not  in  place.  Full 

implementation of the new media laws needs to be ensured. 

•   Promotion  and  protection  of  the  rights  of  the  most  vulnerable  and  discriminated  groups, 
including  the  LGBTI  persons,  persons  with  disabilities,  and  persons  with  HIV/AIDS  has 
yet  to  be  fully  ensured.  Hate-motivated  offences  need  to  be  properly  investigated, 
prosecuted and sanctioned.  

•   Efforts  to  improve  the  difficult  living  conditions  of  Roma  and  to  combat  discrimination 
need  to  be  strengthened.  Government  coordination  and  leadership  of  Roma  integration 
policy needs to be further improved. 

A  detailed  analysis  of  freedom  of  expression  follows  below.  For  a  detailed  analysis  of 
developments  on  other  human  rights  and  the  protection  of  minorities,  see  Chapter  23  — 
Judiciary and fundamental rights. For developments in trade union rights, anti-discrimination 
and equal opportunities, see also Chapter 19 — Social policy and employment. 

Freedom of expression 

Serbia has achieved some level of preparation concerning the right to freedom of expression. 
No progress has been made overall in the last year. A legislative package aimed at improving 
the situation in the media and clarifying the legal framework, particularly in relation to state 
financing and control of the  media, is in place. However, conditions for the  full exercise of 
freedom of expression are not in place. The new media laws need to be implemented. It has 
yet  to  be  seen  whether  media  privatisation  will  increase  transparency  of  ownership  and 
funding.  Threats  and  violence  against  journalists  remain  of  concern.  Criminal  charges  and 
final  convictions  are  rare.  The  overall  environment  is  not  conducive  to  the  full  exercise  of 
freedom  of  expression.  In  addressing  the  shortcomings  outlined  here,  in  the  coming  year 
Serbia should in particular:  

17 

 
 
→ create an enabling environment in which freedom of expression can be exercised without 
hindrance;  threats,  physical  assaults  and  cases  of  incitements  to  violence  against  journalists 
and bloggers should be reacted to and publicly condemned; 

→ complete the process of privatising state- and municipally owned media; 

→ strengthen the independence of the Regulatory Body for Electronic Media so as to better 
support editorial independence in the media; 

→ ensure adequate funding to public broadcasting service and ensure editorial independence. 

Intimidation of journalists 

Threats  and  violence  against  journalists  remain  of  concern.  Some  criminal  charges  have 
been  filed  but  final  convictions  are  still  rare.  Prolonged  police  protection  of  several 
journalists, with no tangible action taken to remove the reasons for these security measures, in 
practice seriously hampered the exercise of their profession. The commission tasked to look 
into unresolved cases of murdered journalists from 1999 and 2001 has made further progress 
in its work leading to arrests. 
Legislative environment3 

The  2014  media  laws  are  a  step  towards  clarifying  the  legal  framework,  particularly  in 
relation  to  state  financing  and  control  of  the  media.  Defamation  has  not  been  a  criminal 
offence since December 2012. As regards the access to information that state bodies provide 
for  the  media,  the  Commissioner  for  Access  to  Information  of  Public  Interest  has  reported 
several  cases  in  which  state  bodies  resorted  to  paying  fines  rather  than  disclosing  the 
information requested. 
Implementation of legislation/institutions4 

As regards the implementation of the three new media laws, the privatisation of state and 
municipally-owned media has started in line with the Law on Public Information and Media, 
albeit with some delays. The Regulatory Body for Electronic Media has further stepped up 
monitoring of content but its independence needs to be strengthened, in order to actively and 
properly perform its role. The Press Council has been more active in disclosing and analysing 
breaches of professional journalistic standards and the Journalistic Code. There has been no 
progress in investigating a series of cases of actions against websites that occurred in 2014. 
Efforts to identify and prosecute those suspected of violating internet freedoms are needed. 
Public service broadcasters5 

The two public service broadcasters, Radio Television of Serbia (RTS) and Radio Television 
of  Vojvodina  (RTV),  are  financed  from  direct  budget  subsidies  until  2016.  They  are  also 
entitled  to  commercial  funding  and  advertisement  time  which  is  lower  than  that  for 
commercial  broadcasters.  The  funds  are  insufficient,  which  has  an  impact  on  programme 
quality  and  diversity.  Public  broadcasting  services  in  minority  languages  need  to  be 
ensured. 

Economic factors 

Opaque ownership, unregulated financing, covert and open political and economic influence 
on the media and money channelled to favoured media from various state sources continue to 
be features of the media environment. There have been cases reported of the rescheduling of 

3 See also chapter 10 
4 See also chapter 10 
5 See also chapter 10 

18 

 
                                                            
tax debts for certain media outlets. The most common informal pressure on editorial policy is 
through  advertising.  Funding  of  media  from  state  sources  at  all  levels  continues  to  be  a 
problem. It is not yet clear what the effects will be of introducing project-based financing of 
content of public interest following privatisation and whether this method will be used by all 
other state actors which fund media. 

Professional organisation/professional conditions 

There  are  three  main  professional  associations  in  Serbia.  Journalists  have  little  job  security 
and  low  salaries  and  are  thus  prone  to  pressure  and  influence  from  economic  and  political 
quarters.  There  have  been  a  number  of  cases  in  which  journalists  and  editors  have  claimed 
that  their  firing  or  relocation  resulted  from  expressing  an  opinion.  Such  circumstances 
encourage self-censorship. Journalists’ job security should be enhanced and press associations 
need to strengthen their role in trade union and employment matters. 

2.5.  Regional issues and international obligations 

There  are  no  outstanding  issues  concerning  Serbia’s  respect  for  the  Dayton/Paris  Peace 
Agreement. Serbia continues to support the sovereignty and territorial integrity of Bosnia and 
Herzegovina,  while  preserving special relations with Republika Srpska, as envisaged by the 
Dayton Agreement. Serbia also supports Bosnia and Herzegovina’s path to joining the EU. 

Serbia has continued to cooperate fully with the ICTY. Serbia maintained its initiative to the 
ICTY for Serbian convicts to be allowed to serve sentences in Serbia.  

In  the  area  of  domestic  processing  of  war  crimes,  cooperation  between  the  special 
prosecutors of Serbia and Bosnia and Herzegovina continued on an upward course. The first 
joint  investigative  team  worked  successfully  in December,  leading  to  the  indictment  of  five 
suspected perpetrators of war crimes. Cooperation and exchange of information with Croatia 
and  EULEX  continued  but  needs  to  be  stepped  up.  It  is  important  that  these  regional 
cooperation efforts continue to be strengthened. 

Some  progress  has  been  made  on  investigating  high-profile  cases.  In  March,  eight  former 
members of the Special (police) Brigade in the Ministry of Interior of the Republika Srpska 
suspected  of  committing  war  crimes  against  civilians  in  Srebrenica  were  arrested.  Despite 
consistent efforts by the war crimes jurisdictions, the number of investigations against high-
level  officers  has  remained  low,  and  courts  have  continued  to  pass  lenient  sentences.  To 
maintain  the  quality  of  trials,  measures  should  be  put  in  place  to  preserve  the  extensive 
judicial  experience  acquired  in  processing  these  complex  cases.  Only  a  few  victims  of  war 
crimes have access to effective compensation under the current legal framework. No concrete 
steps  have  been  taken  to  address  the  serious  weaknesses  in  the  witness  protection  system. 
Political pressure undermining the work of the War Crimes Prosecution Office is an issue of 
concern. Serbia needs to adopt and implement an overarching national strategy for domestic 
handling  of  war  crimes,  backed  by  adequate  resources.  A  dedicated  prosecution  strategy  is 
also needed. 

Serbia’s  policy  on  the  International  Criminal  Court  is  in  line  with  the  EU’s  guiding 
principles  and  EU  common  positions  on  the  integrity  of  the  Rome  Statute.  Serbia  does  not 
have any bilateral immunity agreements. 

Serbia, Bosnia and Herzegovina, Croatia and Montenegro have continued to closely cooperate 
under the Sarajevo Declaration Process, which aims to find sustainable solutions for some 
74.000 persons who became refugees and displaced persons as a result of the armed conflicts 
in  the  former  Yugoslavia  during  the  1990s.  All  countries  need  to  further  step  up  efforts  to 
deliver  on  the  implementation  of  the  agreed  housing  solutions.  In  Serbia  from  the  4,153 

19 

 
housing solutions approved thus far worth EUR 71.5 million, the first 123 were delivered. The 
issue of refugees’ pensions between Croatia and Serbia is still unresolved. 

The  unresolved  fate  of  missing  persons  from  the  conflicts  in  the  1990s  remains  a 
humanitarian concern in the Western Balkans. As of April, a total of 10 814 persons were still 
missing, according to the figures of the International Committee of the Red Cross (ICRC). Of 
these, 7 019 cases are related to the conflict in Bosnia and Herzegovina, 2 125 to the conflict 
in Croatia and 1 670 to the conflict in Kosovo. The lack of information on new gravesites and 
difficulties in identifying exhumed human remains continue to be the key obstacles to solving 
the remaining cases. With regard to the Kosovo conflict, exhumation works in Rudnica-Raska 
resulted  in  identification  of  52  victims.  By  end  October,  the  Serbian  authorities  had  handed 
over to EULEX all human remains recovered at this location. In line with the commitments 
made  in  the  ICRC-chaired  Working  Group  on  Missing  Persons,  the  Serbian  authorities 
organised assessments of two locations suspected as potential gravesites related to the Kosovo 
conflict and provided the first set of documents requested from its archives in March. Limited 
progress  was  made  on  providing  new  information  on  missing  persons  in  relation  to  the 
conflict  in  Croatia.  In  March,  the  relevant  authorities  of  Serbia  and  Croatia  met  informally 
and agreed to go ahead with a joint update of the official list of missing persons. Ascertaining 
the fate of missing persons remains vital to reconciliation and stability in the region. Sustained 
political commitment and renewed efforts are needed. 

Regional  cooperation  and  good  neighbourly  relations  form  an  essential  part  of  Serbia’s 
process  of  moving  towards  the  EU.  Serbia  has  shown  a  constructive  commitment  to  good 
neighbourly relations. Serbia has also continued to participate actively in regional initiatives 
such  as  the  South-East  Europe  Cooperation  Process,  the  Brdo  process,  the  Regional 
Cooperation Council and the Central European Free Trade Agreement. Serbia hosted a ‘16+1’ 
summit  of  the  states  of  Central  and  Eastern  Europe  (SEE)  and  China  in  December,  and  a 
Black Sea Economic Cooperation Parliamentary Assembly in March. It continued to actively 
support  the  Coalition  for  Reconciliation  Commission  (RECOM)  and  Igman  initiatives  on 
regional reconciliation.  

A fresh impetus has been given to regional cooperation through the 'Berlin process' and the 
Western Balkan six initiative notably regarding the EU’s connectivity agenda.  Serbia hosted 
a  meeting  of  the  foreign  affairs  and  economic  ministers  in  October  and  constructively 
participated in the follow-up meeting in Pristina in March. In April, the Western Balkan Six 
countries reached an agreement on the core transport network and in June 2015 on extending 
three Trans-European Transport Networks core corridors to the Western Balkans. They also 
identified the priority projects to be implemented by 2020. The countries agreed to implement 
before the next summit in Paris a number of 'soft' measures such as aligning and simplifying 
border crossing procedures, road safety and maintenance schemes.  

As  regards  bilateral  relations  with  other  enlargement  countries  and  neighbouring  EU 
Member  States,  Serbia  has  concluded  a  bilateral  convention  on  regional  cooperation  with 
Montenegro under Article 15 of the Stabilisation and Association Agreement, but not yet with 
Albania  or  the  former  Yugoslav  Republic  of  Macedonia.  The  demarcation  of  borders  with 
Bosnia and Herzegovina, Montenegro and Croatia remains pending. 

Relations  with  Albania  improved  overall.  In  October,  an  incident  during  a  football  match 
played by both national teams in Belgrade strained bilateral relations. In January a demarche 
was  issued  in  connection  with  a  flag  of  ‘Greater  Albania’  displayed  at  the  residence  of  the 
Albanian Prime Minister. However the subsequent visit to Serbia by Albania's Prime Minister 
in  November  was  the  first  of  its  kind  in  68  years.  In  March,  the  Speaker  of  the  Serbian 
Parliament paid the first such visit to Tirana in decades. The Serbian Prime Minister's visit to 

20 

 
Tirana  in  May  was  the  first  ever.  Belgrade  hosted  the  first  meeting  of  the  bilateral  Joint 
Commission for Economic Cooperation. Serbian and Albanian Prime Ministers also prepared 
joint  infrastructure  projects  within  the  Western  Balkans  Six  initiative.  The  Serbian  and 
Albanian Ministers of Foreign Affairs took part in a first trilateral meeting with their Italian 
counterpart in Rome. 

Relations  with  Bosnia  and  Herzegovina  remained  good.  The  chair  of  Bosnia  and 
Herzegovina’s Presidency visited Belgrade and the Serbian Prime Minister visited Sarajevo in 
May.  Serbian  authorities  condemned  the  terrorist  attacks  in  Zvornik  in  April.  The  Serbian 
Prime  Minister's  attendance  at  the  commemoration  of  Srebrenica  genocide  in  July  sent  a 
positive  message.  In  the  wake  of  the  attack  against  him  on  that  occasion,  he  invited  the 
members of Bosnia and Herzegovina Presidency, who travelled to Belgrade in July. 

Relations  with  the  former  Yugoslav  Republic  of  Macedonia  were  further  upgraded.  The 
President of the former Yugoslav Republic of Macedonia visited Belgrade in October. A joint 
session of the two governments took place in February in Skopje at which several cooperation 
agreements were signed in the field of economy, culture, the environment, tourism, education, 
science and technology, together with an agreement on a border-crossing point. The Serbian 
authorities condemned the attacks in Kumanovo in May.  

Relations  with  Montenegro  remained  good.  The  Speaker  of  the  Serbian  Parliament  visited 
Podgorica in October. The Prime Ministers met at the ‘16+1’ SEE-China summit in Belgrade 
in December. The Serbian Minister of Foreign Affairs visited Montenegro in February in his 
capacity as the OSCE Chairperson-in-Office. There were no developments on issues related to 
citizenship rights in the two countries.  

Relations with Turkey remained stable. There were sporadic tensions in November after the 
murder of a Serbian sports fan in Istanbul. The Serbian and Turkish Prime Ministers met at 
the  World  Economic  Forum  in  Davos  in  January.  The  Speaker  of  the  Serbian  Parliament 
visited  Ankara  in  April.  A  Protocol  on  inter-parliamentary  cooperation  was  signed  on  that 
occasion. 

Relations  with  Bulgaria,  Romania  and  Hungary  improved  further  overall.  The  Bulgarian 
President visited Serbia in March. The Bulgarian, Romanian and Serbian Prime Ministers met 
in  April  in  Craiova  to  discuss  energy  and  transport  infrastructure  cooperation  and  agreed  to 
give these meetings a permanent format as the ‘Craiova Group’. Three new border-crossing 
points between Serbia and Romania were opened in November. The two Prime Ministers met 
on several occasions. A trilateral China-Hungary-Serbia memorandum on cooperation on the 
construction of the Belgrade-Budapest railway was signed at the ‘16+1’ SEE-China summit. 
The two Prime Ministers met again in Subotica in February to discuss energy issues. The two 
countries  developed  constructive  cooperation  on  addressing  the  peak  of  irregular  migrants 
from  Kosovo  passing  through  Serbia  early  in  2015.  A  joint  session  of  Serbia  and  Hungary 
governments took place in July in Budapest, resulting in the signature of several agreements 
on education, infrastructure and European integration. 

There were ups and downs in relations with Croatia. The Serbian Prime Minister attended the 
inauguration  of  the  new  Croatian  President  in  February  and  the  Serbian  Foreign  Minister 
visited  Zagreb  in  March.  The  inter-state  commission  for  the  return  of  cultural  heritage  to 
Croatia decided in March on the return of over 500 cultural assets. In June, a Croatian citizen 
sentenced for war crimes in Serbia was transferred to serve the remainder of his sentence in 
Croatia. The provisional release of ICTY detainee Vojislav Šešelj and his subsequent public 
statements prompted sharp reactions in Zagreb. Serbia declared 5th August, commemorating 
the "operation Storm" in Croatia, a day of mourning and protested for hate speech and display 
of  fascist  symbols  during  Croatian  commemorations.  The  decision  of  Vukovar's  local 

21 

 
authorities  to  remove  bilingual  signboards  prompted  acute  reactions  in  Belgrade.  Tensions 
following temporary restrictions of border crossings in September have been overcome. 

3.  NORMALISATION OF RELATIONS BETWEEN SERBIA AND KOSOVO 

Serbia and Kosovo have remained engaged in the implementation of the agreements reached 
in  the  dialogue,  in  particular  the  April  2013  ‘First  agreement  of  principles  governing  the 
normalisation of relations’. Work under the EU-facilitated dialogue has continued at technical 
level throughout the reporting period. The high-level dialogue resumed in February 2015, and 
four meetings attended by Prime Ministers Vučić and Mustafa were held in April, June and 
August. 

Key agreements were finalised on 25 August 2015. General principles/main elements on the 
establishment of the Association /Community of Serb majority municipalities in Kosovo 
through the adoption of its Statute were agreed. The text defines the legal framework of the 
Association/Community,  its  objectives,  organisational  structure,  relations  with  central 
authorities,  legal capacity, budget  and financial support. It also provides the modalities/next 
steps for its establishment. In the field of Energy, two new Serbian energy companies (one 
dealing with import, export and transit; the other with supply and distribution services) were 
established  in  Kosovo.  These  companies  are  proceeding  with  their  internal  organisation 
before being able to apply for licenses. An action plan detailing the implementation steps of 
the Telecoms arrangement was also approved. Serbia and Kosovo agreed to ask the European 
Union to revitalise the Mitrovica bridge and its surroundings so that it can be reopened to all 
traffic by summer/not later than June 2016. In line with the same timetable, it was also agreed 
that  the  North  Mitrovica  municipality  will  revitalise  its  main  street  (King  Peter  Street)  by 
turning it into a pedestrian zone. 

Progress has been made in other important areas. Following an agreement in February 2015, 
the  dismantling  of  the  Serbian  structures  on  justice  is  well-advanced.  Serbia  facilitated 
applications  of  Kosovo  Serb  judges  and  prosecutors  in  the  Kosovo  judiciary.  The  proper 
handling  of  cases  in  the  Mitrovica  Basic  Court,  where  Serbian  official  statements  have  at 
times  interfered  with  the  proceedings,  requires  a  dispassionate  environment.  Integration  of 
Kosovo Serb police and civil protection personnel is nearing completion. An agreement on 
vehicle insurance of June 2015, providing for the recognition in each other's jurisdiction of 
Serbia  and  Kosovo's  respective  vehicle  insurance  is  being  implemented.  On  customs, 
agreements  were  reached  on  the  import  of  controlled  goods  into  Kosovo,  including  for 
medicines. In the context of the liaison arrangements, and following an agreement reached 
in November 2014, all official visits are directly arranged by Liaison Officers. Progress was 
also reached in the field of cadastre: a new archives building was opened in Belgrade, where 
the scanning of documents pertaining to Kosovo is to be completed by June 2016. Following 
the Serbian Constitutional Court's rulings adjudicating that the form in which some dialogue 
agreements  have  been  transposed  was  unconstitutional,  Serbia  has  adjusted  its  regulatory 
framework  related  to  these  agreements,  with  the  exception  of  freedom  of  movement.  The 
Constitutional Court's rulings on the energy and telecoms agreements are still pending. Serbia 
needs to find legal solutions for the implementation of agreements that are sustainable and can 
withstand legal challenges. 

Implementation of other agreements has continued, albeit at a slower pace. On IBM, further to 
the  six  interim  facilities,  two  additional  permanent crossing points,  were  agreed,  for  which 
Serbia has initiated the expropriation process on its territory. However, illegal crossing roads/ 
by-passes,  in  particular  in  the  north  of  Kosovo,  continue  to  be  regularly  used  to  smuggle 
substantial amounts of goods. Additional measures need to be taken by Serbia to stop illegal 

22 

 
 
crossings.  The  processing  of  cases  in  the  framework  of  the  2013  general  modalities  for 
Mutual Legal Assistance has been suspended between October 2014 and August 2015 by the 
Serbian authorities. The handling of over 600 pending cases has resumed in September 2015. 
On regional cooperation, Kosovo became a permanent participant in RACVIAC (the Centre 
for  Security  Cooperation)  and  joined  MARRI  (Migration,  Asylum,  Refugees  Regional 
Initiative).  However,  Serbia  needs  to  remain  committed  to  the  continued  implementation  of 
the agreement on representation and participation of Kosovo in regional forums. Serbia and 
Kosovo  also  participated  in  constructive  discussions  to  improve  cooperation  in  tackling 
migratory flows from Kosovo early this year. 

Overall,  Serbia  and  Kosovo  have  remained  engaged  in  the  dialogue  and  committed  to  the 
implementation of the April 2013 First agreement of principles governing the normalisation 
of  relations  and  other  agreements  reached  in  the  dialogue.  The  steps  taken  gave  fresh 
momentum in the normalisation of relations and should have a positive and concrete impact 
on  the  everyday  life  of  citizens  in  both  Kosovo  and  Serbia.  Further  progress  in  this  area 
remains essential for advancing the European future of both Serbia and Kosovo. 

4.  ECONOMIC CRITERIA 

Key economic figures 

Gross  domestic  product  per  capita  (%  of  EU28  in 
PPS) 

GDP growth (%) 

2013 

37 

2.6 

2014 

36 

-1.8 

Unemployment rate (female; male) (%) 

22.1 (23.8; 20.8)  18.9 (19.6; 18.3)

Economic  activity  rate  for  persons  aged  20–64: 
proportion  of  the  population  aged  20–64  that  is 
economically active (female; male) (%) 

66.0 (56.8; 75.3)  66.2 (57.5; 75.1)

Current account balance (% of GDP) 

Foreign direct investment (FDI) (% of GDP) 

-6.1 

3.9 

-6 

3.8 

Source: Eurostat 

In  line  with  the  conclusions  of  the  European  Council  in  Copenhagen  in  June  1993,  EU 
accession  requires  the  existence  of  a  functioning  market  economy  and  the  capacity  to  cope 
with competitive pressure and market forces within the Union. 

The  monitoring  of  these  economic  criteria  should  be  seen  in  the  context  of  the  increased 
importance  of  economic  governance  in  the  enlargement  process;  in  2015  the  enlargement 
countries  were  invited  to  prepare  Economic  Reform  Programmes  (ERPs),  which  set  out  a 
medium-term  macro-fiscal  policy  framework  together  with  key  structural  reforms  aimed  at 
supporting  the  framework  and  boosting  competitiveness.  The  ERPs  were  the  basis  for 
country-specific  recommendations  jointly  adopted  by  the  EU  and  the  Western  Balkans  and 
Turkey in the Economic and Financial Dialogue meeting on 12 May 2015. 

23 

 
 
 
4.1.  The existence of a functioning market economy 

Serbia  is  moderately  prepared  in  developing  a  functioning  market  economy.  Good 
progress was made to address some of the policy weaknesses, in particular with regard to the 
budget deficit, labour market and the business environment. However, fiscal imbalances are 
still high and major sectors of the economy are in need of reform. Credit activity is weak, also 
constrained by very high level of non-performing loans. The private sector is underdeveloped 
and hampered by weaknesses with the rule of law. In line with the ERP recommendations and 
in  order  to  support  long-term  growth,  in  the  coming  year  Serbia  should  pay  particular 
attention to: 

→ sustaining efforts to reduce the budget deficit and the high public debt level; 

→  advancing  private  sector  development  through  the  restructuring  and  privatisation  of 
state-owned enterprises (SOEs) and addressing the challenges of stagnating credit growth and 
non-performing loans (NPLs); 

→ implementing public administration reform. 

Economic policy essentials 

The  government’s  determination  to  pursue  economic  reforms  has  strengthened.  Serbia 
submitted its Economic Reform Programme, covering the period 2015-2017, in March 2015. 
The objectives of the programme are to achieve macroeconomic stability, to remove obstacles 
to  growth  and  to  improve  competitiveness.  To  this  end,  the  authorities  have  already 
undertaken  significant  measures  to  reduce  the  budget  deficit.  They  have  also  outlined  an 
ambitious  reform  agenda  aimed  at  restructuring  state-owned  enterprises,  streamlining  and 
improving  the  performance  of  public  administration,  improving  the  business  environment, 
and strengthening financial stability. Serbia needs to follow up on its commitments and take 
further  steps  to  implement  the  ERP  recommendations,  which  are  set  out  below.  Since 
February, the government reform agenda has been supported by a new arrangement with the 
International Monetary Fund. 

Macroeconomic stability 

Serbia’s  economy 
is  recovering  from  a  third 
recession in five years, but GDP remains around its 
pre-crisis  level.  Economic  growth  averaged  1.0 % 
over  2008-2013,  while  it  was  negative  in  2014.  The 
economy  has  become  less  dependent  on  consumer 
spending and more open as exports have increased by 
close to 50 % since 2009. The shift to new sources of 
growth  is  incomplete  as  investments  remain  weak 
despite  some  signs  of  picking  up  in  2015.  Slow 
economic  development  has  led  to  stagnating  average 

income per capita (PPS), which stands at 36% of the EU average. 

24 

 
 
External  imbalances  have  been  reduced  by  growing 
exports  and  subdued  imports.  The  current  account 
deficit fell below 5.0 % of GDP in the first half of 2015, 
down  from  double-digit  levels  in  the  beginning  of  the 
decade. Most of the deficit was covered by net foreign 
direct  investment,  which  stabilised  at  close  to  4 %  of 
GDP,  still  below  the  needs  of  the  economy.  External 
debt  has  increased  since  mid-2014  to  around  80 %  of 
GDP but, in view of shrinking external imbalances, debt 
sustainability  does  not  raise  immediate  concerns.  The 
stand  at  a 
official 
comfortable  level,  covering  about  seven  months  of  imports  of  goods  and  services  —  an 
important buffer in view of external risks. 

foreign  exchange 

reserves 

Unemployment remains very high despite signs of improving labour market conditions. 
Unemployment  fell  below  20 %  and  both  employment  and  activity  rates  have  increased. 
Although  some  of  the  new  jobs  were  in  the  public  sector  or  in  informal  employment,  large 
gains were observed in registered private employment, especially for women. Most of these 
jobs,  however,  went  into  less  paid,  low  productivity  sectors.  Average  real  wages  fell  as  a 
result of public sector wage cuts. However, private sector wages have recently increased.   

Prices  have  been  broadly  stable,  allowing  the  central  bank  to  reduce  interest  rates. 
Inflation  has  been  below  the  central  bank  tolerance  band  (4 %  ±1.5  percentage  points)  for 
more  than  a  year.  Low  inflation  is  the  result  of  low  international  prices  of  primary 
commodities,  weak  domestic  demand,  exchange  rate  stability  and  delays  in  administrative 
price  adjustments.  The  low  inflationary  environment  and  a  rapidly  falling  budget  deficit  in 
2015 allowed the central bank to cut its key interest rate in successive steps, from 8.0 % in 
February  to  5.0 %  in  September  2015  and  to  gradually  cut  the  foreign  currency  reserve 
requirement ratio by six percentage points by February 2016. 

