COMMISSION STAFF WORKING DOCUMENT SERBIA 2015 REPORT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS EU Enlargement Strategy

EN EN
EUROPEAN
COMMISSION
Brussels, 10.11.2015
SWD(2015) 211 final
COMMISSION STAFF WORKING DOCUMENT
SERBIA
2015 REPORT
Accompanying the document
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS
EU Enlargement Strategy
{COM(2015) 611 final}
{SWD(2015) 210 final}
{SWD(2015) 212 final}
{SWD(2015) 213 final}
{SWD(2015) 214 final}
{SWD(2015) 215 final}
{SWD(2015) 216 final}
Offentligt
KOM (2015) 0611 - SWD-dokument
Europaudvalget 2015
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Table of Contents
1. INTRODUCTION....................................................................................................... 4
1.1. Context .............................................................................................................. 4
1.2. Summary of the report....................................................................................... 4
2. POLITICAL CRITERIA............................................................................................. 6
2.1. Democracy ........................................................................................................ 6
2.2. Public administration reform............................................................................. 8
2.3. Rule of law ...................................................................................................... 11
2.4. Human rights and the protection of minorities................................................ 17
2.5. Regional issues and international obligations ................................................. 19
3. NORMALISATION OF RELATIONS BETWEEN SERBIA AND KOSOVO...... 22
4. ECONOMIC CRITERIA.......................................................................................... 23
4.1. The existence of a functioning market economy............................................. 24
4.2. The capacity to cope with competitive pressure and market forces within
the Union......................................................................................................... 28
5. ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP...................... 31
5.1. Chapter 1: Free movement of goods ............................................................... 31
5.2. Chapter 2: Freedom of movement for workers ............................................... 32
5.3. Chapter 3: Right of establishment and freedom to provide services............... 32
5.4. Chapter 4: Free movement of capital .............................................................. 33
5.5. Chapter 5: Public procurement........................................................................ 33
5.6. Chapter 6: Company law................................................................................. 35
5.7. Chapter 7: Intellectual property law................................................................ 35
5.8. Chapter 8: Competition policy ........................................................................ 36
5.9. Chapter 9: Financial services .......................................................................... 37
5.10. Chapter 10: Information society and media .................................................... 37
5.11. Chapter 11: Agriculture and rural development.............................................. 38
5.12. Chapter 12: Food safety, veterinary and phytosanitary policy........................ 39
5.13. Chapter 13: Fisheries....................................................................................... 40
5.14. Chapter 14: Transport policy........................................................................... 40
5.15. Chapter 15: Energy.......................................................................................... 41
5.16. Chapter 16: Taxation....................................................................................... 43
5.17. Chapter 17: Economic and monetary policy................................................... 44
5.18. Chapter 18: Statistics....................................................................................... 44
5.19. Chapter 19: Social policy and employment .................................................... 45
5.20. Chapter 20: Enterprise and industrial policy................................................... 47
5.21. Chapter 21: Trans-European networks............................................................ 47
5.22. Chapter 22: Regional policy and coordination of structural instruments........ 48
5.23. Chapter 23- Judiciary and fundamental rights ................................................ 49
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5.24. Chapter 24: Justice, freedom and security ...................................................... 59
5.25. Chapter 25: Science and research.................................................................... 64
5.26. Chapter 26: Education and culture.................................................................. 65
5.27. Chapter 27: Environment and climate change ................................................ 65
5.28. Chapter 28: Consumer and health protection.................................................. 67
5.29. Chapter 29: Customs union............................................................................. 68
5.30. Chapter 30: External relations......................................................................... 69
5.31. Chapter 31: Foreign, security and defence policy........................................... 70
5.32. Chapter 32: Financial control.......................................................................... 71
5.33. Chapter 33: Financial and budgetary provisions............................................. 73
Annex I - Relations between the EU and Serbia............................................................... 74
Annex II – Statistical Annex ............................................................................................. 76
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1. INTRODUCTION
1
1.1. Context
The European Council granted Serbia the status of candidate country in 2012. Accession
negotiations were launched in January 2014. The analytical examination of the EU acquis
(screening process) was completed in March 2015. The Stabilisation and Association
Agreement (SAA) between Serbia and the EU entered into force in September 2013.
Serbia remained committed to its strategic goal of EU accession and continued to build a track
record in implementing the obligations of the SAA. It is implementing an ambitious political
and economic reform agenda and successfully finalised the action plans required for the
opening of the rule of law negotiating chapters. Serbia played a constructive role in the
region. It remained committed to the normalisation of its relations with Kosovo∗
and came to
key agreements with Kosovo within that process. It has also had a very constructive role in
managing the migration crisis.
1.2. Summary of the report
As regards the political criteria, stakeholders, including civil society, were increasingly
involved in the accession process. Though co-operation between the authorities and the
independent regulatory bodies and the Ombudsman has recently increased, it should be
further improved. The use of urgent procedures in parliament should be curtailed.
Constitutional reforms will be needed for alignment with EU standards in some areas.
Serbia is moderately prepared in the area of public administration reform. Good progress has
been achieved with the adoption of a comprehensive action plan. Serbia needs to remain
committed and implement its reform targets. Strong political will remains essential to
professionalise and depoliticise the administration and make recruitment and dismissal
procedures more transparent, especially for senior management positions.
The judicial system has reached some level of preparation. New rules for evaluating judges
and prosecutors were adopted in May. Most Court Presidents have now been appointed on a
permanent basis. Further steps are needed to tackle political influence. The quality and
efficiency of the judiciary and access to justice are hampered by an uneven distribution of
workload, a burdensome case backlog and the lack of a free legal aid system.
Serbia has some level of preparation in preventing and fighting corruption, which remains
widespread. The anti-corruption effort has yet to yield significant results. The institutional set-
up is not yet functioning as a credible deterrent. A track record of effective investigations,
prosecutions and convictions in corruption cases is required, including at high level.
Serbia has some level of preparation as regards the fight against organised crime. New DNA
and drug chemistry laboratories became operational. The country is actively contributing to
international and regional cooperation. Serbia adopted strategies for the fight against money
laundering and terrorism financing as well as a financial investigation strategy but it still lacks
an overall strategic picture of the organised crime situation on its territory. A credible track
record in the fight against organised crime needs to be established.
1
This report covers the period from October 2014 to September 2015. It is based on input from a variety of
sources, including contributions from the government of Serbia, the EU Member States, European Parliament
reports and information from various international and non-governmental organisations. As a rule, legislation or
measures which are under preparation or awaiting parliamentary approval have not been taken into account.
∗
This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the ICJ
Opinion on the Kosovo declaration of independence.
5
The legal and institutional framework for the respect of fundamental rights is in place.
Consistent implementation across the country needs to be ensured, including as regards
protection of minorities. More needs to be done to ensure conditions for the full exercise of
media freedom and the freedom of expression, where Serbia has achieved some level of
preparation. Further sustained efforts are needed to improve the situation of Roma and of
refugees and displaced persons. The authorities took steps to strengthen the protection of the
rights of lesbian, gay, bisexual, transgender and intersex (LGBTI) persons, and again
facilitated a pride parade in Belgrade. However, a stronger culture of respect for LGBTI
persons is still needed.
Serbia participated constructively in regional initiatives and worked to improve its bilateral
relations in a spirit of reconciliation and good neighbourly relations. The Prime Minister's
attendance at the Srebrenica genocide commemoration in July sent a positive message.
Regarding the normalisation of relations with Kosovo, Serbia remained committed to the
implementation of the April 2013 'First agreement of principles governing the normalisation
of relations' and other agreements reached in the EU- facilitated dialogue. Key agreements
were finalised in August on energy, telecoms, establishment of the Association/Community of
Serb majority municipalities as well as the Mitrovica Bridge. The dialogue achieved further
concrete results in the fields of justice, civil protection integration, vehicle insurance, customs
collection and IBM. There were also constructive discussions to improve cooperation in
tackling migratory flows from Kosovo. The steps taken gave fresh momentum to the
normalisation of relations and should have a positive and concrete impact on the everyday life
of citizens in both Kosovo and Serbia.
As regards the economic criteria, Serbia is moderately prepared in developing a functioning
market economy. Good progress has been made to address some of the policy weaknesses and
the positive momentum for advancing structural reforms needs to be preserved. Serbia's
economy is recovering from a recession. Thanks to significant consolidation measures and
better tax collection, the budget deficit has fallen sharply. Fiscal consolidation should be
sustained and underpinned by implementing reforms as planned. Inflation remains very low,
allowing the central bank to reduce interest rates. Unemployment, though very high, has fallen
below 20%. Progress has been made with restructuring of publicly owned companies and
main utilities, but it needs to advance further. The private sector is underdeveloped and
hampered by weaknesses in the rule of law and difficult access to finance. The process of
economic reforms needs to continue with particular emphasis on restructuring state owned
enterprises and public utilities.
Serbia is moderately prepared in terms of capacity to cope with competitive pressure and
market forces within the Union. The education system has remained inefficient, physical
infrastructure underdeveloped and the informal sector and state aid are substantial. Serbia
needs to improve the quality of the education system, gearing it towards labour market needs,
stimulate private investments and speed up the implementation of public infrastructure
projects. It needs to better regulate para-fiscal charges and provide a transparent framework of
state support to the private sector, redirecting it towards efficient and horizontal objectives,
such as support to SMEs and research and development.
As regards its ability to take on the obligations of membership, Serbia has continued to
align its legislation with the EU acquis across the board. Adequate financial and human
resources, and sound strategic frameworks will be crucial to maintain the pace of reforms.
Serbian legislation is now largely aligned in areas such as intellectual property, anti-trust and
mergers, and monetary policy. Serbia set up a National Investment Committee, bringing
together national authorities, donors and international financial institutions (IFIs) to
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coordinate Serbian investment policy in key sectors of the single project pipeline (energy,
transport, environment and business-related infrastructure), which sets an example in the
region. In the areas of public procurement, statistics and financial control, Serbia is
moderately prepared. Serbia will need to align its foreign and security policy progressively
with the European Union's Common Foreign and Security Policy in period up to accession.
Mixed-migration flows increased dramatically, creating a substantial burden on the Serbian
asylum and migration framework. Serbia made a substantial effort to ensure that third country
nationals transiting through the country received shelter and humanitarian supplies, with EU
support as well as the support of others. At the same time, Serbia should continue efforts to
address the increase of unfounded asylum applications lodged by Serbian nationals in EU and
Schengen countries, with a view to preserving the visa free regime.
2. POLITICAL CRITERIA
2.1. Democracy
Elections
Serbia has not yet addressed all of the recommendations of the OSCE’s Office for Democratic
Institutions and Human Rights (OSCE/ODIHR), in particular those on ensuring that campaign
financing and the electoral process are transparent. Certain local municipality elections and
other local events have been marred by violence and claims of intimidation and irregularities
that have not yet been properly investigated. Those responsible should be brought to justice.
Parliament
Parliament’s legislative activity was intensive and reflected increased involvement in the
accession negotiation process. Consultation and transparency to some extent improved.
However, the use of urgent procedures, including on draft legislation linked to the EU
accession process, remained extensive. Oversight of the executive needs to be further
enhanced. Parliament needs to increase its support for the institutional role of independent
regulatory bodies and the Ombudsman's office and promote implementation of their
recommendations.
Parliament engaged in intensive legislative activity. Consultation processes improved, in
particular through frequent use of public hearings, including on EU accession-related issues,
and parliamentary sessions on specific topics held locally. Parliament is increasingly involved
by the government in the accession negotiations process. Parliament also has regular meetings
and consultations with other stakeholders, including the National Convent on European
Integration which brings together civil society organisations involved in the accession
negotiations process. Parliament has yet to adopt an annual work plan and a code of ethics.
The use of urgent procedures remains extensive, including for major pieces of legislation.
This limits the time allowed for scrutiny of draft legislation, and is not always strictly
necessary. More democratic and open cross-party political dialogue needs to be promoted.
Parliament remained engaged in its oversight activity through questions and regular debates
on government reports. It did not, however, regularly hold monthly sessions or oral questions
to the government. Independent regulatory bodies’ reports are discussed but parliament needs
to take a more proactive approach to promoting and monitoring the implementation of their
findings and recommendations. Parliamentary debates should not be used to undermine
independent regulatory bodies and the Ombudsman’s role.
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Governance
The Serbian government remained actively engaged towards its EU accession priority goal. A
core negotiating team was formed in September 2015. Involvement of parliament and other
stakeholders, including civil society, needs to be further strengthened and streamlined. While
recent steps to increase dialogue are welcome, the Serbian government needs to cooperate
fully with independent regulatory bodies and the Ombudsman's office and to respect their
remit. The legal framework for local self-government still needs to be improved and further
implemented. Constitutional changes are needed to address issues of importance for the
accession negotiations.
The Serbian government improved consistency in implementing its programme of priority
reforms. It remained committed to EU integration and to the EU-facilitated dialogue with
Kosovo. With political direction from the Minister for EU Integration, leadership by its Chief
Negotiator, and effective support from the Serbian European Integration Office, the Serbian
administration demonstrated a high level of preparedness and professionalism in the screening
process. A core negotiating team was formed in September 2015. The government addressed
the findings of the 2014 Progress Report by acting on the National Plan for the Adoption of
the Acquis for the period 2014-2018. Further systematic involvement of parliament and civil
society in the accession process is needed. Greater coordination of sectoral policies and
anticipation of their financial implications remain crucial for the negotiations. Further efforts
are needed to communicate more effectively the benefits of joining the EU to Serbian citizens.
Public consultations need to be wider and deadlines more realistic to enable all interested
parties to provide qualitative input. This is especially needed for draft legislation with major
economic and social impacts. More effective monitoring of the implementation of enacted
legislation and strategic documents is needed. Independent regulatory bodies and the
Ombudsman play an essential role in ensuring that the executive is accountable. It is a matter
of concern if members of the government act in such a way as to undermine their work. The
Prime Minister's initiative to hold regular meetings with them is a welcome step.
As regards local self-government, the law on Vojvodina’s resources still needs to be adopted
as prescribed by the Constitution. Local administrative and management capacity is weak and
significant disparities between municipalities persist. Responsibilities continue to be exercised
at local level without proper analysis of the capacity and resources required. Transfers
earmarked by line ministries need to be allocated in line with the law on municipal finance.
Local authorities should be consulted more on new legislation that has local implications.
The Constitution has yet to be revised to reflect fully the recommendations of the Venice
Commission, particularly on parliament’s role in judicial appointments, the political parties’
control of parliamentary office, the independence of key institutions and the protection of
fundamental rights, including data protection. A parliamentary action team was formed in
April for this purpose.
