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DE RUEHBW #0759/01 2091539
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P R 281541Z JUL 09
FM AMEMBASSY BELGRADE
TO RUEHC/SECSTATE WASHDC PRIORITY 0106
INFO EUROPEAN POLITICAL COLLECTIVE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHBW/AMEMBASSY BELGRADE
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK

UNCLAS SECTION 01 OF 02 BELGRADE 000759 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL SR
SUBJECT: SERBIA: REGIONAL DEVELOPMENT LAW ADOPTED 
 
REF: BELGRADE 276 
 
Summary 
------- 
 
¶1. (SBU) The Serbian Parliament on July 8 adopted a Law on Regional 
Development that envisages the establishment of seven statistical 
regions, whose borders would be defined by a separate government 
decision.  The main purpose of the law is to reduce the disparity of 
economic development of certain parts of the country and to permit 
access to EU regional development funds.  Opposition politicians 
criticized the law as either an attempt to divide Serbia or as an 
insincere decentralization effort.  Some national minority groups 
requested that ethnic representation also be one of the criteria for 
defining a region, which the government promised to take into 
consideration.  The law is a good start toward decentralization, but 
it does not yet go far enough to satisfy EU requirements.  End 
Summary. 
 
Seven Statistical Regions 
------------------------- 
 
¶2. (U) Serbia's National Assembly adopted on July 8 a new Law on 
Regional Development.  The new law, drafted by the Ministry of 
Economy and Regional Development, is designed to reduce regional 
differences and to promote their sustainable development.  The law 
envisages the formation of seven statistical regions in Serbia: 
Vojvodina, Belgrade, Western, Eastern, Central, Southern, and Kosovo, 
without specifying the borders of the regions.  These details are to 
be defined by a separate Government decree based on the 
recommendation of the Republican Statistical Office within six months 
after the adoption of the Law. 
 
¶3. (U) According to the level of their development, the regions will 
be classified into two groups - those that are above 75% of annual 
per capita GDP, and those that are below.  They will also be 
sub-classified into four groups according to the level of development 
of local self-government.  The law also sets economic criteria to 
differentiate municipalities and regions according to the level of 
their development, introduces classification of local self-government 
units, and determines the distribution of funds.  Financial sources 
for regional development will be provided from the national, 
provincial, and local government budgets, pre-accession EU funds, 
international community donations, development credits from 
international monetary institutions, and other sources. 
 
New Agencies 
------------ 
 
¶4. (U) The law provides for the formation of several new bodies to 
plan and conduct development of these regions.  A National Council, 
which will be led by a relevant - but still undetermined - minister, 
will plan regional development.  A National Agency for Regional 
Development will administer regional development, replacing the 
current Republican Agency for Small and Medium Enterprises.  In 
addition, seven regional councils will be created to provide a 
perspective on development planning from each region. 
 
What is the Purpose of the Law? 
------------------------------ 
 
¶5. (U) Government officials have promoted the law as important for 
decentralization, and to stimulate the economy in the least developed 
areas of Serbia.  Minister of Economy and Regional Development 
Mladjan Dinkic (G-17 Plus) told the National Assembly June 8 that the 
law's adoption was the second step in Serbia's decentralization.  The 
first step was the 2006 Law on Financing of Local Self-Government, 
while the final step of functional decentralization would be the Law 
on Return of Assets to Local Self-Governments planned for the end of 
this year, Dinkic said.  Deputy Prime Minister Bozidar Djelic 
announced that the goal of the law was to reduce the differences 
between certain regions of the country and most importantly to open 
the possibility of competing for European Union development funds. 
Djelic told the press on June 8 that the law would facilitate 
inter-municipal, inter-regional, cross-border, and international 
cooperation.  Djelic said the law was not intended to divide and 
would only introduce statistical regions.  In a June 9 interview with 
daily Danas, President Tadic said regionalization was an opportunity 
for balanced development among the regions.  Tadic said solutions for 
the Vojvodina Statute would be incorporated into the idea of 
regionalization. 
 
Too Much or Too Little Decentralization? 
 
BELGRADE 00000759  002 OF 002 
 
 
---------------------------------------- 
 
¶6. (U) Although the Government and representatives of the ruling 
coalition claimed that this law did not translate to political 
regionalization some of the opposition claimed that the law 
represented the disintegration of Serbia.  The Serbian Radical Party 
(SRS) and the Democratic Party of Serbia (DSS) claimed that the law 
would lead to further partition of Serbia and that the governing 
coalition was opening a "Pandora's box" by drawing new regional 
boundaries.  The Serbian Progressive Party (SNS) criticized the law 
for putting the new National Council in charge of distributing funds 
to the regions. 
 
¶7. (U) Others in the opposition believe the law will not represent 
real decentralization and does not go far enough.  Deputy Speaker of 
Parliament, law professor Judita Popovic from the opposition Liberal 
Democratic Party (LDP), criticized the law at a July 7 conference on 
regionalization organized in Novi Pazar, saying that the real 
intention of the law was to divert attention from the Statute of 
Vojvodina (ref) and to prevent full and functional decentralization 
of Serbia.  Popovic claimed that new statistical regions would not be 
able to apply independently for EU funds and would have no 
administrative capacity, forcing them to rely on the central 
government to carry out their work.  At the same conference, LDP MP 
Kenan Hajdarevic said the government was insincere in its claims that 
the statistical regions would not eventually become 
political-administrative regions and cautioned that borders should be 
drawn carefully now. 
 
Ethnic Minorities Concerned about Marginalization 
--------------------------------------------- ---- 
 
¶8. (U) Concerned that geographic areas with large minority 
populations would be split over statistical regions, representatives 
of all ethnic minority parties conditioned their support for the law 
on the publication of criteria for defining the regions.  The Forum 
of Sandzak Bosniak MPs from rival parties, established in response to 
this law, requested that the Sandzak municipalities of Novi Pazar, 
Sjenica, Tutin, Nova Varos, Prijepolje, and Priboj be in one region. 
The Bosniak MPs voted for the law based on the Government's promise 
to accept this request.  Hungarian Coalition MPs requested that 
municipalities with a predominantly Hungarian population be in one 
sub-region, within the Vojvodina province. Ethnic Albanian MP Riza 
Halimi demanded that the southern municipalities of Presevo, 
Bujanovac, and Medvedja also be in one region. 
 
¶9. (U) While few officials responded to these requests publicly, the 
few public statements rejected these ideas.  Socialist Party (SPS) 
Executive Board president Branko Ruzic told daily Vecernje Novosti on 
July 16 that there was no possibility of creating regions drawn on 
ethnic lines.  Economy Ministry State Secretary Dejan Jovanovic told 
Vecernje Novosti the Statistical Office would provide recommendations 
for the regions based on quantitative criteria, such as the size of 
population and level of development, similar to those applied in the 
European Union. 
 
Comment 
------- 
 
¶10. (SBU) Although the Regional Development Law was never intended to 
implement real regionalization or decentralization, disparate 
opposition forces used it as an opportunity to criticize the 
government for either the "secret" partition of the country or for 
insincere efforts at decentralization.  This has created a great deal 
of public confusion about the true purpose of the law, which is to 
make it possible for Serbia to obtain EU regional development funds. 
Functional regionalization and full decentralization are 
preconditions for Serbia's accession to the European Union, and this 
law intends to provide the basis for serious reform in that area. 
The law, however, leaves significant competences to the central 
government, especially in the identification of needs and the 
distribution of funds, leaving much more to be done to achieve 
effective decentralization.  End Comment. 
BRUSH