The  budget  deficit  fell  sharply  in  the  first  half  of 
2015,  but  fiscal  consolidation  still  needs  to  be 
sustained  and  underpinned  by 
implementing 
structural  reforms.  The  2015  budget  targets  a  deficit 
of  5.8 %  of  GDP  and  is  based  on  a  large  decrease  in 
current expenditure. Considerable savings have already 
been  made  from  the  cuts  in  pensions  and  public  sector 
salaries  implemented  last  year.  Additional  savings  are 
expected from a number of other measures ranging from 
public  administration  reform,  to  lower  subsidies  and 
reforming public enterprises. 

25 

 
 
 
 
 
 
 
 
 
Revenue collection continued to improve in 2015, in particular due to some excise duties and 
non-tax revenue (e.g. telecom licences and 
SOEs  dividends).  In  addition,  expenditure 
restraint  and  under  execution  of  capital 
spending have led to a better-than-expected 
budgetary  performance.  By  the  end  of 
August the cumulative deficit stood at only 
1.1 %  of  the  annual  GDP  —  a  third  of  its 
level in the previous year and far below the 
target. 

ERP  recommendation  1:  ‘Strengthen  fiscal 
consolidation by using any excess revenue and 
current  expenditure  savings  to  further  reduce 
budget  deficits  in  2015  and  the  following 
medium-term 
years. 
the 
consolidation  path  by 
planned structural reforms.’ 

implementing 

Underpin 

the 

line  with  ERP 

In  view  of  Serbia’s  high  indebtedness  and 
the extensive structural reform agenda, and 
in 
recommendations, 
consolidation  efforts  need  to  be  sustained. 
This  requires  Serbia  to  tackle  the  biggest 
sources 
further 
strengthening tax administration and public 
finance  management,  implementing  public 
administration reform and restructuring state-owned enterprises in line with adopted plans. 

ERP  recommendation  3:  ‘Further  strengthen 
finance  management,  notably  by 
public 
improving  the  budgetary  process  and  the 
capacity of the tax administration. Compile and 
start  submitting  to  Eurostat  excessive  deficit 
procedure notification tables before the end of 
2015.’ 

fiscal 

risk 

by 

of 

The recently improved fiscal performance followed years of increasing fiscal imbalances 
and  missed  budget  deficit  targets.  The  budget  deficit  averaged  5.7 %  of  GDP  over 
2009-2014,  regularly  overshooting  planned  deficits.  It  went  up  to  6.7 %  of  GDP  in  2014, 
reflecting mainly higher spending on interest payments, activated government guarantees and 
expenditure related to bail outs of failed state-owned banks and loss-making SOEs. Revenue 
was lower than planned and budget execution was marked by significant under execution of 
capital expenditure, pointing to a general problem of weak preparation of public investment 
projects. Government debt rose above 70 % of GDP.  

Interplay of market forces 

Some  steps  have  been  taken  to  start  restructuring  large  state-owned  enterprises. 
Payment  discipline  between  SOEs  has  been  improved  and  could  be  further  strengthened 
following  recent  legislative  amendments.  However,  SOEs  restructuring  continued  to  face 
delays and big utility companies remain a significant source of market distortions and fiscal 
risk.  Therefore,  it  is  important  that  Serbia  advances  the  restructuring  of  these  companies  in 
accordance with ERP recommendations. 

In  December,  the  government  adopted 
guidelines  for  restructuring  Srbijagas,  the 
state-owned  gas  company.  In  line  with 
these, in early July it adopted a decision to 
unbundle the operation of gas transmission 
networks  and  distribution  activities.  The 
financial  restructuring  of  the  company  is 
still  awaited  and  the  resolution  of  its 
biggest debtors needs to advance further. 

‘Advance 

ERP  recommendation  2: 
the 
restructuring  and  privatisation  of  state-owned 
enterprises, prioritising the biggest companies. 
Introduce  better  corporate  governance  and 
advance,  as  planned,  the  organisational  and 
financial  restructuring  of  large,  loss-making 
utilities. […]’  

A corporate restructuring plan for Elektroprivreda Srbije, the state-owned power utility, was 
adopted in November and — as a first step  — the company was reorganised to increase its 
efficiency.  A  financial  restructuring  plan,  which  contains  measures  to  reduce  costs  and 
improve revenues, including a 4.5 % increase in the regulated electricity tariff, was adopted in 
June. In January 2015, the government announced full liberalisation of the electricity and gas 

26 

 
market, allowing users to switch to a distributor other than the state-owned utility company. 
However, only 5 % of all users have done so, as households and small buyers still have the 
right to guaranteed usage at regulated prices. 

In July, Railways Serbia was unbundled into passenger, freight and infrastructure, including 
by  creating  a  holding  company.  Corporate  and  financial  restructuring  plans  have  been 
prepared and are planned to be adopted by the government in September. 

Privatisation attempts have been revived recently, although results so far are marginal. 
The  sustainable  operation  and  future  privatisation  of  the  steel  mill  in  Smederevo  is  a  key 
challenge.  In  June,  the  government  took  steps  to  start  the  privatisation  of  the  majority 
state-owned Telekom Srbija. In January, it adopted an action plan to resolve 188 companies 
through a bankruptcy procedure. In addition, about 200 enterprises are expected to be fully or 
partially privatised, either by equity or asset sales, or through strategic partnership. 

The protection of companies in restructuring from forcible collection of debts and bankruptcy 
expired in June. However, it was extended for 37 of them until October, while for another 17 
firms,  deemed  of  strategic  importance  and  employing  some  22.000  people,  protection  was 
extended until end of May 2016. As the end of the restructuring process is expected to result 
in redundancies, the government has put in place an adequately funded social programme. In 
view  of  the  time  and  capacity  needed  to  process  such  a  large  number  of  privatisations,  the 
government should prioritise the restructuring of the biggest and most problematic cases. 

Market entry and exit 

Procedures for construction permits have been improved but further efforts are needed 
to  ensure  proper  implementation.  As  in  previous  years,  in  2014  the  number  of  newly 
established  companies  (8 209)  was  more  than  three  times  the  number  of  companies  closed 
(2 601). Still, market entry has continued to be burdened by lengthy and costly procedures to 
obtain  various  permits.  One  major  improvement  was  the  introduction  of  a  new  integrated 
procedure for issuing construction permits (‘one-stop shops’); its implementation has in most 
cases  significantly  shortened  the  time  required  to  obtain  permits.  The  establishment  of  an 
electronic permitting system is envisaged to be set up by 2016. The issue of converting usage 
rights into ownership rights of construction land, which had hindered potential investments, 
was solved but further efforts are needed to ensure proper implementation. 

Legal system 

Legal  predictability  and  enforcement  have  remained  weak  and  significant  efforts  are 
needed to further improve the business environment. Many laws, important for structural 
reforms  and  socioeconomic  development,  are  still  adopted  through  emergency  procedures, 
without  proper  consultation  and  public 
debate.  Moreover,  the  implementation  of 
laws remains problematic as there are long 
delays  in  the  adoption  of  by-laws.  The 
judicial  system  has  been  slow  to  enforce 
property rights.  

ERP  recommendation  5: 
the 
business  environment  and  tackle  the  grey 
economy,  notably  by  better  regulating  para-
inspections,  and 
fiscal  charges,  business 
leasing  of 
to  further 
labour.  Take  steps 
simplify  the  regulatory  environment  by  re-
launching the ‘regulatory guillotine’.’ 

The backlog in the courts is still substantial 
and companies often avoid using the courts 
as 
problems. 
to 
Enforcement of legislation on property restitution, which is expected to improve legal clarity 
over real estate ownership, is making progress; 42 % of all claims submitted have now been 
resolved. 

‘Improve 

solution 

their 

a 

27 

 
The  informal  economy  remains  a  major  obstacle  to  fair  competition  and  business 
development. To tackle the grey economy, the government adopted an action plan and set up 
a coordination body. A new law on inspection oversight, introducing a risk assessment system 
and  better  coordination  between  different  administrative  bodies,  was  adopted  in  April. 
Implementation  of  the  new  legislation  and  rules  still  needs  to  be  tested.  Further  efforts  are 
needed  to  better  control  para-fiscal  charges  and  to  regulate  labour  leasing,  and  to  further 
simplify  the  regulatory  environment  in 
accordance with ERP recommendations. 

Financial sector development 

ERP  recommendation  4:  ‘Advance  with  the 
rebalancing  of  macroeconomic  policies  with 
fiscal  consolidation  as  a  pre-condition  for  a 
more  accommodative  monetary  policy  stance, 
with  a  view  to  fostering  a  pick-up  in  the  pace 
of  credit  extension.  In  this  context,  increased 
efforts  to  address  the  high  burden  of  non-
performing  loans  on  banks’  balance  sheets, 
involving  all  key  stakeholders  including  the 
central  bank  as  necessary,  also  appear 
warranted.’ 

The  banking  system  is  still  facing  a 
number  of  challenges,  including  weak 
level  of 
credit  activity  and  a  high 
non-performing 
(NPLs).  The 
loans 
financial  sector  continued  to  be  dominated 
mostly 
by 
foreign-owned, holding more than 90 % of 
all assets, followed by insurance companies 
with  5.2 %.  In  June,  the  central  bank 
enhanced 
its  monitoring  of  majority 
Greek-owned  banks  and  limited  their  transactions  with  parent  banking  groups.  Euroisation 
continued to be widespread, with about three quarters of deposits and of loans to households 
and businesses denominated in or linked to foreign currencies. 

commercial 

banks, 

Financial  intermediation  was  revived  only  temporarily  due  to  a  boost  from  a  government 
subsidised programme. Still, credit growth remained weak and credit to the private companies 
continued  shrinking,  marking  an  absolute  five-year  low  in  April.  Commercial  banks  have 
channelled  their  resources  into  lending  to  the  government,  albeit  at  a  slower  pace,  and  in 
building up their net foreign assets. 

Mirroring  the  difficult  economic  environment  and  constraining  lending  activity,  NPLs 
remained  very  high  at  22.8 %  in  June.  However,  the  banking  system  as  a  whole  remained 
adequately  capitalised  and  liquid.  With  the  help  of  international  financial  institutions,  the 
government adopted a comprehensive strategy and an action plan for NPL resolution in line 
with  ERP  recommendations.  In  August,  the  central  bank  also  adopted  an  action  plan  for 
implementing  this  strategy.  Special  bank  diagnostic  studies,  to  be  completed  in  October, 
should  also  provide  additional  information  on  the  quality  of  bank  assets  and  support  the 
implementation of the NPL strategy. Governance weaknesses prompted the strengthening of 
the supervisory and improvement of the bank recovery and resolution frameworks. 

4.2.  The  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the 

Union 

Serbia  is  moderately  prepared  in  terms  of  capacity  to  cope  with  competitive  pressure 
and market forces within the Union. Some progress was made particularly with regard to 
further opening up the labour market and providing support for the development of small and 
medium-sized  enterprises  (SMEs).  However,  the  education  system  has  remained  inefficient, 
physical  infrastructure  underdeveloped  and  the  informal  sector  and  state  aid  have  remained 
substantial. 

In  line  with  the  ERP  recommendations  and  in  order  to  support  long  term  growth,  in  the 
coming year Serbia should pay particular attention to: 

28 

 
→ improving the quality of the education system and gearing it towards labour market needs; 

→  stimulating  private  investments  and  speeding  up  the  implementation  of  public 
infrastructure projects; 

→ providing a transparent framework of state support to the private sector, with a focus on 
SMEs. 

Human and physical capital 

6: 

‘Adopt 

spending 

recommendation 

The  needs  of  the  economy  and  a 
worsening 
situation 
demographic 
demand 
further  reforms  of  human 
capital  policies  in  accordance  with  ERP 
recommendations.  Although  Serbia’s 
public 
is 
comparable  to  that  of  EU  countries,  its 
quality  has  remained  low,  manifested  in 
below-average  OECD  Programme 
for 
International  Student  Assessment  (PISA) 
test scores and a high number of unskilled 
workers.  Despite  recent  improvements,  the  labour  market  is  still  characterised  by  high 
unemployment, skills mismatches, a high share of informal employment, and high migration 
rates (especially of highly-skilled workers). 

a 
ERP 
comprehensive  and  well-targeted  set  of  active 
labour  market  policies,  with  a  focus  on  youth 
and  the  long  term  unemployed,  as  well  as 
dedicated  skills  upgrade  programmes.  The 
finalisation  of 
the  national  qualifications 
framework  should  be  the  first  step  in  a 
progressive  reform  of  the  education  system, 
aimed  at  improving  the  outcomes  of  the 
system,  thereby  enhancing  the  human  capital 
productivity.’ 

education 

on 

The  efficiency  of  the  education  system  needs  to  be  improved  by  rationalising  the  school 
network and gearing vocational education more to labour market needs. Additional emphasis 
should be placed on teacher training and curriculum reforms at basic levels of education. This 
is  the  means  by  which  the  basic  and  transversal  skills  and  student  competences  can  be 
improved,  better  preparing  them  for  the  job  market  or  further  education.  Serbia  has 
maintained  a  relatively  high  proportion  of  public  investment  in  research  and  innovation. 
However, there is little private investment and little cooperation between  public and private 
researchers. 

Active labour market policies have been in decline until recently. They need to focus on youth 
and the long-term  unemployed  and provide stimulation to employers to reduce  the informal 
forms of employment, in line with ERP recommendations. 

Physical  infrastructure  is  severely  affected  by  years  of  underinvestment  and  concerted 
efforts  are  needed  to  boost  private  and  public  investment.  Investment  has  still  not 
recovered to pre-crisis levels and remained 
at  about  a  quarter  below  its  peak.  Public 
investment, 
in  particular,  has  been 
subdued.  The  poor  state  of  infrastructure 
undermines  competitiveness  and  deters 
foreign  investors,  hampering  regional  and 
EU trade integration. There is a clear need 
to  increase  public  investment,  improve 
the 
preparation 
implementation  of  public  projects, 
in 
particular  those  included  in  Serbia-EU’s 
‘single project pipeline.’ 

ERP  recommendation  7:  ‘Stimulate  private 
investment, for example by establishing public 
schemes  to  support  lending  to  SMEs  and 
research  activities  in  companies.  To  increase 
public  investment,  improve  preparation  and 
speed up the implementation of public projects. 
Step  up  the  works  on  corridors  VII  and  X  in 
line  with  the  regional  core  network.  Improve 
energy  production  and 
transmission,  most 
notably  by  better  governance  of  energy  firms, 
regulation of the network and the construction 
of gas inter-connectors.’ 

speed 

and 

up 

The  ongoing  fiscal  consolidation  and  the 

29 

 
reform  of  governance  of  public  projects  should  create  the  conditions  for  increasing 
infrastructure investment and stepping up work on regional transport corridors in accordance 
with ERP recommendations. In addition, to diversify energy supplies Serbia should go ahead 
with the construction of gas inter-connectors as planned. Private investment should be further 
stimulated by establishing public schemes to support lending to SMEs and research activities 
in companies, in line with ERP recommendations. 

Sectoral and enterprise structure 

The  structure  of  the  economy  remained  broadly  unchanged  and  reducing  the  large 
informal  sector  remains  a  major  challenge.  With  a  share  of  50.9 %  of  GDP,  services 
continued to play a major role in the economy. In 2014, agriculture slightly increased its share 
to  8.1 %  of  GDP,  whereas  industry’s  share  fell  by  1.7  percentage  points  to  20.7 %  of  GDP 
due  to  the  floods  which  severely  affected  the  energy  and  mining  sectors.  Employment  was 
roughly  unchanged  across  sectors,  with  agriculture  remaining  the  biggest  sector,  employing 
almost  a  fifth  of  the  labour  force.  The  large  informal  sector  represents  a  major  obstacle  for 
economic development, fuelled by weak rule of law, and imposes significant risks and costs 
to the overall economy. 

SMEs account for over 70 % of employment, but contribute only 53 % of the total gross value 
added. They remain disadvantaged compared to large companies and state-owned companies 
that  receive  state  aid.  SMEs  are  the  most  affected  by  the  poor  access  to  finance  in  Serbia, 
Limited  progress  has  been  made  as  regards  the  development  of  SME-oriented  financial 
instruments. 

State influence on competitiveness 

in 

line 

with 

ERP  recommendation  2:  ‘[…]  Review  the 
efficiency  of  all  forms  of  state  aid  and  take 
steps  to  reduce  it.  Proceed  to  revisit  public 
sector employment in a sustainable manner by 
the  Action  plan  on  public 
implementing 
administration reform.’ 

State  support  for 
loss-making  SOEs 
remained  significant  and  needs  to  be 
addressed 
ERP 
recommendations.  In  2014,  spending  on 
these  measures  combined  has  reached  the 
highest level since 2000. The increase over 
the last three years was in large part due to 
the delayed process of resolution of SOEs. However, signalling a change in policy, the 2015 
budget law does not envisage new issuance of state guarantees for liquidity support and limits 
new  project-based  guarantees.  More  predictable  instruments  of  state  support  to  the  private 
sector  need  to  be  developed  to  benefit  both  foreign  and  domestic  investors.  State  support 
should also be redirected towards efficient and horizontal objectives, such as support to SMEs 
and research and development. 

Economic integration with the EU 

Serbia improved its external competitiveness and increased further its trade integration 
with  the  EU.  A  weaker  dinar  and  a  relative  decrease  of  labour  costs  have  boosted  external 
competitiveness.  The  EU  increased  its  trade  with  Serbia  and  remained  by  far  the  country’s 
main trading partner, accounting for 69 % of total exports and 61 % of total imports of goods. 
Exports to Central European Free Trade Agreement (CEFTA) countries represent 20 % of all 
exports and have the potential to be boosted by the planned trade liberalisation in the services 
sector. 

The EU also remains the main source of FDI with a share of almost three-quarters. Through 
the network of various free trade agreements, Serbia enjoys good market access but needs to 
facilitate trade by measures removing non-tariff barriers, especially for companies operating 
in global value chains. 

30 

 
5. 

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

5.1.  Chapter 1: Free movement of goods 

The free movement of goods ensures that many products can be traded freely across the EU 
based on common rules and procedures. Where products are governed by national rules the 
principle of the free movement of goods prevents these creating unjustified barriers to trade. 

Serbia is moderately prepared for the free movement of goods. Some progress was made, 
notably  with  the  adoption  of  European  standards.  In  the  coming  year,  Serbia  should  in 
particular: 

→ ensure better implementation of technical requirements and standards. 

On the general principles, Serbia is drafting a methodology to ensure alignment with Articles 
34-36  of  the  Treaty  on  the  Functioning  of  the  European  Union  (TFEU).  On  horizontal 
measures,  the  quality  infrastructure  strategy  for  the  period  2015-2020  was  not  yet  adopted. 
The  administrative  capacity  of  the  Ministry  of  Economy,  in  charge  of  coordination,  has 
decreased and needs to be strengthened.  

On  standardisation,  the  Institute  for  Standardisation  of  Serbia  (ISS)  has  adopted 
approximately 96 % of all European standards and harmonisation documents. It has met the 
technical criteria for full membership of the European Committee for Standardisation (CEN) 
and  the  European  Committee  for  Electrotechnical  Standardisation  (CENELEC).  The  ISS 
currently  has  187  active  technical  committees  and  62  full-time  employees.  Amendments  to 
the Law on Standardisation were adopted in May, aiming to further align national legislation 
with the acquis. 

A  total  of  37  conformity  assessment  bodies  have  been  designated  under  the  relevant  EU 
directives.  In  April  2015  Serbia  repealed  the  formal  ex ante  controls  on  certificates  of 
conformity, specifically for imports of products covered by the Machinery Directive, the Low 
Voltage Directive and the Electromagnetic Compatibility Directive. However, certain ex ante 
controls  remain,  specifically  for  imports  of  products  covered  by  the  Radio  equipment  and 
Telecommunications  Terminal  Equipment  Directive  and  fire  protection  devices  and 
appliances.  

On  accreditation,  the  Accreditation  Body  of  Serbia  (ABS)  in  October  2014  signed  a  new 
International  Accreditation  Forum  Multilateral  Agreement  extending  management  system 
certification.  Accreditation  process  continued  steadily  over  the  reporting  period  but  ABS 
staffing levels remain insufficient. 

On metrology, secondary legislation in the non-harmonised area was adopted, together with a 
regulation based on recommendations of the International Organisation of Legal Metrology. 
The number of internationally recognised national standards for calibration and measurement 
stood  at  143.  The  Directorate  for  Measures  and  Precious  Metals  upgraded  its  market 
surveillance capacity, particularly for supervision of the implementation of EU directives on 
standards and non-automatic scales.  

In market surveillance, the law on general inspection oversight was adopted in April 2015. 
The  Product  Safety  Council  was  reconstituted  in  August  2015  in  order  to  improve 
coordination and operations amongst various stakeholders. The administrative capacity of the 
line ministry has been upgraded, but remains insufficient. 

On  ‘Old  Approach’  product  legislation,  Serbia  adopted  secondary  legislation  on  crystal 
glass product marking which aims to be in line with the acquis, and laws on active substances 
in biocidal products. Legislation on motor vehicles and emissions of pollutants from non-road 

31 

 
engines remains to be adopted. As regards ‘New and Global Approach’ product legislation, 
legislation on recreational craft and on cableway installations was adopted. The former is in 
line with the acquis; the latter is partially aligned with the relevant directives. The law on fire 
protection  equipment  was  adopted  but  remains  to  be  aligned  with  relevant  EU  directives. 
Further alignment is required in the areas of cableway installations, construction products, toy 
safety and eco-design requirements for energy-related products. 

As  regards  procedural  measures,  Serbia  adopted  legislation  on  civilian  firearms,  and 
adopted  and  fully  implemented  legislation  on  the  export  and  import  of  arms  and  military 
equipment which is in line with the EU export control regime. Legislation on the production 
and transfer of arms and military equipment remains to be adopted. Serbia still needs to align 
its legislation with the acquis on pricing medicinal products and on returning cultural objects 
unlawfully removed from the territory of an EU Member State. 

5.2.  Chapter 2: Freedom of movement for workers 

Citizens of one Member State have the right to work in  another Member State  and must  be 
given the same working and social conditions as other workers. 

Serbia  is  moderately  prepared  in  the  area  of  freedom  of  movement  for  workers.  Some 
progress was made in this chapter, notably in adopting new legislation on access to the labour 
market. In the coming year, Serbia should in particular: 

→ continue its efforts for strengthening the capacity of social security institutions.  

As  regards access  to  the  labour  market,  a  Law  on  Employment  of  Foreigners  and  a  work 
permit  rulebook  were  adopted  in  November  2014.  The  law  regulates  the  employment  of 
foreign citizens in Serbia and further aligns its legislation with the acquis.  

The Ministry of Labour’s 2015 action plan and the annual plan of the National Employment 
Service  (NES)  include  provisions  on  EURES,  the  European  jobs  network,  and  create  a 
network of private employment agencies which will publish vacancies jointly with the NES. 

As  regards  coordination  of  social  security  systems,  new  agreements  came  into  force  with 
Belgium, Luxembourg, Hungary and Canada. An agreement with Romania was finalised, but 
is  not  yet  signed,  and  an  agreement  with  France  was  ratified  in  March.  An  agreement  on 
electronic  exchange  of  social  security  data  was  signed  with  Montenegro.  The  capacity  of 
social security institutions needs further strengthening.  

5.3.  Chapter 3: Right of establishment and freedom to provide services 

EU natural and legal persons have the right to establish themselves in any Member State and 
to provide cross-border services. For certain regulated professions, there are rules on mutual 
recognition of qualifications. Postal services are gradually being opened up to competition. 

Serbia is moderately prepared in these fields. Some progress was made with the adoption 
of regulations on postal services. In the coming year, Serbia should in particular: 

→ adopt a strategy for alignment with the professional qualifications acquis; 

→  adopt  an  umbrella  law  on  services,  as  a  first  step  towards  alignment  with  the  Services 
directive. 

There were no developments on the right of establishment. On freedom to provide cross-
border services, an umbrella law aligning Serbian legislation with the Services Directive is 
still needed. Screening of sectorial laws has to be completed to prepare for their alignment. A 
strategy  and  a  law  on  mutual  recognition  of  professional  qualifications  have  yet  to  be 
adopted. 

32 

 
As regards postal services, the Regulatory Agency for Electronic Communications and Postal 
Services  adopted  a  regulation  on  the  conditions  of  access  to  the  postal  operator’s  postal 
network in December 2014. It also adopted a regulation on minimum standards for universal 
postal  services  provision.  Both  regulations  further  align  Serbian  legislation  with  the  acquis. 
The inspection of postal services remains inadequate. The public postal operator has not yet 
been turned into a corporate company. 

5.4.  Chapter 4: Free movement of capital 

In  the  EU,  capital  and  investments  must  be  able  to  move  without  restriction  and  there  are 
common rules for cross-border payments. Banks and other economic operators apply certain 
rules to support the fight against money laundering and terrorist financing. 

Serbia is moderately prepared in the area of free movement of capital. Some progress was 
made with the adoption of the Law on Payment Services. In the coming year, Serbia should in 
particular: 

→ further liberalise short-term capital movements. 

→ strengthen the Agency for the Prevention of Money Laundering. 

There  were  no  developments  on  capital  movements  and  payments.  Short-term  capital 
transactions  and  deposit  activities  by  residents  are  still  restricted,  while  long-term  capital 
transactions have been fully liberalised. The acquisition of real estate, especially agricultural 
land, is still restricted. On payment systems, in December, Serbia adopted a Law on Payment 
Services to further align its legislation with the Payment Services Directive and the Electronic 
Money Directive.  

Serbia  adopted  a  national  strategy  for  the  fight  against  money  laundering  and  terrorism 
financing  in  December.  The  Agency  for  the  Prevention  of  Money  Laundering  and  the 
Financial  Intelligence  Unit  of  the  Ministry  of  Finance  both  need  greater  administrative  and 
analytical capacity. The agency still does not have adequate premises, which prevents it from 
recruiting  new  staff.  Serbia  still  needs  to  establish  a  track  record  of  investigation  of  and 
conviction in money laundering cases. 

5.5.  Chapter 5: Public procurement 

EU  rules  ensure  public  sector  procurement  of  goods  and  services  in  any  Member  State  is 
open to all EU companies on the basis of non-discrimination. 

Serbia  is  moderately  prepared  in  this  area,  which  is  particularly  vulnerable  to  corruption. 
More efforts are needed to prevent corruption from occurring during the procurement cycle. 
Good progress has been made in the past year, notably by adopting amendments to the Law 
on Public Procurement and increasingly using open tender procedures. 

Significant  efforts  are  needed  across  the  board  to  improve  competition,  efficiency  and 
transparency in public tenders. In the coming year , Serbia should in particular: 

→ strengthen the capacity of the Public Procurement Office and the Republic Commission for 
the Protection of Rights in Public Procedures; 

→  swiftly  implement  the  public  procurement  strategy  in  particular  on  ensuring  the  sound 
implementation  of  existing  legislation  and  on  further  alignment  with  the  EU  Concessions 
Directive. 