Civil society
Some progress was made in improving cooperation between the government and civil society
organisations (CSOs). However, additional measures should be taken to ensure transparent
dialogue between CSOs and other state institutions.
An empowered civil society is a crucial component of any democratic system and should be
recognised and treated as such by the state institutions. Civil society organisations and human
rights defenders play a key role in raising awareness of civil and political rights in a climate
that is often hostile to criticism. Civil society continued to grow, especially at local level.
8
Since May, the Prime Minister took the initiative to call regular meetings with representatives
of leading CSOs. Cooperation between the government and civil society still needs to be
improved and a mechanism ensuring transparent dialogue with CSOs is needed. The
authorities included civil society organisations in the accession negotiations process.
However, civil sector's participation in policy making is still to a large extent ad hoc which
prevents the use of the full potential of the sector.
The Office for Cooperation with Civil Society has taken a number of initiatives. The director
of the office resigned in March and a successor has not yet been appointed. The 2015-2019
national strategy for an enabling environment for CSOs was drafted with wide participation
by civil society. Mechanisms to ensure transparent funding of CSOs need to be put in place.
Serbian laws, e.g. tax rules, do not encourage private donations to CSOs. The law on
volunteering has not significantly expanded voluntary work and the law on social protection
has yet to be fully implemented as regards CSOs providing social services.
Civilian oversight of the security forces
Parliament has continued to perform its oversight role. The remit of the Ombudsman’s office
in this field needs to be better understood and defended. Serbia’s legislative framework needs
to be strengthened.
The parliamentary committee for oversight of the security forces continued to review the
activities and reports on the Security-Information Agency (BIA), the Military Intelligence
Services and the Inspector General of the Ministry of Defence on a regular basis. The
committee held a debate on the Ombudsman’s office's investigation into incidents involving
military officers during the 2014 Pride parade, and on the Ombudsman's assertions that the
Military Security Agency had illegally intercepted communications. The comments made on
this occasion denigrating the Ombudsman, who was acting within his prerogative with regard
to civilian control of the security forces, hamper effective oversight. The potential for abuse
of interception of communications needs to be addressed. A law on access to state security
files still needs to be adopted. A new law on the BIA, reviewing the current regulations giving
the security services responsibilities for criminal proceedings and the use of special measures,
has not yet been adopted.
2.2. Public administration reform
Serbia is moderately prepared with the reform of its public administration. Good progress
has been achieved with the adoption of a comprehensive public administration reform action
plan, a law on inspection oversight, a national training strategy for local government, and the
law on maximum number of public sector employees. However, Serbia now needs to ensure
that the ambitious reform plans and the legal framework are implemented. Strong political
will remains essential to professionalise and depoliticise the administration and make
recruitment and dismissal procedures more transparent, especially for senior management
positions. In the coming year, Serbia should, in particular:
→ streamline the roles and responsibilities of leading institutions in charge of policy making
and coordination and develop a consolidated planning and monitoring system;
→ amend the current civil service framework to fully guarantee neutrality and continuity of
the public administration and ensure merit-based recruitment, promotion and dismissal
procedures by eradicating exceptions and transitional arrangements in appointments;
→ adopt a comprehensive multi-annual public financial management reform programme.
9
Public service and human resources management
The legal framework for the central government civil service is in place, but it does not apply
to many public employees exercising key state functions. The legal separation of political and
public service positions is not clearly enforced. The civil service law provides for merit-
based recruitment, promotion and dismissal procedures. Several provisions, however,
leave space for wide discretionary powers and are regularly used in practise. Turnover of
senior civil servants is an area of particular concern. Nearly 60 % of senior civil servants are
still appointed on the basis of exceptions or transitional arrangements. Also reorganisation can
be used unfairly to dismiss or reassign staff. Disciplinary procedures are in line with civil
service principles and an appeals mechanism is in place. A civil service law for local
government employees has not yet been adopted.
The Ministry of Public Administration and Local Self-Government is responsible for central
coordination of human resources management. The Human Resources Management Service
(HRMS), not directly accountable to the ministry, is in charge of maintaining the HRM
information system. The system is not used to support human resources policy planning and
monitoring. Human resources units in public administration bodies are weak and mainly
compliance-oriented.
The civil service remuneration system is based on standard job classifications, but in
practice it does not achieve equal pay for equal work across the public administration. A
performance bonus scheme allows some discretionary awards, which are not in line with a
transparent and fair salary system. A centralised payroll system is needed.
The civil service professional training strategy has envisaged a new system for professional
development but it has not been fully implemented. The number of civil servants receiving
training, through HRMS, remains low, including those at senior management posts. There are
no synergies with training programmes provided for local government civil servants. The
design of the performance appraisal system is appropriate but appraisal grades are inflated in
practice, entitling staff to advance through salary steps in ways that the current budget cannot
support. There is also no link between the performance appraisal system and training.
Integrity in public service is promoted in line with the anti-corruption strategy; relevant
measures to prevent corruption in public service are being implemented.
Policy development and coordination
The legal basis and institutions for a coherent policy-making system including European
integration are in place. In practice policy coordination focuses on formal, procedural issues
rather than on substance, and a clearer division of responsibilities between the General
Secretariat, the Public Policy Secretariat and the new delivery units in the Prime Minister’s
Office is essential. Policy planning is not systematically linked with medium-term fiscal
planning. This jeopardises the sustainability of strategies and reform programmes. The
hierarchy among strategies is needed to reduce the number of overlapping strategies.
Inclusive and evidence-based policy and legislative development is only partially ensured.
The administration has limited number of staff and capacity to develop policy and legislative
proposals, including on the acquis. This is due to the fact that the administration has large
implementation and inspection departments due to traditional focus on ensuring compliance.
Public and inter-ministerial consultations on proposals are required but often conducted
formalistically and too late in the process. Regulatory impact assessments are usually carried
out, but their quality varies considerably. The introduction in March of compulsory financial
impact assessments for all legislation is a positive step, but the Ministry of Finance will have
to allocate necessary resources.
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The government publishes annual monitoring reports on key strategic documents. This
enables public scrutiny of government work. However, the reports do not measure
achievements against objectives. Parliamentary scrutiny is conducted by specialist legislative
committees, without assessing the implementation of laws or strategies.
Accountability of the administration
The way the state administration is organised does not ensure effective lines of
accountability. Many agencies decide on public policies and report to the Prime Minister and
even to parliament rather than to the minister responsible for their area. Agencies have
proliferated, making oversight difficult. Rationalisation is one of the priorities of the public
administration reform (PAR) strategy, but the financial resources, capacity and political
backing to carry out this process are a concern. Within institutions managerial accountability
is not systematic and responsibilities are not delegated to middle management (see Chapter 32
- Financial control).
The relevant internal and external oversight mechanisms are in place to enforce the citizens'
right to good administration. The Ombudsman plays a key role, and the public authorities
are obliged to report on implementation of his recommendations (see under Governance). The
right to access public information is governed by the law on free access to information of
public importance. The scope of the exemptions allowed does not meet European standards.
The Commissioner for Information of Public Importance lacks resources, and this has resulted
in a backlog of complaints. The law needs to be further strengthened to ensure the
Commissioner’s decisions are carried out.
The general administrative procedures law governs the right to administrative justice, but a
large number of special administrative procedures hinder overall transparency. The continuing
backlog in administrative courts has also damaged public confidence. As regards the right to
seek compensation, there are neither clear rules for compensation in cases of wrongdoing,
nor available data on implementation of court cases.
Public financial management
Serbia has a medium-term budgetary framework, but strategies are not consistent with it.
Programme budgeting has recently been introduced, but managerial accountability is needed
to make it effective. Institutional coverage, in-year monitoring and reporting are weak and the
budget is less reliable over the medium term. Until now, Serbia has focused on reforming
certain parts of its public finance system, without explicitly linking different areas and reform
measures. A public financial management reform programme for 2015-17 is under
finalisation and should address identified weaknesses, link all public finance areas together
and sequence reform actions among them. Budget transparency is not sufficiently ensured in
practice. The 2014 deadline for submitting the budget to parliament was not met.
Service delivery to citizens and businesses
The PAR strategy aims at creating a more user-oriented administration. However, so far e-
government projects and one-stop-shops have only been introduced on a case-by-case basis.
Public satisfaction with government services is not measured regularly. There are too many
special administrative procedures, which make it difficult to improve the level of service and
introduce e-services. The recently adopted law on inspection supervision aims to simplify
administrative procedures, improve law enforcement, tackle the grey economy and reduce
administrative burdens. The new law on administrative procedures has yet to be adopted.
11
Strategic framework for public administration reform
Serbia has a PAR strategy and an action plan for 2015-2017. It sets clear targets and
indicators and a good monitoring framework for measuring progress. Its effectiveness will
need to be further assessed. A separate e-government strategy has not yet been adopted. The
PAR Council, chaired by the Prime Minister, ensures political support. The Ministry of
Public Administration and Local Self-Government coordinates implementation, via the inter-
ministerial PAR group consisting of relevant state administration bodies, civil society and
local government representatives. Financial sustainability of the reforms is not yet ensured.
PAR measures have been budgeted as specific projects in individual institutions in the 2015
budget. The government will need to ensure funding in the 2016 budget and in the medium-
term expenditure framework.
2.3. Rule of law
Functioning of the judiciary
Serbia’s judicial system has some level of preparation. Some progress has been made in the
last year in promoting merit-based requirements for career progression, e.g. by adopting rules
for evaluating judges and prosecutors. However, judicial independence is not assured in
practice. There is scope for political interference in the recruitment and appointment of judges
and prosecutors. Administration of justice is slow, with a significant backlog of cases.
Frequent changes of legislation and insufficient training make the legal environment
challenging. In addressing the shortcomings outlined below in the coming year, Serbia should
in particular:
→ establish and implement a fair and transparent merit-based recruitment system and career
management to better guarantee the operational independence of the justice system;
→ adopt a new law on free legal aid and enable smooth implementation in cooperation with
main stakeholders;
→ reduce the case backlog and harmonise case law.
Strategic documents
In 2013 Serbia adopted a new 5 years National Judicial Reform strategy (NJRS) and action
plan. The latter will need to be revised so as to reflect the main recommendations of the
functional review of the justice system conducted by the World Bank.
Management bodies
The High Judicial Council (HJC) and the State Prosecutorial Council (SPC) submit
proposals to parliament on judicial appointments and dismissals. They are chaired by the
Supreme Court President and the State Prosecutor respectively. The HJC has 11 members.
The SPC has 11 members. Responsibility for court and prosecution budgets is divided
between the Councils (which are responsible for the budget for judges/prosecutors and
operational costs) and the Ministry of Justice, which is responsible for court/prosecution
office staff including judicial/prosecution assistants, infrastructure, IT equipment and capital
investments. Efficiency in financial management is hampered by this shared responsibility
and accountability.
Independence and impartiality
The independence of judges and prosecutors is laid down in the Constitution and framework
legislation. However, the Constitution and laws allow political influence. Parliament appoints
the Supreme Court President and all court presidents, the State Prosecutor and all prosecutors.
12
The composition and method of election of the HJC and SPC need to be amended to exclude
political interference. Both councils have failed to react publicly in protection of judicial
independence in cases of political interference in the work of judges and prosecutors. Court
rules of procedure provide for random allocation of cases, but in practice not all courts use
this procedure and exceptions are relatively frequent. There is no corresponding technology
for allocating files randomly in prosecution offices. There is a legal framework in place on
preventing judges from being removed and on withdrawing cases from judges. However,
Court presidents retain extensive powers to remove judges from cases or reassign cases.
Courts are not obliged to inform the HJC of the number of court cases withdrawn from
judges.
Accountability
Codes of ethics are in place for judges, prosecutors and lawyers, but there is little training.
There is an ethical committee in the SPC, but the HJC does not have such a body. There are
no integrity plans in place for the judiciary. Integrity is not a standard criterion in the selection
and nomination process. Disciplinary procedures are in place for both judges and
prosecutors. The HJC and SPC are responsible for launching proceedings and for decisions on
disciplinary and ethical matters. Where wrongdoing has been proven, the sanctions applied in
disciplinary cases so far have not been deterrent. There are few cases against prosecutors. The
HJC faced obstruction in concluding one landmark disciplinary case concerning judicial
independence. Judges and prosecutors must declare their assets to the Anti-Corruption
Agency every year and report possible conflicts of interest. A criminal case was filed against
one judge, but it was rejected. Fourteen cases were brought against judges who failed to report
significant changes in property ownership on time.
Professionalism and competence
Appointments, evaluation and dismissals are in the hands of the HJC and SPC. Both
councils have adopted criteria and guidelines on appointments and evaluation. Application of
the rules for judges has been delayed. Serbia lacks a comprehensive system of periodic
individual evaluation of judges and prosecutors. There is a need to set out a systematic
approach to career development, including training needs.
Quality of justice
The Judicial Academy is an independent institution with a mandate for initial and continuous
training of the judiciary. Its current annual budget is EUR 1.496 million. It has 30 staff. The
High Judicial Council and State Prosecutorial Council determine the number of initial trainees
each year. Continuous training is voluntary, except where it is required by law or by a council
decision. Initial training so far does not guarantee the standards needed by people entering the
profession. The offered continuous training is insufficient to help practitioners overcome the
serious challenges posed by numerous changes in the law and the poor overall quality of the
laws. Judicial and prosecution assistants so far do not receive training.
In 2015, the total budget for the judicial system represented EUR 26 per inhabitant. There are
38 judges, 11 prosecutors and 116 practising lawyers per 100 000 inhabitants. There are 209
private bailiffs (enforcement agents). The judicial system is adequately resourced compared to
the EU average and in relation to GDP, but resources are not always allocated efficiently.
Courts are partly funded by court fees (43 %), but collection rates are low and a further
decline is expected as services are transferred to public notaries and private bailiffs. Budget
planning and resource allocation are rarely adjusted. Automated information exchange is rare
and information and communication technology remains largely underdeveloped.
Meaningful, accurate and timely statistics are missing. There is not a consistent or easily
13
accessible body of case law. There is no case-weighting system able to address the issue of
significant differences in workload. A new law on mediation has been in force since January
but awareness of mediation is limited and training among professionals is required. Serbia has
observer status in the European Judicial Training Network (EJTN).
Efficiency
The overall length of proceedings and the number of old cases recorded as a backlog remain
a serious concern. A national backlog reduction programme is in place but the courts did not
meet the targets set for 2014, partially owing to a four-month strike by lawyers. The court
system remains clogged by bureaucracy and extra-judicial duties, such as certification of
documents, and especially by 1.6 million enforcement cases, mostly related to civil claims
and utility bills. In 2014, the backlog increased further in the Supreme Court with a clearance
rate, i.e. ratio of solved cases to newly received cases, of 80.7 %, whereas the basic courts,
administrative courts and higher courts had clearance rates of 110 %, 103.74 % and 108.47 %
respectively. Human resources policy is challenged by the need to manage a relatively high
number of judges and the lack of skills among support staff.
