30.03.2011

INEVITABLE EARLY ELECTION


The International Institute for Middle-East and Balkan Studies (IFIMES) in Ljubljana, Slovenia, regularly analyses events in the Middle East and the Balkans. IFIMES has analysed current events in Serbia following the reconstruction of the government of Republic of Serbia, which was carried out on 14th March 2011. The most interesting sections from the analysis entitled "INEVITABLE EARLY ELECTION" are published below.

The assassination of the first democratically elected Prime Minister of Serbia Zoran Đinđić on 12th March, 2003 represents a milestone in post-Milošević Serbia and the beginning of Serbia’s consistent political deterioration. The following governments, except the government of the Prime Minister Zoran Živković, have not been sufficiently recognizable, implementing reforms of solely cosmetic nature.

The situation in Serbia and the standard of living of Serbian citizens is best illustrated with Serbian average salary in February 2011 – only 35.538 Serbian dinars or 340 Euros. According to Transparency International’s level of corruption Serbia shares the 78th place together with China, Colombia, Greece, Lesotho, Peru and Thailand.

The fact of the matter is that Serbia is nowadays even further from Europe than in the year 2000. There is a higher degree of anti-EU sentiment nowadays than in the days of the coup against Slobodan Milošević.

The reconstruction of Serbian government, which was carried out on 14th March 2011, is a consequence of constant government crisis culminating with the resignation of the controversial Minister of Economy Mlađan Dinkić, who is at the same time president of G17 Plus/United Regions of Serbia parties. Dinkić also took part in the coup against the government of Zoran Živković, which was estimated as the most successful government of Serbia after the government of Zoran Đinđić.

The analysts consider that the government reconstruction was carried out with prevalently the same ministers is not going to bring the much needed change in Serbia, especially in terms of reform implementation that is connected to Serbian membership in the EU, but will accelerate the path towards early parliamentary election. The early election is inevitable, despite the fact that it hasn’t been called yet.

PROBLEMATIC GOVERNMENT MEMBERS

A specificity of Serbian political scene is the existence of political leaders that are presidents of two different political parties at the same time. Mlađan Dinkić is the president of G17 Plus and the United Regions of Serbia (Ujedinjeni regioni Srbije - URS) political parties, while Minister Rasim Ljajić presides over the Sandžak Democratic Party (SDP) and the Social Democratic Party of Serbia (SDPS) at the same time. An additional specificity of Ljajić is that one of his parties is of the right wing political orientation, while the other one is leftist. The above mentioned parties are taking part in the work of the current government. These gentlemen have been on the political scene far too long with very poor results.

Vice Prime Minister of the current government is Ivica Dačić, the symbol of Milošević’s regime, who was on the “black list” of American Administration for more than ten years and was removed from it under suspicious circumstances. The circumstances of his removal from the list have not been cleared up yet, especially the role of the former American ambassador in Serbia, William Montgomery, because according to American laws lobbying for removal from the black list is strictly prohibited. He has also been linked to the “Suitcase” corruption affair.

The newly appointed Minister of Health in the Government of Serbia is Zoran Stanković (G17 Plus/URS), the former Minister of Defence, who is being connected with the war crimes suspects, especially with General Ratko Mladić.

The Minister of Foreign Affairs Vuk Jeremić as a member of government is, according to some foreign policy experts, leading a “schizophrenic” foreign policy, leaning on four pillars, namely EU-Russia-USA-China. This kind of foreign policy is childish for Serbia, which is a small country with a heavy historical burden, a large number of unsolved inner problems and a very poor economy. The goal of any serious policy should be first of all to take care of its citizens.

Instead of modernizing the judicial system through reform implementation, the Minister of Justice Snežana Malović additionally politicized the judicatory, which is obvious if one takes a closer look at the numerous politically motivated judicial proceedings. It is a fact that reforms cannot be implemented by the same people that provoked such circumstances. Granting a chance to Snežana Malović, the Minister of Justice, and to Slobodan Homen, the Secretary of State of the Ministry of Justice to implement a reform of judicial system according to EU standards is not the result of overlooking of the two above mentioned persons, but of their intention to entirely subdue the judicial system to the interests of the political group that installed them on the leading positions on the top of judicial pyramid. An unacceptable method of criminal prosecution was used in cases of Bogoljub Karić, Slobodan Radulović, Branivoj Lazović, Stanko Subotić and others. For this reason it is absolutely indispensable to establish a monitoring over judicial proceedings that are being carried out against owners and management of private companies, accused of criminal acts of misfeasance, in order to eradicate the practice of abusing the criminal justice to eliminate political opponents.