33 

 
 
 
Institutional set-up and legal alignment 

The  legal  framework  is  broadly  in  line  with  the  acquis.  The  Law  on  Public  Procurement 
adopted  in  2012  is  largely  in  line  with  the  EU  directives  on  classical  and  utilities' 
procurement,  but  does  not  take  full  advantage  of  the  flexibility  procedures  offered  by  the 
utilities  directive.  The  law  was  amended  in  February  2015  to  reduce  the  price  preference 
given  to  domestic  bidders  to  5 %,  ahead  of  the  schedule  for  liberalisation  under  the 
Stabilisation and Association Agreement, and in July to further align it with the EU Directives 
adopted in 2014. The legislation on defence and security procurement is broadly in line but 
contains more exemptions than the EU Directive. Serbia must ensure that bilateral agreements 
concluded with non-EU countries do not unduly restrict competition and are fully consistent 
with  the  EU  acquis.  The  Law  on  Public-Private  Partnership  follows  the  basic  rules  of  the 
acquis, but needs to be aligned with the new Directive on Concessions. 

In October 2014, the government adopted a public procurement strategy for 2014-2018 and a 
related action plan, which includes measures to further strengthen the regulatory framework 
and align it fully with the EU acquis. 

The  Public  Procurement  Office  (PPO)  is  the  independent  state  body  which  supervises  the 
implementation  of  the  Law  on  Public  Procurement.  Its  role  in  launching  certain  regulatory 
reforms should be clarified. 

Implementation and enforcement capacity 

Serbia’s  public  procurement  market  remained  relatively  stable  as  a  percentage  of  gross 
domestic product (GDP), at 7.7 % in 2014 compared with 6.8 % in 2013 and 8.5 % in 2012. 

Monitoring  of  the  award  and  implementation  of  contracts  is  improving.  Since  use  of  the 
negotiated procedure must now be authorised by the PPO, the value of negotiated procedures 
fell to 5 % of the total value of public tenders in 2014, from 17 % in 2013. In 2014, the State 
Audit Institution detected irregularities in tenders worth EUR 63 million, as against EUR 263 
million in 2013. The public procurement portal is increasingly used, with 50 % more notices 
published in 2014 than in 2013. 

The capacity to manage public procurement processes was  further  improved through the 
certification of an additional 890 public procurement officials by the PPO. However, the PPO 
does not have enough administrative capacity itself for its numerous responsibilities. The role 
and function of the annual procurement plans adopted by the contracting authorities needs to 
be reviewed; publishing them would further increase transparency. 

The framework for integrity and handling conflicts of interest was strengthened under the 
new public procurement law. In December 2014, the PPO adopted a model internal plan for 
preventing  corruption  in  public  procurement  procedures.  From  January  2015,  high-volume 
contracting authorities are expected to gradually adopt their own plans for curbing corruption 
based on this model.    

Efficient remedy system 

The legislation regarding the right to legal remedy is broadly in line with the acquis and is 
implemented by the Republic Commission for the Protection of Rights in Public Procedures 
(the Republic Commission), an independent state body. 

The  number  of  requests  for  protection  of  rights  received  by  the  Republic  Commission 
increased by 35 % in 2014 compared to 2013. The Republic Commission took a total of 2 702 
decisions  in  2014  compared  with  1 966  in  2013,  an  increase  of  37 %.  Public  procurement 
procedures were partially or fully annulled in 1 336 cases. In 2014, the Republic Commission 

34 

 
further  built  up  its  enforcement  record  by  reviewing  the  implementation  of  266  of  its 
decisions  and  concluded  that  in  7  cases,  they  had  not  been  properly  enforced  by  the 
contracting authorities. 

The Republic Commission has continued to build up its implementation capacity to a total 
of 70 employees, which is still not enough. The capacity of the administrative courts to deal 
with complex public procurement cases also needs to be strengthened. 

5.6.  Chapter 6: Company law 

The  EU  has  common  rules  on  the  formation,  registration,  and  disclosure  requirements  of  a 
company,  with  complementary  rules  for  accounting  and  financial  reporting,  and  statutory 
audit. 

Serbia  has  a  good  level  of  preparation  in  company  law.  Some  progress  was  made  with 
online filing of financial statements, and the first audit quality control inspections.  

On company law, it has been possible since December to incorporate a business in 24 hours. 
Financial statements can now be filed electronically on the Register of Financial Statements. 
Serbia  is  developing  online  electronic  company  registration  to  facilitate  its  business 
environment; the process is not yet fully operational.    

On corporate accounting and auditing, the Chamber of Authorised Auditors made the first 
quality control inspections of audit firms based on the 2013 Law on Auditing. The law needs 
to be amended to align with the new EU Accounting and Auditing Directives. 

5.7.  Chapter 7: Intellectual property law 

The  EU  has  harmonised  rules  for  the  legal  protection  of  copyright  and  related  rights.  This 
covers, 
trademarks,  designs, 
biotechnological inventions and pharmaceuticals.  

instance,  computer  programs,  broadcasting  and 

for 

Serbia has reached a good level of preparation as concerns alignment of intellectual property 
law  with  the  acquis.  Some  progress  was  made  on  intellectual  property  rights  (IPR).  In  the 
coming year, Serbia should in particular: 

→ further align its Law on Copyright, Topographies of Semiconductor Products, Patents and 
Trademarks with the acquis, including with the IPR Enforcement Directive; 

→ strengthen formal coordination of different stakeholders on enforcement. 

On  copyright  and  neighbouring  rights,  full  alignment  with  the  acquis  of  the  Law  on 
Copyright and Related Rights remains to be achieved, in particular as regards the amendments 
introduced in 2012. The Law on the Protection of Topographies of Semiconductor Products 
also needs to be aligned with the acquis. 

On industrial property rights, the amendments to the Law on Industrial Design adopted in 
May  2015  align  them  further  with  the  acquis.  The  other  relevant  laws  on  patent  and 
trademarks still need to be further aligned. 

On  enforcement,  the  number  of  counterfeit  and  pirated  goods  confiscated  by  the  customs 
administration and the Market Inspectorate increased substantially, partly as the result of the 
use of newly procured equipment. The number of checks carried out by the Ministry of the 
Interior fell, while the number of criminal charges that it brought stabilised (at 90 in 2014). 
There were 1 110 court cases on IPR in 2014, compared with 731 in 2013. 

Further  alignment  of  legislation  with  the  Directive  on  the  Enforcement  of  Intellectual 
Property  Rights  was  ensured  by  the  adoption  of  the  amendments  to  the  Law  on  Industrial 

35 

 
Design. The other IPR laws still need to be aligned. A permanent coordination body for the 
enforcement of IPR was set up in October 2014, but is not yet fully operational. The national 
IPR strategy and action plan 2011-2015 were broadly implemented and need to be replaced 
by a new strategic framework.  

5.8.  Chapter 8: Competition policy 

EU rules protect free competition. They include anti-trust rules against restrictive agreements 
between companies and abuse of dominant position. EU rules also prevent governments from 
granting state aid which distorts competition.  

Serbia is moderately prepared in the area of competition policy. Some progress was made 
in the area of antitrust and mergers. In the coming year, Serbia should in particular: 

→ make significant progress in aligning its legislation on state aid control with the acquis as 
state aid control still has significant shortcomings; 

→ take steps to make the Commission for State Aid Control more independent and effective; 

→  ensure  that  aid  received  by  the  steel  mill  Smederevo  Zelezara  is  compatible  with  the 
Stabilisation and Association Agreement. 

On antitrust and mergers policy, Serbian legislation is largely in line with the acquis. The 
Commission for the Protection of Competition (CPC) maintained its activity level: in 2014, it 
took  no  decision  on  anticompetitive  agreements,  but  five  decisions  on  abuse  of  dominance 
and 97 decisions on mergers, two of which were approved subject to conditions. The level and 
number  of  fines  remain  relatively  modest:  only  one  fine,  of  EUR 160 000,  was  imposed  in 
2014.  The  organisation  of  the  first  two  dawn-raids  against  cartels  in  July  is  a  positive 
development towards a more effective fight against cartels. The CPC's administrative capacity 
was  significantly  strengthened  in  2015.  The  judiciary’s  capacity  to  assess  complex 
competition cases needs be strengthened. 

In  state  aid,  the  rules  on  de  minimis  state  aid  were  further  aligned  with  the  Commission 
General Block Exemption Regulation in October 2014. The exemption from state aid rules for 
companies in the process of restructuring and privatisation has not yet been repealed. Serbia 
still has to draw up a regional aid map. The monitoring of cumulation of aid granted needs to 
be strengthened. A number of existing state aid schemes, including fiscal ones, still need to be 
aligned with the acquis. In 2014, the Commission for State Aid Control (CSAC) adopted 43 
decisions and conclusions, including 17 launching ex post checks. This is slightly fewer than 
in the previous year. In line with Protocol 5 of the Stabilisation and Association Agreement, 
Smederevo Zelezara, a steel mill in difficulty, has not received state aid since 1 February 2015 
but it needs to be shown that the aid received before then was compatible with competition 
law. 

The  new  members  of  the  CSAC  are  not  affiliated  to  state-aid-granting  ministries  but  still 
nominated by them. The operational independence of the CSAC remains to be demonstrated, 
notably  through  a  track  record  of  well-founded  decisions.  The  capacity  of  the  CSAC’s 
secretariat,  already  insufficient,  declined  further.  Further  advocacy  efforts  are  needed  to 
ensure that all aid measures are notified to the CSAC and approved before being granted. Aid 
measures should be made more transparent. 

As regards liberalisation, full alignment with the EU rules on state aid in the form of public 
service compensation has yet to be ensured. Serbian legislation has yet to be aligned with the 
Directive  on  the  Transparency  of  Financial  Relations  between  Member  States  and  Public 
Undertakings. 

36 

 
5.9.  Chapter 9: Financial services 

EU rules aim at ensuring fair competition between and the stability of financial institutions, 
namely  banking,  insurance,  supplementary  pensions,  investment  services  and  securities 
markets. They include rules on authorisation, operation and supervision of these institutions. 

Serbia  is  moderately  prepared  in  the  area  of  financial  services. Good  progress  was  made 
with  the  adoption  of  the  framework  for  resolution  of  banks  and  the  laws  on  insurance  and 
payment services. In the coming year, Serbia should in particular: 

→  take  additional  steps  to  align  Serbia’s  rules  with  Basel  III  standards  and  the  Solvency  II 
Directive. 

On  banks  and  financial  conglomerates,  in  February  2015,  Serbia  adopted  several  laws 
which establish a new legal framework for the resolution of banks and insurance companies in 
difficulties, based in particular on the Bank Recovery and Resolution Directive. In February 
2015 both the Law on Deposit Insurance and the Law on the Deposit Insurance Agency were 
adopted and further aligned with the Directive on Deposit Guarantee Schemes. In December, 
the  National  Bank  of  Serbia  revised  its  strategy  for  the  full  implementation  of  Basel  III 
standards. Legislation on financial conglomerates remains outstanding. 

On  insurance  and  occupational  pensions,  the  Law  on  Insurance  adopted  in  January  2015 
and subsequent decisions of the NBS are more in line with the acquis. Further alignment with 
the Solvency II Directive still has to be achieved. A Decree laying down the minimum sum to 
be  insured  by  motor  third-party  liability  insurance  was  adopted  in  October  2014,  bringing 
Serbia’s rules more closely to the acquis. Full alignment with the Directive on Institutions for 
Occupational Retirement Provision has not yet been achieved.   

On  financial  market  infrastructure,  Serbia  adopted  the  Law  on  Payment  Services,  in 
December 2014, to further align its legislation with the Settlement Finality Directive. 

On the securities market and investment services, amendments to the Law on Investment 
Funds were adopted in October 2014 to further align it with the Directive on Undertakings for 
Collective  Investment  in  Transferable  Securities.  The  Securities  Commission  also  adopted 
several  by-laws  on  reporting  requirements  and  accountancy  rules  applicable  to  investment 
funds and broker dealer companies. 

5.10.  Chapter 10: Information society and media 

The EU supports the good functioning of the internal market for electronic communications, 
electronic  commerce  and  audio-visual  services.  The  rules  protect  consumers  and  support 
universal availability of modern services. 

Serbia  is  moderately  prepared  in  the  information  society  and  media.  Some  progress  was 
made,  notably  with  the  digital  switchover  being  completed  and  with  respect  to  the  ongoing 
implementation of the three new media laws. In the coming year, Serbia should in particular: 

→  continue  alignment  of  the  legislative  framework  in  electronic  communications  with  the 
2009 EU regulatory framework; 

→ ensure the independence of the Regulatory Body on Electronic Media and strengthen the 
administrative and inspectorate capacity of the line ministry; 

→ elaborate and ensure comprehensive regulation of advertising. 

On  electronic  communications  and  information  and  communications  technology,  the 
digital  switchover  was  completed  in  June  2015.  Serbia  also  introduced  technological 
neutrality  in  the  900  and  2100 MHz  frequency  bands  and  assigned  the  1800 MHz  band  to 

37 

 
operators, allowing 3G and 4G services as of April. Serbia has yet to fully align with the 2009 
EU  regulatory  framework  for  e-communications.  Competitive  safeguards  have  not  yet  been 
fully implemented. The operational independence of the telecom regulator needs to be fully 
ensured.  The  draft  law  on  emergency  services,  introducing  permanent  financing  of  the 
emergency  number  112,  remains  to  be  adopted.  55 %  of  the  population  have  a  broadband 
connection. 

At the end of August 2015, Kosovo and Serbia agreed the Action Plan to implement the 2013 
Prime  Ministers  telecom  arrangements.  The  agreement  of  September  2014  signed  by  the 
former  Yugoslav  Republic  of  Macedonia,  Bosnia  and  Herzegovina,  Montenegro  and  Serbia 
on reducing the prices of mobile roaming services came into force in July 2015. 

In information society services, laws on information security and the e-government strategy 
remain to be adopted. The administrative and inspection capacity of the line ministry and its 
units  responsible  for  information  and  communication  technology  and  digital  administration 
remain insufficient. 

On audio-visual policy, the implementation of the Law on Public Information and Media, the 
Law on Electronic Media and the Law on Public Service Broadcasting is ongoing. The public 
broadcasters  RTS  and  RTV  adopted  statutes  in  line  with  the  Law  on  Public  Service 
Broadcasting.  A  method  of  monitoring  revenue  and  expenditure  allowing  separate  book-
keeping  for  public  and  commercial  activities  is  yet  to  be  introduced.  This  is  a  matter  of 
concern with regard to monitoring state aid provided to RTS and RTV, as well as for ensuring 
their editorial independence. RTS and RTV should prepare consolidated records of licence fee 
payers  and  forms  for  collection  of  and  exemption  from  licence  fee  payments,  which  is  a 
precondition for introducing the licence fee. 

The Regulatory Body for Electronic Media faces delays in preparing all the by-laws needed to 
implement the Law on Electronic Media. The regulator needs to be fully independent when 
monitoring  the  fulfilment  of  programming  obligations  of  broadcasters.  The  regulator  is  not 
fulfilling  its  role  of  monitoring  of  the  retransmitted  audio-visual  media  content  on  cable 
operators which is regularly interrupted by local advertisements. This makes it more difficult 
to broadcast in line with the Audio-visual Media Services Directive and affects overall media 
advertising revenue. 

5.11.  Chapter 11: Agriculture and rural development 

The  Common  Agricultural  Policy  supports  farmers  and  rural  development.  This  requires 
strong management and control systems. There are also common EU rules for quality policy 
and organic farming.  

Serbia  is  at  an  early  stage  of  preparation  in  agriculture  and  rural  development.  Some 
progress was made with expansion of the Farm Accountancy Data Network and adoption of  
the Instrument for Pre-accession Assistance for Rural Development (IPARD). In the coming 
year, Serbia should in particular: 

→  develop an action plan for acquis alignment in agriculture and rural development 

→    ensure  adequate  allocation  of  resources  and  strengthening  of  the  capacity  of  all  IPARD 
bodies with a view to obtaining entrustment with budget implementation tasks. 

As  regards  horizontal  issues,  the  implementation  of  the  strategy  for  agricultural  and  rural 
development for the period 2014-2024 has started. Serbia's adoption of a national programme 
for  agriculture  would  contribute  to  ensuring  its  implementation  and  sector  planning. 
Establishment of the Farm Accountancy Data Network (FADN) is progressing. Serbia has yet 
to designate formal institutional responsibilities pertaining to FADN and adopt a rulebook to 

38 

 
transpose  the  FADN  regulation.  Verification  of  data  quality  and  the  use  of  the  FADN  data 
will  greatly  facilitate  policy  planning  and  monitoring.  As  regards  activities  towards 
establishing  the  Integrated  Administration  and  Control  System  (IACS)  to  prepare  for  the 
management and control of agricultural payments, Serbia should focus on developing the land 
parcel  identification  system  and  the  farm  register.  This  requires  it  to  clarify  the 
responsibilities of stakeholders, adopt the legal base and build capacity to ensure the system 
works properly. 

In the area of the common market organisation (CMO), in the wine sector, registration of 
vineyards  has  progressed.  Administrative  capacity  in  the  sector  needs  further  strengthening. 
Rulebooks  on  the  zoning  of  viticultural  geographical  production  areas  and  packaging  and 
labelling of wines were adopted. A draft law on spirit drinks is advancing and must be aligned 
with the acquis before adoption.  

On  rural  development,  the  IPARD  programme  (2014-2020)  was  adopted  in  January.  It 
focuses on upgrading holdings and processing establishments to EU standards. Relocation of 
the IPARD Agency to Belgrade was an important development. The legal base for adequately 
resourcing IPARD operating structures has been created. Staff recruitment and training need 
to  accelerate.  The  capacity  of  the  offices  of  the  National  Authorising  Officer,  the  National 
IPA Coordinator and the Audit Authority in relation to IPARD needs to expand further. This 
gives  cause  for  serious  concern  for  timely  implementation  of  the  programme  and  should  be 
promptly addressed. 

On quality policy, no progress can be reported. On organic farming, the national action plan 
for the development of the organic sector remains to be adopted.   

5.12.  Chapter 12: Food safety, veterinary and phytosanitary policy 

EU  hygiene  rules  for  foodstuff  production  ensure  a  high  level  of  food  safety.  Animal  health 
and welfare and the safety of food of animal origin are safeguarded together with quality of 
seed, plant protection material, harmful organisms and animal nutrition. 

Serbia  is  moderately  prepared  in  the  area  of  food  safety,  veterinary  and  phytosanitary 
policy.  Some  progress  was  made,  with  the  opening  of  the  phytosanitary  laboratory  and  the 
re-alignment  of  the  maximum  level  of  aflatoxins  in  milk  with  the  level  in  the  EU.  In  the 
coming year, Serbia should in particular: 

→  review  the  capacity  of  the  veterinary,  phytosanitary  and  national  reference  laboratories 
directorates and adopt an action plan to strengthen them.   

In the area of general food safety, in February the phytosanitary laboratory was the first of 
the  national  reference  laboratories  to  be  opened.  Further  efforts  are  needed  to  put  other 
laboratories  into  operation,  such  as  the  laboratory  for  quality  control  of  raw  milk,  and  to 
obtain accreditation for them as necessary. On food safety rules and specific rules for feed, 
the  permitted  level  of  aflatoxins  in  milk  has  been  aligned  with  the  requirements  of  the  EU 
acquis. Yeasts have been added as a new category to the catalogue of feed materials. Planned 
amendments to food safety law are still pending. 

On  veterinary  policy,  a  programme  of  animal  health  protection  measures  for  2015  was 
adopted in April. No new cases of classical swine fever were notified, while the programme to 
eradicate rabies in wildlife continued successfully. The country has adopted an animal health 
programme  on  bluetongue  disease  and  allocated  funds  to  buy  vaccines.  The  plan  for 
controlling  residues  of  veterinary  products  and  medicines  in  animals  for  2015  is  being 
implemented. Serbia has largely aligned its legislation on animal welfare on farms with EU 
law, but implementation and enforcement need to be improved. National legislation on animal 

39 

 
welfare  in  slaughterhouses  and  transport  has  yet  to  be  aligned  with  the  acquis.  National 
legislation  on  identifying  and  registering  bovines  should  be  better  enforced  by  increasing 
coordination  with  the  Agrarian  Payments  Directorate  on  cross-compliance  of  subsidies,  and 
with the police on preventing illegal trafficking and trade in animals.   

In  relation  to  the  placing  food,  feed  and  animal  by-products  on  the  market,  Serbia 
introduced  temporary  amendments  on  how  to  classify  and  handle  animal  by-products.  They 
address  the  lack  of  developed  infrastructure  for  collection  and  transport  and  the  lack  of 
capacity of rendering plants. A national monitoring and control programme for food and feed 
safety needs to be adopted. Serbia also needs to adopt a programme for upgrading agri-food 
establishments and the food safety council needs to be appointed. The management of animal 
by-products  is  an  area  of  particular  concern.  Serbia  should  strengthen  enforcement  of 
legislation on separation and treatment of animal waste and adopt and implement a strategy to 
align it with EU acquis. 

In the area of phytosanitary policy, the Law on Plant Protection Products is not implemented 
in  relation  to  registration,  for  which  the  previous  non-EU  compliant  procedure  is  still 
applicable.  The  rulebooks  for  the  annual  programme  for  post-registration  control  of  plant 
protection products and measures for plant health protection for 2015 have been adopted.   

The new law on genetically modified organisms remains to be adopted, in line with the EU 
acquis, which would also allow Serbia to join the World Trade Organisation. 

5.13.  Chapter 13: Fisheries 

The  Common  Fisheries  Policy  protects  living  resources  of  the  sea  and  limits  the 
environmental  impact  of  fisheries.  This  includes  setting  catch  quotas,  managing  fleet 
capacity, rules for aquaculture as well as support for fisheries and coastal communities. 

Serbia  is  moderately  prepared  in  the  area  of  fisheries.  Some  progress  was  made  with 
creating  the  legal  base  for  a  national  catch  certification  scheme  for  imports  and  exports  of 
fishery products and a system for collecting market data. 

As  regards  EU  requirements  on  resource  and  fleet  management,  and  inspection  and 
control,  the  law  on  animal  husbandry  needs  to  be  amended  to  provide  a  legal  basis  for  the 
introduction  of  a  national  catch  certification  scheme  for  imports  and  exports  of  fishery 
products. A law on protection and sustainable use of fish stocks came into force in December. 

Serbia  does  not  have  any  structural  actions  in  place  for  small-scale  fisheries  or  inland 
fisheries.  As  regards  market  policy,  the  capacity  of  the  administration  managing  and 
controlling imports and exports of fisheries products needs to be upgraded and brought into 
line with the acquis. 

5.14.  Chapter 14: Transport policy 

The EU has common rules for technical and safety standards, security, social standards, state 
aid  and  market  liberalisation  in  road  transport,  railways,  inland  waterways,  combined 
transport, aviation and maritime transport.   

Serbia  is  moderately  prepared  in  transport  policy.  Good progress  was  made  on  road,  rail 
and inland waterways. In the coming year, Serbia should in particular: 

→  ensure  that  railway  undertakings  that  were  certified  and  licensed  by  Serbian  authorities 
have  access  to  the  network  and  the  service  facilities  in  Serbia  for  the  purpose  of  providing 
domestic or international rail freight services;  

40 

 
→  confer  all  competencies  regarding  type  authorisation,  vehicle  authorisation  and  national 
vehicle register to the safety authority;  

→ further strengthen its administrative capacity for enforcement and inspection. 

On  road  transport,  legislation  aimed  at  aligning  with  the  acquis  on  dangerous  goods  was 
adopted in November. The Serbian Strategy on road safety was adopted in July. Legislation 
on  driving  and  on  rest  periods  for  domestic  lorry  drivers  remains  to  be  adopted.  Further 
alignment  with  the  road  safety  and  dangerous  goods  acquis  is  still  necessary.  While  the 
number  of  fatal  road  traffic  accidents  is  falling,  it  remains  high  and  road  safety  remains  a 
concern. 

As  regards  rail  transport,  an  agreement  on  railway  border  crossing  procedures  was  signed 
between Serbia and the former Yugoslav Republic of Macedonia in February. The law on air, 
railway  and  waterborne  accident  investigations  was  adopted  in  August,  providing  for  the 
establishment  of  an  independent  accident  investigation  body.  Open  access  to  the  railway 
market,  with  transparent  track  access  charges  and  capacity  allocation,  still  needs  to  be 
achieved.  Serbian  Railways  continue  to  deny  track  access  to  a  duly  licensed  and  safety-
certified domestic freight operator. Serbian Railways were unbundled in July. Public service 
obligation contracts have yet to be signed. 

On inland waterway transport, the strategy on waterborne transport development for 2015-
2025  was  adopted  in  January.  In  February,  amendments  were  adopted  to  the  law  on 
navigation and ports on inland waterways. The merchant shipping law remains to be adopted. 

On  intermodal  transport,  the  construction  of  the  first  modern  intermodal  terminal  in 
Belgrade  has  not  yet  started.    Further  implementing  legislation  on  support  measures  for 
intermodal  transport,  on  incentive  measures  for  road  carriers  and  on  loading  units  on  the 
railways is needed. 

On  air  transport,  the  revised  list  of  air  carriers  subject  to  an  operating  ban  in  the  EU  was 
adopted  in  January.  The  Serbian  European  Aviation  Safety  Agency  and  Civil  Aviation 
Directorate agreed on a new working arrangement in May. Further alignment with the acquis 
on accident investigation and working time is required. Inquiries into Air Serbia’s compliance 
with  the  ‘effective  control’  requirements  in  the  European  Common  Aviation  Agreement 
(ECAA) are ongoing. The administrative capacity of the Civil Aviation Directorate requires 
strengthening to fulfil the obligations of the ECAA Agreement. Serbia actively participates as 
an observer in the Joint Service Provisional Area initiative.  

As regards maritime transport, amendments to the law on maritime transport were adopted 
in  February.  A  national  and  international  shipping  registers  was  established.  A  rulebook  on 
ship documents and books was adopted in July. In the  area of satellite navigation,  Serbian 
participation in the Galileo programme has yet to start. 

5.15.  Chapter 15: Energy 

EU energy policy covers competition and state aids, equal access to resources, the internal 
energy market, energy efficiency, nuclear energy and nuclear safety and radiation protection. 

Serbia  is  moderately  prepared  in  the  area  of  energy.  Some  progress  was  made  in  the 
internal energy market. In the coming year, Serbia should in particular: 

→  take  measures  to  improve  alignment  with  the  acquis  in  renewable  energy,  energy 
efficiency,  develop  competition  in  the  gas  market  and  achieve  cost-reflective  electricity 
tariffs; 

41 

 
→  participate  in  the  region's  electricity  Coordinated  Auction  Office  in  line  with  its  Energy 
Community obligations; 

→  strengthen  the  independence  and  increase  administrative  capacity  of  the  energy  and 
nuclear regulators. 