Fight against corruption
Serbia has some level of preparation in the fight against corruption. Some progress has been
achieved in the past year, especially in implementing existing legislation and adopting a new
law on whistle-blower protection. However, corruption remains widespread and strong
political impetus has yet to translate into sustained results. In addressing the shortcomings
outlined below in the coming year, Serbia should pay particular attention to:
→ establishing a track record on investigations, indictments and final convictions in high-
level corruption cases,
→ creating a robust system to coordinate and monitor implementation of the national anti-
corruption strategy and action plan, ensuring that all key institutions have adequate capacity
and resources to fulfil their remits effectively;
→ urgently amending and implementing the economic and corruption crimes section of the
Criminal Code (in particular Article 234 on abuse of position of a responsible person) with a
view to providing a credible and predictable criminal law framework;
→ swiftly adopting a new Law on the Anti-Corruption Agency to strengthen its role as a key
institution in a more effective fight against corruption.
Track record
There is some initial track record of investigation, prosecution and convictions in
corruption cases which are not considered high level. So far there has been no final
conviction for high-level corruption. Policy-makers should ensure law enforcement bodies
are fully empowered to act effectively and impartially when investigating corruption
allegations. Healthcare, education, construction and spatial planning, infrastructure projects
and the privatisation of public enterprises are particularly vulnerable to corruption.
Independent supervision and capacity for early detection of wrongdoing and conflicts of
interest in the management of state-owned companies, in privatisation procedures, public-
private partnerships and in relation to public procurement procedures, are underdeveloped.
There should be greater accountability and transparency in the management of public
enterprises. Internal control departments lack equipment, resources and competent staff.
Financial investigations are not yet being launched systematically in cases of corruption and
organised crime. In a few corruption cases, assets have been confiscated.
14
As regards political influence on the police, judges and prosecutors, Ministers (and
MPs/party members) continue to criticise ongoing corruption investigations and court rulings.
Preventing corruption in local administration requires more attention. Repeated leaks to the
media about ongoing investigations, in breach of the presumption of innocence, are an issue
of serious concern. A number of high-profile cases, including where evidence of alleged
wrongdoing has been presented by the media, have not been seriously investigated.
The Anti-Corruption Agency monitors the funding of political activities, including the
municipal election campaigns in 2014, and issued a report in November. It also files requests
for misdemeanour proceedings relating to asset declarations and conflict of interest.
However, there is no track record of judicial follow-up to the Anti-Corruption Agency’s work,
e.g. through in-depth checks on party funding, conflicts of interest and asset declarations. As
regards free access to information, an analysis of refused requests for access to information
shows that they mainly concern privatisation, concessions, public-private partnerships and
other related issues that have an impact on the budget.
Institutional framework
Serbia’s independent Anti-Corruption Agency has had a mandate to collect, analyse and,
where necessary, to launch administrative investigations on data related to assets, conflicts of
interest, political party financing and electoral campaigns, as a means of preventing
corruption. However, the Agency lacks adequate financial, material and human resources to
play its role effectively. The Anti-Corruption Council analyses cases of systemic corruption
and provides the government with policy advice. However, the Council is under-resourced
and the government does not follow up and act on its recommendations often enough. Laws
on access to information are in place, but they do not ensure that the decisions of the
Commissioner for Free Access to Information of Public Importance and Personal Data
Protection are followed up. The Commissioner is unable to monitor outcomes.
As regards law enforcement, prosecutors, judges and police do not have sufficient means to
fight corruption. The prosecution service leads criminal investigations but cooperation with
the police suffers from the lack of a common approach. Police and prosecutors are not
proactive enough. There is no safe and secure platform for exchanging sensitive information
between them, which hampers investigations. Capacity to carry out financial investigations
and confiscate assets in corruption cases is limited.
Legal framework
The legal framework for the fight against corruption is broadly in place. The excessive
recourse to the provision on abuse of office in the private sector in the Criminal Code is
harmful to the business climate and legal certainty. Amendments to the Criminal Code are
still under consideration to provide for a sustainable legal solution to effectively prosecute
cases of criminal economic offences. There has been a significant delay in amending the Law
on the Anti-Corruption Agency to enhance its role as a key institution in the fight against
corruption.
Serbia has ratified all major international instruments against corruption and is party to the
UN Convention against Corruption, but has chosen not to criminalise illicit enrichment. It
has signed and ratified the Council of Europe anti-corruption conventions. Procedures for
investigating corruption cases, especially cases of high-level corruption, are often prolonged
due to lack of capacity and an inadequate legal framework for financial investigations and
asset recovery. Resources are inadequate and the relevant action plan has not been adopted.
The law on access to information does not ensure adequate enforcement of the decisions of
15
the Commissioner for Free Access to Information of Public Importance and Personal Data
Protection. Lobbying is not regulated. Laws on conflict of interest need to be amended.
Strategic framework
The anti-corruption strategy and action plan for 2013-2018 is being implemented but
several measures have been delayed. The inter-ministerial group to coordinate action, set up
in 2014, has only met once and hence has not had the intended impact.
Fight against organised crime
Serbia has some level of preparation in the fight against organised crime. Some progress
has been made in reorganising the Ministry of Interior and in increasing capacity for border
control. However, the number of final convictions remains low. Efforts to investigate wider
criminal networks and to process money laundering cases need to be stepped up. Financial
investigations and the concept of intelligence-led policing remain underused. Precautionary
freezing of assets is rarely applied and the level of assets confiscated is low. Independent and
transparent oversight of the police is not in place. In addressing the shortcomings outlined
below in the coming year, Serbia should pay particular attention to:
→ stepping up intelligence-led investigations with a view to developing a sustainable track
record of final convictions and dismantling networks involved in organised crime, money
laundering, people smuggling and trafficking in human beings;
→ establishing a secure platform to exchange intelligence between law enforcement agencies,
devoting more attention to sharing data on cases with prosecutors and with the asset recovery
directorate;
→ adopting a new law on the organisation of the police, and reinforcing the functions and
independence of the internal control sector of the police.
Track record
The number of final convictions for organised crime remains low compared to the estimated
value of the criminal market of the region. Very few cases have been brought for trafficking
in human beings, despite Serbia being a source, transit and destination country for human
trafficking. Labour exploitation of men, mainly Serbian nationals abroad, is increasing. There
is a need to better identify victims, particularly asylum seekers and unaccompanied foreign
minors.
Serbia established good international and regional cooperation in the field of drugs, in
particular with the 2014 seizure of 168 kg of marijuana jointly with the former Yugoslav
Republic of Macedonia. In many cases there has been no serious effort to investigate wider
criminal networks. This also applies to money laundering cases (6 indictments in 2014).
Effective implementation of anti-money laundering legislation by all relevant institutions,
including banks, is still needed. Criminal investigations are often narrow in scope and
companies or organisations are very rarely investigated. There is no policy of systematically
running serious financial investigations. The concept of financial investigation does not go
beyond the seizure and confiscation of criminal assets of individuals. Serbia is not yet in a
position to run complex financial investigations alongside criminal investigations.
Precautionary freezing of assets is rarely applied early in the investigation. So assets often
disappear, which results in a poor track record of confiscating criminal assets on final
conviction. Sanctions applied by judges are not sufficiently deterrent. There are frequent
leaks to the press, violating the secrecy of the investigation.
16
Institutional and operational capacity
Serbia has 33 387 police officers, or 464 per 100 000 inhabitants. In October 2014, the
Ministry of Interior started reforming human resources departments to create a centralised
service. There are no clear criteria for the recruitment, promotion, career path and evaluation
of staff in the police, who remain vulnerable to politically motivated decisions. Serbia needs
to take steps to exclude any political influence in police work. Command structures are
complex, with overlapping responsibilities. The Ministry of Interior currently has three
training centres, to be integrated into a new sector for human resources. The police academy
is funded by the Ministry of Interior, but not part of it. Negotiations on cooperation with the
European Police College (CEPOL) were concluded in April.
Specialised units are in place on anti-terrorism, trafficking in human beings, synthetic drugs,
cybercrime and financial investigations. All these units are in need of further staffing and
specialised training. The general level of equipment varies across the ministry. Independent
and transparent oversight of the police is not in place. The internal control section of the
police is not independent or able to take special investigative actions without resorting to the
intelligence agencies. There is a lack of resources, legal powers and overall political support
from government, parliament and police leadership.
The operational capacity of prosecutors and the police is weakened by the lack of a secure
platform for storing and exchanging information. Getting the various law enforcement
agencies such as the police and the tax and customs administrations to work together on
operations is hampered by the lack of smooth data exchange. An operational agreement with
Europol is in place but the ministry has not yet appointed a liaison officer to The Hague.
International cooperation is well established. The witness protection unit in the ministry
lacks adequate staff, equipment and premises. The level of cooperation between the Serbian
Witness Protection Unit and prosecutors needs to be improved. As regards crime statistics, a
DNA database and profiling capacity are in place. A comprehensive, multidisciplinary and
victim-oriented approach to human trafficking is needed. Capacity for anti-money laundering
action is weak. Delays at the financial investigation stage increase the risk that assets will be
taken out of the country. The courts and the Directorate for the Management of Seized
Assets in the Ministry of Justice are under-equipped to carry out their remit to seize and
confiscate property. The secure database of the Serbian police does not allow cases to be
classified as international or domestic. It does not provide information from asset recovery
activities. There is no standard measure on criminal statistics.
Legal framework
The law on the confiscation of criminal assets needs to be aligned with EU rules, notably as
regards third party confiscation, extended confiscation and precautionary freezing of assets.
Alignment is still required as regards the Swedish Initiative2
and the Prüm Decision,
eliminating violence at sports events, protecting public figures and prosecuting motor vehicle
crime with trans-border implications. Criminal legislation on issues such as trafficking in
human beings, online child pornography and cybercrime needs to be aligned with EU rules. A
number of shortcomings in the investigation phase need to be addressed, notably as regards
the timeframe and arrangements for using special investigative measures. The police’s
dependence on the security and intelligence agencies to carry out certain special investigative
measures in criminal investigations remains a matter of serious concern. The investigative
powers of the border police and customs remain limited.
2
The Swedish Initiative provides a common legal framework for effective and speedy exchange of information
and intelligence between EU States’ law enforcement authorities.
17
Strategic framework
Serbia has national strategies on anti-money laundering, financial investigation and terrorism
financing. Serbia still needs to establish a strategic picture of the organised crime situation
inspired by the EU SOCTA methodology (serious and organised crime threat assessment).
Serbia needs to adopt strategies on cybercrime and trafficking of human beings.
Fight against terrorism
Serbia amended its Criminal Code to criminalise the organisation of and participation in war
or armed conflict in a foreign country. A coordination group for the fight against terrorism
and the prevention of radicalisation and extremism has been set up. Serbia is also actively
involved in international and regional police and judicial cooperation. The phenomenon of
foreign terrorist fighters needs a tailor-made approach by the intelligence and law
enforcement community and a coherent judicial policy on offenders. For developments in
these areas, see Chapter 24 — Justice, freedom and security
2.4. Human rights and the protection of minorities
Overall situation
The legislation and institutions needed to uphold international human rights law are in place.
Legislation to protect minorities and cultural rights is also broadly in place. However,
sustained efforts are needed to ensure effective and consistent implementation across the
country. Shortcomings particularly affect the following areas:
• Conditions for the full exercise of freedom of expression are still not in place. Full
implementation of the new media laws needs to be ensured.
• Promotion and protection of the rights of the most vulnerable and discriminated groups,
including the LGBTI persons, persons with disabilities, and persons with HIV/AIDS has
yet to be fully ensured. Hate-motivated offences need to be properly investigated,
prosecuted and sanctioned.
• Efforts to improve the difficult living conditions of Roma and to combat discrimination
need to be strengthened. Government coordination and leadership of Roma integration
policy needs to be further improved.
A detailed analysis of freedom of expression follows below. For a detailed analysis of
developments on other human rights and the protection of minorities, see Chapter 23 —
Judiciary and fundamental rights. For developments in trade union rights, anti-discrimination
and equal opportunities, see also Chapter 19 — Social policy and employment.
Freedom of expression
Serbia has achieved some level of preparation concerning the right to freedom of expression.
No progress has been made overall in the last year. A legislative package aimed at improving
the situation in the media and clarifying the legal framework, particularly in relation to state
financing and control of the media, is in place. However, conditions for the full exercise of
freedom of expression are not in place. The new media laws need to be implemented. It has
yet to be seen whether media privatisation will increase transparency of ownership and
funding. Threats and violence against journalists remain of concern. Criminal charges and
final convictions are rare. The overall environment is not conducive to the full exercise of
freedom of expression. In addressing the shortcomings outlined here, in the coming year
Serbia should in particular:
18
→ create an enabling environment in which freedom of expression can be exercised without
hindrance; threats, physical assaults and cases of incitements to violence against journalists
and bloggers should be reacted to and publicly condemned;
→ complete the process of privatising state- and municipally owned media;
→ strengthen the independence of the Regulatory Body for Electronic Media so as to better
support editorial independence in the media;
→ ensure adequate funding to public broadcasting service and ensure editorial independence.
Intimidation of journalists
Threats and violence against journalists remain of concern. Some criminal charges have
been filed but final convictions are still rare. Prolonged police protection of several
journalists, with no tangible action taken to remove the reasons for these security measures, in
practice seriously hampered the exercise of their profession. The commission tasked to look
into unresolved cases of murdered journalists from 1999 and 2001 has made further progress
in its work leading to arrests.
Legislative environment3
The 2014 media laws are a step towards clarifying the legal framework, particularly in
relation to state financing and control of the media. Defamation has not been a criminal
offence since December 2012. As regards the access to information that state bodies provide
for the media, the Commissioner for Access to Information of Public Interest has reported
several cases in which state bodies resorted to paying fines rather than disclosing the
information requested.
Implementation of legislation/institutions4
As regards the implementation of the three new media laws, the privatisation of state and
municipally-owned media has started in line with the Law on Public Information and Media,
albeit with some delays. The Regulatory Body for Electronic Media has further stepped up
monitoring of content but its independence needs to be strengthened, in order to actively and
properly perform its role. The Press Council has been more active in disclosing and analysing
breaches of professional journalistic standards and the Journalistic Code. There has been no
progress in investigating a series of cases of actions against websites that occurred in 2014.
Efforts to identify and prosecute those suspected of violating internet freedoms are needed.
