Serbia’s parliament endorses new (old) government

Serbia’s parliament endorses new (old) government
By Ivana Jovanovic in Belgrade August 12, 2016

The Serbian parliament endorsed Aleksandar Vucic’s new government and programme at a session on August 11. The new cabinet has 19 ministers, including three ministers without portfolio, eight of whom are new to the government.

Vucic has a new four-year mandate as prime minister, after the electoral list of his Serbian Progressive Party (SNS) won 131 of the 250 parliament seats in the early election on April 24.

Vucic decided to call early parliamentary elections just two years after he started his first term in April 2014, explaining he wanted a new full term and citizens’ full support to finish economic reforms and the EU integration process, which are the two main objectives of his new government. However, the election did not bring the expected result; the number of SNS list MPs decreased from 158 in 2014, as more parties entered the parliament.

Of the 225 deputies who attended the parliament session on August 11, 163 supported the new cabinet, 62 voted against and 24 left the chamber before the vote took place. The new government was supported by the SNS and all its pre-election coalition partners, its junior coalition partner in the previous government the Socialist Party of Serbia (SPS) and several minority parties including the Alliance of Vojvodina Hungarians (SVM). Both the SPS and the SVM are part of the new government.

“The new government will be working hard and will be fighting for only one aim - better [living] standard for our citizens, better economy, rule of law, a country in which kids of all citizens would want to stay and live,” Vucic said after being re-elected.

According to Dragan Djukanovic, vice president of think tank the Belgrade Center for Foreign Policy, the most important task of the new government will be the continuation of the EU integration process and the opening of new negotiation chapters.

“In Serbia, which has been deeply divided, it is very important to remain on the European path. We should bear in mind that anti-European and Eurosceptic sides can gain significant support if the government and its prime minister don’t keep moving forward in the EU integration process. This process brings economic stability,” Djukanovic told bne IntelliNews.

In July, Serbia opened Chapters 23 on the judiciary and fundamental rights and 24 on justice, freedom and security in its EU negotiation process, despite an attempt to block their opening by Croatia. Zagreb initially refused to approve the opening of Chapter 23 in April, demanding guarantees that Serbia would not abuse its law on universal jurisdiction over war crimes trials and that it would ensure rights for the Croatian minority in Serbia and full cooperation with the Hague war crimes tribunal. While it later allowed the chapters to be opened, Zagreb has set up a commission to monitor how Serbia is meeting benchmarks from the two chapters.

European dreams

Many young Serbians do not vote at all, but they still see EU integration as a possibility for a better future.

“I really hope [Vucic] is honest when speaks about the EU because the integration with the 28 EU countries and opening of borders would mean a chance for a job, a chance for a better job, a chance for a career. We are stuck here where a job is a fantasy! ... as long as I need a working visa, I’m not competitive,” Snezana Pejkovic (28), a biologist from Sabac, told bne IntelliNews.

“I do not only see the EU as a chance to leave. I think it would bring jobs and opportunities here, as investors would trust in market which is regulated according to the rules which are put in place in 28 other countries. ... If [Vucic] and his people convince me they are taking us in this direction, I’ll give them my vote in 2020, but now I just can’t," Pejkovic added.

Both Vucic and Serbia’s current President Tomislav Nikolic owe much of their political success to their 2008 decision to quit the ultra nationalist Serbian Radical Party (SRS) led by Vojislav Seselj. The two left the SRS to form the SNS whose main principle has been moving Serbia towards the EU. This brought Vucic support both within the country and internationally. Even though the EU is his main policy goal, he still insists on good relations with Russia, which is broadly justified by Serbia’s dependence on Russian gas.

“Vucic though seems to be playing the field a bit, eager to keep warm relations with the EU, the US, Russia, China and the UAE. The latter keeps FDI inflows/trade elevated, and this has been a key part of Serbia’s stellar recent real GDP growth performance – with officials now talking of 2.5%-3% real GDP growth this year, as net FDI comes in around 5%,” Timothy Ash of Nomura International said in an analyst note.

Djukanovic believes that Serbia will open four more negotiation chapters by the end of 2016, though the normalisation process between Belgrade and Pristina, which is covered by Chapter 35, will remain a challenge. Chapter 35 and Chapter 32 on financial control were the first two chapters to be opened in December 2014. Chapter 35 makes Serbia’s integration to the EU unique as the negotiations are conditioned by a non-EU member.