On security of supply, two decrees on mandatory oil stocks were adopted in October 2014 
and  the  Directorate  for  Management  of  Mandatory  Stocks  was  set  up  in  the  Ministry  of 
Mining and Energy. However, Serbia is still at a very early stage of alignment with the acquis 
and  cannot  provide  information  about  its  stock  levels.  Preparatory  work  on  building  a  gas 
interconnector  between  Serbia  and  Bulgaria  should  accelerate  in  order  to  diversify  Serbia’s 
gas supply. The security of the electricity supply was seriously affected by the damage to the 
Kolubara coal mine during the 2014 floods, when Serbia had to import electricity and lignite. 
Serbia  has  ceased  all  preparation  for  the  South  Stream  pipeline  following  Russia's 
abandonment of the project. 

Substantial  progress  was  made  in  terms  of  normalisation  of  relations  between  Serbian  and 
Kosovan  transmission  companies.  Following  an  agreement  in  August  2015  between  Serbia 
and Kosovo, a Serbian power supply company should be established to supply customers in 
northern Kosovo. This company has not yet been established. The parallel management that 
Serbia  installed  at  the  Gazivode/Ujmani  hydropower  plant  continues  to  interfere  in  its 
operation, with a risk of flooding. 

On the internal energy market, the law on energy (which incorporates provisions from the 
third Energy Package) was adopted in December. The energy sector development strategy has 
not  yet  been  adopted.  Since  January, electricity  and  gas  markets  have  been  fully  opened  in 
Serbia.  New  electricity  and  gas  supplier  switching  rules  came  into  force  in  July.  Further 
efforts are needed to strengthen the independence of the Serbian energy agency, AERS, and 
its  capacity  to  cover  responsibilities  arising  from  the  third  Energy  Package.  At  the  end  of 
2014,  Serbia  adopted  a  plan  to  unbundle  the  gas  utility,  Srbijagas,  addressing  its  failure  to 
meet its obligations under the Energy Community.   

At  the  end  of  2014,  AERS  approved  agreements  between  the  transmission  system  operator 
EMS  and  its  Hungarian,  Bulgarian  and  Croatian  counterparts  on  bilateral  coordinated 
allocation  of  capacity.  Regulated  electricity  tariffs  need  be  adjusted  to  reflect  cost.  The 
Secretariat of the Energy Community opened infringement proceedings against Serbia for its 
failure to participate in the activities of the region’s Coordinated Auction Office. 

On  renewable  energy,  administrative  procedures  for  issuing  permits  and  network 
connections were simplified by the new energy law of December 2014. Amendments to the 
planning  and  construction  law  adopted  in  December  2014  provide  a  simplified  approval 
procedure for building energy facilities. There is no significant investment in the renewable 
energy sector. Substantial efforts are urgently needed to achieve Serbia’s target of obtaining 
27 %  of  gross  final  energy  consumption  from  renewable  sources  by  2020.  Any  further 
development of hydropower should be in line with EU environmental legislation. 

Full alignment with the energy efficiency acquis has not yet been achieved. Two rulebooks 
on  energy  management  were  adopted  in  December.  The  ministry  lacks  administrative 
capacity  to  draft  by-laws.  The  energy  efficiency  fund  did  not  produce  significant  results 
although 11 contracts were signed with different municipalities for projects in the field. 

On  nuclear  energy,  nuclear  safety  and  radiation  protection,  Serbia  adopted  a  regulation 
setting up a nuclear security and safety programme and a regulation on the safety of nuclear 
facilities  and  nuclear  material.  A  national  strategy  for  the  sector  has  yet  to  be  adopted  and 
alignment with the acquis on radioactive waste management, radiation protection, spent fuel, 

42 

 
nuclear  safety  and  security  is  needed.  The  Serbian  Radiation  Protection  and  Nuclear  Safety 
Agency  (SRPNA)  has  not  consolidated  the  inspection  activities  of  the  relevant  ministries. 
SRPNA filled 26 posts out of its approved 35. SRPNA issued an operating licence for a new 
nuclear and radioactive waste hangar. An action plan needs to be drafted for decommissioning 
research  reactor  A  at  the  Vinča  site.  The  radiological  situation  at  the  abandoned  Kalna 
uranium mine needs to be improved. 

5.16.  Chapter 16: Taxation 

EU  rules  on  taxation  cover  value-added  tax  and  excise  duties  as  well  as  aspects  of  taxing 
income from savings of individuals and of corporate taxes. They also deal with cooperation 
between tax administrations, including information exchange to prevent tax evasion. 

Serbia  is  moderately  prepared  in  the  area  of  taxation.  Some  progress  was  made  with  the 
adoption  of  the  2015-2020  programme  to  transform  the  tax  administration.  This  should 
strengthen strategic management and planning of taxation. In the coming year, Serbia should 
in particular: 

→  improve operational activities to curb the informal economy; 

→ further align national rules on excise goods, including those on imported spirits and coffee, 
with those of the acquis; 

→ further simplify and unify tax procedures and better train staff. 

On  indirect  taxation,  no  progress  can  be  reported  on  value  added  tax  (VAT).  Excise 
legislation still contains some discriminatory measures on imported spirits and coffee. Excise 
duty  on  electricity  and  on  electronic  cigarettes  was  introduced,  as  of  August.  On  direct 
taxation, the amended law on profit tax passed in December exempts humanitarian aid, and 
assistance provided to different levels of government.  

On administrative cooperation and mutual assistance, Serbia signed an agreement to join 
the Fiscalis 2020 programme, which came into force in July.  

On  operational  capacity  and  computerisation,  electronic  services  to  taxpayers  were 
further extended and revenue increased. The use of e-declarations became compulsory for a 
large  number  of  tax  declarations.  Efforts  to  combat  the  grey  economy  intensified,  with 
reinforced checks  on VAT compliance. A new  programme  for  2015-2020  to  transform  the 
tax  administration  was  adopted  in  June.  As  a  positive  development,  it  includes  quarterly 
performance  indicators  to  assess  compliance  with  objectives.  While  public  communication 
has  improved,  the  tax  administration  should  upgrade  taxpayer  service  and  simplify 
administrative procedures. Efforts are needed to train staff more effectively. The new well-
equipped data centre has become fully operational this year; but maintaining staffing in the 
IT division has become a challenge due to wage competition from the private sector. 

The  tax  administration  has  intensified  work  on  improving  supervision  by  training  of  tax 
inspectors  in  various  fields,  in  line  with  EU  methodology.  The  discretionary  powers  of 
individual  tax  inspectors  should  be  further  reduced.  Some  work  was  also  done  to  improve 
operational activities to curb the informal economy, notably against illegal trade in fine-cut 
tobacco and cigarettes and in games of chance and gambling activities. 

43 

 
 
5.17.  Chapter 17: Economic and monetary policy 

EU rules require the independence of central banks and prohibit them directly financing the 
public  sector.  Member  States  coordinate  their  economic  policies  and  are  subject  to  fiscal, 
economic and financial surveillance.  

Serbia is moderately prepared in the area of economic and monetary policy. Some progress 
was  made  on  alignment  with  the  acquis  and  with  the  preparation  of  the  Economic  Reform 
Programme (ERP). In the coming year, Serbia should in particular: 

→  intensify  efforts  to  improve  economic  policy  coordination,  including  the  design  and 
implementation of structural reforms. 

On monetary policy, alignment of the legal framework is well advanced. Monetary financing 
of  the  public  sector  is  prohibited  by  the  central  bank  law.  The  law  also  establishes  price 
stability  as  the  central  bank's  primary  objective.  However,  Serbia's  inflation  rate  has  been 
below the central bank's tolerance band (4 % ±1.5 percentage points) since 2014.  

On  economic  policy,  Serbia  submitted  its  ERP  to  the  European  Commission  in  March.  It 
outlines a comprehensive programme of fiscal consolidation and structural reforms anchored 
in a stand-by arrangement with the International Monetary Fund. The proposed set of sectoral 
reform  measures  in  the  ERP  is  appropriate  but  remains  modest  in  relation  to  the  needs  and 
vague in terms of budgeting and implementation schedules. The weak presentation of many 
sectoral reforms indicates that the ERP should have undergone a more thorough consultation 
procedure inside and outside government. This would ensure domestic ownership and better 
implementation.  

Serbia introduced fiscal rules in 2010, but public debt continued to increase and is expected to 
stabilise only in 2017 at almost 80 % of GDP, breaching the statutory 45 % ceiling. The Fiscal 
Council,  which  is  an  independent  institution  set up  under  the  same  legislation,  continued  to 
express valuable opinions on budgetary and economic policies. 

5.18.  Chapter 18: Statistics 

EU  rules  require  that  Member  States  are  able  to  produce  statistics  based  on  professional 
independence,  impartiality,  reliability,  transparency,  and  confidentiality.  Common  rules  are 
provided for the methodology, production and dissemination of statistical information.  

Serbia  is  moderately  prepared  in  statistics.  Good  progress  was  achieved  in  the  past  year, 
notably  in  harmonising  data  production  with  the  acquis  and  further  developing  sectoral 
statistics. In the coming year, Serbia should in particular: 

→  improve  the  compilation  of  macroeconomic  statistics  in  line  with  European  System  of 
Accounts  (ESA)  2010,  start  sending  data  for  the  EU’s  excessive  deficit  procedure  and 
improve the process for sending data to Eurostat; 

→  continue  to  boost  coordination  of  statistical  data  producers  on  macroeconomic  statistics 
(Statistical Office, Ministry of Finance, and National Bank) and strengthen the administrative 
capacity of the Statistical Office; 

→  align  its  legislative  framework  on  territorial  units  for  statistics  (NUTS)  with  the  NUTS 
regulation, in line with its SAA obligations. 

On  statistical  infrastructure,  the  legal  framework  is  largely  in  line  with  the  European 
statistics Code of Practice, while the upcoming revision of the law on statistics is expected to 
increase  the  professional  independence  of  the  Statistical  Office  of  the  Republic  of  Serbia 
(SORS).  The  capacity  of  the  Statistical  Office  needs  to  be  further  strengthened,  notably  in 

44 

 
relation to human resources. Data transmission to Eurostat has started, but this needs to be 
considerably improved. On classifications and registers, main classifications are in line with 
the acquis while, the classification of territorial units remains to be aligned. 

Regarding  macroeconomic  statistics,  SORS  compiles  annual  and  quarterly  GDP  data  in 
current  and  constant  prices.  Annual  sector  accounts  are  compiled  as  of  2005  and  data  for 
2011-2013  were  sent  to  Eurostat.  However,  further  efforts  are  needed  for  improving  the 
quality of the data. Data on the government deficit and debt are produced by the Ministry of 
Finance, but considerable efforts are needed to further develop finance statistics and ‘supply 
and  use’  tables.  Monthly  and  quarterly  balance  of  payment  data  and  quarterly  data  on  the 
international investment positions produced by the National Bank of Serbia are only partially 
in line with the EU acquis. The harmonised index of consumer prices is used according to EU 
standards.     

In  the  area  of  structural  business  statistics  and  short-term  statistics,  an  increase  of  data 
coverage  is  necessary.  Foreign  affiliates  statistics  are  only  partially  in  line  with  the  acquis. 
Data  for  tourism  is  not  provided  by  type  of  locality  or  for  national  tourism.  For  transport, 
road,  railway,  inland  waterways  and  air  transport  statistics  need  to  be  harmonised  with  the 
acquis and data needs to be sent more frequently. Research and development data are partially 
aligned  with  the  acquis  and  further  efforts  are  needed  to  send  research  and  development 
expenditure and other related data to Eurostat. Statistics on business and household usage of 
information  and  communications  technology  are  produced  twice  a  year.  The  Community 
Innovation Survey (CIS) has been carried out twice; the 2010 data were sent to Eurostat but 
the 2012 data are still being processed.        

On  social  statistics,  Serbia  is  partially  in  line  with  the  acquis.  The  population  and  housing 
census was conducted in 2011 and data have subsequently been published. The EU survey on 
income  and  living  conditions  is  being  implemented  and  the  2013  data  were  published.  For 
social  protection  statistics,  the  European  System  of  integrated  Social  Protection  Statistics 
(ESSPROS)  is  implemented.  Labour  market  statistics  are  broadly  in  line  with  the  acquis. 
Statistics on structure of earnings and job vacancies still need to be produced. The labour cost 
survey  data  for  2012  were  sent  to  Eurostat,  while  full  implementation  and  transmission  of 
quarterly labour cost index is expected end-2015. Public health statistics are partially in line 
with the acquis. Statistical surveys of crime are conducted but still need to be aligned. 

In  the  area  of  agricultural  statistics  crop  production,  animal  production,  milk,  dairy  and 
slaughter  statistics  have  been  aligned,  while  orchard  and  vineyards  surveys  have  yet  to  be 
introduced. Supply balance sheets and agricultural price statistics need to be harmonised with 
the acquis. The SORS continued to release data from the 2012 agriculture census. 

As  regards  energy  statistics,  annual  energy  statistics  are  produced  for  all  relevant  energy 
sources  and  are  submitted  to  Eurostat.  Environment  statistics  are  partially  in  line  with  the 
acquis. Waste and water statistics are collected but coverage has to be improved.  

5.19.  Chapter 19: Social policy and employment 

EU rules in the social field include minimum standards for labour law, equality, health and 
safety at work and anti-discrimination. They also promote social dialogue at European level.  

Serbia is moderately prepared in social policy and employment. Some progress was made 
on employment policy, social policy, and occupational health and safety. The preparation of 
Serbia’s  first  employment  and  social  reform  programme  is  an  important  step  in  identifying 
key challenges in employment and social policies and policy reforms to address them. These 
areas continue to be affected by scarce public finances and insufficient institutional capacity. 
In the coming year, Serbia should in particular: 

45 

 
→ ensure financial and institutional resources for employment and social policies;  

→ significantly strengthen social dialogue at all levels. 

On  labour  law,  steps  were  taken  to  review  alignment  gaps  in  labour  legislation.  Labour 
inspection activities have been intensified and better targeted, especially in relation to fighting 
undeclared  work.  Alignment  continues  regarding  health  and  safety  at  work.  The 
administrative capacity of the Labour Inspectorate needs to be increased. 

With  regard  to  social  dialogue,  consultation  of  the  Socio-Economic  Council  on  legislative 
amendments remains limited. Walk-outs of representative trade unions from working groups 
in  charge  of  preparing  important  pieces  of  legislation  are  a  concern.  There  has  been  little 
further  progress  in  developing  tri-partite  social  dialogue  at  local  level.  Several  sector 
collective agreements remain to be concluded following the repeal of collective agreements in 
January. Bipartite social dialogue remains weak. Initial steps were taken to revise the laws on 
strike and peaceful settlement of labour disputes.  

In  the  area  of  employment  policy,  employment  rate  continued  to  rise  moderately  to  42  %. 
There  has  been  a  decrease  in  both  unemployment  rate  and  informal  employment.  The 
proportion  of  young  people  not  in  employment,  education  or  training  while  decreasing 
slightly,  remains  high  at  18.6 %.  Half  of  the  unemployed  are  below  the  age  of  35.  In  2015 
fiscal consolidation measures and restructuring of socially owned enterprises are expected to 
have a negative effect on overall employment. The government has set up a social fund for 
severance  payments.  A  package  of  active  labour  market  measures  has  been  earmarked  to 
target  workers  affected  by  restructuring  of  state  owned  enterprises.  Serbia  has  prepared  its 
first  employment  and  social  reform  programme.  It  identifies  key  challenges  in  employment 
policy and sets out social policies and policy reforms to address them.  

As regards preparations for the European Social Fund, high staff turnover is affecting IPA 
management  expertise  in  the  Ministry  of  Labour,  Employment,  Veteran  and  Social  Affairs 
and  in  the  National  Employment  Service.  (See  also  Chapter  22  —  Regional  policy  and 
coordination of structural instruments) 

On social inclusion, the second national report on social inclusion and poverty reduction was 
adopted in October 2014. The third wave of the Survey on Income and Living Conditions was 
completed in May and provides an important source of indicators used at EU level to monitor 
poverty and social exclusion in light of the Europe 2020 strategy. The at-risk-of-poverty rate 
was  25.6 %  in  2014,  up  from  24.6 %  in  2013.  The  availability  and  quality  of  community-
based  services  across  the  country  remains  uneven.  The  provision  of  social  services  is 
additionally compromised by the lack of implementing regulations and ineffective distribution 
of budget funds. Better enforcement of the regulatory framework is necessary. Only 17.8 % of 
registered unemployed Roma were included in active labour market measures. Roma continue 
to  be  excluded  from  a  range  of  social  services  and  their  participation  in  the  formal  labour 
market remains very low. 

On  social  protection,  the  2014  pension  fund  deficit  remained  large.  As  a  part  of  fiscal 
consolidation  measures,  all  pensions  above  RSD 25 000  (approximately  EUR 210)  were 
progressively  reduced  in  November  2014.  The  measure  affected  about  39 %  of  pensioners. 
Amendments  to  the  Law  on  Pensions  and  Disability  Insurance  and  the  budget  system  law, 
adopted  in  December,  provide  that  pensions  will  not  be  raised  until  the  ratio  of  pension 
expenditure to GDP falls below 11 %. 

On  anti-discrimination  policy,  the  Office  of  the  Commissioner  for  Protection  of  Equality 
continued to raise awareness and promote mechanisms for protection against discrimination. 
The groups most discriminated against remain Roma, lesbian, gay, bisexual, transgender and 

46 

 
intersex  people,  people  with  HIV/AIDS,  people  with  disabilities,  and  women.  (See  also 
Chapter 23 — Judiciary and fundamental rights) 

On  equal  opportunities  between  women  and  men,  amendments  made  to  the  labour  law  in 
July  2014  help  to  empower  women  at  work,  help  working  mothers  to  reconcile  family  and 
professional  life,  and  offer  greater  protection  to  pregnant  workers.  However,  the  legislation 
needs  to  be  fully  implemented,  particularly  regarding  the  dismissal  of  pregnant  women  and 
women  on  maternity  leave,  sexual  harassment,  the  gender  pay  gap  and  inequality  in 
promotion, salaries and pensions. Women's participation in the labour market as well as the 
gender pay gap need to be tackled further. (See also Chapter 23 — Judiciary and fundamental 
rights). 

5.20.  Chapter 20: Enterprise and industrial policy 

EU industrial policy enhances competitiveness, facilitates structural change and encourages 
an enterprise friendly environment that stimulates small and medium sized enterprises.  

Serbia is moderately prepared in enterprise and industrial policy. Some progress was made 
with  the  adoption  of  a  new  strategy  and  action  plan.  The  issue  of  construction  permits  was 
also addressed. In the coming year, Serbia should in particular: 

→  improve  the  business  environment,  especially  for  small  and  medium-sized  enterprises 
(SMEs), and facilitate their access to finance. 

On enterprise and industrial policy, an enterprise and industrial strategy for 2015-2020 was 
adopted in March, together with an action plan for 2015-2016. The strategy is in line with the 
Small  Business  Act  (SBA)  principles.  Serbia  and  the  Commission  agreed  that  the  country 
would participate in the EU competitiveness and SME programme (COSME) as of 2016. 

On  enterprise  and  industrial  instruments,  Serbia  participated  in  the  latest  SBA 
performance  review  which  demonstrated  that  the  national  authorities  improved  the  self-
assessment process. First policy results show improvements on several scores, particularly in 
relation to bankruptcy, business support services and export promotion.  However, support for 
smoother and cheaper access to finance remains problematic. Fresh financial instruments need 
to be developed and rolled out in order to reverse the long trend of credit stagnation. There 
was some progress concerning late payments but full alignment with the EU directive remains 
to be achieved. 

As regards the business environment, the process of reviewing, updating and simplifying laws 
stalled;  regulatory  impact  assessment  is  not  systematically  respected.  Company  registration 
has  been  simplified,  but  parafiscal  charges  continue  to  weigh  on  company  operations.  The 
state has yet to propose a policy approach which would ensure some overview and control of 
these charges, which are largely collected by municipalities and regulatory agencies. 

In sectoral policies, the new law on construction permits adopted in late 2014 delivered good 
results, as the number of construction permits tripled and the time taken to issue them fell.  

5.21.  Chapter 21: Trans-European networks 

The EU promotes trans-European networks in the areas of transport, telecommunications and 
energy to strengthen the internal market and contribute to growth and employment. 

Serbia is moderately prepared for trans-European networks. Some progress was made and 
work continued on the extension of Orient East-Med core corridor in the Western Balkans for 
both road and rail. In the coming year, Serbia should in particular: 

→ intensify its preparatory work for the gas interconnector with Bulgaria. 

47 

 
On transport networks, Serbia continued to participate in the South-East Europe Transport 
Observatory and to implement the memorandum of understanding on the development of the 
South-East  Europe  Core  Regional  Transport  Network.  The  country  played  an  active  role  in 
the Western Balkans 6 connectivity agenda by endorsing the agreement on the regional core 
transport network in Brussels in April, and the further agreement (in Riga in June) on the core 
network  corridors  and  on  the  list  of  projects  to  be  implemented  by  2020  (in  Vienna  in 
August). The new law on planning and construction was adopted in December. It simplifies 
permitting and spatial planning procedures, allowing quicker implementation of infrastructure 
projects. 

On  road  infrastructure  on  Orient  East-Med  core  corridor,  work  is  progressing  on  the  E-75 
from  Niš  to  the  border  with  former  Yugoslav  Republic  of  Macedonia,  with  work  having 
started on the Caričina Dolina to Vladičin Han segment in April. Work continues on the E-80 
from  Niš  to  the  Bulgarian  border  (Prosek  to  Dimitrovgrad)  and  the  Belgrade  bypass. 
Construction  work  on  the  Subotica  to  Kelebija  (Y  branch)  segment  has  been  temporarily 
suspended  due  to  insufficient  funds.  Work  on  Road  Route  4  (Belgrade  to  Bar)  is  ongoing. 
Work on railway Orient East-Med core corridor is ongoing. 

On trans-European energy networks, Serbia continues to support the implementation of the 
Gas  Ring  Project  for  South-East  Europe.  Preparatory  work  on  the  construction  of  the  gas 
interconnector between Serbia and Bulgaria needs to intensify to increase gas supply security. 
Construction  of  the  Resita-Pancevo  electricity  interconnection  between  Romania  and  Serbia 
has  started.  Investment  preparations  for  the  project  pipelines  in  transport  and  energy  are 
advancing well. 

5.22.  Chapter 22: Regional policy and coordination of structural instruments 

The  EU  funds  regional  development  in  the  Member  States.  Implementation  is  the 
responsibility of the Member States that must have adequate administrative capacity to ensure 
the good handling and sound financial management of the projects.  

Serbia is moderately prepared in regional policy and coordination of structural instruments. 
Some  progress  was  made:  Serbia  is  acquiring  valuable  experience  of  managing  EU  funds 
under  ‘indirect  management’  through  component  I  of  the  IPA.  In  the  coming  year,  Serbia 
should in particular: 

→ ensure adequate capacity to implement ‘indirect management’ programmes. 

The  legislative  framework  is  still  not  fully  in  line  with  the  acquis,  while  the  ability  of  the 
budgetary  system  and  resources  to  provide  adequate  financing  capacity  at  aggregate  level 
remains to be tested. On the institutional framework, Serbia started to manage programs on 
Transition  Assistance  and  Institution  Building  (IPA  component  I).  Work  continued  to  align 
the structures for programming and implementing national development policy and strategic 
planning with those of EU regional policy, so that Serbia can increase its ability to absorb EU 
funds and cofinance EU-funded programmes. On administrative capacity, further efforts are 
needed to put in place a staff retention policy to cope with the anticipated workload and staff 
turnover. 

Notable  efforts  were  made  on  programming  and  continued  preparations  for  the  ‘sector 
approach’  used  under  IPA  II.  Potential  final  beneficiaries  need  to  improve  their  ability  to 
produce  project  documentation  in  line  with  IPA  requirements.  On  investment  in  transport, 
energy, environment and business infrastructure, Serbia continued to make significant efforts 
to establish a single project pipeline by preparing and using a methodology for selecting the 
most  relevant  projects.  As  part  of  this,  a  National  Investment  Committee  was  set  up  in 

48 

 
October  2014  and  meets  regularly.  On  monitoring  and  evaluation,  sectoral  monitoring 
committees for all sectors of IPA components I and II are operational and meet regularly. 

On  financial  management,  control  and  audit,  Serbia’s  financial  management  and  control 
systems  were  further  developed  to  comply  with  the  indirect  management  requirements  for 
IPA  components  I  and  II  (Cross-border  cooperation).  The  capacity  of  the  audit  authority 
remains an issue of concern which needs to be addressed adequately. 

5.23.  Chapter 23- Judiciary and fundamental rights 

The  EU's  founding  values  include  the  rule  of  law  and  respect  for  human  rights.  A  proper 
functioning  judicial  system  and  effective  fight  against  corruption  are  of  paramount 
importance, as is the respect for fundamental rights in law and in practice.  

Serbia has achieved some level of preparation for the acquis and European standards in this 
area  and  has  made  some  progress.  In  September  2015  the  action  plan  required  for  the 
opening of rule of law Chapter 23 was successfully finalised. Improved rules for evaluating 
prosecutors and judges were adopted and steps were taken to reduce the sizeable backlog of 
cases.  However,  there  is  still  scope  for  political  influence  over  judicial  appointments.  The 
national  anti-corruption  strategy  has  so  far  not  yielded  the  expected  results.  Corruption 
remains prevalent in many areas and continues to be a serious cause of concern. As regards 
fundamental rights, conditions for the full exercise of freedom of expression are not in place. 
Legislation to protect minorities is broadly in place but needs to be consistently implemented 
across the country. In the coming year, Serbia should in particular: 

→  consolidate  the  justice  reform  process,  addressing  existing  gaps  in  the  independence, 
accountability and effectiveness of the judicial system and ensure its effective implementation 

→  establish  a  track  record  of  investigation,  prosecution  and  final  convictions  in  corruption 
cases, particularly in high-level corruption cases; 

→ ensure conditions for the full exercise of freedom of expression; 

→implement  the  anti-discrimination  framework  more  effectively,  promote  equality  and 
ensure  the  integration  of  persons  belonging  to  the  most  vulnerable  groups  (Roma,  LGBTI 
persons, persons with disabilities, and persons with HIV/AIDS) and minorities. 

(See  also  the  specific  recommendations  on  the  judicial  system,  the  fight  against  corruption 
and the freedom of expression in sections 2.3 and 2.4.) 

Functioning of the judiciary 

Strategic documents 

Serbia  is  implementing  the  action  plan  for  the  National  Judicial  Reform  Strategy  (NJRS) 
2013-2018, although there have been some delays. The Strategy Implementation Commission 
lacks a work plan and financial and administrative support, so it cannot drive implementation 
effectively.  

Management bodies 

Only  9  out  of  the  11  positions  on  the  High  Judicial  Council  (HJC)  are currently  filled.  The 
work of the HJC should be more transparent. Agendas for its meetings are published, but not 
the  minutes.  There  was  only  one  public  session  in  2014.  The  State  Prosecutorial  Council 
(SPC) and HJC post annual reports on their websites, but there is little up-to-date information 
on their activities. The councils urgently need to take over responsibility for the entire judicial 
budget and for effective management of the judicial system.  