Public service broadcasters5
The two public service broadcasters, Radio Television of Serbia (RTS) and Radio Television
of Vojvodina (RTV), are financed from direct budget subsidies until 2016. They are also
entitled to commercial funding and advertisement time which is lower than that for
commercial broadcasters. The funds are insufficient, which has an impact on programme
quality and diversity. Public broadcasting services in minority languages need to be
ensured.
Economic factors
Opaque ownership, unregulated financing, covert and open political and economic influence
on the media and money channelled to favoured media from various state sources continue to
be features of the media environment. There have been cases reported of the rescheduling of
3
See also chapter 10
4
See also chapter 10
5
See also chapter 10
19
tax debts for certain media outlets. The most common informal pressure on editorial policy is
through advertising. Funding of media from state sources at all levels continues to be a
problem. It is not yet clear what the effects will be of introducing project-based financing of
content of public interest following privatisation and whether this method will be used by all
other state actors which fund media.
Professional organisation/professional conditions
There are three main professional associations in Serbia. Journalists have little job security
and low salaries and are thus prone to pressure and influence from economic and political
quarters. There have been a number of cases in which journalists and editors have claimed
that their firing or relocation resulted from expressing an opinion. Such circumstances
encourage self-censorship. Journalists’ job security should be enhanced and press associations
need to strengthen their role in trade union and employment matters.
2.5. Regional issues and international obligations
There are no outstanding issues concerning Serbia’s respect for the Dayton/Paris Peace
Agreement. Serbia continues to support the sovereignty and territorial integrity of Bosnia and
Herzegovina, while preserving special relations with Republika Srpska, as envisaged by the
Dayton Agreement. Serbia also supports Bosnia and Herzegovina’s path to joining the EU.
Serbia has continued to cooperate fully with the ICTY. Serbia maintained its initiative to the
ICTY for Serbian convicts to be allowed to serve sentences in Serbia.
In the area of domestic processing of war crimes, cooperation between the special
prosecutors of Serbia and Bosnia and Herzegovina continued on an upward course. The first
joint investigative team worked successfully in December, leading to the indictment of five
suspected perpetrators of war crimes. Cooperation and exchange of information with Croatia
and EULEX continued but needs to be stepped up. It is important that these regional
cooperation efforts continue to be strengthened.
Some progress has been made on investigating high-profile cases. In March, eight former
members of the Special (police) Brigade in the Ministry of Interior of the Republika Srpska
suspected of committing war crimes against civilians in Srebrenica were arrested. Despite
consistent efforts by the war crimes jurisdictions, the number of investigations against high-
level officers has remained low, and courts have continued to pass lenient sentences. To
maintain the quality of trials, measures should be put in place to preserve the extensive
judicial experience acquired in processing these complex cases. Only a few victims of war
crimes have access to effective compensation under the current legal framework. No concrete
steps have been taken to address the serious weaknesses in the witness protection system.
Political pressure undermining the work of the War Crimes Prosecution Office is an issue of
concern. Serbia needs to adopt and implement an overarching national strategy for domestic
handling of war crimes, backed by adequate resources. A dedicated prosecution strategy is
also needed.
Serbia’s policy on the International Criminal Court is in line with the EU’s guiding
principles and EU common positions on the integrity of the Rome Statute. Serbia does not
have any bilateral immunity agreements.
Serbia, Bosnia and Herzegovina, Croatia and Montenegro have continued to closely cooperate
under the Sarajevo Declaration Process, which aims to find sustainable solutions for some
74.000 persons who became refugees and displaced persons as a result of the armed conflicts
in the former Yugoslavia during the 1990s. All countries need to further step up efforts to
deliver on the implementation of the agreed housing solutions. In Serbia from the 4,153
20
housing solutions approved thus far worth EUR 71.5 million, the first 123 were delivered. The
issue of refugees’ pensions between Croatia and Serbia is still unresolved.
The unresolved fate of missing persons from the conflicts in the 1990s remains a
humanitarian concern in the Western Balkans. As of April, a total of 10 814 persons were still
missing, according to the figures of the International Committee of the Red Cross (ICRC). Of
these, 7 019 cases are related to the conflict in Bosnia and Herzegovina, 2 125 to the conflict
in Croatia and 1 670 to the conflict in Kosovo. The lack of information on new gravesites and
difficulties in identifying exhumed human remains continue to be the key obstacles to solving
the remaining cases. With regard to the Kosovo conflict, exhumation works in Rudnica-Raska
resulted in identification of 52 victims. By end October, the Serbian authorities had handed
over to EULEX all human remains recovered at this location. In line with the commitments
made in the ICRC-chaired Working Group on Missing Persons, the Serbian authorities
organised assessments of two locations suspected as potential gravesites related to the Kosovo
conflict and provided the first set of documents requested from its archives in March. Limited
progress was made on providing new information on missing persons in relation to the
conflict in Croatia. In March, the relevant authorities of Serbia and Croatia met informally
and agreed to go ahead with a joint update of the official list of missing persons. Ascertaining
the fate of missing persons remains vital to reconciliation and stability in the region. Sustained
political commitment and renewed efforts are needed.
Regional cooperation and good neighbourly relations form an essential part of Serbia’s
process of moving towards the EU. Serbia has shown a constructive commitment to good
neighbourly relations. Serbia has also continued to participate actively in regional initiatives
such as the South-East Europe Cooperation Process, the Brdo process, the Regional
Cooperation Council and the Central European Free Trade Agreement. Serbia hosted a ‘16+1’
summit of the states of Central and Eastern Europe (SEE) and China in December, and a
Black Sea Economic Cooperation Parliamentary Assembly in March. It continued to actively
support the Coalition for Reconciliation Commission (RECOM) and Igman initiatives on
regional reconciliation.
A fresh impetus has been given to regional cooperation through the 'Berlin process' and the
Western Balkan six initiative notably regarding the EU’s connectivity agenda. Serbia hosted
a meeting of the foreign affairs and economic ministers in October and constructively
participated in the follow-up meeting in Pristina in March. In April, the Western Balkan Six
countries reached an agreement on the core transport network and in June 2015 on extending
three Trans-European Transport Networks core corridors to the Western Balkans. They also
identified the priority projects to be implemented by 2020. The countries agreed to implement
before the next summit in Paris a number of 'soft' measures such as aligning and simplifying
border crossing procedures, road safety and maintenance schemes.
As regards bilateral relations with other enlargement countries and neighbouring EU
Member States, Serbia has concluded a bilateral convention on regional cooperation with
Montenegro under Article 15 of the Stabilisation and Association Agreement, but not yet with
Albania or the former Yugoslav Republic of Macedonia. The demarcation of borders with
Bosnia and Herzegovina, Montenegro and Croatia remains pending.
Relations with Albania improved overall. In October, an incident during a football match
played by both national teams in Belgrade strained bilateral relations. In January a demarche
was issued in connection with a flag of ‘Greater Albania’ displayed at the residence of the
Albanian Prime Minister. However the subsequent visit to Serbia by Albania's Prime Minister
in November was the first of its kind in 68 years. In March, the Speaker of the Serbian
Parliament paid the first such visit to Tirana in decades. The Serbian Prime Minister's visit to
21
Tirana in May was the first ever. Belgrade hosted the first meeting of the bilateral Joint
Commission for Economic Cooperation. Serbian and Albanian Prime Ministers also prepared
joint infrastructure projects within the Western Balkans Six initiative. The Serbian and
Albanian Ministers of Foreign Affairs took part in a first trilateral meeting with their Italian
counterpart in Rome.
Relations with Bosnia and Herzegovina remained good. The chair of Bosnia and
Herzegovina’s Presidency visited Belgrade and the Serbian Prime Minister visited Sarajevo in
May. Serbian authorities condemned the terrorist attacks in Zvornik in April. The Serbian
Prime Minister's attendance at the commemoration of Srebrenica genocide in July sent a
positive message. In the wake of the attack against him on that occasion, he invited the
members of Bosnia and Herzegovina Presidency, who travelled to Belgrade in July.
Relations with the former Yugoslav Republic of Macedonia were further upgraded. The
President of the former Yugoslav Republic of Macedonia visited Belgrade in October. A joint
session of the two governments took place in February in Skopje at which several cooperation
agreements were signed in the field of economy, culture, the environment, tourism, education,
science and technology, together with an agreement on a border-crossing point. The Serbian
authorities condemned the attacks in Kumanovo in May.
Relations with Montenegro remained good. The Speaker of the Serbian Parliament visited
Podgorica in October. The Prime Ministers met at the ‘16+1’ SEE-China summit in Belgrade
in December. The Serbian Minister of Foreign Affairs visited Montenegro in February in his
capacity as the OSCE Chairperson-in-Office. There were no developments on issues related to
citizenship rights in the two countries.
Relations with Turkey remained stable. There were sporadic tensions in November after the
murder of a Serbian sports fan in Istanbul. The Serbian and Turkish Prime Ministers met at
the World Economic Forum in Davos in January. The Speaker of the Serbian Parliament
visited Ankara in April. A Protocol on inter-parliamentary cooperation was signed on that
occasion.
Relations with Bulgaria, Romania and Hungary improved further overall. The Bulgarian
President visited Serbia in March. The Bulgarian, Romanian and Serbian Prime Ministers met
in April in Craiova to discuss energy and transport infrastructure cooperation and agreed to
give these meetings a permanent format as the ‘Craiova Group’. Three new border-crossing
points between Serbia and Romania were opened in November. The two Prime Ministers met
on several occasions. A trilateral China-Hungary-Serbia memorandum on cooperation on the
construction of the Belgrade-Budapest railway was signed at the ‘16+1’ SEE-China summit.
The two Prime Ministers met again in Subotica in February to discuss energy issues. The two
countries developed constructive cooperation on addressing the peak of irregular migrants
from Kosovo passing through Serbia early in 2015. A joint session of Serbia and Hungary
governments took place in July in Budapest, resulting in the signature of several agreements
on education, infrastructure and European integration.
There were ups and downs in relations with Croatia. The Serbian Prime Minister attended the
inauguration of the new Croatian President in February and the Serbian Foreign Minister
visited Zagreb in March. The inter-state commission for the return of cultural heritage to
Croatia decided in March on the return of over 500 cultural assets. In June, a Croatian citizen
sentenced for war crimes in Serbia was transferred to serve the remainder of his sentence in
Croatia. The provisional release of ICTY detainee Vojislav Šešelj and his subsequent public
statements prompted sharp reactions in Zagreb. Serbia declared 5th
August, commemorating
the "operation Storm" in Croatia, a day of mourning and protested for hate speech and display
of fascist symbols during Croatian commemorations. The decision of Vukovar's local
22
authorities to remove bilingual signboards prompted acute reactions in Belgrade. Tensions
following temporary restrictions of border crossings in September have been overcome.
3. NORMALISATION OF RELATIONS BETWEEN SERBIA AND KOSOVO
Serbia and Kosovo have remained engaged in the implementation of the agreements reached
in the dialogue, in particular the April 2013 ‘First agreement of principles governing the
normalisation of relations’. Work under the EU-facilitated dialogue has continued at technical
level throughout the reporting period. The high-level dialogue resumed in February 2015, and
four meetings attended by Prime Ministers Vučić and Mustafa were held in April, June and
August.
Key agreements were finalised on 25 August 2015. General principles/main elements on the
establishment of the Association /Community of Serb majority municipalities in Kosovo
through the adoption of its Statute were agreed. The text defines the legal framework of the
Association/Community, its objectives, organisational structure, relations with central
authorities, legal capacity, budget and financial support. It also provides the modalities/next
steps for its establishment. In the field of Energy, two new Serbian energy companies (one
dealing with import, export and transit; the other with supply and distribution services) were
established in Kosovo. These companies are proceeding with their internal organisation
before being able to apply for licenses. An action plan detailing the implementation steps of
the Telecoms arrangement was also approved. Serbia and Kosovo agreed to ask the European
Union to revitalise the Mitrovica bridge and its surroundings so that it can be reopened to all
traffic by summer/not later than June 2016. In line with the same timetable, it was also agreed
that the North Mitrovica municipality will revitalise its main street (King Peter Street) by
turning it into a pedestrian zone.
Progress has been made in other important areas. Following an agreement in February 2015,
the dismantling of the Serbian structures on justice is well-advanced. Serbia facilitated
applications of Kosovo Serb judges and prosecutors in the Kosovo judiciary. The proper
handling of cases in the Mitrovica Basic Court, where Serbian official statements have at
times interfered with the proceedings, requires a dispassionate environment. Integration of
Kosovo Serb police and civil protection personnel is nearing completion. An agreement on
vehicle insurance of June 2015, providing for the recognition in each other's jurisdiction of
Serbia and Kosovo's respective vehicle insurance is being implemented. On customs,
agreements were reached on the import of controlled goods into Kosovo, including for
medicines. In the context of the liaison arrangements, and following an agreement reached
in November 2014, all official visits are directly arranged by Liaison Officers. Progress was
also reached in the field of cadastre: a new archives building was opened in Belgrade, where
the scanning of documents pertaining to Kosovo is to be completed by June 2016. Following
the Serbian Constitutional Court's rulings adjudicating that the form in which some dialogue
agreements have been transposed was unconstitutional, Serbia has adjusted its regulatory
framework related to these agreements, with the exception of freedom of movement. The
Constitutional Court's rulings on the energy and telecoms agreements are still pending. Serbia
needs to find legal solutions for the implementation of agreements that are sustainable and can
withstand legal challenges.
Implementation of other agreements has continued, albeit at a slower pace. On IBM, further to
the six interim facilities, two additional permanent crossing points, were agreed, for which
Serbia has initiated the expropriation process on its territory. However, illegal crossing roads/
by-passes, in particular in the north of Kosovo, continue to be regularly used to smuggle
substantial amounts of goods. Additional measures need to be taken by Serbia to stop illegal
23
crossings. The processing of cases in the framework of the 2013 general modalities for
Mutual Legal Assistance has been suspended between October 2014 and August 2015 by the
Serbian authorities. The handling of over 600 pending cases has resumed in September 2015.
On regional cooperation, Kosovo became a permanent participant in RACVIAC (the Centre
for Security Cooperation) and joined MARRI (Migration, Asylum, Refugees Regional
Initiative). However, Serbia needs to remain committed to the continued implementation of
the agreement on representation and participation of Kosovo in regional forums. Serbia and
Kosovo also participated in constructive discussions to improve cooperation in tackling
migratory flows from Kosovo early this year.
Overall, Serbia and Kosovo have remained engaged in the dialogue and committed to the
implementation of the April 2013 First agreement of principles governing the normalisation
of relations and other agreements reached in the dialogue. The steps taken gave fresh
momentum in the normalisation of relations and should have a positive and concrete impact
on the everyday life of citizens in both Kosovo and Serbia. Further progress in this area
remains essential for advancing the European future of both Serbia and Kosovo.
