VZCZCXRO0745
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHBW #1323/01 2711206
ZNR UUUUU ZZH
R 281206Z SEP 07
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC 1503
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0006
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 BELGRADE 001323 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR 4232/ITA/MAC/EUR/OEERIS/SSAVICH 
 
E.O. 12958: N/A 
TAGS: EFIN ECON EINV KIDE KPRV SR
SUBJECT: ECONOMIC TRAIN NOT (YET) DERAILED BY KOSOVO 
 
 
Summary 
------- 
¶1.  (U) During introductory meetings with Serbian government 
leaders and the U.S. business community the Ambassador heard 
positive messages that economic reform activity is moving 
forward.  Despite the fact that economic issues are pushed 
off the front page by Kosovo, there are areas of progress and 
efforts by some political, economic and business leaders to 
push ahead with economic reforms which are important in 
sustaining Serbia's current economic growth.  U.S. firms 
report continued interest from Serbian government officials 
to hear business community concerns. End Summary. 
 
 
Dinkic Focused on Privatization, Jobs and Investment 
--------------------------------------------- ------- 
 
¶2.  (SBU) Economy Minister Mladjan Dinkic highlighted several 
goals for the coming months during a September 14 discussion. 
Dinkic will focus on finishing the privatization of socially- 
owned firms (generally midsize companies, which exclude the 
largest state-owned firms) by the end of next year.  He plans 
to use bankruptcy procedures for an increasing number of 
firms that do not attract bidders.  Dinkic's goal is to move 
firms through bankruptcy in four months, but this is 
dependent on capacity in the municipal courts.  He also hopes 
to pass several amendments to the recent bankruptcy law to 
smooth the process.  Commenting on the prospects for 
privatization of the state-owned oil firm NIS, Dinkic 
lamented the plan to sell just 25% of the firm initially as 
inadequate, but that Deputy Prime Minister Djelic is from the 
"French school of economy" and prefers to maintain a state 
hand in the firm. 
 
¶3.  (SBU) Turning to his other priority, jobs and investment, 
Dinkic highlighted his ministry's focus on the automotive, 
electronics, technology and tourism industries.  Dinkic hoped 
to attract international bidders, especially GM, to bid in 
the planned December tender for state-owned automaker Zastava 
(Yugo).  (Note: Dinkic hopes to meet with senior GM officials 
in Detroit during his mid-October visit for the fall 
IMF/World Bank meetings. End Note.)  Dinkic looked to India's 
technology parks as a potential model for Serbia and has 
authorized investment subsidies of $2700 to $14000 per job 
for new investors in targeted sectors. 
 
Permits and Regulation 
---------------------- 
 
¶4.  (U) Dinkic recognized that the construction and 
permitting process required significant updates and 
simplification of procedures.  This theme was also 
highlighted by companies on the AMCHAM board in earlier 
discussions.  Dinkic is leading a legislative reform council 
with the goal of simplifying regulatory procedures, and he 
has a World Bank advisor to support this effort. 
 
AMCHAM Finds Access 
------------------- 
 
¶5.  (U) During an introduction to the AMCHAM's programs and 
goals on September 12, AMCHAM board members outlined their 
companies' experiences in Serbia.  Overall, AMCHAM members 
reported that they have adequate access to senior 
policymakers, and that their concerns are heard by the 
political leadership.  They noted that the bureaucracy 
remained entrenched and often required pressure from above to 
reform.  AMCHAM members noted that while their operations are 
profitable, they are frustrated with the lack of 'aftercare' 
from the government on items ranging from permitting and 
licensing to occasional public criticism by government 
officials in the media. 
 
¶6. (U) During a September 11 meeting with Parliament Speaker 
Oliver Dulic, Dulic emphasized that parliament was moving 
legislation and that it was not paralyzed by the political 
situation.  He hoped to direct the parliament to focus beyond 
Kosovo to measures that would improve Serbia's economy and 
the standard of living of its people. 
 
Comment 
------- 
 
¶7. (SBU) While Kosovo remains the number one item on the 
government's agenda, and on the front pages of the newspaper, 
there are efforts by some in the economic field to press 
forward with the economic agenda needed to move Serbia toward 
the EU.  Political uncertainty has, surprisingly, not stopped 
 
BELGRADE 00001323  002 OF 002 
 
 
the Belgrade Stock Exchange sentiment index from nearing its 
highest levels since its inception in June 2005.  Business 
and economic leaders are realistic about the political 
challenges Serbia faces in the coming months, but many remain 
optimistic about the economic opportunities ahead. End 
Comment. 
 
MUNTER