49 

 
 
Independence and impartiality 

Various gaps in the independence of the justice system remain to be addressed by revising the 
Constitution and the legal framework. The nomination procedure for judges and prosecutors 
needs  to  be  amended,  as  do  the  three-year  probation  period  for  candidate  judges  and  the 
composition  of  and  method  of  election  to  the  HJC  and  SPC.  Representatives  of  the 
government  still  publicly  comment  on  ongoing  trials/investigations,  which  undermines  the 
independence of the judiciary. Court rules provide for random allocation of cases, but not all 
courts use this procedure and exceptions are frequent. Especially smaller courts assign cases 
manually. This creates a risk for interference by the court administration or president. There is 
no technology for allocating files randomly in prosecution offices.  

Accountability 

The  disciplinary  prosecutor  of  the  HJC  started  42  disciplinary  proceedings  in  2014  and 
submitted  19  proposals  for  dismissal.  On  proposal  of  the  Disciplinary  Commission  11  final 
decisions  were  taken  by  HJC  in  2014:  five  judges  were  dismissed, three  judges  resigned 
before the end of the proceeding, two were fined and in one case the statute of limitation had 
expired. In 2014, some 2 000 complaints against the work of judges and court presidents were 
filed  with  the  HJC  (mostly  on  excessive  length  of  hearings).  The  number  of  disciplinary 
complaints  against  prosecutors  and  deputy  prosecutors  increased  in  2014,  but  most  were 
dismissed and in the few cases where sanctions were applied, they were not deterrent.  

Professionalism and competence 

The  current  system  of  recruitment,  transfer  and  promotion  should  be  reformed  to  ensure  a 
transparent  and  predictable  judicial  career  system.  Clear  rules  and  an  efficient  promotion 
system need to be the norm. The HJC appointed 60 (permanent) judges at all levels in 2014-
2015  and  proposed  49  new  candidates  to  parliament.  New  rules  for  evaluating  judges  were 
adopted  in  May.  While  most  court  presidents  were  approved  by  parliament  in  May,  their 
appointment  is  still  pending  in  six  courts.  In  2014,  the  SPC  selected  19  deputy  prosecutors 
and proposed candidates to parliament for 4 appeal prosecutors and 45 first-time deputies. In 
May,  the  SPC  adopted  rules  on  evaluating  prosecutors  and  on  the  election  of  public  and 
deputy public prosecutors. The recruitment and evaluation processes should include a greater 
role for judicial education. Judges and prosecutors are appointed to specific offices. There is 
no mechanism for transferring them elsewhere. 

Quality of justice 

The Judicial Academy continued to organise regular training in EU law, in-service training for 
management posts in the courts, in-service training for specialised judicial posts and general 
in-service training. The academy’s budget slightly decreased compared to previous year (EUR 
1.5 million in 2014 and EUR 1.496 million for 2015). There is a need to increase the quality 
and  to  ensure  the  academy’s  capacity  to  become  a  proper  entry  point  to  the  judicial 
profession. A training needs assessment is urgently needed. 

A new special law protecting the right to a trial within a reasonable time was adopted in May 
and  will  come  into  force  in  January  2016.  Some  steps  have  been  taken  to  monitor  and 
harmonise court practices. In May the Supreme Court of Cassation adopted an action plan to 
monitor  and  harmonise  case  law  more  effectively.  There  is  no  comprehensive  or  effective 
mechanism for this yet. Poor quality legislation can result in contradictory court rulings. Case 
law, especially for the most important cases, and consolidated legislation should be accessible 
online. 

50 

 
Workload  across  the  country  remains  uneven.  The  situation  became  critical  in  Belgrade’s 
basic  prosecution  offices  which  process  the  majority  of  all  cases  and  where  new 
responsibilities  for  criminal  investigation  have  not  been  backed  by  the  necessary  staff  and 
resources. A case weighting system to calculate significant differences in workload between 
and within courts is urgently needed.  

The  HJC  and  SPC  continued  to  share  budgetary  authority  with  the  Ministry  of  Justice. 
Measures  must  urgently  be  taken  to  prepare  the  councils  for  taking  responsibility  for  the 
judicial  budget  by  the  end  of  2015.  Both  the  HJC  and  the  SPC  saw  a  decline  in  their 
respective  budgets.  Specific  financial,  resource  and  infrastructure  challenges  for  the 
prosecution  service,  stemming  from  the  introduction  of  a  prosecutorial-led  investigation 
model, need to be addressed. 

There  is  no  centralised  data  collection  system  for  the  courts.  The  introduction  of  public 
notaries, meant as an efficient way of relieving the burden on the judicial system, has proven 
problematic.  Selection  and  appointment  procedures  should  be 
the 
implementation  of  the  law  should  take  into  account  the  need  to  ensure  quality  services  and 
access  to  justice.  The  law  on  notaries  was  amended  in  September  2014  to  remove  the 
notaries’  monopoly  of  real  estate  transactions.  The  adoption  of  by-laws  on  detailed 
supervision/inspection of the work of notaries and private bailiffs has been delayed. The new 
Law  on  Enforcement  and  Security  has  not  been  adopted.  There  is  a  need  for  broader 
awareness raising and training of all stakeholders on alternative dispute resolution. 

improved  and 

Automated information exchange is extremely limited across the sector and information and 
communication  technology  is  little  used  for  sharing  information  on  court  practice  and 
accessing services. The performance of the system is difficult to measure as data is scattered 
and based on insufficiently accurate manual collection of data. 

Efficiency 

The overall length of proceedings and the number of old cases registered as a backlog remain 
of serious concern. A national backlog reduction programme is in place but the courts did not 
meet  targets  set  for  2014,  partly  owing  to  the  lawyers’  strike.  In  2014,  the  courts  received 
1 752 185 new cases and were able to settle 1 793 212, an improvement of 1 % compared to 
2013.  The  court  system  remains  clogged  by  extra-judicial  duties,  such  as  certifying 
documents, and especially by 1.6 million enforcement cases, mostly related to civil claims. A 
review  of  the  legal  framework  is  needed  to  allow  older  cases  to  be  transferred  to  private 
bailiffs,  which  would  help  reduce  the  massive  backlog  in  court  enforcement.  In  2014,  the 
backlog in the Supreme Court increased (with a clearance rate of 80.7 %) while in the basic 
courts, administrative courts and higher courts it fell (with clearance rates of 110 %, 103.74 % 
and 108.47 %, respectively). 

Anti-corruption policy 

Track record 

There  is  some  initial  track  record  of  investigation,  prosecution  and  convictions  in  cases 
which  are  not  considered  high-level  corruption.  Sentences  for  corruption  offences  range 
from  6  months  to  12  years,  but  the  law  is  not  applied  consistently.  Procedures  for 
investigating  corruption  cases,  particularly  cases  of  high-level  corruption,  often  take  a  long 
time  because  capacity  is  lacking  and  shortcomings  in  the  legal  framework  prevent  effective 
and systematic financial investigations and asset confiscations. 

The  specialist  prosecution  office  for  organised  crime  and  corruption  initiated  investigations 
against  86  persons  for  high  level  and  severe  corruption  cases  in  2014.  The  office  raised 

51 

 
indictments or indicting proposals against 54 persons. Indictments were confirmed against 32 
persons, and additionally the indicting proposals entered into force against 5 persons. So far, 
there  have  been  no  final  convictions  for  high-level  corruption.  The  Prosecution  Offices  of 
general  jurisdiction  raised  indictments  against  990  persons  for  corruption  related  cases  in 
2014, and against 204 persons indictments were confirmed. Against 147 persons proceedings 
were discontinued and against 10 persons charges were rejected. In 2014, in one case of high 
level  corruption  assets  have  been  permanently  confiscated.  Leaks  to  the  media  about 
ongoing investigations, in breach of the presumption of innocence, continue to be an issue of 
serious  concern.  There  have  been  no  investigations  of  these  breaches.  A  number  of  high 
profile cases, including some in which evidence of alleged wrongdoing has been presented by 
the media, have never been seriously investigated. 

A track record of judicial follow-up to the Anti-Corruption Agency, in-depth checks of party 
funding, conflict of interest and asset declarations still needs to be established. The Anti-
Corruption  Agency  received  1 481  requests  to  investigate  conflicts  of  interest  in  2014 
(compared  to  1 402  in  2013)  and  processed  1 286  cases  (compared  to  958  in  2013).  This 
resulted in 68 requests for misdemeanour proceedings (compared to 58 in 2013) and 43 first 
instance judgments most of which were reprimands and fines. 

The  agency  submitted  168  requests  for  misdemeanour  proceedings  relating  to  asset 
declarations, of which 153 cases are for failing to submit reports on time. A total of 85 cases 
resulted in convictions by misdemeanour courts in 2014. The agency also filed 14 criminal 
charges in 2014 due to reasonable suspicion that a public official had not reported assets or 
had  given  false  information  about  assets  with  the  intention  of  concealing  the  facts. 
Proceedings are under way in 11 cases, a plea bargain is being negotiated in another, and in 
two cases the criminal charge was dismissed.  

As regards checks on the funding of political activities and elections, the agency submitted 
33  requests  for  misdemeanour  proceedings  for  violations  of  the  law  on  financing  political 
activities. Misdemeanour courts handed down a larger number of sentences based on requests 
made  in  previous  years  (125  compared  with  28  in  2013),  including  45  final  sentences.  In 
2014, the agency published 31 decisions taking funds from public sources away from political 
entities.  

Institutional framework 

Prevention measures  

Serbia’s institutions for preventing corruption broadly meet international standards and have 
shown  good  potential.  However,  human  resources  and  cooperation  need  improvement.  The 
revised law enabling the Anti-Corruption Agency to enhance its role as the key institution 
needs to be adopted urgently. The agency continued to perform well, in line with its mandate 
and despite limited resources and both legal and institutional obstacles. The agency needs to 
increase its ability to collect and analyse data and its access to relevant databases. Overall, it 
must receive and maintain the capacity, tools and financial resources needed to carry out its 
mandate.  The  requirements  of  the  Law  on  Public  Procurement  and  the  national  anti-
corruption strategy and action plan have yet to be fully implemented. Healthcare, education, 
construction  and  spatial  planning,  infrastructure  projects  and  the  privatisation  of  public 
enterprises remain particularly vulnerable to corruption. Independent supervision and capacity 
for early detection of wrongdoing and conflicts of interest need to be further developed. There 
should be greater accountability and transparency in the management of public enterprises. 

The Anti-Corruption Council remained active in exposing and analysing cases of systemic 
corruption, in its advisory role to the government. However, the government does not follow 

52 

 
up  on  its  recommendations.  The  Council  remains  under-resourced  and  the  appointment  of 
new Council members has been pending since 2013.  

The  institutional  capacity  of  the Commissioner  for  Free  Access  to  Information  of  Public 
Importance and Personal Data Protection needs to be further increased to ensure effective 
monitoring and adequate follow-up to the increasing number of requests for access to public 
information.  Requests  for  access  to  information  that  were  refused  mainly  concerned 
privatisation, concessions, public-private partnerships and other related procedures that have 
an impact on the budget. 

Law enforcement  

Judges, prosecutors and investigators specialised in financial crime including corruption have 
received further training but a more sustainable approach to specialist training at all levels is 
needed.  The  specialist  prosecution  service  for  organised  crime  and  corruption  has 
continued  to  process  cases  of  high-level  corruption.  Comprehensive  analyses  of  the  risk  of 
corruption in justice and law enforcement have been carried out. 

Interinstitutional cooperation, between law enforcement agencies and with the prosecution 
service, has improved to a certain extent but requires further strengthening. The new financial 
investigation  strategy  includes  plans  to  reorganise  the  law  enforcement  authorities,  increase 
their level of specialisation, and recruit forensic accountants. However, funding has yet to be 
allocated. 

There  is  no  secure  platform  for  electronic  data  exchange  or  communication  between  the 
prosecution  service,  the  police,  tax  and  other  authorities.  There  is  also  no  system  allowing 
statistical monitoring of criminal proceedings. Internal control departments continue to lack 
equipment, resources and human capacity. Reform of the inspection services is needed to 
increase  their  accountability.  Effective  supervision  and  deterrent  sanctions  in  cases  of 
wrongdoing need to be applied. The independence and accountability of all investigative and 
judicial bodies dealing with corruption needs to be strengthened to ensure efficiency. 

Legal framework 

The  legal  framework  for  the  fight  against  corruption  is  broadly  in  place.  Corruption 
offences,  including  passive  and  active  corruption,  are  defined  in  the  Criminal  Code.  The 
excessive  recourse  to  the  provision  on  abuse  of  office  in  the  private  sector  in  the  Criminal 
Code  is  harmful  to  the  business  climate  and  legal  certainty.  Amendments  to  the  Criminal 
Code  are  still  under  consideration  to  provide  for  a  sustainable  legal  solution  to  effectively 
prosecute  cases  of  criminal  economic  offences.  The  Law  on  Civil  Servants  includes 
provisions on a code of conduct for civil servants and monitoring mechanisms. Preventing 
corruption in local government requires greater attention. The provisions in the current Law 
on  the  Anti-Corruption  Agency  on  preventing  conflicts  of  interest  and  declaring  and 
checking on the assets of public officials should be amended to ensure its enforcement and 
deterrent sanctions in cases of proven infringements. The law on financing political activities 
is  in  place,  but  needs  to  be  revised  to  ensure  its  penalty  provisions  are  applied.  The 
OSCE/ODHIR  recommendations  on  financing  electoral  campaigns  have  not  yet  been 
addressed. Serbia should develop more robust legal provisions and ensure deterrent sanctions 
are  applied  to  proven  infringements  of  the  law  on  financing  political  activities,  conflicts  of 
interest and declaration and verification of assets of public officials. The new law on whistle-
blower protection entered into force in June.   

General shortcomings in Serbia’s laws and rules are conducive to corruption. The quality of 
legal drafting on corruption-related issues needs to improve and further efforts are needed to 
simplify procedures and clarify implementing rules. 

53 

 
Strategic framework 

Several important measures in the anti-corruption strategy and action plan for 2013-2018 
are  behind  schedule,  e.g.  setting  up  efficient  coordination  and  monitoring  mechanisms. 
Adequate resources and human capacity to fully implement the strategy and action plan have 
not yet been allocated.  

The  inter-ministerial  coordination  group  put  in  place  in  2014  and  chaired  by  the  Prime 
Minister  met  only  once.  There  is  an  urgent  need  to  ensure  better  working  arrangements 
between  the  Ministry  of  Justice  and  other  institutions  and  bodies  involved  in  combating 
corruption. This applies primarily to relations with the ACA. 

The  government  adopted  a  strategy  on  financial  investigations  in  May  which  calls  for 
investigation  of  the  money  trail  of  crime  alongside  criminal  investigations,  and  supports 
investigation  beyond  the  initial  case.  However,  adequate  resources  have  yet  to  be  allocated 
and no action plan has been adopted. The action plan for the public administration reform 
strategy  includes  measures  to  increase  accountability  and  transparency  in  the  public  sector 
with a view to combating corruption, but needs to be adequately resourced. 

Fundamental rights 

Serbia  has  ratified  all  the  main  international  human  rights  instruments.  However, 
implementation  of  the  relevant  international  instruments  needs  to  be  improved  and  more 
consistent.  Since  September  2014,  the  European  Court  of  Human  Rights  (ECtHR)  has 
found  that  the  country  violated  the  European  Convention  on  Human  Rights  (ECHR)  in  14 
cases relating mainly to the right to a fair trial and protection of property. A total of 1253 new 
applications have been allocated to a decision-making body, bringing the number of pending 
applications to 1494.  

In relation to the promotion and enforcement of human rights, relevant state bodies such as 
the Office for Human and Minority Rights, parliamentary committees, the Ombudsman, the 
Equality Protection Commissioner and also civil society organisations continued to promote 
awareness-raising on human rights, tolerance and non-discrimination. The role of the Office 
for Human and Minority Rights needs to be strengthened. 

As  regards  prevention  of  torture  and  ill-treatment,  the  Ombudsman’s  Office  acts  as  the 
national  preventive  mechanism.  It  needs  more  human  resources  and  a  solid  and  permanent 
internal  structure.  Penalties  in  the  Criminal  Code  are  not  proportionate  to  the  severity  and 
gravity of the crimes of ill-treatment and torture. Proper legal safeguards against torture and 
abuse  in  social  institutions  have  yet  to  be  adopted.  Overcrowding,  especially  in  maximum 
security wards, poor living conditions, difficult access to specialist treatment programmes and 
inadequate  access  to  healthcare  in  prisons  are  still  matters  of  concern.  Legislation  covering 
detention in police custody, the prevention of torture and the internal complaints system needs 
to  be  amended  to  strengthen  the  rights  of  detainees  in  line  with  international  standards.  An 
effective internal non-judicial mechanism for reviewing complaints has yet to be set up. There 
has  been  no  progress  in  changing  the  unlawful  practice  of  using  district  prisons  for  police 
detention. 

Concerning  the  prison  system,  implementing  legislation  for  new  laws  on  criminal 
punishment and on alternative measures and sanctions was adopted. Enforcement judges, in 
their  main  capacity  of  protectors  of  prisoners’  rights,  have  been  operational  since  October 
2014. The probation service has expanded to 25 offices throughout Serbia.  

A  new  law  on  personal  data  protection  needs  to  be  adopted  to  ensure  full  alignment  with 
EU standards. Video surveillance, biometrics, security of data on the internet, processing and 

54 

 
protection of sensitive data as well as direct marketing remain inadequately regulated, leaving 
significant  room  for  abuse.  Legislation  on  processing  sensitive  data  should  be  adopted 
urgently. There is a need to boost capacity and funding for the Office of the Commissioner for 
Free Access to Information of Public Importance and Personal Data Protection. 

Freedom  of  thought,  conscience  and  religion  is  guaranteed  by  the  Constitution  and 
generally respected. Several religious organisations are registered. Incidents related to religion 
have  continued  to  decline.  In  addition  to  seven  communities  recognised  as  traditional 
religious  communities,  several  religious  organisations  have  been  registered.  The  lack  of 
transparency  and  consistency  in  the  registration  process  continues  to  be  one  of  the  main 
obstacles preventing some religious groups from exercising their rights. Contested provisions 
of the rulebook on the register of churches and religious communities have not been changed. 
Access to church services in some minority languages is not fully guaranteed across Serbia. 

As regards freedom of expression, there were several cases of threats and violence against 
journalists. Follow-up in terms of investigations, prosecution and final convictions has been 
very  limited.  A  number  of  critical  discussion  programmes  have  been  cancelled  or  have  had 
their content and scope reduced. Statements by state officials in relation to investigative work 
of  journalists  have  not  been  conducive  to  creating  an  environment  in  which  freedom  of 
expression  can  be  exercised  without  hindrance.  The  commission  tasked  to  look  into 
unresolved cases of murdered journalists from 1999 and 2001 has made further progress in its 
work, with charges brought against several former security agency members for the murder of 
a publisher. However, the investigation of two other prominent murders of journalists has not 
progressed. 

The three new media laws are being implemented, but their impact and effectiveness in terms 
of achieving the goals of the 2011 Serbian media strategy remain to be seen. The introduction 
of a media registry to bring more transparency to media ownership is at an early stage. The 
Commissioner  for  Access  to  Information  of  Public  Interest  reported  several  cases  in  which 
state  bodies  resorted  to  paying  fines  rather  than  disclosing  the  information  requested.  The 
introduction  of  a  registration  requirement  to  access  the  online  National  Economic  Registry 
hampers  the  ability  of  journalists  to  research  public  information  in  confidentiality.  The 
process of privatising state- and municipally owned media was started, albeit with some delay  

The Regulatory Body for Electronic Media has increased its monitoring of content., It has not 
reacted to programme changes that could affect the broadcasters’ ability to meet the criteria 
on the basis of which they were awarded the frequencies. The regulator’s independence needs 
to be strengthened. The Press Council has been more active in disclosing and analysing cases 
of breaches of professional journalistic standards and the Journalistic Code. The Press Council 
has  raised  major  concern  towards  practices  contrary  to  the  ethics  of  the  profession  and  the 
protection of privacy. 

There  is  no  consolidated  record  of  the  number  of  cases  brought  against  the  media  for 
defamation, and fines are very low. Media reporting based on anonymous or leaked sources, 
detailing investigations, announcing arrests and quoting investigation documents continue to 
undermine  trust  in  judicial  institutions,  breach  personal  data  laws  and  challenge  the 
presumption of innocence. 

The  internet  is  free  and  available  with  very  little  regulation.  There  has  been  no  substantial 
progress  in  investigations  on  hacking  attacks  against  websites  occurred  in  2014.  Efforts  are 
needed to identify and prosecute those suspected of violating internet freedoms. 

55 

 
Programming  on  public  service  broadcasters  frequently  features  state  officials  from  the 
governing parties and equal minded analysts, while the presence of the opposition and critical 
or independent commentators is less frequent.  

Freedom  of  assembly  and  association  is  generally  respected  but  the  public  assembly  law 
needs to be fully aligned with the Constitution. During Serbia’s hosting of the ‘16+1’ summit 
of the states of Central and Eastern Europe and China in December, the authorities prohibited 
demonstrations of members of Falun Gong, arresting and expelling a number of EU citizens. 
A demonstration to commemorate Srebrenica was prohibited for security reasons. Activities 
of extreme right-wing organisations and violent groups of so-called football fans continue to 
be a cause of concern.  

With  regard  to  property  rights,  December  2014  amendments  to  the  law  on  restitution 
extended the deadline for the start of financial compensation for confiscated property to 2018 
while the period of repayment was shortened from 15 to 12 years. The Agency for Restitution 
had adopted around 34 000 opinions and first-instance decisions on the return of confiscated 
property out of 76 000 submitted claims. Property with an estimated value of over 1 billion 
euro  has  been  returned  to  the  original  owners.  A  majority  of  the  agency’s  decisions  were 
approved  by  the  Ministry  of  Finance  as  the  second-instance  decision  body.  The  Ministry's 
insufficient staff levels led to delays in processing complaints. 

Serbia’s  non-discrimination  legislation  is  generally  in  line  with  European  standards,  with 
further alignment needed in particular as regards the scope of exceptions from the principle of 
equal  treatment,  the  definition  of  indirect  discrimination  and  the  obligation  to  ensure 
reasonable  accommodation  for  employees  with  disabilities.  The  action  plan  for  the  anti-
discrimination  strategy  needs  to  be  implemented.  The  office  of  the  Commissioner  for  the 
Protection of Equality still lacks adequate premises and its capacity needs to be strengthened. 
The persons most discriminated against remain the Roma, lesbian, gay, bisexual, transgender 
and  intersex  (LGBTI)  persons,  persons  with  disabilities  and  persons  with  HIV/AIDS  who, 
together with human rights defenders, often face hate speech and threats. Instigating national, 
racial  and  religious  hatred  and  intolerance  is  prohibited  in  the  criminal  code.  Proper 
investigation, prosecution and sanctioning of hate-motivated offences remains essential.  

Concerning  equality  between  women  and  men,  a  Coordination  Body  for  Gender  Equality 
was  set  up  in  October  2014,  replacing  the  Gender  Equality  Directorate  in  the  Ministry  of 
Labour,  Employment,  Veteran  and  Social  Affairs.  A  sustainable  institutional  set  up  for 
promotion of gender equality with adequate resources needs to be ensured.  (See also Chapter 
19 − Social policy and employment). The increasing number of women killed by their partners 
is of concern. Emergency protection orders are not issued promptly, the number of shelters is 
insufficient  and  there  is  no  state-run  centre  for  victims  of  sexual  violence  and  no  national 
women’s  helpline.  The  protection  of  women  against  all  forms  of  violence  needs  to  be 
strengthened and mechanisms for coordinating the collection and sharing of data between all 
relevant  actors  in  the  system  enhanced.  Although  the  number  of  women  members  of 
parliament  increased  to  34 %,  women's  participation  in  politics  and  in  the  private  sector 
remains very low. 

The  National  Council  on  the  Rights  of  the  Child  has  restarted  its  work.  Ensuring  more 
effective coordination of children’s rights and child protection systems should be prioritised, 
including  in  national  policies.  Administrative  data  are  still  not  disaggregated  to  enable  the 
status  of  vulnerable  groups  to  be  monitored,  particularly  with  regard  to  Roma  children  and 
children with disabilities. A new action plan for children and a new national strategy for the 
prevention of and protection of children from violence are still needed.  

56 

 
The  situation  of  children  with  disabilities  in  large  institutions  continues  to  be  of  concern. 
Family  and  parenting  support  services  should  be  prioritised  to  prevent  placement  in 
institutional  care.  There  is  a  need  to  further  expand  community-based  services  and  ensure 
more  integrated  service  delivery.  The  rulebook  on  recognising  discrimination  in  education 
institutions needs to be adopted without further delays. Funding mechanisms for schemes to 
divert  young  people  away  from  crime  need  to  be  decided  on  as  a  matter  of  priority. 
Mechanisms and services supporting asylum seekers need to be strengthened to become child-
sensitive. 

Regarding integration of persons with disabilities, laws on the movement of persons with 
disabilities  with  guide  dogs  and  on  the  use  of  sign  language  have  been  adopted.  Social 
inclusion  needs  to  improve  significantly,  particularly  with  regard  to  employment,  education 
and  the  availability  of  community-based  services.  The  system  of  social  services,  including 
those  for  elderly  persons,  is  still  largely  institutionalised.  The  treatment  of  persons  with 
mental  disabilities  in  institutions  is  still  not  regulated  in  accordance  with  international 
standards. The procedure for depriving persons with psychosocial and intellectual disabilities 
of their legal capacity should be aligned with international standards. (See also Chapter 19 − 
Social policy and employment) 

A number of activities have been conducted with the aim of promoting the rights of LGBTI 
persons.  Parliament  has  been  active  in  hosting  events  related  to  rights  of  LGBTI  persons. 
Police  officers  in  all  regional  police  departments  were  trained  on  working  with  victims  of 
trans-/homophobic  violence.  Serbia  was  one  of  the  signatories  of  the  Joint  Statement  of 
Ministers of the region at the 2015 IDAHO forum. A Pride Parade was held in Belgrade on 20 
September without major incidents for a second year in a row. LGBTI persons and activists 
often face hate speech and threats and in some cases physical violence. There is no centralised 
official  data  on  the  number  of  crimes  motivated  by  homophobia  and  transphobia.  School 
textbooks containing discriminatory content need to be repealed. Serbia has no procedures for 
legal  gender  recognition  in  place,  even  in  cases  of  gender  reassignment.  Greater  political 
commitment  to  promoting  a  culture  of  respect  for  LGBTI  persons  and  to  ensuring  non-
discrimination at work, in the health sector and the education system is still needed. 

Labour  and  trade  union  rights  are  guaranteed  by  the  Constitution  and  broadly  upheld. 
However, the right to strike, collective bargaining and the functioning of social dialogue need 
further strengthening. Poor respect of tripartite dialogue remains of concern. The procedures 
and  criteria  for  determining  the  representativeness  of  trade  unions  need  to  be  agreed  in  a 
transparent  way.  Consultation  of  the  Socio-Economic  Council  on  legislative  amendments 
remains limited. (See also Chapter 19 − Social policy and employment) 

The  2011  Criminal  Procedure  Code  contains  provisions  on  procedural  rights  regarding 
injured  party  and  witnesses.  However,  the  legal  framework  remains  to  be  completed,  in 
particular  when  it  comes  to  free  legal  aid,  and  the  implementation  of  procedural  safeguards 
fully assessed to ensure an effective protection system, supported by adequate staff, training 
and  infrastructure.  Support  and  protection  for  victims  of  crime  is  not  in  line  with  EU  rules, 
and effective mechanisms for protecting victims’ rights are lacking.  