4. ECONOMIC CRITERIA
Key economic figures 2013 2014
Gross domestic product per capita (% of EU28 in
PPS)
37 36
GDP growth (%) 2.6 -1.8
Unemployment rate (female; male) (%) 22.1 (23.8; 20.8) 18.9 (19.6; 18.3)
Economic activity rate for persons aged 20–64:
proportion of the population aged 20–64 that is
economically active (female; male) (%)
66.0 (56.8; 75.3) 66.2 (57.5; 75.1)
Current account balance (% of GDP) -6.1 -6
Foreign direct investment (FDI) (% of GDP) 3.9 3.8
Source: Eurostat
In line with the conclusions of the European Council in Copenhagen in June 1993, EU
accession requires the existence of a functioning market economy and the capacity to cope
with competitive pressure and market forces within the Union.
The monitoring of these economic criteria should be seen in the context of the increased
importance of economic governance in the enlargement process; in 2015 the enlargement
countries were invited to prepare Economic Reform Programmes (ERPs), which set out a
medium-term macro-fiscal policy framework together with key structural reforms aimed at
supporting the framework and boosting competitiveness. The ERPs were the basis for
country-specific recommendations jointly adopted by the EU and the Western Balkans and
Turkey in the Economic and Financial Dialogue meeting on 12 May 2015.
24
4.1. The existence of a functioning market economy
Serbia is moderately prepared in developing a functioning market economy. Good
progress was made to address some of the policy weaknesses, in particular with regard to the
budget deficit, labour market and the business environment. However, fiscal imbalances are
still high and major sectors of the economy are in need of reform. Credit activity is weak, also
constrained by very high level of non-performing loans. The private sector is underdeveloped
and hampered by weaknesses with the rule of law. In line with the ERP recommendations and
in order to support long-term growth, in the coming year Serbia should pay particular
attention to:
→ sustaining efforts to reduce the budget deficit and the high public debt level;
→ advancing private sector development through the restructuring and privatisation of
state-owned enterprises (SOEs) and addressing the challenges of stagnating credit growth and
non-performing loans (NPLs);
→ implementing public administration reform.
Economic policy essentials
The government’s determination to pursue economic reforms has strengthened. Serbia
submitted its Economic Reform Programme, covering the period 2015-2017, in March 2015.
The objectives of the programme are to achieve macroeconomic stability, to remove obstacles
to growth and to improve competitiveness. To this end, the authorities have already
undertaken significant measures to reduce the budget deficit. They have also outlined an
ambitious reform agenda aimed at restructuring state-owned enterprises, streamlining and
improving the performance of public administration, improving the business environment,
and strengthening financial stability. Serbia needs to follow up on its commitments and take
further steps to implement the ERP recommendations, which are set out below. Since
February, the government reform agenda has been supported by a new arrangement with the
International Monetary Fund.
Macroeconomic stability
Serbia’s economy is recovering from a third
recession in five years, but GDP remains around its
pre-crisis level. Economic growth averaged 1.0 %
over 2008-2013, while it was negative in 2014. The
economy has become less dependent on consumer
spending and more open as exports have increased by
close to 50 % since 2009. The shift to new sources of
growth is incomplete as investments remain weak
despite some signs of picking up in 2015. Slow
economic development has led to stagnating average
income per capita (PPS), which stands at 36% of the EU average.
25
External imbalances have been reduced by growing
exports and subdued imports. The current account
deficit fell below 5.0 % of GDP in the first half of 2015,
down from double-digit levels in the beginning of the
decade. Most of the deficit was covered by net foreign
direct investment, which stabilised at close to 4 % of
GDP, still below the needs of the economy. External
debt has increased since mid-2014 to around 80 % of
GDP but, in view of shrinking external imbalances, debt
sustainability does not raise immediate concerns. The
official foreign exchange reserves stand at a
comfortable level, covering about seven months of imports of goods and services — an
important buffer in view of external risks.
Unemployment remains very high despite signs of improving labour market conditions.
Unemployment fell below 20 % and both employment and activity rates have increased.
Although some of the new jobs were in the public sector or in informal employment, large
gains were observed in registered private employment, especially for women. Most of these
jobs, however, went into less paid, low productivity sectors. Average real wages fell as a
result of public sector wage cuts. However, private sector wages have recently increased.
Prices have been broadly stable, allowing the central bank to reduce interest rates.
Inflation has been below the central bank tolerance band (4 % ±1.5 percentage points) for
more than a year. Low inflation is the result of low international prices of primary
commodities, weak domestic demand, exchange rate stability and delays in administrative
price adjustments. The low inflationary environment and a rapidly falling budget deficit in
2015 allowed the central bank to cut its key interest rate in successive steps, from 8.0 % in
February to 5.0 % in September 2015 and to gradually cut the foreign currency reserve
requirement ratio by six percentage points by February 2016.
The budget deficit fell sharply in the first half of
2015, but fiscal consolidation still needs to be
sustained and underpinned by implementing
structural reforms. The 2015 budget targets a deficit
of 5.8 % of GDP and is based on a large decrease in
current expenditure. Considerable savings have already
been made from the cuts in pensions and public sector
salaries implemented last year. Additional savings are
expected from a number of other measures ranging from
public administration reform, to lower subsidies and
reforming public enterprises.
26
Revenue collection continued to improve in 2015, in particular due to some excise duties and
non-tax revenue (e.g. telecom licences and
SOEs dividends). In addition, expenditure
restraint and under execution of capital
spending have led to a better-than-expected
budgetary performance. By the end of
August the cumulative deficit stood at only
1.1 % of the annual GDP — a third of its
level in the previous year and far below the
target.
In view of Serbia’s high indebtedness and
the extensive structural reform agenda, and
in line with ERP recommendations,
consolidation efforts need to be sustained.
This requires Serbia to tackle the biggest
sources of fiscal risk by further
strengthening tax administration and public
finance management, implementing public
administration reform and restructuring state-owned enterprises in line with adopted plans.
The recently improved fiscal performance followed years of increasing fiscal imbalances
and missed budget deficit targets. The budget deficit averaged 5.7 % of GDP over
2009-2014, regularly overshooting planned deficits. It went up to 6.7 % of GDP in 2014,
reflecting mainly higher spending on interest payments, activated government guarantees and
expenditure related to bail outs of failed state-owned banks and loss-making SOEs. Revenue
was lower than planned and budget execution was marked by significant under execution of
capital expenditure, pointing to a general problem of weak preparation of public investment
projects. Government debt rose above 70 % of GDP.
Interplay of market forces
Some steps have been taken to start restructuring large state-owned enterprises.
Payment discipline between SOEs has been improved and could be further strengthened
following recent legislative amendments. However, SOEs restructuring continued to face
delays and big utility companies remain a significant source of market distortions and fiscal
risk. Therefore, it is important that Serbia advances the restructuring of these companies in
accordance with ERP recommendations.
In December, the government adopted
guidelines for restructuring Srbijagas, the
state-owned gas company. In line with
these, in early July it adopted a decision to
unbundle the operation of gas transmission
networks and distribution activities. The
financial restructuring of the company is
still awaited and the resolution of its
biggest debtors needs to advance further.
A corporate restructuring plan for Elektroprivreda Srbije, the state-owned power utility, was
adopted in November and — as a first step — the company was reorganised to increase its
efficiency. A financial restructuring plan, which contains measures to reduce costs and
improve revenues, including a 4.5 % increase in the regulated electricity tariff, was adopted in
June. In January 2015, the government announced full liberalisation of the electricity and gas
ERP recommendation 1: ‘Strengthen fiscal
consolidation by using any excess revenue and
current expenditure savings to further reduce
budget deficits in 2015 and the following
years. Underpin the medium-term
consolidation path by implementing the
planned structural reforms.’
ERP recommendation 3: ‘Further strengthen
public finance management, notably by
improving the budgetary process and the
capacity of the tax administration. Compile and
start submitting to Eurostat excessive deficit
procedure notification tables before the end of
2015.’
ERP recommendation 2: ‘Advance the
restructuring and privatisation of state-owned
enterprises, prioritising the biggest companies.
Introduce better corporate governance and
advance, as planned, the organisational and
financial restructuring of large, loss-making
utilities. […]’
27
market, allowing users to switch to a distributor other than the state-owned utility company.
However, only 5 % of all users have done so, as households and small buyers still have the
right to guaranteed usage at regulated prices.
In July, Railways Serbia was unbundled into passenger, freight and infrastructure, including
by creating a holding company. Corporate and financial restructuring plans have been
prepared and are planned to be adopted by the government in September.
Privatisation attempts have been revived recently, although results so far are marginal.
The sustainable operation and future privatisation of the steel mill in Smederevo is a key
challenge. In June, the government took steps to start the privatisation of the majority
state-owned Telekom Srbija. In January, it adopted an action plan to resolve 188 companies
through a bankruptcy procedure. In addition, about 200 enterprises are expected to be fully or
partially privatised, either by equity or asset sales, or through strategic partnership.
The protection of companies in restructuring from forcible collection of debts and bankruptcy
expired in June. However, it was extended for 37 of them until October, while for another 17
firms, deemed of strategic importance and employing some 22.000 people, protection was
extended until end of May 2016. As the end of the restructuring process is expected to result
in redundancies, the government has put in place an adequately funded social programme. In
view of the time and capacity needed to process such a large number of privatisations, the
government should prioritise the restructuring of the biggest and most problematic cases.
Market entry and exit
Procedures for construction permits have been improved but further efforts are needed
to ensure proper implementation. As in previous years, in 2014 the number of newly
established companies (8 209) was more than three times the number of companies closed
(2 601). Still, market entry has continued to be burdened by lengthy and costly procedures to
obtain various permits. One major improvement was the introduction of a new integrated
procedure for issuing construction permits (‘one-stop shops’); its implementation has in most
cases significantly shortened the time required to obtain permits. The establishment of an
electronic permitting system is envisaged to be set up by 2016. The issue of converting usage
rights into ownership rights of construction land, which had hindered potential investments,
was solved but further efforts are needed to ensure proper implementation.
Legal system
Legal predictability and enforcement have remained weak and significant efforts are
needed to further improve the business environment. Many laws, important for structural
reforms and socioeconomic development, are still adopted through emergency procedures,
without proper consultation and public
debate. Moreover, the implementation of
laws remains problematic as there are long
delays in the adoption of by-laws. The
judicial system has been slow to enforce
property rights.
The backlog in the courts is still substantial
and companies often avoid using the courts
as a solution to their problems.
Enforcement of legislation on property restitution, which is expected to improve legal clarity
over real estate ownership, is making progress; 42 % of all claims submitted have now been
resolved.
ERP recommendation 5: ‘Improve the
business environment and tackle the grey
economy, notably by better regulating para-
fiscal charges, business inspections, and
leasing of labour. Take steps to further
simplify the regulatory environment by re-
launching the ‘regulatory guillotine’.’
28
The informal economy remains a major obstacle to fair competition and business
development. To tackle the grey economy, the government adopted an action plan and set up
a coordination body. A new law on inspection oversight, introducing a risk assessment system
and better coordination between different administrative bodies, was adopted in April.
Implementation of the new legislation and rules still needs to be tested. Further efforts are
needed to better control para-fiscal charges and to regulate labour leasing, and to further
simplify the regulatory environment in
accordance with ERP recommendations.
Financial sector development
The banking system is still facing a
number of challenges, including weak
credit activity and a high level of
non-performing loans (NPLs). The
financial sector continued to be dominated
by commercial banks, mostly
foreign-owned, holding more than 90 % of
all assets, followed by insurance companies
with 5.2 %. In June, the central bank
enhanced its monitoring of majority
Greek-owned banks and limited their transactions with parent banking groups. Euroisation
continued to be widespread, with about three quarters of deposits and of loans to households
and businesses denominated in or linked to foreign currencies.
Financial intermediation was revived only temporarily due to a boost from a government
subsidised programme. Still, credit growth remained weak and credit to the private companies
continued shrinking, marking an absolute five-year low in April. Commercial banks have
channelled their resources into lending to the government, albeit at a slower pace, and in
building up their net foreign assets.
Mirroring the difficult economic environment and constraining lending activity, NPLs
remained very high at 22.8 % in June. However, the banking system as a whole remained
adequately capitalised and liquid. With the help of international financial institutions, the
government adopted a comprehensive strategy and an action plan for NPL resolution in line
with ERP recommendations. In August, the central bank also adopted an action plan for
implementing this strategy. Special bank diagnostic studies, to be completed in October,
should also provide additional information on the quality of bank assets and support the
implementation of the NPL strategy. Governance weaknesses prompted the strengthening of
the supervisory and improvement of the bank recovery and resolution frameworks.
4.2. The capacity to cope with competitive pressure and market forces within the
Union
Serbia is moderately prepared in terms of capacity to cope with competitive pressure
and market forces within the Union. Some progress was made particularly with regard to
further opening up the labour market and providing support for the development of small and
medium-sized enterprises (SMEs). However, the education system has remained inefficient,
physical infrastructure underdeveloped and the informal sector and state aid have remained
substantial.
In line with the ERP recommendations and in order to support long term growth, in the
coming year Serbia should pay particular attention to:
ERP recommendation 4: ‘Advance with the
rebalancing of macroeconomic policies with
fiscal consolidation as a pre-condition for a
more accommodative monetary policy stance,
with a view to fostering a pick-up in the pace
of credit extension. In this context, increased
efforts to address the high burden of non-
performing loans on banks’ balance sheets,
involving all key stakeholders including the
central bank as necessary, also appear
warranted.’
29
→ improving the quality of the education system and gearing it towards labour market needs;
→ stimulating private investments and speeding up the implementation of public
infrastructure projects;
→ providing a transparent framework of state support to the private sector, with a focus on
SMEs.
Human and physical capital
The needs of the economy and a
worsening demographic situation
demand further reforms of human
capital policies in accordance with ERP
recommendations. Although Serbia’s
public spending on education is
comparable to that of EU countries, its
quality has remained low, manifested in
below-average OECD Programme for
International Student Assessment (PISA)
test scores and a high number of unskilled
workers. Despite recent improvements, the labour market is still characterised by high
unemployment, skills mismatches, a high share of informal employment, and high migration
rates (especially of highly-skilled workers).
The efficiency of the education system needs to be improved by rationalising the school
network and gearing vocational education more to labour market needs. Additional emphasis
should be placed on teacher training and curriculum reforms at basic levels of education. This
is the means by which the basic and transversal skills and student competences can be
improved, better preparing them for the job market or further education. Serbia has
maintained a relatively high proportion of public investment in research and innovation.
However, there is little private investment and little cooperation between public and private
researchers.