One of the Vice Prime Ministers of Serbian Government and the main negotiator for EU accession, Božidar Đelić, has regularly shown a high degree of incapacity, political immaturity and general unworthiness of being in such a high position, even though he’s been a member of the government for many years now. His endeavours for increasing the value of his personal property are much more visible than his endeavours for Serbia and its citizens. In addition, Đelić is not exactly a kind of political personality who enjoys the trust in EU circles.

The personal composition of Serbian government is additionally encumbered by the fact that Serbia practically doesn’t have a Prime Minister, because the President Boris Tadić has established a presidential system without implementing the necessary Constitutional amendments. In recent years, the government has only formally been led by the Prime Minister Mirko Cvetković, whereas the head of government is de facto the Serbian president Boris Tadić.

The power is concentrated in the hands of the current Serbian President Boris Tadić who tried to establish a system which analysts described as Tadić’s attempt of “Putinization” of Serbia. Nevertheless, the analysts are warning that there is a crucial difference between Vladimir Putin and Boris Tadić. Putin managed to reintroduce Russia to the world scene, while Serbia headed by Tadić is in constant regression and deterioration. Tadić is nothing but a bad copy of Putin and the only thing he managed to create is the Serbian Hodorkowsky – namely Bogoljub Karić.

THE SALE OF KARIĆ’S AND THE STATE PART OF TELEKOM SERBIA

The international institute IFIMES has thoroughly examined the founder of MOBTEL and the way “Karić Brothers” System BK Trade created rights to 13% of the state company Telekom Serbia (TELEKOM).

With the memorandum of association of MOBTEL dated 14th April 1994, the founder ”JP PTT Saobraćaja Srbija” (Public Company for Mail, Telegraph and Telephone Communications Serbia) was obliged, among other, to abstain from concluding a contract with a third party – competitor and to abstain from competition with the newly-founded company MOBTEL, which gained exclusive rights of providing mobile phone services for a period of seven years. However, in violation of their obligations under the JP PTT memorandum of association of MOBTEL, JP PTT Saobraćaja Srbija founded a telecommunication company called “Telekom Srbija” a.d. Beograd, with which the landline network was transferred in the Republic of Serbia and to which the Serbian Government issued a licence for construction and use of public mobile radio-telephony in the Republic of Serbia. The decision to establish TELEKOM was adopted by JP PTT company, signed by the Chairman of the Board of Directors and approved by the Government of Serbia.

Taking into account that JP PTT is a public company, managed by the Government of Serbia through a decision-making body, namely the Board of Directors, whose members are appointed and resolved and whose decisions are approved and validated only with the consent of the Government of Serbia, it is clear that the foundation of TELEKOM was carried out solely with a full consent of the state and its bodies.

The establishment of TELEKOM was carried out without notification and prior consent of MOBTEL and another foreign founder BK Trade from Moscow, contrary to the provisions of the memorandum of association of MOBTEL and contrary to the imperative provision of Article 92 PCA which provides that a member of a limited liability company (in this case JP PTT as a founder and a member of MOBTEL) cannot possess this capacity (i.e. be a founder or a member or a shareholder) in any other company (that is in any legal form, be it a joint-stock company or a limited liability company) of the same or similar activity that could be competitive.

In this case JP PTT acquired, by founding MOBTEL, ownership share in two companies that have been carrying out a competitive activity (with MOBTEL and TELEKOM) and thus began, contrary to the law, to compete illegally with MOBTEL through TELEKOM and became its own competitor. In this competition MOBTEL is in an unequal position, given the fact that TELEKOM had the legal and de facto monopoly over the landline telephone network or the provision of public landline telephony services, without which there is no public mobile radio telephony, having also the right to provide mobile telephony services.