The legal framework for the protection of minorities and cultural rights is in place. Serbia is a 
party  to  the  Framework  Convention  on  National  Minorities.  The  legislation  is  being 
implemented  most  effectively  in  the  Autonomous  Province  of  Vojvodina.  It  needs  to  be 
further  stepped  up,  particularly  in  other  parts  of  the  country.  Elections  to  the  National 
Minority  Councils  took  place  in  October  2014,  when  20  national  minorities  elected  their 
councils.  In  April,  the  Republican  National  Minority  Council  was  re-established.  A 
comprehensive revision of the Law on National Minority Councils to implement the relevant 

57 

 
decision of the Constitutional Court and to ensure it is in line with laws on the media, culture 
and education needs to be adopted. The State Fund for National Minorities is not operational 
yet. Effective functioning of local councils for inter-ethnic relations needs to be ensured. The 
legislation needs to be implemented consistently throughout Serbia, particularly in education, 
the use of languages, and access to media and religious services in minority languages. This 
should not affect learning of the official language, which is an important factor in the social 
inclusion of minorities. The public service broadcaster RTS needs to ensure more consistent 
access  to  information  in  minority  languages.  Following  privatisation,  public  broadcasting 
services  in  minority  languages  need  to  be  made  sustainable.  Representation  of  national 
minorities in public administration, particularly at local level, needs to be enhanced. Serbia is 
preparing  a  dedicated  action  plan  on  the  protection  of  national  minorities  throughout  the 
country by the end of 2015, as requested in the framework of chapter 23 negotiations. 

The  Autonomous  Province  of  Vojvodina  maintained  a  high  degree  of  protection  for 
minorities.  The  inter-ethnic  situation  remained  good  overall.  However,  in  October  2014 
following  an  incident  at  a  football  match  in  Belgrade  between  the  national  teams  of  Serbia 
and  Albania,  there  were  several  attacks  against  the  property  of  members  of  the  Albanian 
minority.  The  Provincial  Ombudsman’s  2014  annual  report  noted  that  the  law  enforcement 
authorities  seemed  to  have  failed  to  act  preventively.  Majority  of  cases  concern  general 
discrimination on the basis of ethnicity. 

Regarding  the  municipalities  of  Presevo,  Bujanovac  and  Medvedja,  the  situation  was 
stable overall. The dialogue between the central authorities and local ethnic Albanian leaders 
on  a  comprehensive  programme  of  integration  and  economic  recovery  has  not  resumed.  A 
more constructive cooperation of all stakeholders is needed. In order to address the inaccurate 
population  figures  resulting  from  the  ethnic  Albanians'  boycott  of  the  2011  census  and 
consequences on planning, the government decided to adopt an estimation of the population, 
with  the  help  of  independent international  experts  and  in  line  with  the  recommendations  by 
the  Advisory  Committee  of  the  FCNM.  The  government’s  Coordinating  Body  continued 
performing its activities efficiently. Its role should be supported. In October 2014, the fourth 
generation of students was enrolled in the Department of Economics in Bujanovac and new 
scholarships  were  provided  for  students  from  Presevo  and  Bujanovac  studying  at  the 
University of Novi Sad. Investment and grants to local entrepreneurs continued to be provided 
by central government. The region remains severely underdeveloped and the ethnic Albanian 
population continues to be underrepresented in public services.  

The  situation  in  the  Sandzak  area  was  mostly  stable.  The  new  Bosniak  National  Minority 
Council  was  elected  and  started  work,  thus  resolving  a  long-standing  problem.  A  more 
constructive cooperation of all stakeholders is needed on the ground. The Bosniak community 
continues  to  be  underrepresented  in  the  local  administration,  judiciary  and  police.  The  area 
remains  among  the  most  underdeveloped,  with  a  high  unemployment  rate  and  a  lack  of 
adequate infrastructure and investment.  

The adoption of a new Roma strategy and action plan remains outstanding. The third Roma 
seminar,  held  in  June,  concluded  that  good  progress  had  been  made  with  regard  to  civil 
registration but in all other areas progress was slow and uneven. The subsequent registration 
of undocumented citizens led to a fall in the number of ‘legally invisible persons’. Systemic 
solutions  have  been  found  to  prevent  future  reoccurrence  of  such  cases.  Further  efforts  are 
needed to ensure that children born to undocumented parents are registered immediately. The 
Roma  continue  to  face  difficult  living  conditions  and  discrimination  in  access  to  social 
protection,  health,  employment  and  adequate  housing.  Compliance  with  international 
standards on forced eviction and relocation still needs to be ensured. Legalisation of informal 
Roma  settlements  should  be  considered  as  a  way  of  enabling  them  to  be  regulated  and 

58 

 
covered by urban planning. Additional teaching assistants and health mediators are needed to 
address  the  high  school  drop-out  rate  among  Roma  children  and  poor  access  to  healthcare. 
Such  positions  should  be  included  in  the  national  qualifications  framework.  Measures  to 
address domestic violence in Roma families need to be stepped up.  

According to the UNHCR, there are around 35 259 people who became refugees refugees and 
203 140 internally displaced persons (IDPs) in Serbia as a result of the armed conflict in ex-
Yugoslavia during the 1990s, of whom approximately 90 000 with displacement related needs 
and without a durable solution. The closure of the 10 remaining ‘collective centres’ hosting 
227  refugees  and  495  IDPs  is  a  priority.  The  housing  situation  of  displaced  persons  has 
improved  slightly.  Many  refugees  and  IDPs  still  suffer  from  difficult  living  conditions, 
unemployment and poverty. Roma IDPs face double discrimination. The Law on Permanent 
and Temporary Residence needs to be implemented more consistently to allow IDPs without 
proper documentation to obtain basic rights. Serbia lacks a comprehensive strategy and action 
plan  for  resolving  the  protracted  displacement  situation  and  assisting  IDPs  with  finding 
durable solutions. 

5.24.  Chapter 24: Justice, freedom and security 

The EU has common rules for border control, visas, external migration and asylum. Schengen 
cooperation entails the lifting of border controls inside the EU. There is also cooperation in 
the  fight  against  organised  crime  and  terrorism,  and  judicial,  police  and  customs 
cooperation.   

There is some level of preparation in Serbia to implement the acquis on justice, freedom and 
security. In September 2015 the action plan required for the opening of rule of Chapter 24 was 
successfully  finalised.  Some  progress  was  made,  particularly  in  areas  such  as  the  fight 
against terrorism and drugs. Serbia is on the transit route for mixed migration of persons in 
need of protection and economic migrants via Turkey and Greece, towards northern Europe. 
The volume of mixed migration increased dramatically in the last year, weighing heavily on 
the asylum and migration framework, which is generally weak. Serbia is actively involved in 
international and regional police and judicial cooperation. In the coming year, Serbia should 
in particular: 

→  in  close  cooperation  with  EU  Member  States,  continue  its  constructive  approach  in 
providing  urgent  respond  to  the  migratory  crisis  situation  and  significantly  strengthen 
migration  management  and  asylum  policies,  with  a  specific  focus  on  identifying  people  in 
need of protection; 

→  make  significant  further  efforts  to  tackle  the  phenomenon  of  unfounded  asylum 
applications lodged by Serbia’s nationals in EU Member States; 

→ establish a track record of proactive investigation, prosecution, final conviction and asset 
confiscation  in  cases  of  organised  crime,  including  money  laundering,  and  smuggling  of 
people. 

(See also the specific recommendations on the fight against organised crime in section 2.3.) 

Legal and irregular migration 

Serbia should be commended for its constructive approach in dealing with the migration crisis 
until now. Given its geographical location at the EU external borders, Serbia faces increasing 
mixed  migration  flows.  The  management  of  these  flows,  as  well  as  ensuring  borders 
surveillance,  is  a  considerable  challenge  for  the  Serbian  administration.  As  an  immediate 
response to the crisis, Serbia made a substantial effort to ensure that third country nationals 
receive  shelter  and  humanitarian  supplies  with  EU  and  international  support.  A  one-stop 

59 

 
centre in Preševo as well as  refugee aid centers were established, close to the borders with the 
former Yugoslav Republic of Macedonia, Hungary and Croatia. In June, a working group on 
mixed migration flows was set up to elaborate a needs assessment. There has been a marked 
rise in criminal charges for human smuggling. In June, Serbia arrested nine customs officials 
suspected of letting people illegally cross the border with Hungary. 549 criminal charges were 
filed against 816 persons facilitating irregular migration. In the first half of 2015, 5 576 cases 
of  illegal  entry  were  detected  at  the  common  border  with  the  former  Yugoslav  Republic  of 
Macedonia,  of  which  98 %  were  detected  by  Serbian border  guards. The implementation of 
the  readmission  agreement  with  the  EU  resulted  in  2014  in  the  return  of  6 962  people  to 
Serbia  (compared  with  6 239  in  2013).  Reception  and  accommodation  capacity  needs  to  be 
upgraded  and  adapted  to  increasing  needs.  Efforts  are  required  to  ensure  that  sufficient  and 
well-trained  staff  both  at  central  and  local  level  can  respond  to  the  challenges  and 
consequences of growing migratory pressure. Particular attention should be given to the needs 
of  minors  and  vulnerable  groups.  Better  coordination  is  required  among  all  institutions 
involved  in  tackling  irregular  migration.  Legislation  on  legal  migration  needs  to  be  aligned 
with the acquis. 

Asylum 

In September, the Serbian government adopted a "Response plan in the case of mass influx of 
migrants",  which  aims  at  managing  flows  of  third  country  nationals  who  intend  to  seek 
asylum  in  the  EU  or  in  Serbia.  Serbia's  current  accommodation  capacity  stands  at  810  beds 
and  through  the  implementation  of  the  plan  could  be  extended  substantially.  In  January  the 
Asylum  Office  was  set  up  as  a  separate  civilian  unit  within  the  border  police  directorate.  It 
will  be  responsible  for  determining  refugee  status  in  the  first  instance.  Up  to  29  staff  are 
planned with 19 positions occupied..  

In  2014,  Serbia  faced  some  16 500  intentions  to  apply  (compared  with  5 065  in  2013),  but 
only  some  1 400  people  were  effectively  registered  for  asylum  and  400  submitted  an 
application.  Only  18  interviews  were  conducted  and  14  decisions  taken,  resulting  in  8 
rejections, 1 person granted recognition of refugee status and 5 people granted other forms of 
protection.  From  January  2015  to  September  2015, 169  156  migrants  were  registered  when 
transiting through the territory of the Republic of Serbia. Only 546 applied for asylum. In the 
same  period,  16  persons  got  asylum  and  14  subsidiary  protection.  28  received  a  negative 
decision.  

There  is  an  urgent  need  for  short-term  measures  to  improve  the  processing  of  applications 
including the establishment of a protection-sensitive screening mechanism within the asylum 
procedure  aimed  at  distinguish  between  third  country  nationals  and  persons  in  need  of 
international  protection  and  increase  accommodation  capacity.  Comprehensive,  overarching 
reform is urgently needed to rationalise the whole asylum system and bring it into line with 
EU  acquis  and  international  standards.  Serbia  needs  enough  well-trained  staff  to  handle  the 
increasing  number  of  applications.  Closer  cooperation  between  the  asylum  bodies  and  the 
border police is necessary. Allegations of corrupt practices and activities by organised crime 
groups involved in people smuggling continue to be made.  

Visa policy  

Interconnection  of  the  integrated  Serbian  Visa  Information  System  with  diplomatic  and 
consular missions and other relevant databases has yet to be completed. The list of countries 
for which visas are required has not been fully aligned with the acquis. On implementation of 
the  visa-free  regime  with  the  EU,  Serbia  continued  to  take  measures  to  address  the 
phenomenon  of  unfounded  asylum  applications  lodged  by  Serbian  nationals  in  EU  Member 
States and Schengen associated countries. Border controls and surveillance were stepped up 

60 

 
and 12 criminal charges for facilitating the abuse of the right to asylum in a foreign country 
were filed. The high number of unfounded asylum applications filed by Serbian citizens in EU 
Member States and Schengen-associated countries continues to be a problem as the total share 
of applications from Serbian citizens to the top five targeted destinations in  2014 is close to 
44% (around  18  847  out  of  the  total  42 840). Serbia continues to cooperate on measures to 
reduce the number of unfounded asylum claims, partly through operational cooperation with 
Member States and awareness-raising campaigns. Both operational checks on tourist agencies 
and  transport  companies  and  border  control  and  surveillance  were  improved.  Policies  to 
improve  the  social  and  economic  inclusion  of  the  most  vulnerable  groups  of  the  population 
most likely to migrate, in particular Roma, need to be stepped up and systematically funded in 
order  to  have  a  practical  impact  on  the  situation,  albeit  in  the  medium  to  long  term.  The 
capacity and resources to allow returnees to reintegrate remain limited. 

Schengen and external borders  

Serbia  continued  to  improve  infrastructure  and  equipment  at  border  crossing  points.  In 
January a risk analysis unit was set up in the border police directorate with a total projected 
staff of 14 (currently 12). It remains to be adequately staffed to become operational. In March, 
a  new  head  of  the  border  police  was  appointed,  after  an  eight-month  gap.  Coordination 
between  various  border  agencies  needs  to  be  improved.  A  new  Integrated  Border 
Management (IBM) strategy, in line with the EU concept, remains to be adopted. Measures to 
prevent corruption include shift rotations of border police officers carrying out border checks 
and border surveillance.  

Serbia  intensified  its  regional  cooperation  on  border  management.  However,  these  efforts 
were  overshadowed  by  the  very  sharp  increase  in  the  flows  of  third  country  nationals 
transiting  through  the  region.  The  Joint  Centre  for  Police  Cooperation  between  Bosnia  and 
Herzegovina,  Montenegro  and  Serbia,  in  Trebinje,  continued  to  work  with  liaison  officers 
from Bosnia and Herzegovina and Montenegro with a view to improving regional capacity to 
counter cross-border crimes and illegal migration. However, Serbia needs to urgently appoint 
a  liaison  officer.  An  agreement  with  Bosnia  and  Herzegovina  to  block  alternative  routes 
across  the  state  border  is  still  pending.  Cooperation  with  Montenegro  in  the  area  of  border 
management,  including  on  identification  of  unauthorised  border  crossing  places  needs  to  be 
stepped-up. Serbia continues to cooperate actively with Frontex.  

As  part  of  the  dialogue  on  the  implementation  of  the  integrated  border  management  (IBM) 
protocol,  Serbian  authorities  are  cooperating  on  technical  activities  related  to  setting  up  the 
six permanent IBM crossing points with Serbia/Kosovo. The first annual meeting on the rules 
for  travel  across  the  administrative  boundary  line  took  place  in  March.  In  April,  both  sides 
agreed  to  open  two  new  border  crossing  points  in  Kapi  and  Izvor.  In  February,  Serbia  and 
Kosovo began consultations on migratory flows. A second meeting was held in April. 

Judicial cooperation in civil and criminal matters  

Serbia needs to take measures allowing direct cooperation between Serbian and foreign courts 
and  centralising  the  receipt  of  requests  to  courts  for  international  judicial  cooperation. 
Additional  training  is  needed  to  improve  knowledge  of  judicial  cooperation  and  build  the 
necessary language skills. Specifically on judicial co-operation in criminal matters, Serbia 
has not yet concluded a cooperation agreement with Eurojust because of the delay in updating 
its legal framework for protection of personal data. As regards judicial co-operation in civil 
matters, Serbia has not yet acceded to the 1996 Hague Convention on Child Protection. 

61 

 
 
 
Fight against organised crime 

Track record 

In  the  reporting  period,  277  criminal  charges  were  brought  against  516  people  for  illegal 
crossing of the state border and people smuggling. In July 2015, an important drug lord was 
convicted to 20 years imprisonment, together with some associates. There remain indications 
that the network they belonged to, remains active in the smuggling of cocaine to Europe.  In 
2014,  2 138  criminal  charges  were  brought  for  drugs  offences.  From  January  to  May  2015, 
22 kg of heroine, 8 kg of cocaine, 202 kg of marijuana and 8 kg of hashish were confiscated. 
The  total  amount  of  heroin  seized  in  2014  (193 kg)  was  3.4  times  that  seized  in  2013 
(56.6 kg).  Twelve  organised  criminal  groups  involved  in  drug  trafficking  were  dismantled.. 
Seven criminal charges on suspicion of human trafficking (involving 14 perpetrators and 16 
victims)  were  filed  from  January  to  April  2015.  In  2014,  98  final  judgments  on  human 
smuggling, convicting 142 people, were issued. 

Precautionary freezing of assets at an early stage of an investigation is rarely applied. Assets 
thus often disappear, which results in a poor track record of confiscating criminal assets at the 
time  of  final  conviction.  The  number  of  final  convictions  for  organised  crime  activities 
remains low compared to the estimated scale of the regional and domestic criminal market. A 
track  record  of  proactive  investigation  remains  to  be  established.  Final  convictions  and 
effective dismantling of criminal organisations remain rare. 

Institutional and operational capacity 

Operational  cooperation  at  bilateral  and  regional  level  further  improved.  In  March,  a  first 
meeting  between  the  police  directors  of  Serbia  and  Kosovo  took  place  with  the  support  of 
EULEX. The police has access to Interpol databases of wanted persons, stolen motor vehicles, 
documents and works of art. Cooperation with Europol has intensified but the liaison officer 
in  The  Hague  has  not  been  appointed  yet.  Negotiations  on  cooperation  with  the  European 
Police  College  (CEPOL)  were  finalised  in  April  and  a  working  arrangement  is  under 
preparation. 

Three  specialised  units,  for  crime  analysis;  terrorism  and  extremism;  and  drug  prevention, 
addiction and repression need to be adequately staffed, trained and equipped. Further efforts 
are  needed  to  reform  the  organisation  of  the  police.  The  level  of  inter-agency  cooperation, 
information  flow  and  exchange  between  law  enforcement  agencies  needs  to  be  further 
improved. A central criminal intelligence system and harmonised statistical data have yet to 
be set up. Cooperation between the police and the special prosecutor’s office for cybercrime is 
improving.  The  High-Tech  Crime  Unit  remains  understaffed,  considering  the  wide  range  of 
complex  criminal  activity  it  is  expected  to  investigate.  The  accreditation  process  for  the 
forensic institute of the Serbian police was completed in November 2014. New DNA and drug 
chemistry laboratories became operational in the Serbian National Crime Technical Centre. 

Very few cases of trafficking in human beings have been successfully investigated, despite 
Serbia  being  a  source,  transit  and  destination  country  for  trafficked  people  and  facing 
increased  migratory  pressure.  The  draft  anti-trafficking  strategy  and  action  plan  are  still 
pending  adoption.  A  comprehensive,  multidisciplinary  and  victim-oriented  approach  to 
human  trafficking  has  yet  to  be  developed.  While  Serbia  has  a  coordinator  for  operational 
cooperation  in  the  Ministry  of  Interior,  it  has  yet  to  appoint  a  national  rapporteur  on 
combating human trafficking in line with the acquis. The Centre for Protection of Victims of 
Human  Trafficking  needs  to  strengthen  its  capacity.  No  state-run  emergency  shelter  is 
available  for  the  victims  of  trafficking  and  there  is  no  appropriate  centre  for  child  victims. 
Adequate  funding  needs  to  be  earmarked  for  assisting  victims  of  human  trafficking;  the 

62 

 
relevant  fund  has  not  yet  been  set  up.  There  is  a  need  to  further  improve  identifying, 
protecting and assisting victims of trafficking. 

On  money  laundering,  Serbia’s  capacity  to  run  complex  financial  investigations  alongside 
criminal  investigations  needs  to  be  stepped  up.  Law  enforcement  agencies  and  prosecution 
services do not have access to relevant databases in line with data protection rules and inter-
agency  cooperation.  The  directorate  that  manages  seized  assets  lacks  staff  and  capacity, 
including storage capacity. An asset recovery office in line with the acquis still needs to be set 
up. In order to handle money laundering and financial crime cases more efficiently, exchange 
of data and pro-active co-operation between relevant agencies needs to be improved.  

Legal framework 

The  ministry  has  started  to  reform  its  human  resources  system.  This  should  contribute  to 
limiting the exposure of police staff to politically motivated decisions. The legal framework 
for police cooperation needs to be further aligned with the acquis. The Public Prosecutor leads 
both  the  pre-investigation  and  investigation  phases  of  cases.  It  is  important  to  streamline 
cooperation  between  the  prosecution  and  the  police  and  improve  the  monitoring  and 
performance of criminal justice. Hence, a number of shortcomings in the investigation phase 
need  to  be  addressed  through  amendments  to  the  Criminal  Procedures  Code,  notably  as 
regards the timeframe and arrangements for using special investigative measures. The police’s 
dependence on the security and intelligence agencies to carry out certain special investigative 
measures  in  criminal  investigations  remains  a  matter  of  serious  concern.  The  investigative 
powers of the border police and customs remain limited. The law on confiscation of criminal 
assets needs to be aligned with the acquis. 

Strategic framework 

In December, Serbia adopted a national strategy for the fight against money laundering and 
terrorism  financing.  A  financial  investigation  strategy  was  adopted  in  May.  The  draft  anti-
trafficking  strategy  and  action  plan  are  still  pending  adoption.  Serbia  has  no  strategy  on 
cybercrime  and  has  not  yet  developed  the  capacity  to  make  a  strategic  analysis  of  the 
organised  crime  situation  on  its  territory  based  on  Europol’s  methodology  for  Serious  and 
Organised  Crime  Threat  Assessment  (SOCTA).  Intelligence-led  policing  based  on  crime 
mapping and systematic use of threat assessments has not been developed. Fighting organised 
crime and corruption remains fundamental to countering criminal infiltration of the political, 
legal and economic systems. 

Fight against terrorism  

In October amendments to the Criminal Code were adopted, criminalising the phenomenon of 
foreign  terrorist  fighters  in  line  with  UN  Security  Council  Resolution  2178  (2014).  In  the 
reporting period, 21 people were convicted for terrorism. In January, a coordination group for 
the fight against terrorism, prevention of radicalisation and extremism was set up. A new Law 
on  Limiting  the  Disposal  of  Assets  to  Prevent  Terrorism  was  adopted  in  March.  A  single 
national  database,  more  efficient  procedures  for  data  exchange  and  better  inter-agency 
operational cooperation are still needed. Efforts need to be enhanced to identify, prevent and 
disrupt the flow of foreign terrorist fighters traveling to conflict areas such as Iraq and Syria. 

Cooperation in the field of drugs  

Good international and regional cooperation continued on drugs, in particular with the seizure 
of 168 kg of marijuana in a joint operation with the former Yugoslav Republic of Macedonia. 
The national drug strategy and action plan were approved in December. Appropriate financial 
resources  are  needed  to  ensure  it  is  properly  implemented.  The  Prosecutor’s  Office  for 

63 

 
Organized  Crime  initiated  several  investigations  for  the  criminal  offense  of  unauthorized 
production and trafficking of narcotic drugs and criminal alliance. The national focal point for 
cooperation with the European Monitoring Centre for Drugs and Drug Addiction was moved 
from the Public Health Institute to the Ministry of Health. Transfer of  know-how following 
this  move  should  be  ensured.  At  interdepartmental  level,  there  is  a  Commission  for 
Psychoactive  Controlled  Substances  and  the  Office  for  Combating  Drugs,  which  is  still  not 
operational. As part of the national drug strategy, a clear definition of the responsibilities and 
powers  of  the  various  institutions  as  regards  inter-agency  cooperation  is  needed.  The 
establishment  of  an  early  warning  system  is  pending.  Serbia  will  need  to  ensure  proper 
staffing of and smooth exchange of data between the various bodies and departments active in 
this  area.  The  lack  of  secure  storage  of  seized  drugs  and  precursors  prior  to  destruction 
remains an issue of concern. An appropriate process for the destruction of precursors has yet 
to be set up.   

Customs cooperation  

Regional  and  international  customs  cooperation  continued,  including  through  joint  actions 
(see also Chapter 29 — Customs union). Serbia  needs to ensure that  the IT strategy  for the 
customs  administration  is  fully  aligned  with  EU  legislation  on  the  use  of  technology  for 
customs purposes. The investigative powers of customs officers and their ability to exchange 
data with other agencies at the border need to be broadened. 

For measures against counterfeiting of the euro, see Chapter 32 — Financial control. 

5.25.  Chapter 25: Science and research 

The  EU  provides  significant  support  to  research  and  innovation.  All  Member  States  can 
benefit from the EU’s research programmes, the more so where there is scientific excellence 
and solid investment in research. 

Serbia is at good level of preparation in science and research. Some progress was made in 
improving  the  framework  for  science,  research  and  innovation.  In  the  coming  year,  Serbia 
should in particular: 

→  take  actions  to  modernise  organisation  of  research  and  innovation  in  line  with  the 
European Research Area and Innovation Union; 

→ stimulate cooperation between industry and academia and increase level of investment in 
research. 

Serbia  participates  in  EU  research  and  innovation  programmes  Horizon  2020.  It  has  taken 
measures  to  ensure  good  administrative  capacity  notably  established  a  good  network  of 
National Contact Points (NCPs), nominated representatives in the Horizon 2020 Programme 
Committees  and  organised  at  regular  intervals  workshops  and  information  days  on  Horizon 
2020. Based on first Horizon 2020 statistics, participation is good. Serbia obtained for the first 
time  a  grant  from  the  European  Research  Council  (ERC)  which  demonstrates  scientific 
excellence.  Further  efforts  remain  necessary  in  particular  to  increase  participate  in  research 
and innovation actions on societal challenges and involve private sector in research. 

On the European Research Area, limited policy actions have been taken in the last year. In 
2014, the level of investment in research decreased to 0.78% of GDP compared to almost 1 % 
in  2013.  The  level  is  now  substantially  lower  than  Serbia's  own  national  target.  Serbia 
nominated its representative in the European Research Area Committee (ERAC) and related 
ERA advisory bodies and attends regularly the meetings.  

64 

 
On measures for the Innovation Union, the Serbian Innovation Fund continues to be active, 
and has successfully implemented 55 projects. 

5.26.  Chapter 26: Education and culture 

The  EU  supports  cooperation  in  education  and  culture  through  funding  programmes  and 
through  the  open  method  of  coordination.  Member  States  must  also  prevent  discrimination 
and facilitate education of children of EU migrant workers. 

Serbia is at good level of preparation in the area of education and culture. Some progress 
was  made  with  the  adoption  of  an  action  plan  for  the  implementation  of  the  education 
strategy. In the coming year, Serbia should in particular: 

→ start preparations for establishment of a national Erasmus+ agency; 

→ implement the action plan with education reforms according to schedule. 

In education, training and youth, Serbia continued to participate successfully in Erasmus+. 
Preparations for the opening of a National Agency, which is needed for full participation in 
Erasmus+, have not yet begun.  