Active labour market policies have been in decline until recently. They need to focus on youth
and the long-term unemployed and provide stimulation to employers to reduce the informal
forms of employment, in line with ERP recommendations.
Physical infrastructure is severely affected by years of underinvestment and concerted
efforts are needed to boost private and public investment. Investment has still not
recovered to pre-crisis levels and remained
at about a quarter below its peak. Public
investment, in particular, has been
subdued. The poor state of infrastructure
undermines competitiveness and deters
foreign investors, hampering regional and
EU trade integration. There is a clear need
to increase public investment, improve
preparation and speed up the
implementation of public projects, in
particular those included in Serbia-EU’s
‘single project pipeline.’
The ongoing fiscal consolidation and the
ERP recommendation 6: ‘Adopt a
comprehensive and well-targeted set of active
labour market policies, with a focus on youth
and the long term unemployed, as well as
dedicated skills upgrade programmes. The
finalisation of the national qualifications
framework should be the first step in a
progressive reform of the education system,
aimed at improving the outcomes of the
system, thereby enhancing the human capital
productivity.’
ERP recommendation 7: ‘Stimulate private
investment, for example by establishing public
schemes to support lending to SMEs and
research activities in companies. To increase
public investment, improve preparation and
speed up the implementation of public projects.
Step up the works on corridors VII and X in
line with the regional core network. Improve
energy production and transmission, most
notably by better governance of energy firms,
regulation of the network and the construction
of gas inter-connectors.’
30
reform of governance of public projects should create the conditions for increasing
infrastructure investment and stepping up work on regional transport corridors in accordance
with ERP recommendations. In addition, to diversify energy supplies Serbia should go ahead
with the construction of gas inter-connectors as planned. Private investment should be further
stimulated by establishing public schemes to support lending to SMEs and research activities
in companies, in line with ERP recommendations.
Sectoral and enterprise structure
The structure of the economy remained broadly unchanged and reducing the large
informal sector remains a major challenge. With a share of 50.9 % of GDP, services
continued to play a major role in the economy. In 2014, agriculture slightly increased its share
to 8.1 % of GDP, whereas industry’s share fell by 1.7 percentage points to 20.7 % of GDP
due to the floods which severely affected the energy and mining sectors. Employment was
roughly unchanged across sectors, with agriculture remaining the biggest sector, employing
almost a fifth of the labour force. The large informal sector represents a major obstacle for
economic development, fuelled by weak rule of law, and imposes significant risks and costs
to the overall economy.
SMEs account for over 70 % of employment, but contribute only 53 % of the total gross value
added. They remain disadvantaged compared to large companies and state-owned companies
that receive state aid. SMEs are the most affected by the poor access to finance in Serbia,
Limited progress has been made as regards the development of SME-oriented financial
instruments.
State influence on competitiveness
State support for loss-making SOEs
remained significant and needs to be
addressed in line with ERP
recommendations. In 2014, spending on
these measures combined has reached the
highest level since 2000. The increase over
the last three years was in large part due to
the delayed process of resolution of SOEs. However, signalling a change in policy, the 2015
budget law does not envisage new issuance of state guarantees for liquidity support and limits
new project-based guarantees. More predictable instruments of state support to the private
sector need to be developed to benefit both foreign and domestic investors. State support
should also be redirected towards efficient and horizontal objectives, such as support to SMEs
and research and development.
Economic integration with the EU
Serbia improved its external competitiveness and increased further its trade integration
with the EU. A weaker dinar and a relative decrease of labour costs have boosted external
competitiveness. The EU increased its trade with Serbia and remained by far the country’s
main trading partner, accounting for 69 % of total exports and 61 % of total imports of goods.
Exports to Central European Free Trade Agreement (CEFTA) countries represent 20 % of all
exports and have the potential to be boosted by the planned trade liberalisation in the services
sector.
The EU also remains the main source of FDI with a share of almost three-quarters. Through
the network of various free trade agreements, Serbia enjoys good market access but needs to
facilitate trade by measures removing non-tariff barriers, especially for companies operating
in global value chains.
ERP recommendation 2: ‘[…] Review the
efficiency of all forms of state aid and take
steps to reduce it. Proceed to revisit public
sector employment in a sustainable manner by
implementing the Action plan on public
administration reform.’
31
5. ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP
5.1. Chapter 1: Free movement of goods
The free movement of goods ensures that many products can be traded freely across the EU
based on common rules and procedures. Where products are governed by national rules the
principle of the free movement of goods prevents these creating unjustified barriers to trade.
Serbia is moderately prepared for the free movement of goods. Some progress was made,
notably with the adoption of European standards. In the coming year, Serbia should in
particular:
→ ensure better implementation of technical requirements and standards.
On the general principles, Serbia is drafting a methodology to ensure alignment with Articles
34-36 of the Treaty on the Functioning of the European Union (TFEU). On horizontal
measures, the quality infrastructure strategy for the period 2015-2020 was not yet adopted.
The administrative capacity of the Ministry of Economy, in charge of coordination, has
decreased and needs to be strengthened.
On standardisation, the Institute for Standardisation of Serbia (ISS) has adopted
approximately 96 % of all European standards and harmonisation documents. It has met the
technical criteria for full membership of the European Committee for Standardisation (CEN)
and the European Committee for Electrotechnical Standardisation (CENELEC). The ISS
currently has 187 active technical committees and 62 full-time employees. Amendments to
the Law on Standardisation were adopted in May, aiming to further align national legislation
with the acquis.
A total of 37 conformity assessment bodies have been designated under the relevant EU
directives. In April 2015 Serbia repealed the formal ex ante controls on certificates of
conformity, specifically for imports of products covered by the Machinery Directive, the Low
Voltage Directive and the Electromagnetic Compatibility Directive. However, certain ex ante
controls remain, specifically for imports of products covered by the Radio equipment and
Telecommunications Terminal Equipment Directive and fire protection devices and
appliances.
On accreditation, the Accreditation Body of Serbia (ABS) in October 2014 signed a new
International Accreditation Forum Multilateral Agreement extending management system
certification. Accreditation process continued steadily over the reporting period but ABS
staffing levels remain insufficient.
On metrology, secondary legislation in the non-harmonised area was adopted, together with a
regulation based on recommendations of the International Organisation of Legal Metrology.
The number of internationally recognised national standards for calibration and measurement
stood at 143. The Directorate for Measures and Precious Metals upgraded its market
surveillance capacity, particularly for supervision of the implementation of EU directives on
standards and non-automatic scales.
In market surveillance, the law on general inspection oversight was adopted in April 2015.
The Product Safety Council was reconstituted in August 2015 in order to improve
coordination and operations amongst various stakeholders. The administrative capacity of the
line ministry has been upgraded, but remains insufficient.
On ‘Old Approach’ product legislation, Serbia adopted secondary legislation on crystal
glass product marking which aims to be in line with the acquis, and laws on active substances
in biocidal products. Legislation on motor vehicles and emissions of pollutants from non-road
32
engines remains to be adopted. As regards ‘New and Global Approach’ product legislation,
legislation on recreational craft and on cableway installations was adopted. The former is in
line with the acquis; the latter is partially aligned with the relevant directives. The law on fire
protection equipment was adopted but remains to be aligned with relevant EU directives.
Further alignment is required in the areas of cableway installations, construction products, toy
safety and eco-design requirements for energy-related products.
As regards procedural measures, Serbia adopted legislation on civilian firearms, and
adopted and fully implemented legislation on the export and import of arms and military
equipment which is in line with the EU export control regime. Legislation on the production
and transfer of arms and military equipment remains to be adopted. Serbia still needs to align
its legislation with the acquis on pricing medicinal products and on returning cultural objects
unlawfully removed from the territory of an EU Member State.
5.2. Chapter 2: Freedom of movement for workers
Citizens of one Member State have the right to work in another Member State and must be
given the same working and social conditions as other workers.
Serbia is moderately prepared in the area of freedom of movement for workers. Some
progress was made in this chapter, notably in adopting new legislation on access to the labour
market. In the coming year, Serbia should in particular:
→ continue its efforts for strengthening the capacity of social security institutions.
As regards access to the labour market, a Law on Employment of Foreigners and a work
permit rulebook were adopted in November 2014. The law regulates the employment of
foreign citizens in Serbia and further aligns its legislation with the acquis.
The Ministry of Labour’s 2015 action plan and the annual plan of the National Employment
Service (NES) include provisions on EURES, the European jobs network, and create a
network of private employment agencies which will publish vacancies jointly with the NES.
As regards coordination of social security systems, new agreements came into force with
Belgium, Luxembourg, Hungary and Canada. An agreement with Romania was finalised, but
is not yet signed, and an agreement with France was ratified in March. An agreement on
electronic exchange of social security data was signed with Montenegro. The capacity of
social security institutions needs further strengthening.
5.3. Chapter 3: Right of establishment and freedom to provide services
EU natural and legal persons have the right to establish themselves in any Member State and
to provide cross-border services. For certain regulated professions, there are rules on mutual
recognition of qualifications. Postal services are gradually being opened up to competition.
Serbia is moderately prepared in these fields. Some progress was made with the adoption
of regulations on postal services. In the coming year, Serbia should in particular:
→ adopt a strategy for alignment with the professional qualifications acquis;
→ adopt an umbrella law on services, as a first step towards alignment with the Services
directive.
There were no developments on the right of establishment. On freedom to provide cross-
border services, an umbrella law aligning Serbian legislation with the Services Directive is
still needed. Screening of sectorial laws has to be completed to prepare for their alignment. A
strategy and a law on mutual recognition of professional qualifications have yet to be
adopted.
33
As regards postal services, the Regulatory Agency for Electronic Communications and Postal
Services adopted a regulation on the conditions of access to the postal operator’s postal
network in December 2014. It also adopted a regulation on minimum standards for universal
postal services provision. Both regulations further align Serbian legislation with the acquis.
The inspection of postal services remains inadequate. The public postal operator has not yet
been turned into a corporate company.
5.4. Chapter 4: Free movement of capital
In the EU, capital and investments must be able to move without restriction and there are
common rules for cross-border payments. Banks and other economic operators apply certain
rules to support the fight against money laundering and terrorist financing.
Serbia is moderately prepared in the area of free movement of capital. Some progress was
made with the adoption of the Law on Payment Services. In the coming year, Serbia should in
particular:
→ further liberalise short-term capital movements.
→ strengthen the Agency for the Prevention of Money Laundering.
There were no developments on capital movements and payments. Short-term capital
transactions and deposit activities by residents are still restricted, while long-term capital
transactions have been fully liberalised. The acquisition of real estate, especially agricultural
land, is still restricted. On payment systems, in December, Serbia adopted a Law on Payment
Services to further align its legislation with the Payment Services Directive and the Electronic
Money Directive.
Serbia adopted a national strategy for the fight against money laundering and terrorism
financing in December. The Agency for the Prevention of Money Laundering and the
Financial Intelligence Unit of the Ministry of Finance both need greater administrative and
analytical capacity. The agency still does not have adequate premises, which prevents it from
recruiting new staff. Serbia still needs to establish a track record of investigation of and
conviction in money laundering cases.
5.5. Chapter 5: Public procurement
EU rules ensure public sector procurement of goods and services in any Member State is
open to all EU companies on the basis of non-discrimination.
Serbia is moderately prepared in this area, which is particularly vulnerable to corruption.
More efforts are needed to prevent corruption from occurring during the procurement cycle.
Good progress has been made in the past year, notably by adopting amendments to the Law
on Public Procurement and increasingly using open tender procedures.
Significant efforts are needed across the board to improve competition, efficiency and
transparency in public tenders. In the coming year , Serbia should in particular:
→ strengthen the capacity of the Public Procurement Office and the Republic Commission for
the Protection of Rights in Public Procedures;
→ swiftly implement the public procurement strategy in particular on ensuring the sound
implementation of existing legislation and on further alignment with the EU Concessions
Directive.
34
Institutional set-up and legal alignment
The legal framework is broadly in line with the acquis. The Law on Public Procurement
adopted in 2012 is largely in line with the EU directives on classical and utilities'
procurement, but does not take full advantage of the flexibility procedures offered by the
utilities directive. The law was amended in February 2015 to reduce the price preference
given to domestic bidders to 5 %, ahead of the schedule for liberalisation under the
Stabilisation and Association Agreement, and in July to further align it with the EU Directives
adopted in 2014. The legislation on defence and security procurement is broadly in line but
contains more exemptions than the EU Directive. Serbia must ensure that bilateral agreements
concluded with non-EU countries do not unduly restrict competition and are fully consistent
with the EU acquis. The Law on Public-Private Partnership follows the basic rules of the
acquis, but needs to be aligned with the new Directive on Concessions.
In October 2014, the government adopted a public procurement strategy for 2014-2018 and a
related action plan, which includes measures to further strengthen the regulatory framework
and align it fully with the EU acquis.
The Public Procurement Office (PPO) is the independent state body which supervises the
implementation of the Law on Public Procurement. Its role in launching certain regulatory
reforms should be clarified.
Implementation and enforcement capacity
Serbia’s public procurement market remained relatively stable as a percentage of gross
domestic product (GDP), at 7.7 % in 2014 compared with 6.8 % in 2013 and 8.5 % in 2012.
Monitoring of the award and implementation of contracts is improving. Since use of the
negotiated procedure must now be authorised by the PPO, the value of negotiated procedures
fell to 5 % of the total value of public tenders in 2014, from 17 % in 2013. In 2014, the State
Audit Institution detected irregularities in tenders worth EUR 63 million, as against EUR 263
million in 2013. The public procurement portal is increasingly used, with 50 % more notices
published in 2014 than in 2013.
The capacity to manage public procurement processes was further improved through the
certification of an additional 890 public procurement officials by the PPO. However, the PPO
does not have enough administrative capacity itself for its numerous responsibilities. The role
and function of the annual procurement plans adopted by the contracting authorities needs to
be reviewed; publishing them would further increase transparency.
The framework for integrity and handling conflicts of interest was strengthened under the
new public procurement law. In December 2014, the PPO adopted a model internal plan for
preventing corruption in public procurement procedures. From January 2015, high-volume
contracting authorities are expected to gradually adopt their own plans for curbing corruption
based on this model.
Efficient remedy system
The legislation regarding the right to legal remedy is broadly in line with the acquis and is
implemented by the Republic Commission for the Protection of Rights in Public Procedures
(the Republic Commission), an independent state body.
The number of requests for protection of rights received by the Republic Commission
increased by 35 % in 2014 compared to 2013. The Republic Commission took a total of 2 702
decisions in 2014 compared with 1 966 in 2013, an increase of 37 %. Public procurement
procedures were partially or fully annulled in 1 336 cases. In 2014, the Republic Commission
35
further built up its enforcement record by reviewing the implementation of 266 of its
decisions and concluded that in 7 cases, they had not been properly enforced by the
contracting authorities.