The direct damage caused to MOBTEL after the foundation of TELEKOM and introduction of the second mobile operator can be directly observed through lost revenue due to the reduced number of users while increasing the cost per user. In addition MOBTEL was obligated to pay 3% for the development of TT network as well as $2 or $1,5 a month per extension for using the landline network, which meant a direct income for TELEKOM, while there was no such obligation for TELEKOM.

With annexes to the memorandum of association of MOBTEL which were approved by the Government of Serbia in 1998 and by concluding the Agreement of February 12th 1999 between JP PTT Saobraćaja “Srbija” from Belgrade, “Karić Brothers” System – BK Trade from Moscow and mobile communication company “Srbija” BK-PTT d.o.o. Novi Beograd on the temporary method of compensation for lost profit due to the introduction of the other operator and the abandonment of an exclusive right for performing activities of mobile telephony, a partial reimbursement for the damage caused to MOBTEL (due to the foundation and activity of TELEKOM) was provided, and thus the state itself, as well as JP PTT admitted unfair competition, which, among other consisted of JP PTT guarantee that the permanent founder of MOBTEL, BK Trade will be given 13% of income earned through TELEKOM’s mobile telephony.

According to the Article 10(2) of the Agreement concluded on April 2nd 1998 between JP PTT “Serbia” from Belgrade, BK Trade and the company for mobile communications “Srbija” BK-PTT from Belgrade and with the provision of Article 1(2) of the Annex of the memorandum of association of a mixed company in order to introduce public mobile telephony system in the Republic of Serbia, which was concluded between JP PTT saobraćaja “Srbija” from Belgrade and BK trade from Moscow on April 2nd 1998, it was agreed that by establishing a separate legal entity for conducting public mobile phone telephony activity by TELEKOM, the contracting parties are in agreement that BK Trade or the legal entity designated by BK Trade is, instead of participating in the income in accordance with paragraph 1 above, entitled to 13% of total incorporation and management rights in the newly founded company.

The Serbian Government adopted a Decision to approve the annex to the memorandum of association of a mixed company in order to introduce public mobile telephony services in the Republic of Serbia on 7th August 1998, which was concluded on April 2nd 1998 between JP PTT saobraćaja “Srbija” Beograd and “Brothers Karić” System BK Trade, based in Moscow.

The Board of Directors in JP PTT saobraćaja “Srbija” brought a decision as the competent authority that the funds generated from the 13% of revenue ceded to BK Trade can be paid out.

At their 31st Board of Directors session on April 21st 2000, the mobile telecommunications company “Srbija” BK-PTT adopted the decision on the distribution of the company’s realized net profit according to the balance sheet for 1999, which states that BK Trade has the right to withdraw or make a free transfer of the remainder of the earnings in the amount of 153,749,857 dinars, which will be paid to BK Trade by suspending the tax on profit.

The funds were allocated to a commercial bank, the National Bank of Serbia controlled the documentation connected to the transfer of funds, approved and executed this transfer of funds to the foreign founder of MOBTEL, BK Trade Moscow, which gave the instructions that these funds be allocated to the account of the company named Daki international Ltd.

The transfer of funds was executed in line with the applicable laws of the Republic of Serbia and there was no breach of regulations, given the fact that the transfer was executed on the basis of the decision of the competent authorities with the approval of the National Bank of Serbia.

Therefore, the analysts have noted that in the announced new privatization of TELEKOM the new potential buyers should be careful, because the state ownership in TELEKOM is not 31%, but has been reduced by the 13% share owned by „Brothers Karić“ System BK Trade, and thus amounts to 18%.

The Serbian Government is trying to sell Telecom under currently unfavourable market conditions and an unclear ownership structure, which creates suspicion that TELEKOM is being sold due to the needs of financing the current government spending, to finance the election campaign of the ruling party and the illicit enrichment of certain individuals. The Serbian government wants to sell TELEKOM at a price of 1.400.000.000 Euros, while some estimation say that TELEKOM is worth 6.000.000.000 Euros.