Serbia  adopted  an  action  plan  for  the  new  education  strategy  in  January  2015.  However, 
several measures have been delayed and need to be stepped up. Additional investment (human 
and  infrastructure)  in  education  should  target  pre-school  and  basic  education  levels.  Pre-
school education benefits about 50% of children under 6 years whereas the EU target for 2020 
is 95%. Serbia, at 8.7% , has already met the EU 2020 target on early school leavers (<10%). 
The reforms for the training of primary and secondary school teachers should be stepped up 
and focused on student-centred teaching, developing basic and transversal skills in students.  

Serbia  ranked  43  out  of  65  in  the  2012  PISA  evaluation.  There  was  some  progress  in 
reforming the vocational education and training system to better meet the needs of the labour 
market.  The  National  Qualifications  Framework  needs  to  be  finalised  and  cross-referenced 
with the European qualifications Framework. The ongoing reform of higher education needs 
to  put  particular  emphasis  on  the  relevance  of  its  study  programmes,  as  the  unemployment 
rate  for  graduates  with  tertiary  education  (aged  19-24)  stands  at  40 %  and  emigration  of 
young and skilled people is high. The lack of an efficient system for the recognition of foreign 
diplomas continues to be a serious impediment to graduates’ further study and employment.   
A  new  strategy  on  youth  2015-2025  and  action  plan  were  adopted  in  February.  Serbia 
contributed to the new EU Youth report. It participates very actively in the Erasmus+ Youth 
in Action strand.  

On  culture,  Serbia  ratified  the  European  Convention  for  the  Protection  of  Audiovisual 
Heritage in May. It is participating successfully in the Culture sub-programme of the Creative 
Europe programme and in Europe for Citizens. Serbia has made some progress in aligning its 
legislation  in  the  audio-visual  media  sector  in  order  to  be  able  to  participate  in  the  MEDIA 
sub-programme of Creative Europe. 

5.27.  Chapter 27: Environment and climate change 

The  EU  promotes  strong  climate  action,  sustainable  development  and  protection  of  the 
environment. EU law contains provisions addressing climate change, water and air quality, 
waste  management,  nature  protection,  industrial  pollution,  chemicals,  noise  and  civil 
protection.  

Serbia is at an early  stage of  preparation in the areas of environment and climate change. 
Some  progress  was  made  in  further  aligning  policies  and  legislation  with  the  environment 
and climate change acquis and civil protection in particular as Serbia submitted its intended 

65 

 
nationally  determined  contribution  to  the  expected  2015  Paris  climate  agreement.  In  the 
coming year, Serbia should in particular: 

→  finalise  the  setting  up  of  systematic  strategic  planning,  and  start  implementing  the 
country's contribution to the expected 2015 Paris Climate Agreement; 

→  consolidate  its  strategic  planning  and  administrative  capacity  to  further  align  its  policies 
with  EU  policies,  and  accompany  this  with  substantial  investment  linked  to  strategic 
priorities; 

→ take measures to set up an effective and permanent financing system for environment and 
climate action, including a stable financing of essential basic services, such as environmental 
monitoring; 

In  the  area  of  the  environment,  no  progress  can  be  reported  on  horizontal  legislation. 
Additional  efforts  are  still  required  to  improve  reporting  from  agricultural  and  mining 
operators. Serbia maintains a high level of timely and complete data delivery to the European 
Environment  Agency  in  the  European  Environment  Information  and  Observation  Network 
(EIONET). It needs to boost capacity for effective public participation and consultation in the 
environmental decision-making process, particularly at local level.      

The annual update on air quality showed that seven of Serbia’s eight urban agglomerations 
exceed the margin of tolerance of several pollutants. The air quality plan for Belgrade remains 
to  be  adopted  and  air  quality  planning  for  the  remaining  agglomerations  needs  to  be 
accelerated. Work on a national emission reduction plan for the power sector was completed 
but  remains  to  be  adopted.  Serbia  missed  its  Energy  Community  deadline  to  implement  the 
1999 Directive on Sulphur Content in Fuels.   

On  waste  management,  work  started  on  the  regional  waste  management  centre  for  the 
Subotica  district,  which  will  serve  approximately  280 000  people.  Non  acquis  compliant 
landfills  need  to  be  closed  more  quickly.  A  regulation  on  the  plan  for  reducing  packaging 
waste  2015-2019  was  adopted  in  December.  Additional  efforts  are  needed  to  meet  relevant 
targets  for  glass-  and  metal-containing  packaging  waste.  More  national  investment  and 
improvements  to  address  systemic  weaknesses  in  the  implementation  of  environmental 
projects  will  be  needed  if  management  of  all  special  waste  streams  is  to  comply  with  EU 
requirements. Full alignment with the Waste Framework Directive remains to be achieved and 
enforcement of waste legislation needs to improve. 

As regards water quality, no progress can be reported. A national strategy and action plan on 
water  protection  have  yet  to  be  adopted.  Priority  should  be  given  to  aligning  the  legislation 
with the acquis and implementing the code of good agricultural practice. 

As  regards  nature  protection,  the  implementing  provisions  of  Annex  VI  of  the  Habitats 
Directive have been included  in  Serbian  fisheries legislation  in October 2014. To overcome 
the  current  standstill  in  Natura  2000,  the  institutional  framework  for  designating  and 
managing  future  Natura  2000  sites  needs  to  be  streamlined  and  adequately  resourced.  The 
legal  base  and  administrative  capacity  for  enforcement  of  the  Convention  on  International 
Trade  in  Endangered  Species  of  Wild  Fauna  and  Flora  (CITES)  needs  to  be  improved. 
Investments in hydropower need to comply with nature protection obligations. 

As regards industrial pollution and risk management, amendments in March to the Law on 
Integrated Pollution Prevention and Control defer the deadline by which existing installations 
must  hold  a  valid  permit  from  2015  to  2020.  Serbia  has  not  yet  addressed  the  acquis 
requirement  of  either  a  fully  integrated  permitting  process  covering  all  areas  or  formal 

66 

 
consultation  between  permitting  authorities.  Capacity  constraints  hamper  progress  in 
implementing the legislation on prevention of chemicals accidents. 

As  regards  chemicals  management,  March  amendments  to  the  Law  on  Chemicals  and  the 
Law on Biocides provide for a clear delineation of previously overlapping inspection remits 
between  environment,  market  and  sanitary  inspections,  and  veterinary  inspections  for 
biocides. Capacity for environmental inspection is adequate. 

In  civil  protection,  disaster  risk  reduction  and  disaster  management  need  to  be  treated  as  a 
matter  of  priority,  particularly  in  the  light  of  the  severe  floods  in  2014.  Serbia  became  the 
33rd participating state in the EU Civil Protection Mechanism in July. Serbia needs to ensure 
that  the  Niš  Humanitarian  Centre  does  not  duplicate  the  role  of  the  EU  Civil  Protection 
Mechanism in the region. Serbia will also need to accomplish a countrywide risk assessment 
and assessment of its risk management capabilities. 

On  climate  change,  work  on  a  comprehensive  countrywide  climate  policy  and  strategy 
commenced.  It  needs  to  become  consistent  with  the  EU  2030  framework  and  it  should  be 
well-integrated  into  all  relevant  sectoral  policies.  Serbia  submitted  its  intended  nationally 
determined contribution (INDC) to the expected 2015 Paris Climate Agreement in June. The 
INDC is an economy-wide emissions reduction target of 9.8% by 2030 in comparison to 1990 
levels,  and  it  also  covers  aspects  related  to  adaptation  to  climate  change.  Legislation  on 
greenhouse  gases  emissions  monitoring,  reporting  and  verification  for  aligning  with  the  EU 
Emissions  Trading  System  was  prepared  for  adoption.  Activities  pertaining  to  the 
establishment  of  a  monitoring  and  reporting  system  for  greenhouse  gases  emissions  in  line 
with  EU  Monitoring  Mechanism  legislation  kicked  off  in  May  2015.  Serbia  moreover 
implemented 
freeze 
hydrochlorofluorocarbons (HCFC) consumption at  the baseline  level in 2013.  Serbia started 
the preparation of a National Adaptation Plan. The National Committee for Environment and 
Climate  Change  was  established  in  November  2014.  Considerable  strengthening  of 
administrative capacities is needed as well as awareness raising activities. 

the  Montreal  Protocol, 

required  measure  of 

first 

the 

to 

5.28.  Chapter 28: Consumer and health protection 

EU rules protect consumers in relation to product safety, dangerous imitations and liability 
for  defective  products.  The  EU  also  ensures  high  common  standards  for  tobacco  control, 
blood, tissues, cells and organs, patients’ rights and communicable diseases.  

Serbia  is  moderately  prepared  in  consumer  and  health  protection.  Some  progress  was 
made,  notably  with  the  establishment  of  the  Consumer  Council.  In  the  coming  year,  Serbia 
should in particular: 

→ strengthen the administrative capacity of relevant authorities for consumer protection; 

→ work on strengthening the overall financial sustainability of the public health system. 

On  consumer  protection,  in  December,  the  Consumer  Council,  was  set  up  to  encourage 
cooperation  between  consumer  protection  organisations.  The  National  Consumer  Complaint 
Register  is  operational,  but  not  publicly  accessible.  The  number  of  complaints  filed  by 
consumers  has  increased.  The  Rulebook  on  the  operation  of  alternative  dispute  settlement 
entities  was  adopted  in  August.  Cooperation  between  the  line  ministries  and  consumer 
organisations  needs  to  increase,  as  does  cooperation  between  consumer  protection 
organisations.  The  administrative  capacity  of  the  authorities  for  consumer  protection  and 
market surveillance needs to be further strengthened.  

On product safety-related issues, the new law on Safety Items of General Use has not been 
adopted.  Alignment  with  the  General  Product  Safety  Directive  should  be  further  improved 

67 

 
through  amendments  to  the  law  on  product  safety.  On  non-safety-related  issues,  the 
amended  Law  on  Protection  of  Users  of  Financial  Services  was  adopted  in  January,  further 
aligning legislation with the acquis. 

In the area of public health, the newly established e-Health Unit in the Ministry of Health is 
not  operational.  The  EU-funded  centralised  electronic  health  record  system  is  not  yet  fully 
integrated.  A  new  law  on  health  records  was  adopted  in  November.  The  poor  financial 
situation of the public health fund puts the sustainability of the sector in question. Shortages 
of medical and administrative staff in primary healthcare centres pose difficulties, especially 
in  rural  areas.  Greater  human  resource  management  and  organisational  capacity  is  needed, 
and a national plan for human resources in the health sector needs to be implemented. New 
programmes  of  specialisation  and  professional  development  should  be  developed.  No 
progress was made in the preparation of a new strategy on tobacco control. 

On  communicable  diseases,  surveillance  and  response  capacity  remain  limited  and  require 
modernisation.  Further  alignment  of  the  national  legislation  with  the  acquis  is  required.  A 
centralised health information and communication system has to be developed. More attention 
needs to  be given to  effective,  sustainable financing of disease-specific strategies, including 
the  national  HIV/AIDS  strategy  and  awareness-raising,  notably  on  the  importance  of  child 
vaccination.  Additional  work  is  needed  in  particular  on  surveillance  of  antimicrobial 
resistance and inter-sectoral cooperation. 

On  blood,  tissues,  cells  and  organs,  alignment  with  the  acquis  and  development  of 
administrative capacity are still at an early stage.  The administrative and technical capacity of 
the Directorate for Biomedicine needs strengthening and a legislative framework that outlines 
its competences and responsibilities in terms of oversight of the sector needs to be established. 
Overall,  EU  based  quality  and  safety  standards  and  proper  inspection  services  of  the  sector 
need to be developed.  

A  number  of  rulebooks  were  adopted  in  the  field  of  pharmaceuticals,  in  particular  the 
rulebook  on  conditions  for  importing  medical  products  and  devices  lacking  marketing 
authorisation. Community-based mental health services still need to be developed. 

On  drug  abuse  prevention,  the  government  office  for  the  fight  against  drugs  is  not  yet 
operational.  In  December,  the  government  adopted  the  strategy  for  drug  abuse  suppression 
(2014-2021)  and  an  action  plan  (2014-2017).  On  rare  diseases,  the  Law  on  the  Prevention 
and  Diagnosis  of  Genetic  Diseases,  Genetic  Anomaly  and  Rare  Diseases  was  adopted  in 
January. Continued efforts are needed to facilitate implementation. 

5.29.  Chapter 29: Customs union 

All Member States are part of the EU customs union and follow the same customs rules and 
procedures.  This  requires  legislative  alignment  as  well  as  adequate  implementing  and 
enforcement capacity and access to the common computerised customs systems. 

Serbia is moderately prepared for the customs union. Good progress was made on transit, 
with  the  adoption  of  the  amended  customs  law.  In  the  coming  year,  Serbia  should  in 
particular: 

→  upgrade  or  renew  the  customs  declaration  processing  system  and  integrate  the  risk 
management; 

→ enhance and modernise management of the customs administration.  

As regards customs legislation, an amended customs law was adopted in March, introducing 
a legal basis for use of the EU’s new computerised transit system (NCTS). The customs tariff 

68 

 
has  been  aligned  with  the  2015  EU  Combined  Nomenclature.  Simplified  procedures  for 
express shipments have been introduced. However, the law on the customs administration has 
not  yet  been  adopted  and  legislation  on  cash  controls,  cultural  goods  and  duty  relief  on 
imports of new production equipment still needs to be aligned with the acquis. Legislation on 
customs-related  security  initiatives  has  yet  to  be  implemented.  As  of  February,  the  rules  of 
origin  under  the  Stabilisation  and  Association  Agreement  have  been  harmonised  with  the 
Convention on Pan-Euro-Mediterranean preferential rules of origin. 

The  customs  administration  continued  to  strengthen  its  administrative  and  operational 
capacity.  In  2014,  a  12 %  increase  in  customs  duty  collection  was  achieved.  At  unilateral 
basis, Serbia ratified the convention on the simplification of formalities in trade in goods and 
the  convention  on  a  common  transit  procedure  in  June  2015,  as  part  of  its  preparations  to 
accede to both conventions. The national NCTS is fully operational. A new centralised system 
for  the  management  of  bank  guarantees  is  operational.  The  customs  declaration  processing 
system was further upgraded. Strategic and modern management techniques, including quality 
assurance and change management, are lacking and the IT strategy needs to be updated. Work 
on setting up a functional, interconnected IT system progressed, but the IT division continues 
to lose competent staff.  

Risk management systems needs to be strengthened and harmonised. Integrity among customs 
officials  was  addressed  by  opening  99  disciplinary  procedures  against  113  customs  officers 
for  serious  breaches  of  official  duty.  The  customs  laboratory  needs  to  be  further  equipped. 
Serbia participates in the Customs 2020 programme. 

Customs procedures were implemented without incident at the crossing points between Serbia 
and Kosovo. Closing the illegal crossing roads / by-passes between Serbia and Kosovo would 
help reduce illegal trade and smuggling of petrol and other goods. 

5.30.  Chapter 30: External relations 

The  EU  has  a  common  trade  and  commercial  policy  towards  third  countries,  based  on 
multilateral and bilateral agreements and autonomous measures. There are also EU rules in 
the field of humanitarian aid and development policy.  

Serbia is moderately prepared in the area of external relations. Some progress was made, 
with Serbia joining the EU Civil Protection Mechanism. In the coming year, Serbia should in 
particular: 

→ stop applying safeguards on selected agriculture products, which are not justified under the 
Stabilisation  and  Association  Agreement  and  which  point  to  weaknesses  in  administrative 
capacity to implement trade policy. 

On  the  common  commercial  policy,  no  progress  was  made  with  Serbia’s  accession  to  the 
World Trade Organisation. WTO membership remains dependent on the adoption of a WTO 
and  EU  acquis-compliant  law  on  genetically  modified  organisms  and  on  the  completion  of 
market access negotiations with a number of WTO members. 

On  administrative  capacity,  a  formal  coordination  structure  for  trade  policy  issues  exists, 
consisting of relevant government services. In 2015, Serbia took safeguard measures on EU 
imports of milk, cheese, butter and pork. Consultations with the authorities on the justification 
for  these  measures  were  not  conclusive.  Serbia  should  therefore  discontinue  the  safeguard 
measures without delay and avoid applying such measures unless fully justified. The capacity 
to collect market statistics and consult stakeholders remains weak.  

The  government  updated  the  regulation  on  dual-use  goods  and  adopted  a  regulation  on 
customs control of exports and imports which could be used for capital punishment, torture or 

69 

 
other  degrading  treatment.  Serbia  would  benefit  from  joining  some  of  the  international 
regimes overseeing national export control systems, such as the Wassenaar Arrangement. 

As concerns bilateral agreements with non-EU countries, Serbia is still negotiating a free 
trade  agreement  with  Ukraine.  The  Serbian  parliament  ratified  a  bilateral  investment  treaty 
with Canada in April. 

Some progress has been made on development policy and humanitarian aid. Serbia acceded 
to the EU Civil Protection Mechanism in 2015 and set up a national system for disaster relief. 

5.31.  Chapter 31: Foreign, security and defence policy 

Member  States  must  be  able  to  conduct  political  dialogue  in  the  framework  of  the  foreign, 
security and defence  policy,  to  align with EU  statements, to take part in EU actions and to 
apply agreed sanctions and restrictive measures. 

Serbia is moderately prepared in foreign, security and defence policy. Some progress was 
made as Serbia continued to participate in civil and military crisis management missions. In 
the coming year, Serbia should in particular: 

→ improve alignment with EU declarations and Council decisions; 

→  adopt  legislation  on  the  tracking  mechanism  for  the  implementation  of  EU  restrictive 
measures. 

Regular  political  dialogue  between  the  EU  and  Serbia  on  foreign  and  security  policy 
continued.  On  the  common  foreign  and  security  policy  (CFSP),  a  law  on  implementation 
and tracking of the enforcement of restrictive measures has yet to be adopted. Serbia aligned 
itself,  when  invited,  with  26  out  of  40  EU  declarations  and  Council  decisions  (representing 
alignment of 65%, compared with 62 % reported last year). 

Serbia did not align itself with Council decisions, including EU restrictive measures on the 
illegal  annexation  of  Crimea  by  Russia  and  events  in  eastern  Ukraine.  Nor  did  Serbia  align 
itself with such Council decisions on Bosnia and Herzegovina, or Moldova. 

High-level contacts with Russia continued. Russia’s President visited Serbia in October 2014. 
Serbia’s  President  attended  the  celebration  of  Victory  Day  in  Moscow  and  members  of  the 
presidential  guard  participated  in  the  military  parade.  Serbian  and  Russian  airborne  forces 
held  joint  military  drills  in  November  2014  and  together  with  Byelorussians  forces  in 
September 2015. Contacts with Ukraine were also strengthened. Serbia continued to support 
the territorial integrity and sovereignty of Ukraine, including Crimea. Serbia's Prime Minister 
and the Ukrainian President exchanged invitations for reciprocal high-level visits and Serbia 
delivered  humanitarian  assistance  to  Ukraine  in  April.  In  July,  Serbia's  Minister  of  Foreign 
Affairs  visited  Kiev  in  his  capacity  as  OSCE  chairman  in  office.  Serbia  also  further 
strengthened its relations with China. China's Prime Minister visited Belgrade on the occasion 
of  the’16+1’  summit  of  the  states  of  Central  and  Eastern  Europe  and  China  in  December. 
Serbia's President attended the celebration of victory in World War II in Beijing together with 
the  Serbian  military,  who  participated  in  the  parade.  Serbia's  Prime  Minister  visited  the 
United States in June and September 2015. 

On  non-proliferation,  Serbia  ratified  the  UN  Arms  Trade  Treaty  in  October.  A  new  law 
providing  for  amnesty  and  legalisation  of  illegally  possessed  weapons  and  ammunition 
allowed  the  handing  over  of  more  than  2000  weapons,  160000  ammunitions  and  1000 
explosives,  while  nearby  4500  requests  for  registration  of  illegally  held  weapons  were 
submitted. Serbia adopted a new law on trade in arms and military equipment. Serbia’s 2008 
application to join the Wassenaar Arrangement on export controls for conventional arms and 

70 

 
dual-use  goods  and  technologies  is  pending.  Ratification  of  the  Additional  Protocol  to  the 
Nuclear Non-Proliferation Treaty is still pending.  

Serbia  continued  to  engage  actively  in  cooperation  with  international  organisations.  In 
January, it took the chair of the Organisation for Security and Cooperation in Europe (OSCE). 
Serbia  increased  its  cooperation  with  NATO  by  adopting  an  Individual  Partnership  Action 
Plan in December and expressed willingness to engage in regular political dialogue. 

Serbia  continued  to  participate  in  civil  and  military  crisis  management  missions  under  the 
common security and defence policy (CSDP), in particular EU NAVFOR Atalanta, EUTM 
Somalia, EUTM Mali and EUFOR RCA. In June, parliament approved Serbia’s participation 
in  EUMAM  RCA.  Furthermore,  Serbia  took  part  in  UN  operations,  in  particular  UNIFIL, 
UNOCI,  MONUSCO,  UNFICYP,  UNMIL,  UNTSO  and  MINUSCA.  It  also  approved 
Serbia’s  participation  in  the  following  UN  operations  for  2015:  MINURSO,  MINUSMA, 
UNMOGIP, UNMISS, UNAMID, UNISFA, UNDOF and MINUSTAH. 

5.32.  Chapter 32: Financial control 

Based  on  international  standards,  EU  financial  control  rules  promote  sound  financial 
management  of  national  income  and  expenditure.  They  also  protect  the  EU's  financial 
interests against fraud in the management of EU funds and the euro against counterfeiting. 

Serbia is moderately prepared in this chapter. Good progress was achieved in the past year, 
especially in external audit and protection of the EU’s financial interests. However, managerial 
accountability  principle  is  not  yet  fully  embedded  in  the  management  culture  and 
responsibilities  are not delegated. Significant efforts are  needed to implement public internal 
financial  control  (PIFC)  at  all  levels  of  administration  and  in  state-owned  enterprises.  In  the 
coming year, Serbia should in particular:  

→ improve implementing legislation for PIFC in line with the international standards; 

→  adopt  and  start  implementing  the  new  PIFC  strategy  and  systematically  ensure 
implementation of the government's recommendations on the annual report on PIFC; 

→ resolve impediments to further capacity development of the State Audit Institution. 

Public internal financial control 

Serbia  needs  to  adopt  a  new  public  internal  financial  control  strategy  and  action  plan  for 
2015-2020.  The  action  plan  is  to  be  embedded  in  the  wider  public  financial  management 
reform programme.  

The  Central  Harmonisation  Unit  (CHU)  should  ensure  a  consistent  approach  to  PIFC  by 
ensuring  better  coordination  and  guidance  for  public-sector  organisations.  The  CHU  has 
prepared an annual review of implementation of PIFC in the public sector since 2012, but it 
neither  provides  a  comprehensive  analysis  of  systemic  weaknesses  nor  proposes  corrective 
measures.  The  future  reporting  would  benefit  from  an  assessment  of  implementation  of  the 
PIFC strategy and the State Audit Institution’s findings on public-sector internal control. 

Financial management and control (FMC) in Serbia is regulated in line with the Committee 
of  Sponsoring  Organisations  (COSO)  model  and  the  guidelines  of  the  International 
Organisation  of  Supreme  Audit  Institutions  (INTOSAI).  The  implementing  legislation  still 
needs  to  be  strengthened  with  regard  to  managerial  accountability  and  management  of 
irregularities.  The  focus  is  still  on  the  legality  and  regularity  of  financial  transactions.  Risk 
management  is  not  applied  systematically  and  will  need  to  be  further  developed.  A  key 
challenge  is  also  to  ensure  appropriate  internal  control  in  smaller  institutions  and  at  local 

71 

 
level. Senior public-sector managers will need to be trained to understand their specific role 
and  responsibilities  on  FMC.  The  centralised  budget  inspection  function  still  needs  to  be 
regulated, taking account of compatibility with PIFC requirements 

Internal  audit  in  the  public  sector  is  still  developing  as  a  profession.  Further  efforts  are 
required  to  ensure  that  senior  management  understands  the  purpose  of  internal  audit  and 
actively supports it so that it can add value to the organisation. The situation across the public 
sector  is  diverse  in  terms  of  staffing,  functional  independence,  audit  planning,  management 
acceptance and types of engagement. Most of the central institutions have an audit charter and 
they  perform  audits  according  to  strategic  and  annual  audit  plans.  Many  auditors  are  still 
asked to perform additional duties that jeopardise their professional independence. The lack of 
fully developed internal control in the organisations limits the type and scope of internal audit 
engagements  and  their  added  value  to  management.  The  role  of  internal  audit  needs  to  be 
strengthened as well as management acceptance of this function. 

External audit 

The  constitutional  and  legal  framework  is  in  line  with  the  INTOSAI  standards.  The 
independence  of  the  State  Audit  Institution  (SAI)  is  anchored  in  the  Constitution.  The  SAI 
law provides for an exhaustive audit remit and guarantees the SAI’s functional, organisational 
and financial independence.  

On  institutional  capacity,  the  SAI  is  governed  by  a  Council,  which  has  five  members, 
including a president, nominated by parliament. The SAI has been allocated 431 posts in total. 
At the moment, the SAI has 251 employees, and 212 audit staff. Lack of adequate premises is 
preventing further recruitments and is limiting the SAI’s ability to fulfil its audit mandate. The 
responsibility  assigned  by  the  law  to  the  SAI  to  detect  errors  and  file  with  competent 
authorities misdemeanour, economic offence and criminal charges against individuals further 
constrains the SAI's limited audit resources. The SAI is implementing its 2011-2015 strategic 
development  plan.  The  SAI  has  an  internal  audit  function  with  one  auditor.  Remaining  two 
posts are to be filled to meet international standards. 

To  enhance  the  quality  of  audit  work  the  SAI  adopted  in  April  financial  and  performance 
audit manuals based on the INTOSAI’s professional standards (ISSAI) framework. In July it 
set up a specific sector for audit methodology and quality control. However, only one out of 
nine  staff  members  has  been  appointed  so  far.  Performance  audit  work  is  gradually 
expanding.  However,  parallel  reforms  are  needed  in  Serbia’s  overall  public  financial 
management  system  so  that  the  SAI  can  meaningfully  audit  economy,  efficiency  and 
effectiveness of government spending of public money. 

On  the  impact  of  audit  work,  the  SAI  has  proactively  contributed  to  improvement  of  the 
public-sector internal control standards in Serbia. The SAI’s annual audit report to parliament 
is discussed in the Committee for Finance, the Budget and Control of Public Funds. The SAI 
improved its cooperation with stakeholders and increased its communication with the media. 

Protection of the EU’s financial interests 

As  regards  acquis  alignment,  the  national  legislation  incorporates  the  main  components  of 
the Convention on the Protection of the EU’s Financial Interests and the three protocols to it, 
and  lays  down  the  obligation  to  safeguard  evidence.  The national  anti-fraud  coordination 
service (AFCOS), has been set up as an independent unit under the Minister of Finance, with 
an appropriate legal basis in the budget system law and Ministry of Finance Systematisation 
Act. AFCOS’s capacity has yet to be proven in practice. An AFCOS network involving other 
relevant authorities needs to be set up. No national anti-fraud strategy has been adopted yet. 

