VZCZCXRO5663
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHBW #0148/01 0491539
ZNR UUUUU ZZH
P 181539Z FEB 09
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC PRIORITY 0991
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHEHNS/NSC WASHDC
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFISS/HQ USEUCOM VAIHINGEN GE

UNCLAS SECTION 01 OF 02 BELGRADE 000148 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EINV SR
SUBJECT:  SERBIA'S EASTERN CITIES: GLOOMY FORECOAST WITH BOUTS OF 
OPTIMISM 
 
SUMMARY 
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¶1.  (SBU) Eastern Serbia may represent a preview of things to come 
for all of Serbia due to lack of investment and slow privatization. 
Despite their bleak economic outlook, three of Eastern Serbia's 
largest cities - Pirot, Zajecar and Bor -- have competent mayors who 
work closely with authorities in Belgrade and with international 
donors.  With the expansion of the European Union's borders to 
neighboring Bulgaria, these three cities could benefit from European 
cross-border programs and trade.  Each of the cities has several 
industries that stay afloat, and each also has a relatively 
undeveloped tourism sector with potential for expansion.  End 
Summary 
 
Pirot: Reaching out to Europe 
----------------------------- 
 
¶2. (SBU) Pirot lies about 20 minutes from the Bulgarian border and 
is home to the Tiger Tire factory.  One of its unexploited 
attractions and natural resources is its mineral water which flows 
from nearby mountains.  Though the water is not commercially 
exploited, travelers come from as far away as Austria to fill their 
jugs before returning.  Another attraction is the locally-made 
kilims, or flat-weave carpets.  Still made by hand, these kilims 
represent an authentic process that has not changed in years.  Mayor 
Vladan Vasic, elected in 2008, is a young politician, leader of the 
local citizens' group "Coalition for Pirot," who described his 
contact with Belgrade and Democratic Party (DS) officials as very 
close.  He identified Pirot's close proximity to Bulgaria and the 
new EU border as one of the town's best potentials for development. 
 
Zajecar: Redefines Community Center 
----------------------------------- 
 
¶3. (SBU) Zajecar's industries consist of porcelain, glass, cable and 
metal factories.  During a December 11 development conference 
sponsored by the Regional Agency for Development of Eastern Serbia 
(RARIS), local officials took participants on a tour of Zajecar's 
new multi-million dollar community center.  Use of the center, which 
includes a miniature golf course, tennis courts, a soccer field, a 
small downhill ski area, and a riverfront beach (Zajecar is on the 
Timok River), is free for local residents.  According to Mayor Bosko 
Nicic, leader of the regional coalition "I Live for Krajina," these 
community-based attractions will be very important in the next few 
years to help improve morale as a result of the coming economic 
crisis and similarly help in promoting domestic tourism in the area. 
 In addition to these modern attractions, the region also has 
400-500 B.C. Roman ruins called Felix Romuliana.  Although it 
currently attracts just a few thousand tourists per year, this site 
- which offers up-close tours of an ancient temple - has the 
potential to be a significant attraction with proper advertising. 
Nicic enjoys strong support as mayor and his party won almost 50% of 
seats in municipal assembly - 23 seats out of 50.  Finally, Zajecar 
joined USAID's Municipal Economic Growth Activity in September 2008 
with the main goal being to attract investments, support existing 
businesses and to create and retain jobs. 
 
Bor: Ecologically Hurting 
------------------------- 
 
¶4.  (SBU) The city of Bor is known for its status as a Serbian 
Superfund-level waste site stemming from its vast copper mines 
started in 1900.  On January 1, 2009, Bor's air contained a 
concentration of sulphur dioxide in air that was 100 times higher 
than the allowed limit.  Though temporary measures were taken, 
officials are keen to keep the copper mines operating as they are 
Bor's only source of income.  Attempts to privatize them have 
stalled, including various offers from potential Russian and 
Austrian buyers.  Young DS mayor Srdjan Marjanovic said that Russian 
ownership would be disastrous as they would ignore environmental 
concerns and just mine its copper resources.  Marjanovic's position 
as mayor is new for the DS as it came with restructuring of the 
local government three months after the May 2008 local elections 
that brought the Serbian Radical Party (SRS) to power.  Marjanovic 
maintains close ties with Belgrade and DS politicians and hopes that 
his pleas for economic and environmental assistance will be 
answered. 
 
¶5.  (U) On the scenery side, Bor has a cave deep in a mountain side 
called Lazareva Pecina.  Similar to Felix Romuliana, finding this 
attraction is difficult due to the almost complete lack of 
advertising, but its authenticity and unexploited value make it a 
natural wonder worthy of further investment.  USAID's project in Bor 
includes a Citizen Assistance Center, a business incubator, and 
assistance in launching a Commercial Court. 
 
Comment 
 
BELGRADE 00000148  002 OF 002 
 
 
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¶6.  (SBU) While small amounts of investment could improve the living 
standard of the citizens of Eastern Serbia, a gloomy economic 
forecast for 2009 means that help is not on the way.  In addition to 
unemployment, an environment abused for decades will continue to 
impact recreation and more devastatingly cause health issues for 
those who live in the region.  Each mayor has challenges ahead, 
particularly as they have to lobby Belgrade for funds that must be 
divided for all of Serbia.  Though Eastern Serbia appears to be 
benefitting from good governance at the moment, continued economic 
and environmental depredation could limit the local population's 
patience for the slow pace of DS's economic reforms and leave them 
vulnerable to more populist influences.  End Comment. 
 
 
MUNTER