Besides the controversial Austrian businessman Martin Schlaff, the affair related to the selling of TELEKOM involves some top officials from Serbia as well as some EU high officials, which raises the question of the need for opening the investigation of certain EU officials. Crime and corruption have been systematically destroying the life of Serbian citizens for decades, and now it is paradoxical that even EU high officials are taking part in it. Why EU high officials in Belgrade remain silent and support the corrupted authorities and some individuals that have been directly involved in corruption, which is a „public secret“ in Serbia? This way the EU is further losing its credibility while the interest and trust of the citizens of Serbia in the EU is constantly decreasing.

THE DESTROYED JUDICIAL SYSTEM

Although she has been re-elected as the Minister of Justice, Snežana Malović will jeopardize foreign investment through her actions, because without legal protection there is no attraction and the much needed investment security. The investors want to invest in countries that have an established legal, political and economic framework, which guarantees stability and predictability, but is not yet the case in Serbia.

The analysts believe that the main goal of the judicial reform is the elimination of the current judges and prosecutors and the employment of their own staff, primarily employees from or close to the Democratic party (DS) of Boris Tadić. In case of the Higher Court and Appeals Court in Belgrade it is obvious that the reform enabled a large number of judges to be promoted on the basis of “friendly connections” A large number of criminal court judges who used to be judges at the Fourth Municipal Court in Belgrade were promoted to a higher position. Thus one out of five former municipal courts in Belgrade became the incubator of staff thanks to friendly connections with certain people.

THE EU DOESN’T BELIEVE TADIĆ

The Democratic Party wishes to have exclusivity in being the only pro-EU oriented party in Serbia. The EU has, unfortunately, bought this fairy tale. However, recently there has been a change in EU circles in relations towards the president of Serbia Boris Tadić and his Democratic Party. The EU has become increasingly aware of the fact that the Government of Serbia functions to a large extent as an organized criminal group and that their „pro-EU“ orientation is only a statement that is being used as a cover-up for criminal activities and corruption. That is why EU representatives are gradually loosing trust in Boris Tadić.

The influence of Serbian president over the media is carried out through marketing. President Tadić is surrounded by people who are very well aware of marketing. Serbian political and media scene is increasingly turinig into a marketing field for spinning, where one affair overleaps another, with the aim to divert attention from more important issues and problems such as unemployment, poverty and the difficult economic situation. However, public opinion polls have shown that the people are actually most interested in those topics . That’s why the majority of the media in Serbia are under control of the marketing agencies, owned (controlled) by individuals close to President Tadić who have a direct impact on editorial policy through their (non)approval of advertisements.

An opposition protest was held on 5th February 2011, which gathered some 100,000 people and represented the last warning to the regime of Boris Tadić and a sign that serious and fundamental changes must be implemented in the Government or that an early election should be called. Tadić does not possess enough power and personnel for the implementation of radical changes, so early election remains the only real option.

The analysts have warned that the current regime gained power on the streets (during the 2000 street demonstrations) and that there is a real risk that it will lose its power in the same way.

CAN THE RETURN OF VOJISLAV ŠEŠELJ SAVE TADIĆ?

One of the scarce chances for President Tadić and the Democratic Party to win the upcoming election might be the return of Vojislav Šešelj from the Hague to Serbia in order to take over a part of voters that would vote for the Serbian Progressive Party (SNS) led by Tomislav Nikolić and so try to visibly weaken SNS. Tadić also included certain pro-regime non-governmental organizations in the campaign of Šešelj’s return announcement, who have created the environment for his return. The return of Šešelj to Serbia is the only way to weaken SNS and prevent it from winning the election and thus gaining the mandate to form the government.

The analysts believe that the advisors made some bad estimations and erroneously advised President Boris Tadić, because the return of Vojislav Šešelj would surely represent a defeat for President Tadić.

Another attempt made by President Tadić was to prevent the return of the president of the Movement of Serbian Forces (PSS-BK) Bogoljub Karić, to confiscate his property and to discredit the Karić family. Boris Tadić is abusing the judiciary bodies, which are, according to the current reform, put under full control of the political establishment in order to protect their own personal interests.

PUBLIC OPINION POLL:

The IFIMES International Institute carried out a public opinion poll in the period from 1st to 25th March 2011 on the territory of the Republic of Serbia without Kosovo using the in-depth field interview method. Standard deviation: +/-3. Control: per 10% of the sample. Degree of reliability: 95%.