The Republic Commission has continued to build up its implementation capacity to a total
of 70 employees, which is still not enough. The capacity of the administrative courts to deal
with complex public procurement cases also needs to be strengthened.
5.6. Chapter 6: Company law
The EU has common rules on the formation, registration, and disclosure requirements of a
company, with complementary rules for accounting and financial reporting, and statutory
audit.
Serbia has a good level of preparation in company law. Some progress was made with
online filing of financial statements, and the first audit quality control inspections.
On company law, it has been possible since December to incorporate a business in 24 hours.
Financial statements can now be filed electronically on the Register of Financial Statements.
Serbia is developing online electronic company registration to facilitate its business
environment; the process is not yet fully operational.
On corporate accounting and auditing, the Chamber of Authorised Auditors made the first
quality control inspections of audit firms based on the 2013 Law on Auditing. The law needs
to be amended to align with the new EU Accounting and Auditing Directives.
5.7. Chapter 7: Intellectual property law
The EU has harmonised rules for the legal protection of copyright and related rights. This
covers, for instance, computer programs, broadcasting and trademarks, designs,
biotechnological inventions and pharmaceuticals.
Serbia has reached a good level of preparation as concerns alignment of intellectual property
law with the acquis. Some progress was made on intellectual property rights (IPR). In the
coming year, Serbia should in particular:
→ further align its Law on Copyright, Topographies of Semiconductor Products, Patents and
Trademarks with the acquis, including with the IPR Enforcement Directive;
→ strengthen formal coordination of different stakeholders on enforcement.
On copyright and neighbouring rights, full alignment with the acquis of the Law on
Copyright and Related Rights remains to be achieved, in particular as regards the amendments
introduced in 2012. The Law on the Protection of Topographies of Semiconductor Products
also needs to be aligned with the acquis.
On industrial property rights, the amendments to the Law on Industrial Design adopted in
May 2015 align them further with the acquis. The other relevant laws on patent and
trademarks still need to be further aligned.
On enforcement, the number of counterfeit and pirated goods confiscated by the customs
administration and the Market Inspectorate increased substantially, partly as the result of the
use of newly procured equipment. The number of checks carried out by the Ministry of the
Interior fell, while the number of criminal charges that it brought stabilised (at 90 in 2014).
There were 1 110 court cases on IPR in 2014, compared with 731 in 2013.
Further alignment of legislation with the Directive on the Enforcement of Intellectual
Property Rights was ensured by the adoption of the amendments to the Law on Industrial
36
Design. The other IPR laws still need to be aligned. A permanent coordination body for the
enforcement of IPR was set up in October 2014, but is not yet fully operational. The national
IPR strategy and action plan 2011-2015 were broadly implemented and need to be replaced
by a new strategic framework.
5.8. Chapter 8: Competition policy
EU rules protect free competition. They include anti-trust rules against restrictive agreements
between companies and abuse of dominant position. EU rules also prevent governments from
granting state aid which distorts competition.
Serbia is moderately prepared in the area of competition policy. Some progress was made
in the area of antitrust and mergers. In the coming year, Serbia should in particular:
→ make significant progress in aligning its legislation on state aid control with the acquis as
state aid control still has significant shortcomings;
→ take steps to make the Commission for State Aid Control more independent and effective;
→ ensure that aid received by the steel mill Smederevo Zelezara is compatible with the
Stabilisation and Association Agreement.
On antitrust and mergers policy, Serbian legislation is largely in line with the acquis. The
Commission for the Protection of Competition (CPC) maintained its activity level: in 2014, it
took no decision on anticompetitive agreements, but five decisions on abuse of dominance
and 97 decisions on mergers, two of which were approved subject to conditions. The level and
number of fines remain relatively modest: only one fine, of EUR 160 000, was imposed in
2014. The organisation of the first two dawn-raids against cartels in July is a positive
development towards a more effective fight against cartels. The CPC's administrative capacity
was significantly strengthened in 2015. The judiciary’s capacity to assess complex
competition cases needs be strengthened.
In state aid, the rules on de minimis state aid were further aligned with the Commission
General Block Exemption Regulation in October 2014. The exemption from state aid rules for
companies in the process of restructuring and privatisation has not yet been repealed. Serbia
still has to draw up a regional aid map. The monitoring of cumulation of aid granted needs to
be strengthened. A number of existing state aid schemes, including fiscal ones, still need to be
aligned with the acquis. In 2014, the Commission for State Aid Control (CSAC) adopted 43
decisions and conclusions, including 17 launching ex post checks. This is slightly fewer than
in the previous year. In line with Protocol 5 of the Stabilisation and Association Agreement,
Smederevo Zelezara, a steel mill in difficulty, has not received state aid since 1 February 2015
but it needs to be shown that the aid received before then was compatible with competition
law.
The new members of the CSAC are not affiliated to state-aid-granting ministries but still
nominated by them. The operational independence of the CSAC remains to be demonstrated,
notably through a track record of well-founded decisions. The capacity of the CSAC’s
secretariat, already insufficient, declined further. Further advocacy efforts are needed to
ensure that all aid measures are notified to the CSAC and approved before being granted. Aid
measures should be made more transparent.
As regards liberalisation, full alignment with the EU rules on state aid in the form of public
service compensation has yet to be ensured. Serbian legislation has yet to be aligned with the
Directive on the Transparency of Financial Relations between Member States and Public
Undertakings.
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5.9. Chapter 9: Financial services
EU rules aim at ensuring fair competition between and the stability of financial institutions,
namely banking, insurance, supplementary pensions, investment services and securities
markets. They include rules on authorisation, operation and supervision of these institutions.
Serbia is moderately prepared in the area of financial services. Good progress was made
with the adoption of the framework for resolution of banks and the laws on insurance and
payment services. In the coming year, Serbia should in particular:
→ take additional steps to align Serbia’s rules with Basel III standards and the Solvency II
Directive.
On banks and financial conglomerates, in February 2015, Serbia adopted several laws
which establish a new legal framework for the resolution of banks and insurance companies in
difficulties, based in particular on the Bank Recovery and Resolution Directive. In February
2015 both the Law on Deposit Insurance and the Law on the Deposit Insurance Agency were
adopted and further aligned with the Directive on Deposit Guarantee Schemes. In December,
the National Bank of Serbia revised its strategy for the full implementation of Basel III
standards. Legislation on financial conglomerates remains outstanding.
On insurance and occupational pensions, the Law on Insurance adopted in January 2015
and subsequent decisions of the NBS are more in line with the acquis. Further alignment with
the Solvency II Directive still has to be achieved. A Decree laying down the minimum sum to
be insured by motor third-party liability insurance was adopted in October 2014, bringing
Serbia’s rules more closely to the acquis. Full alignment with the Directive on Institutions for
Occupational Retirement Provision has not yet been achieved.
On financial market infrastructure, Serbia adopted the Law on Payment Services, in
December 2014, to further align its legislation with the Settlement Finality Directive.
On the securities market and investment services, amendments to the Law on Investment
Funds were adopted in October 2014 to further align it with the Directive on Undertakings for
Collective Investment in Transferable Securities. The Securities Commission also adopted
several by-laws on reporting requirements and accountancy rules applicable to investment
funds and broker dealer companies.
5.10. Chapter 10: Information society and media
The EU supports the good functioning of the internal market for electronic communications,
electronic commerce and audio-visual services. The rules protect consumers and support
universal availability of modern services.
Serbia is moderately prepared in the information society and media. Some progress was
made, notably with the digital switchover being completed and with respect to the ongoing
implementation of the three new media laws. In the coming year, Serbia should in particular:
→ continue alignment of the legislative framework in electronic communications with the
2009 EU regulatory framework;
→ ensure the independence of the Regulatory Body on Electronic Media and strengthen the
administrative and inspectorate capacity of the line ministry;
→ elaborate and ensure comprehensive regulation of advertising.
On electronic communications and information and communications technology, the
digital switchover was completed in June 2015. Serbia also introduced technological
neutrality in the 900 and 2100 MHz frequency bands and assigned the 1800 MHz band to
38
operators, allowing 3G and 4G services as of April. Serbia has yet to fully align with the 2009
EU regulatory framework for e-communications. Competitive safeguards have not yet been
fully implemented. The operational independence of the telecom regulator needs to be fully
ensured. The draft law on emergency services, introducing permanent financing of the
emergency number 112, remains to be adopted. 55 % of the population have a broadband
connection.
At the end of August 2015, Kosovo and Serbia agreed the Action Plan to implement the 2013
Prime Ministers telecom arrangements. The agreement of September 2014 signed by the
former Yugoslav Republic of Macedonia, Bosnia and Herzegovina, Montenegro and Serbia
on reducing the prices of mobile roaming services came into force in July 2015.
In information society services, laws on information security and the e-government strategy
remain to be adopted. The administrative and inspection capacity of the line ministry and its
units responsible for information and communication technology and digital administration
remain insufficient.
On audio-visual policy, the implementation of the Law on Public Information and Media, the
Law on Electronic Media and the Law on Public Service Broadcasting is ongoing. The public
broadcasters RTS and RTV adopted statutes in line with the Law on Public Service
Broadcasting. A method of monitoring revenue and expenditure allowing separate book-
keeping for public and commercial activities is yet to be introduced. This is a matter of
concern with regard to monitoring state aid provided to RTS and RTV, as well as for ensuring
their editorial independence. RTS and RTV should prepare consolidated records of licence fee
payers and forms for collection of and exemption from licence fee payments, which is a
precondition for introducing the licence fee.
The Regulatory Body for Electronic Media faces delays in preparing all the by-laws needed to
implement the Law on Electronic Media. The regulator needs to be fully independent when
monitoring the fulfilment of programming obligations of broadcasters. The regulator is not
fulfilling its role of monitoring of the retransmitted audio-visual media content on cable
operators which is regularly interrupted by local advertisements. This makes it more difficult
to broadcast in line with the Audio-visual Media Services Directive and affects overall media
advertising revenue.
5.11. Chapter 11: Agriculture and rural development
The Common Agricultural Policy supports farmers and rural development. This requires
strong management and control systems. There are also common EU rules for quality policy
and organic farming.
Serbia is at an early stage of preparation in agriculture and rural development. Some
progress was made with expansion of the Farm Accountancy Data Network and adoption of
the Instrument for Pre-accession Assistance for Rural Development (IPARD). In the coming
year, Serbia should in particular:
→ develop an action plan for acquis alignment in agriculture and rural development
→ ensure adequate allocation of resources and strengthening of the capacity of all IPARD
bodies with a view to obtaining entrustment with budget implementation tasks.
As regards horizontal issues, the implementation of the strategy for agricultural and rural
development for the period 2014-2024 has started. Serbia's adoption of a national programme
for agriculture would contribute to ensuring its implementation and sector planning.
Establishment of the Farm Accountancy Data Network (FADN) is progressing. Serbia has yet
to designate formal institutional responsibilities pertaining to FADN and adopt a rulebook to
39
transpose the FADN regulation. Verification of data quality and the use of the FADN data
will greatly facilitate policy planning and monitoring. As regards activities towards
establishing the Integrated Administration and Control System (IACS) to prepare for the
management and control of agricultural payments, Serbia should focus on developing the land
parcel identification system and the farm register. This requires it to clarify the
responsibilities of stakeholders, adopt the legal base and build capacity to ensure the system
works properly.
In the area of the common market organisation (CMO), in the wine sector, registration of
vineyards has progressed. Administrative capacity in the sector needs further strengthening.
Rulebooks on the zoning of viticultural geographical production areas and packaging and
labelling of wines were adopted. A draft law on spirit drinks is advancing and must be aligned
with the acquis before adoption.
On rural development, the IPARD programme (2014-2020) was adopted in January. It
focuses on upgrading holdings and processing establishments to EU standards. Relocation of
the IPARD Agency to Belgrade was an important development. The legal base for adequately
resourcing IPARD operating structures has been created. Staff recruitment and training need
to accelerate. The capacity of the offices of the National Authorising Officer, the National
IPA Coordinator and the Audit Authority in relation to IPARD needs to expand further. This
gives cause for serious concern for timely implementation of the programme and should be
promptly addressed.
On quality policy, no progress can be reported. On organic farming, the national action plan
for the development of the organic sector remains to be adopted.
5.12. Chapter 12: Food safety, veterinary and phytosanitary policy
EU hygiene rules for foodstuff production ensure a high level of food safety. Animal health
and welfare and the safety of food of animal origin are safeguarded together with quality of
seed, plant protection material, harmful organisms and animal nutrition.
Serbia is moderately prepared in the area of food safety, veterinary and phytosanitary
policy. Some progress was made, with the opening of the phytosanitary laboratory and the
re-alignment of the maximum level of aflatoxins in milk with the level in the EU. In the
coming year, Serbia should in particular:
→ review the capacity of the veterinary, phytosanitary and national reference laboratories
directorates and adopt an action plan to strengthen them.
In the area of general food safety, in February the phytosanitary laboratory was the first of
the national reference laboratories to be opened. Further efforts are needed to put other
laboratories into operation, such as the laboratory for quality control of raw milk, and to
obtain accreditation for them as necessary. On food safety rules and specific rules for feed,
the permitted level of aflatoxins in milk has been aligned with the requirements of the EU
acquis. Yeasts have been added as a new category to the catalogue of feed materials. Planned
amendments to food safety law are still pending.
On veterinary policy, a programme of animal health protection measures for 2015 was
adopted in April. No new cases of classical swine fever were notified, while the programme to
eradicate rabies in wildlife continued successfully. The country has adopted an animal health
programme on bluetongue disease and allocated funds to buy vaccines. The plan for
controlling residues of veterinary products and medicines in animals for 2015 is being
implemented. Serbia has largely aligned its legislation on animal welfare on farms with EU
law, but implementation and enforcement need to be improved. National legislation on animal
40
welfare in slaughterhouses and transport has yet to be aligned with the acquis. National
legislation on identifying and registering bovines should be better enforced by increasing
coordination with the Agrarian Payments Directorate on cross-compliance of subsidies, and
with the police on preventing illegal trafficking and trade in animals.
In relation to the placing food, feed and animal by-products on the market, Serbia
introduced temporary amendments on how to classify and handle animal by-products. They
address the lack of developed infrastructure for collection and transport and the lack of
capacity of rendering plants. A national monitoring and control programme for food and feed
safety needs to be adopted. Serbia also needs to adopt a programme for upgrading agri-food
establishments and the food safety council needs to be appointed. The management of animal
by-products is an area of particular concern. Serbia should strengthen enforcement of
legislation on separation and treatment of animal waste and adopt and implement a strategy to
align it with EU acquis.