“The Belgrade-Pristina dialogue conditions directly the dynamic of the opening of new chapters, but larger EU larger engagement is needed for implementation of already reached deals and afterwards for establishment of a new agenda,” Djukanovic said.

However, not everyone is enthusiastic about the new government, despite the expected progress towards EU integration.

Tired of talking

Sasa Pavlovi (32), a graphic designer from Belgrade, told bne IntelliNews that he has no expectations of the new government and is tired of political rhetoric which doesn’t bring any change.

“They all make same promises and none keep them once they move to Nemanjina 11 [the address of Serbia’s government]. I do not vote and I think that no one votes in Serbia anymore, except our pensioners who still hope for better future in their seventies, eighties, even nineties. Isn’t it sad? To wait and hope for future when it can take you to only one place? But ok, is better to have Vucic than Seselj anyway,” Pavlovi said.

Valentina Boskovic (24), a fitness trainer from Belgrade, also doesn’t expect anything to change as a result of the new government.

“It is clear that we had elections because someone abroad wanted them. I’m not sure if it was the West or Russia and it doesn’t make me happy, but that is how it is when you are small country on the crossroads,” Boskovic told bne IntelliNews. “This not new but reconstructed government will bring nothing new. We will be poor for the next four years too. I’m scared.”

Continuity and change

An important figure for the continuation of the government’s public finances consolidation is Finance Minister Dusan Vujovic, who was reappointed on August 11.

“The framework we are getting from the International Monetary Fund will apparently have to be respected,” Djukanovic said.

“[I]t is also good news that PM Vucic has recommitted to an EU/IMF reform agenda, which focuses on the need for continued fiscal consolidation (talk of tax and customs reform), reform of public administration (“right tasking”, rather than “right sizing” now), and [state-owned enterprise] reform,” Ash wrote.

Aiming to stabilise public finances, Vucic struck a deal with the IMF, whose board approved a precautionary €1.2bn three-year Stand-By Arrangement (SBA) in February 2015. In H1, the budget gap stood at RSD18.24bn (€148.28mn), down 48.4% in nominal and 48.9% in real terms against January-June 2015. On the other hand, the process of restructuring public companies and downsizing their workforces has stalled.

Vucic told the parliament that for the continuation of this process, there is no one with better qualifications than Vujovic. Before becoming minister of finance in April 2014, Vujovic worked at the World Bank for many years, including as its representative in Ukraine.

The highest-profile loser of the new government is former Minister of Economy Zeljko Sertic, who was not re-appointed, despite playing an important role in the sale of Serbia’s only steel mill Zelezara Smederevo to China’s Hebei Iron and Steel Group (HBIS).

Vucic replaced Sertic with Goran Knezevic, a high level SNS official who served as minister of agriculture, forestry and water management between 2012 and 2013. He joined the SNS in 2010 from the Democratic Party (DS).

Sertic was directly involved in the restructuring of 17 state-controlled firms designated by the government as strategically important for which Serbia agreed with the IMF to extend court protection from creditors until May 31. The companies employ over 20,000 people in total. Reportedly, implementation of pre-pack reorganisation plans (PPRP) has been started for most of them, but the public has not been given any more details about the process.

Vucic’s decision to keep Zlatibor Loncar as health minister has been criticised by some MPs and the media.

The Organized Crime and Corruption Reporting Project’s Serbian partner the Crime and Corruption Reporting Network (KRIK) has published an investigation revealing that Loncar received an apartment in 2002 belonging to the wife of a hitman for the Zemun Clan, and later resold it for a profit. The revelation followed accusations made more than a decade ago by former gangsters that in 2002 Loncar, then a doctor, had received an apartment as payment for the murder in hospital of gangster Veselin Bozovic, a rival of the Zemun Clan who had survived an earlier shooting attack.

Vucic's fan base

Despite this, and criticism from younger voters, many older Serbians still have high hopes of their prime minister. Even Vucic’s decision to cut pensions and public sector wages in November 2014 has not dented their admiration for him,

“I love him, I admire him but I'm scared for him. He can't do it all alone. I can't see anyone who can really help him and support him,” Mira Djordjevic (67), a retired teacher from Belgrade, told bne IntelliNews.

Her husband, Miodrag (69) also a retired teacher, believes that the prime minister has to be strong.

“[The ministers] have a hard job to do, and he has to led them and control them,” Miodrag Djordjevic told bne IntelliNews. “It is not easy to control Serbs, we are a strange nation.”