We used the random three-stage sample of 1711 respondents who are male and female citizens of the Republic of Serbia of lawful age. 124 randomly selected respondents refused to participate in the survey while 112 respondents did not comply with the defined sample. The demographic data was obtained from the Statistical Institute of the Republic of Serbia. The structure of respondents from urban and non-urban areas has been harmonised approximately. The sexual, age, social and educational structure of the respondents resembles the structure of the population of the Republic of Serbia on the basis of the data from the Statistical Institute of the Republic of Serbia. The answers to the most relevant and interesting questions are presented below.

1. DO YOU SUPPORT SERBIA'S FULL MEMBERSHIP IN THE EUROPEAN UNION?

  1. YES 42.4%
  2. NO 29.9%
  3. UNDECIDED 27.7%

2. DO YOU THINK EARLY PARLIAMENTARY ELECTION SHOULD BE HELD IN SERBIA?

  1. YES 66.4%
  2. NO 19.8%
  3. UNDECIDED 13.8%

3. WHO WOULD YOU VOTE FOR IF YOU ATTENDED EARLY PARLIAMENTARY ELECTION?

  1. SNS-NS-PSS-PS 41.8%
  2. DS 24.3%
  3. LDP 8.3%
  4. SRS 7.7%
  5. DSS 7.1%
  6. SPS-PUPS 5.5%
  7. G17 Plus/URS 1.4%
  8. OTHER 3.9%

4. WHO DO YOU BELIEVE MORE?

  1. BORIS TADIĆ 29.8%
  2. TOMISLAV NIKOLIĆ 38.3%
  3. NONE 16.6%
  4. UNDECIDED 15.3%

5. HOW WOULD YOU ASSESS THE WORK OF THE GOVERNMENT OF THE REPUBLIC OF SERBIA SO FAR?

  1. POOR 68.6%
  2. WELL 17.1%
  3. UNDECIDED 14.3%

6. WHO WOULD BETTER PROTECT THE INTERESTS OF THE STATE OF SERBIA?

  1. BORIS TADIĆ 28.7%
  2. TOMISLAV NIKOLIĆ 43.2%
  3. NONE 8.6%
  4. UNDECIDED 19.5%

7. DOES VICE PRIME MINISTER AND MINISTER OF THE INTERIOR OF SERBIA IVICA DAČIĆ IN YOUR OPINION REPRESENT A SYMBOL OF MILOŠEVIĆ'S REGIME?

  1. YES 70.4%
  2. NO 11.8%
  3. UNDECIDED 17.8%

8. DO YOU SUPPORT THE SALE OF THE STATE SHARE IN TELEKOM SERBIA?

  1. YES 11.8%
  2. NO 77.6%
  3. UNDECIDED 10.6%

9. DO YOU BELIEVE THAT THE COURT PROCEEDINGS AGAINST BOGOLJUB KARIĆ AND MEMBERS OF HIS FAMILY WERE POLITICALLY MOTIVATED?

  1. YES 79.6%
  2. NO 11.1%
  3. UNDECIDED 9.3%

10. DO YOU BELIEVE THAT SNS-NS-PSS-PS COALITION CAN BETTER LEAD SERBIA THAN THE CURRENT GOVERNMENT?

  1. YES 63.7%
  2. NO 28.6%
  3. UNDECIDED 7.7%

11. DO YOU THINK PRESIDENT BORIS TADIĆ IS INVOLVED IN THE ACTIVITIES RELATED TO THE RETURN OF VOJISLAV ŠEŠELJ FROM THE HAGUE?

  1. YES 77.1%
  2. NO 20.3%
  3. UNDECIDED 2.6%

12. DO YOU SUPPORT PROTESTS BY NS-NS-PSS-PS OPPOSITION?

  1. YES 62.8%
  2. NO 26.4%
  3. UNDECIDED 10.8%

13. DO YOU LIVE TODAY BETTER OR WORSE THAN A FEW YEARS AGO?

  1. BETTER 22.7%
  2. WORSE 64.8%
  3. UNDECIDED 12.5%

 Ljubljana, 30 March 2011

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