72 

 
On cooperation with the European Commission, a track record of reporting suspected cases 
of irregularity and fraud needs to be developed. A Cooperation Agreement with the European 
Anti-Fraud  Office  (OLAF)  has  yet  to  be  signed.  Serbia  has  set  up  basic  procedures  for 
reporting  of  irregularities  and  suspected  fraud  cases.  An  online  reporting  has  also  been 
established through the OLAF Irregularity Management System. 

Protection of the euro against counterfeiting 

The national legislation is aligned with the acquis, except for authentication of euro coins and 
handling of euro coins unfit for circulation. Serbia still needs to ratify the 1929 International 
Convention  for  the  suppression  of  counterfeiting  currency  and  to  implement  the  relevant 
parts.  Technical  analysis  of  counterfeit  money,  including  euro  banknotes  and  coins,  is 
performed by the National Bank, which has a dedicated department with 13 staff. Employees 
are regularly trained. The National Bank concluded formal cooperation agreements with the 
European Commission on coins in 2013 and with the European Central Bank on banknotes in 
2014.  Cooperation  has  started  with  neighbouring  countries.  At  national  level,  cooperation 
between  the  National  Bank  and  the  Ministry  of  Interior  has  been  formalised  on  transfer  of 
suspected counterfeit money. 

5.33.  Chapter 33: Financial and budgetary provisions 

Rules for funding the EU budget provide for contributions based mainly on the gross national 
income of each Member State as well as from value-added tax and customs duties. 

Serbia is at an early stage of preparation with regard to financial and budgetary provisions. 
No progress was made. In the coming year, Serbia should in particular: 

→  set  up  the  administrative  body  which  will  coordinate  various  institutions  involved  in  the 
own resources system. 

There were no developments in the fields of traditional own resources, the value added tax-
based  resource  or  the  gross  national  income-based  resource.  (For  progress  in  individual 
areas, see: Chapter 16 — Taxation, Chapter 18 — Statistics, Chapter 29 — Customs Union, 
Chapter 32 — Financial control).    

Regarding  administrative  infrastructure,  the  administrative  capacity  of  the  institutions  in 
charge  of  the  relevant  policy  areas  needs  to  be  further  strengthened  and  developed.  A 
coordinating  agency  tasked  to  ensure  the  correct  calculation,  accounting,  forecasting, 
collection, payment, control and reporting to the EU on the implementation of the EU’s own 
resources rules still needs to be set up. Despite some improvements in the reporting period, 
instruments  to  fight  and  reduce  tax  evasion,  fraud  and  the  informal  economy  need  to  be 
further strengthened. 

73 

 
 
Annex I - Relations between the EU and Serbia 

Within  the  framework  of  the  accession  negotiations,  the  analytical  examination  of  the  EU 
acquis,  was  successfully  completed  in  March  2015.  So  far,  14  screening  reports  have  been 
tabled in the Council. The action plans for chapters 23 and 24 have been finalised, sketching 
out a comprehensive reform agenda in the area of the rule of law. Further to its negotiating 
position on chapter 32 last year, Serbia was invited to table four other negotiating positions on 
chapters 5, 13, 20, 25 and 26. 

Serbia is participating in the Stabilisation and Association Process. Serbia has continued to 
build  a  track  record  in  implementing  the  obligations  of  the  Stabilisation  and  Association 
Agreement (SAA). The protocol on the adaptation of the SAA, to take account of Croatia’s 
accession to the EU, was ratified by Serbia in October 2014. Invoking Article 23 of the SAA, 
Serbia  took  safeguard  measures  against  imports  from  the  EU  of  dairy  and  pig  products  in 
February  and  June  2015.  Consultations  with  the  Serbian  authorities  on  the  justification  for 
such measures were inconclusive. Serbia should discontinue the safeguard measures as soon 
as  possible  and  should  avoid  applying  safeguards  unless  the  circumstances  can  be  fully 
justified. Further efforts are needed in particular in the area of state aid, especially to ensure 
the operational independence of the Serbian Commission for State Aid Control, to repeal the 
exemption  of  enterprises  under  privatisation  from  state  aid  rules  and  to  demonstrate  the 
compatibility  of  the  aid  given  to  the  steel  mill  Smederevo  with  Protocol  5  of  the  SAA. 
Regular political and economic dialogue between the EU and Serbia has continued. Meetings 
of the Stabilisation and Association (SA) Council and Committee took place in December and 
February, respectively. Seven sub-committee meetings were held, together with two meetings 
of  a  special  group  on  public  administration  reform.  The  SA  Parliamentary  Committee  met 
twice.  Serbia  continues  to  participate  in  the  multilateral  economic  dialogue  with  the 
Commission  and  EU  Member  States  to  prepare  for  participation  in  multilateral  surveillance 
and EU economic policy coordination. As part of the new approach to economic governance, 
Serbia adopted its first economic reform programme in March 2015 and has taken important 
steps  to  start  implementing  reforms  recommended  by  the  Economic  and  Financial  Affairs 
Council. 

Visa  liberalisation  for  citizens  of  Serbia  travelling  to  the  Schengen  area  has  been  in  force 
since December 2009. As part of the monitoring mechanism in place since visa liberalisation, 
the  Commission  has  been  regularly  assessing  the  progress  made  by  the  country  in 
implementing  reforms  introduced  under  the  visa  roadmap.  The  Commission  submitted  in 
February 2015 its post-visa liberalisation monitoring reports to the European Parliament and 
the Council. A readmission agreement between the European Union and Serbia has been in 
force since 2008. 

Under  IPA  II,  Serbia  continues  to  benefit  from  pre-accession  assistance  with  a  total 
indicative allocation of € 1.5 billion for the period 2014-2020. The IPA National Programme 
2014  amounts  to  €  115  million  overall,  with  most  of  the  funding  supporting  public 
administration  reform,  justice  and  home  affairs,  competitiveness,  education  and  energy. 
Following  the  floods  that  occurred  in  May  2014,  the  Commission  designed  a  special 
programme  on  flood  recovery  and  risk  management,  allocating  €  62  million  exclusively  to 
Serbia.  In  October  2015,  the  Commission  adopted  a  special  measure  on  strengthening  the 
response  capacity  of  the  most  affected  countries  in  the  Western  Balkans  to  cope  effectively 
with  increased  mixed  migration  flows  of  an  amount  of  €  10  million,  focusing  primarily  on 
Serbia and the former Yugoslav Republic of Macedonia. 

74 

 
 
In order to be able to implement in indirect management IPA II assistance the procedure for 
the entrustment of budget implementation tasks needs to be finalised. Urgent action is needed 
from Serbia to strengthen the Audit Authority, which remains critically weak. This led to the 
suspension of assistance and the freezing of payments to Serbia related to the implementation 
of  IPA  2013  National  Programme  under  decentralised  management.  Serbia  continues  to 
benefit from support under the IPA multi-country and regional programmes and to participate 
in  cross-border  cooperation  programmes  with  neighbouring  Western  Balkan  countries  and 
with Member States and in European Regional Development Fund trans-national cooperation 
programmes.  

Serbia  participates  in  the  following  EU  programmes:  Horizon  2020,  Erasmus+,  Creative 
Europe - Culture  Sub-Programme,  Employment and Social Innovation, Europe for Citizens, 
Customs  2020  and  Fiscalis  2020.  Serbia  became  member  of  the  EU  Civil  Protection 
Mechanism  in  June.  Serbia  has  applied  for  observer  status  in  the  EU  Fundamental  Rights 
Agency. 

75 

 
 
Annex II – Statistical Annex 

STATISTICAL DATA (as of 7.09.2015) 
Serbia 

Basic data 
Population (thousand) 
Total area of the country (km²) 

National accounts 
Gross domestic product (GDP) (million national 
currency) 
Gross domestic product (GDP) (million euro) 
GDP (euro per capita) 
GDP  (in  Purchasing  Power  Standards  (PPS) 
per capita) 
GDP  (in  Purchasing  Power  Standards  (PPS) 
per capita), relative to the EU average  (EU-28 
= 100) 
Real  GDP  growth  rate:  change  on  previous 
year of GDP volume (%) 
Gross value added by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
Final  consumption  expenditure,  as  a  share  of 
GDP (%) 
Gross  fixed  capital  formation,  as  a  share  of 
GDP (%) 
Changes in inventories, as a share of GDP (%) 
Exports of goods and services, relative to GDP 
(%) 
Imports of goods and services, relative to GDP 
(%) 

Business 
Industrial  production  volume  index  (2010  = 
100) 
Number of active enterprises (number) 
Birth  rate:  number  of  enterprise  births  in  the 
reference  period  (t)  divided  by  the  number  of 
enterprises active in t (%) 
Death rate: number of enterprise deaths in the 
reference  period  (t)  divided  by  the  number  of 
enterprises active in t (%) 
People  employed  in  SMEs  as  a  share  of  all 
persons  employed  (within  the  non-financial 
business economy) (%) 
Value  added  by  SMEs  (in  the  non-financial 
business economy) (EUR million) 
Total  value  added 
business economy) (EUR million) 

the  non-financial 

(in 

Note 
1) 

Note 
2) 

2) 
2) 
2) 3) 

2) 3) 

2) 

2) 
2) 
2) 
2) 
2) 

2) 

2) 
2) 

2) 

Note 

4) 

4) 

2002 
7 502 
77 474 

2002 
1 037 8
97 
17 100 
2 280 
: 

2010 
7 307 
77 474 

2011 
7 254be 
77 474 

2012 
7 219e 
77 474 

2013 
7 184e 
77 474 

2014 
7 149e 
77 474 

2010 

2011 

2012 

2013 

3 067 210  3 407 563  3 584 236  3 876 403 

29 766 
4 082 
9 000 

33 424 
4 619 
9 500 

31 683 
4 400 
9 700 

34 263 
4 781 
9 800 

2014 
3 878 02
4e 
33 059e 
4 635e 
9 500 

: 

35 

36 

37 

37 

35 

7.1 

0.6 

1.4 

-1.0 

2.6 

-1.8e 

15.0 
27.0 
5.3 
52.7 
96.9 

16.2 

5.0 
20.6 

38.7 

2002 
98.6 

: 
9.9 

10.2 
22.7 
5.7 
61.4 
96.5 

18.6 

-0.1 
32.9 

47.9 

2010 
100.0 

: 
10.2b 

10.7 
23.5 
6.0 
59.8 
95.3 

18.4 

1.7 
34.0 

49.4 

2011 
102.5 

: 
9.3 

6.3 

9.8b 

10.3 

: 

: 

: 

: 

: 

: 

: 

: 

: 

9.0 
24.9 
5.4 
60.7 
95.7 

21.2 

-0.2 
36.9 

53.6 

9.4 
26.6 
5.1 
59.0 
93.1 

17.2 

0.4 
41.2 

51.9 

9.7e 
24.6e 
5.2e 
60.5e 
94.4e 

17.2e 

-1.6e 
44.3e 

54.3e 

2012 
100.2 

2013 
105.6 

2014 
98.8 

: 
: 

: 

: 

: 

: 

: 
: 

: 

: 

: 

: 

: 
: 

: 

: 

: 

: 

Inflation rate 
Consumer price index (CPI), change relative to 
the previous year (%) 

Note 

2002 
16.6 

2010 
6.5 

2011 
11.0 

2012 
7.8 

2013 
7.8 

2014 
2.9 

76 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance of payments 
Balance  of  payments:  current  account  total 
(million euro) 
Balance  of  payments  current  account:  trade 
balance (million euro) 
Balance  of  payments  current  account:  net 
services (million euro) 
Balance  of  payments  current  account:  net 
income (million euro) 
Balance  of  payments  current  account:  net 
current transfers (million euro) 
of which government transfers (million euro) 
**3  year  backward  moving  average  of  the 
current account balance relative to GDP (%) 
Net  inward  foreign  direct  investment  (FDI) 
(million euro) 
Foreign direct investment (FDI) abroad (million 
euro) 
of  which  FDI  of  the  reporting  economy  in  the 
EU-28 countries (million euro) 
Foreign direct investment (FDI) in the reporting 
economy (million euro) 
of  which  FDI  of  the  EU-28  countries  in  the 
reporting economy (million euro) 
**Net international investment position, relative 
to GDP (%) 
Year on  year rate of change in gross inflow of 
remittances (in national currency) from migrant 
workers (%) 

/  surplus, 

Public finance 
***General  government  deficit 
relative to GDP (%) 
***General  government  gross  debt  relative  to 
GDP (%) 
Total  government  revenues,  as  a  percentage 
of GDP (%) 
Total 
percentage of GDP (%) 

expenditure, 

government 

as 

a 

(M2  plus  marketable 

Financial indicators 
Gross  foreign  debt  of  the  whole  economy, 
relative to GDP (%) 
Gross  foreign  debt  of  the  whole  economy, 
relative to total exports (%) 
Money supply: M1 (banknotes, coins, overnight 
deposits, million euro) 
Money  supply:  M2  (M1  plus  deposits  with 
maturity up to two years, million euro) 
Money  supply:  M3 
instruments, million euro) 
Total credit by monetary financial institutions to 
residents (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 = … national currency) 
Trade-weighted  effective  exchange  rate  index 
(2005 = 100) 
Value of reserve assets (including gold) (million 
euro) 

Note 
5) 

2002 
-672 

2010 
-1 887 

2011 
-2 870 

2012 
-3 176 

2013 
-1 585 

2014 
-1 985 

5) 

5) 

5) 

5) 

5) 
5) 

5) 

5) 

5) 

5) 

5) 

5) 

Note 

-3 399 

-4 581 

-5 318 

-5 480 

-3 978 

-4 111 

135 

-74 

8 

-670 

163 

-758 

156 

334 

465 

-799 

-1 095 

-1 343 

2 665 

3 356 

3 043 

2 947 

3 153 

3 003 

519 
-1.3 

193 
-11.2 

206 
-7.1 

151 
-8.3 

131 
-7.7 

89 
-6.9 

500.1 

860.1 

1 826.9 

241.9 

768.5 

1 236.3 

21.2 

143.0 

122.0 

: 

37.2 

100.2 

42.3 

22.3 

10.0 

19.8 

264.2 

35.4 

521.3 

1 003.1 

1 948.9 

284.1 

778.5 

1 500.4 

: 

: 

: 

2002 
: 

71.9 

: 

: 

820.9 

1 710.3 

96.4 

575.9 

1 109.3 

85.0 

81.3 

95.1 

90.1 

99.5 

-9 

-13 

-6 

11 

-13 

2010 
-4.6 

40.8 

41.7 

46.3 

2010 
79.0 

2011 
-4.8 

43.3 

40.0 

44.8 

2011 
72.2e 

2012 
-6.8 

55.8 

41.1 

47.9 

2012 
80.9 

2013 
-5.5 

59.0 

39.7 

45.1 

2013 
75.1 

2014 
-6.7 

68.9 

41.8 

48.4 

2014 
78.1 

Note 

2002 
56.7 

6) 

7) 

8) 

9) 

10) 

310.5 

247.1 

216.5 

223.6 

184.7 

178.7 

1 525 

2 401 

2 807 

2 715 

3 387 

3 563 

1 803 

3 891 

4 663 

4 227 

4 776 

5 078 

3 113 

12 899 

14 339 

14 438 

14 976 

15 422 

3 519 

17 544 

18 995 

19 783 

19 261 

19 708 

: 

12.02 

8.46 

9.81 

7.04 

9.45 

15.20 

14.00 

12.25 

13.75 

12.00 

10.50 

3.80 
60.694 

9.00 
103.043 

7.25 
101.950 

8.75 
113.128 

7.00 
113.137 

5.50 
117.306 

93.7 

115.4 

127.1 

118.3 

126.4 

123.7 

2 186 

10 002 

12 058 

10 915 

11 189 

9 907 

77 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
External trade in goods 
Value of imports: all goods, all partners (million 
euro) 
Value of exports: all goods, all partners (million 
euro) 
Trade  balance:  all  goods,  all  partners  (million 
euro) 
Terms  of  trade  (export  price  index  /  import 
price index * 100) (number) 
Share of exports to EU-28 countries in value of 
total exports (%) 
Share of imports from EU-28 countries in value 
of total imports (%) 

Demography 
Crude  rate  of  natural  change  of  population 
(natural  growth  rate):  number  of  births  minus 
deaths (per thousand inhabitants) 
Infant  mortality  rate  deaths  of  children  under 
one year of age (per thousand live births) 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

Labour market 
Economic activity rate for persons aged 20–64: 
proportion of the population aged 20–64 that is 
economically active (%) 
*Employment  rate  for  persons  aged  20–64: 
proportion  of  the  population  aged  20–64  that 
are in employment (%) 
Male employment rate for persons aged 20–64 
(%) 
Female employment rate for persons aged 20–
64 (%) 
Employment  rate  for  persons  aged  55–64: 
proportion  of  the  population  aged  55–64  that 
are in employment (%) 
Employment by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
People  employed  in  the  public  sector  as  a 
share  of  total  employment,  persons  aged  20–
64 (%) 
People  employed  in  the  private  sector  as  a 
share  of  total  employment,  persons  aged  20–
64 (%) 
Unemployment  rate:  proportion  of  the  labour 
force that is unemployed (%) 
Male unemployment rate (%) 
Female unemployment rate (%) 
Youth  unemployment  rate:  proportion  of  the 
labour  force  aged  15–24  that  is  unemployed 
(%) 
Long-term  unemployment  rate:  proportion  of 
the labour force that has been unemployed for 
12 months or more (%) 
Unemployment  rate  for  persons  (aged  25–64) 
having  completed  at  most  lower  secondary 
education (ISCED 0–2) (%) 
Unemployment  rate  for  persons  (aged  25–64) 
having  completed  tertiary  education  (ISCED  5 
& 6) (%) 

Note 

2002 
: 

2010 
12 475 

2011 
13 706 

2012 
13 522 

2013 
13 345 

2014 
13 512 

Note 

Note 

: 

: 

101 

: 

: 

2002 
-3.3 

10.1 

69.7 
75.0 

2002 
: 

: 

: 

: 

42.0 

: 
: 
: 
: 
: 

: 

7 067 

8 058 

8 251 

10 413 

10 562 

-5 408 

-5 648 

-5 271 

-2 933 

-2 950 

115 

61.8 

57.2 

2010 
-4.8 

6.7 

71.4 
76.6 

2010 
63.7 

119 

62.9 

55.9 

2011 
-5.2 

6.3 

71.6 
76.8 

2011 
64.1 

122 

62.5 

58.5 

2012 
-4.9 

6.2 

72.2 
77.3 

2012 
64.3 

122 

63.8 

55.7 

2013 
-4.8 

6.3 

72.5 
77.7 

2013 
66.0 

122 

65.7 

57.1 

2014 
-4.9 

5.7 

72.6 
77.7 

2014 
66.2 

51.2 

49.2 

48.9 

51.2 

53.5 

59.2 

43.5 

32.8 

22.3e 
21.0e 
5.0e 
51.7e 
31.0 

56.8 

41.7 

31.4 

21.2e 
21.5e 
5.3e 
52.0e 
31.5 

56.7 

41.1 

31.6 

21.0 
21.3 
5.2 
52.6 
32.6 

59.5 

43.1 

34.3 

21.3 
21.1 
4.8 
52.9 
32.6 

61.2 

46.0 

35.9 

21.1 
20.0 
4.4 
54.5 
31.6 

65.5 

65.8 

65.1 

65.2 

66.4 

14.5 

12.9 
16.5 
45.3 

19.2 

18.4 
20.2 
46.2 

23.0 

22.4 
23.7 
50.9 

23.9 

23.2 
24.9 
51.1 

22.1 

20.8 
23.8 
49.4 

18.9 

18.3 
19.6 
47.1 

9.9 

13.3 

16.9 

18.6 

16.8 

12.8 

16.7 

21.6 

23.4 

21.3 

18.1 

17.7 

21.3 

22.3 

20.9 

17.7 

: 

: 

78 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Social cohesion 
Average  nominal  monthly  wages  and  salaries 
(national currency) 
Index  of  real  wages  and  salaries  (index  of 
nominal  wages  and  salaries  divided  by  the 
inflation index) (2000 = 100) 
GINI coefficient — see definitions 
Poverty gap 
*Early  leavers  from  education  and  training: 
proportion of the population aged 18–24 with at 
most lower secondary education who are not in 
further education or training (%) 

Note 
11) 

2002 
13 260 

2010 
47 450b 

2011 
52 733 

2012 
57 430 

2013 
60 708 

2014 
61 426 

11) 

154.9 

277.4b 

277.9 

280.4 

275.0 

271.0 

: 
: 
: 

: 
: 
8.2 

: 
: 
8.5 

: 
: 
8.1 

38.0 
36.6 
8.7 

38.7 
39.9 
8.3 

Standard of living 
Number  of  passenger  cars 
size 
population 
population) 
Number of mobile phone subscriptions relative 
to  population  size  (number  per 
thousand 
population) 

to 
thousand 

(number  per 

relative 

Note 

2002 
179.1 

2010 
214.3 

2011 
230.5 

2012 
239.2 

2013 
246.5 

2014 
: 

322.5 

1 357.0 

1 399.4 

1 261.9 

1 280.9 

1 307.6 

Infrastructure 
Density  of  railway  network  (lines  in  operation 
per thousand km²) 
Length of motorways (kilometres) 

Note 

2002 
49.2 

2010 
49.3 

2011 
49.3 

2012 
49.3 

2013 
49.3 

2014 
49.3 

370 

495 

595 

607 

607 

607 

Innovation and research 
Public  expenditure  on  education  relative  to 
GDP (%) 
*Gross  domestic  expenditure  on  R&D  relative 
to GDP (%) 
Percentage  of  households  who  have  internet 
access at home (%) 

Note 

2002 
3.7 

0.35 

: 

2010 
4.6 

0.74 

39.0 

2011 
4.5 

0.72 

41.2 

2012 
4.5 

0.91 

47.5 

2013 
4.3 

0.82 

55.8 

2014 
: 

: 

62.8 

Environment 
Energy  intensity  of  the  economy  (kg  of  oil 
equivalent  per  1 000  euro  GDP  at  2005 
constant prices) 
Electricity  generated  from  renewable  sources 
relative to gross electricity consumption (%) 
Road  share  of  inland  freight  transport  (based 
on tonne-km) (%) 

Energy 
Primary  production  of  all  energy  products 
(thousand TOE) 
Primary production of crude oil (thousand TOE) 
Primary  production  of  hard  coal  and  lignite 
(thousand TOE) 
Primary  production  of  natural  gas  (thousand 
TOE) 
Net  imports  of  all  energy  products  (thousand 
TOE) 
Gross  inland  energy  consumption  (thousand 
TOE) 
Electricity generation (thousand GWh) 

12) 
12) 

12) 

12) 

12) 

12) 

Note 
3) 

2002 
917.7 

2010 
696.1 

2011 
711.5 

2012 
648.8 

2013 
652.9e 

2014 
: 

: 

12.1 

31.4 

27.8 

22.6 

30.5 

24.8 

44.8 

32.1 

43.1 

Note 
12) 

2002 
11 739 

782 
8 679 

2010 
9 876b 

929b 
7 226b 

2011 
10 504 

1 111 
7 822 

2012 
10 105 

1 224 
7 276 

2013 
11 442 

1 263 
7 668 

: 

44.1 

2014 
: 

: 
: 

: 

: 

: 

364 

342b 

449 

472 

470 

4 741 

6 320b 

5 048 

4 179 

3 760 

15 760 

15 093b 

15 749 

13 997 

15 172 

35.1 

38.0 

38.6 

36.8 

39.9 

79 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
live  swine 

live  bovine  animals 

Agriculture 
Agricultural  production  volume  index  of  goods 
and  services  (at  producer  prices)  (previous 
year = 100) 
Utilised agricultural area (thousand hectares) 
Livestock  numbers: 
(thousand heads, end of period) 
Livestock  numbers: 
heads, end of period) 
Livestock  numbers:  live  sheep  and  live  goats 
(thousand heads, end of period) 
Production  and  utilisation  of  milk  on  the  farm 
(total whole milk) (thousand tonnes) 
Harvested  crop  production:  cereals  (including 
rice) (thousand tonnes) 
Harvested 
(thousand tonnes) 
Harvested 
crop 
(thousand tonnes) 

crop  production: 

sugar  beet 

production: 

vegetables 

(thousand 

Note 

2002 
97.0 

2010 
103.2 

2011 
96.4 

2012 
80.5 

13) 

5 071 
1 112 

3 521b 
938b 

3 528 
937 

3 462 
921e 

2013 
121.8 

3 491 
913 

2014 
102.1 

3 507 
920 

3 634 

3 489b 

3 287 

3 139e 

3 144 

3 236 

1 685 

1 712b 

1 699 

1 867e 

1 841 

1 967 

1 596 

1 498b 

1 474 

1 486e 

1 467 

1 514 

8 298 

9 694b 

9 538 

6 355 

9 091 

10 848 

2 098 

3 551b 

3 004 

2 483 

3180 

3 507 

1 340 

1 117b 

1 024 

936 

1 062 

965 

14) 

13) 
15) 
13) 

13) 

: = not available 
b = break in series 
e = estimated value 
* = Europe 2020 indicator 
** = Macroeconomic Imbalance Procedure (MIP) indicator 
*** = The government deficit and debt data of enlargement countries are published on an "as is" basis and without any 
assurance as regards their quality and adherence to ESA rules. 

  Footnotes: 

1)  Break in 2011 due to the introduction of a new estimation method. 
2)  Based on ESA 2010. 
3)  Source: Eurostat. 
4)  2002: includes all entities in administrative registers (legal units). 
5)  2014: based on balance of payments manual edition 6 (BPM6). 
6)  The  money  supply  M1  consists  of  currency  in  circulation  and  funds  in  giro,  current  and  other  accounts  belonging  to  the 
owners  of  money  balances  in  banks'  liabilities,  including  money  balances  in  the  accounts  of  local  government  bodies,  i.e. 
accounts from which payments can be made without any restrictions. 

7)  The money supply M2, in addition to M1, includes other dinar deposits, both short-and long-term. 
8)  The money supply M3, in addition to M2, includes short-and long term foreign currency deposits (without the so-called frozen 

foreign currency savings). 

9)  Arithmetic mean of official middle exchange rates of the dinar against the euro on working days. 

10) 

Index  of  nominal  effective  exchange  rate  adjusted  for  the  ratio  of  domestic  consumer  price  index  to  the  weighted  sum  of 
indices of consumer prices in the euro area and the United States. Calculation based on geometric average. 

11)  2002:  wages  and  salaries  paid  to  employees  of  legal  entities.  2010–14:  wages  and  salaries  paid  to  employees  of  legal 

entities and of unincorporated enterprises. 

12)  2002: source, Eurostat. 
13) 

In 2014, a new method of data collection including sample surveys was set up. Time series have been revised back to 2007. 

14) 

In  million  litres.  Milk  from  cows,  sheep  and  goats  used  for  human  consumption  or  processing.  2002:  excluding  milk  from 
goats. 

15)  2002: excluding triticale. 

80