In the area of phytosanitary policy, the Law on Plant Protection Products is not implemented
in relation to registration, for which the previous non-EU compliant procedure is still
applicable. The rulebooks for the annual programme for post-registration control of plant
protection products and measures for plant health protection for 2015 have been adopted.
The new law on genetically modified organisms remains to be adopted, in line with the EU
acquis, which would also allow Serbia to join the World Trade Organisation.
5.13. Chapter 13: Fisheries
The Common Fisheries Policy protects living resources of the sea and limits the
environmental impact of fisheries. This includes setting catch quotas, managing fleet
capacity, rules for aquaculture as well as support for fisheries and coastal communities.
Serbia is moderately prepared in the area of fisheries. Some progress was made with
creating the legal base for a national catch certification scheme for imports and exports of
fishery products and a system for collecting market data.
As regards EU requirements on resource and fleet management, and inspection and
control, the law on animal husbandry needs to be amended to provide a legal basis for the
introduction of a national catch certification scheme for imports and exports of fishery
products. A law on protection and sustainable use of fish stocks came into force in December.
Serbia does not have any structural actions in place for small-scale fisheries or inland
fisheries. As regards market policy, the capacity of the administration managing and
controlling imports and exports of fisheries products needs to be upgraded and brought into
line with the acquis.
5.14. Chapter 14: Transport policy
The EU has common rules for technical and safety standards, security, social standards, state
aid and market liberalisation in road transport, railways, inland waterways, combined
transport, aviation and maritime transport.
Serbia is moderately prepared in transport policy. Good progress was made on road, rail
and inland waterways. In the coming year, Serbia should in particular:
→ ensure that railway undertakings that were certified and licensed by Serbian authorities
have access to the network and the service facilities in Serbia for the purpose of providing
domestic or international rail freight services;
41
→ confer all competencies regarding type authorisation, vehicle authorisation and national
vehicle register to the safety authority;
→ further strengthen its administrative capacity for enforcement and inspection.
On road transport, legislation aimed at aligning with the acquis on dangerous goods was
adopted in November. The Serbian Strategy on road safety was adopted in July. Legislation
on driving and on rest periods for domestic lorry drivers remains to be adopted. Further
alignment with the road safety and dangerous goods acquis is still necessary. While the
number of fatal road traffic accidents is falling, it remains high and road safety remains a
concern.
As regards rail transport, an agreement on railway border crossing procedures was signed
between Serbia and the former Yugoslav Republic of Macedonia in February. The law on air,
railway and waterborne accident investigations was adopted in August, providing for the
establishment of an independent accident investigation body. Open access to the railway
market, with transparent track access charges and capacity allocation, still needs to be
achieved. Serbian Railways continue to deny track access to a duly licensed and safety-
certified domestic freight operator. Serbian Railways were unbundled in July. Public service
obligation contracts have yet to be signed.
On inland waterway transport, the strategy on waterborne transport development for 2015-
2025 was adopted in January. In February, amendments were adopted to the law on
navigation and ports on inland waterways. The merchant shipping law remains to be adopted.
On intermodal transport, the construction of the first modern intermodal terminal in
Belgrade has not yet started. Further implementing legislation on support measures for
intermodal transport, on incentive measures for road carriers and on loading units on the
railways is needed.
On air transport, the revised list of air carriers subject to an operating ban in the EU was
adopted in January. The Serbian European Aviation Safety Agency and Civil Aviation
Directorate agreed on a new working arrangement in May. Further alignment with the acquis
on accident investigation and working time is required. Inquiries into Air Serbia’s compliance
with the ‘effective control’ requirements in the European Common Aviation Agreement
(ECAA) are ongoing. The administrative capacity of the Civil Aviation Directorate requires
strengthening to fulfil the obligations of the ECAA Agreement. Serbia actively participates as
an observer in the Joint Service Provisional Area initiative.
As regards maritime transport, amendments to the law on maritime transport were adopted
in February. A national and international shipping registers was established. A rulebook on
ship documents and books was adopted in July. In the area of satellite navigation, Serbian
participation in the Galileo programme has yet to start.
5.15. Chapter 15: Energy
EU energy policy covers competition and state aids, equal access to resources, the internal
energy market, energy efficiency, nuclear energy and nuclear safety and radiation protection.
Serbia is moderately prepared in the area of energy. Some progress was made in the
internal energy market. In the coming year, Serbia should in particular:
→ take measures to improve alignment with the acquis in renewable energy, energy
efficiency, develop competition in the gas market and achieve cost-reflective electricity
tariffs;
42
→ participate in the region's electricity Coordinated Auction Office in line with its Energy
Community obligations;
→ strengthen the independence and increase administrative capacity of the energy and
nuclear regulators.
On security of supply, two decrees on mandatory oil stocks were adopted in October 2014
and the Directorate for Management of Mandatory Stocks was set up in the Ministry of
Mining and Energy. However, Serbia is still at a very early stage of alignment with the acquis
and cannot provide information about its stock levels. Preparatory work on building a gas
interconnector between Serbia and Bulgaria should accelerate in order to diversify Serbia’s
gas supply. The security of the electricity supply was seriously affected by the damage to the
Kolubara coal mine during the 2014 floods, when Serbia had to import electricity and lignite.
Serbia has ceased all preparation for the South Stream pipeline following Russia's
abandonment of the project.
Substantial progress was made in terms of normalisation of relations between Serbian and
Kosovan transmission companies. Following an agreement in August 2015 between Serbia
and Kosovo, a Serbian power supply company should be established to supply customers in
northern Kosovo. This company has not yet been established. The parallel management that
Serbia installed at the Gazivode/Ujmani hydropower plant continues to interfere in its
operation, with a risk of flooding.
On the internal energy market, the law on energy (which incorporates provisions from the
third Energy Package) was adopted in December. The energy sector development strategy has
not yet been adopted. Since January, electricity and gas markets have been fully opened in
Serbia. New electricity and gas supplier switching rules came into force in July. Further
efforts are needed to strengthen the independence of the Serbian energy agency, AERS, and
its capacity to cover responsibilities arising from the third Energy Package. At the end of
2014, Serbia adopted a plan to unbundle the gas utility, Srbijagas, addressing its failure to
meet its obligations under the Energy Community.
At the end of 2014, AERS approved agreements between the transmission system operator
EMS and its Hungarian, Bulgarian and Croatian counterparts on bilateral coordinated
allocation of capacity. Regulated electricity tariffs need be adjusted to reflect cost. The
Secretariat of the Energy Community opened infringement proceedings against Serbia for its
failure to participate in the activities of the region’s Coordinated Auction Office.
On renewable energy, administrative procedures for issuing permits and network
connections were simplified by the new energy law of December 2014. Amendments to the
planning and construction law adopted in December 2014 provide a simplified approval
procedure for building energy facilities. There is no significant investment in the renewable
energy sector. Substantial efforts are urgently needed to achieve Serbia’s target of obtaining
27 % of gross final energy consumption from renewable sources by 2020. Any further
development of hydropower should be in line with EU environmental legislation.
Full alignment with the energy efficiency acquis has not yet been achieved. Two rulebooks
on energy management were adopted in December. The ministry lacks administrative
capacity to draft by-laws. The energy efficiency fund did not produce significant results
although 11 contracts were signed with different municipalities for projects in the field.
On nuclear energy, nuclear safety and radiation protection, Serbia adopted a regulation
setting up a nuclear security and safety programme and a regulation on the safety of nuclear
facilities and nuclear material. A national strategy for the sector has yet to be adopted and
alignment with the acquis on radioactive waste management, radiation protection, spent fuel,
43
nuclear safety and security is needed. The Serbian Radiation Protection and Nuclear Safety
Agency (SRPNA) has not consolidated the inspection activities of the relevant ministries.
SRPNA filled 26 posts out of its approved 35. SRPNA issued an operating licence for a new
nuclear and radioactive waste hangar. An action plan needs to be drafted for decommissioning
research reactor A at the Vinča site. The radiological situation at the abandoned Kalna
uranium mine needs to be improved.
5.16. Chapter 16: Taxation
EU rules on taxation cover value-added tax and excise duties as well as aspects of taxing
income from savings of individuals and of corporate taxes. They also deal with cooperation
between tax administrations, including information exchange to prevent tax evasion.
Serbia is moderately prepared in the area of taxation. Some progress was made with the
adoption of the 2015-2020 programme to transform the tax administration. This should
strengthen strategic management and planning of taxation. In the coming year, Serbia should
in particular:
→ improve operational activities to curb the informal economy;
→ further align national rules on excise goods, including those on imported spirits and coffee,
with those of the acquis;
→ further simplify and unify tax procedures and better train staff.
On indirect taxation, no progress can be reported on value added tax (VAT). Excise
legislation still contains some discriminatory measures on imported spirits and coffee. Excise
duty on electricity and on electronic cigarettes was introduced, as of August. On direct
taxation, the amended law on profit tax passed in December exempts humanitarian aid, and
assistance provided to different levels of government.
On administrative cooperation and mutual assistance, Serbia signed an agreement to join
the Fiscalis 2020 programme, which came into force in July.
On operational capacity and computerisation, electronic services to taxpayers were
further extended and revenue increased. The use of e-declarations became compulsory for a
large number of tax declarations. Efforts to combat the grey economy intensified, with
reinforced checks on VAT compliance. A new programme for 2015-2020 to transform the
tax administration was adopted in June. As a positive development, it includes quarterly
performance indicators to assess compliance with objectives. While public communication
has improved, the tax administration should upgrade taxpayer service and simplify
administrative procedures. Efforts are needed to train staff more effectively. The new well-
equipped data centre has become fully operational this year; but maintaining staffing in the
IT division has become a challenge due to wage competition from the private sector.
The tax administration has intensified work on improving supervision by training of tax
inspectors in various fields, in line with EU methodology. The discretionary powers of
individual tax inspectors should be further reduced. Some work was also done to improve
operational activities to curb the informal economy, notably against illegal trade in fine-cut
tobacco and cigarettes and in games of chance and gambling activities.
44
5.17. Chapter 17: Economic and monetary policy
EU rules require the independence of central banks and prohibit them directly financing the
public sector. Member States coordinate their economic policies and are subject to fiscal,
economic and financial surveillance.
Serbia is moderately prepared in the area of economic and monetary policy. Some progress
was made on alignment with the acquis and with the preparation of the Economic Reform
Programme (ERP). In the coming year, Serbia should in particular:
→ intensify efforts to improve economic policy coordination, including the design and
implementation of structural reforms.
On monetary policy, alignment of the legal framework is well advanced. Monetary financing
of the public sector is prohibited by the central bank law. The law also establishes price
stability as the central bank's primary objective. However, Serbia's inflation rate has been
below the central bank's tolerance band (4 % ±1.5 percentage points) since 2014.
On economic policy, Serbia submitted its ERP to the European Commission in March. It
outlines a comprehensive programme of fiscal consolidation and structural reforms anchored
in a stand-by arrangement with the International Monetary Fund. The proposed set of sectoral
reform measures in the ERP is appropriate but remains modest in relation to the needs and
vague in terms of budgeting and implementation schedules. The weak presentation of many
sectoral reforms indicates that the ERP should have undergone a more thorough consultation
procedure inside and outside government. This would ensure domestic ownership and better
implementation.
Serbia introduced fiscal rules in 2010, but public debt continued to increase and is expected to
stabilise only in 2017 at almost 80 % of GDP, breaching the statutory 45 % ceiling. The Fiscal
Council, which is an independent institution set up under the same legislation, continued to
express valuable opinions on budgetary and economic policies.
5.18. Chapter 18: Statistics
EU rules require that Member States are able to produce statistics based on professional
independence, impartiality, reliability, transparency, and confidentiality. Common rules are
provided for the methodology, production and dissemination of statistical information.
Serbia is moderately prepared in statistics. Good progress was achieved in the past year,
notably in harmonising data production with the acquis and further developing sectoral
statistics. In the coming year, Serbia should in particular:
→ improve the compilation of macroeconomic statistics in line with European System of
Accounts (ESA) 2010, start sending data for the EU’s excessive deficit procedure and
improve the process for sending data to Eurostat;
→ continue to boost coordination of statistical data producers on macroeconomic statistics
(Statistical Office, Ministry of Finance, and National Bank) and strengthen the administrative
capacity of the Statistical Office;
→ align its legislative framework on territorial units for statistics (NUTS) with the NUTS
regulation, in line with its SAA obligations.
On statistical infrastructure, the legal framework is largely in line with the European
statistics Code of Practice, while the upcoming revision of the law on statistics is expected to
increase the professional independence of the Statistical Office of the Republic of Serbia
(SORS). The capacity of the Statistical Office needs to be further strengthened, notably in
45
relation to human resources. Data transmission to Eurostat has started, but this needs to be
considerably improved. On classifications and registers, main classifications are in line with
the acquis while, the classification of territorial units remains to be aligned.
Regarding macroeconomic statistics, SORS compiles annual and quarterly GDP data in
current and constant prices. Annual sector accounts are compiled as of 2005 and data for
2011-2013 were sent to Eurostat. However, further efforts are needed for improving the
quality of the data. Data on the government deficit and debt are produced by the Ministry of
Finance, but considerable efforts are needed to further develop finance statistics and ‘supply
and use’ tables. Monthly and quarterly balance of payment data and quarterly data on the
international investment positions produced by the National Bank of Serbia are only partially
in line with the EU acquis. The harmonised index of consumer prices is used according to EU
standards.
In the area of structural business statistics and short-term statistics, an increase of data
coverage is necessary. Foreign affiliates statistics are only partially in line with the acquis.
Data for tourism is not provided by type of locality or for national tourism. For transport,
road, railway, inland waterways and air transport statistics need to be harmonised with the
acquis and data needs to be sent more frequently. Research and development data are partially
aligned with the acquis and further efforts are needed to send research and development
expenditure and other related data to Eurostat. Statistics on business and household usage of
information and communications technology are produced twice a year. The Community
Innovation Survey (CIS) has been carried out twice; the 2010 data were sent to Eurostat but
the 2012 data are still being processed.
On social statistics, Serbia is partially in line with the acquis. The population and housing
census was conducted in 2011 and data have subsequently been published. The EU survey on
income and living conditions is being implemented and the 2013 data were published. For
social protection statistics, the European System of integrated Social Protection Statistics
(ESSPROS) is implemented. Labour market statistics are broadly in line with the acquis.
Statistics on structure of earnings and job vacancies still need to be produced. The labour cost
survey data for 2012 were sent to Eurostat, while full implementation and transmission of
quarterly labour cost index is expected end-2015. Public health statistics are partially in line
with the acquis. Statistical surveys of crime are conducted but still need to be aligned.
In the area of agricultural statistics crop production, animal production, milk, dairy and
slaughter statistics have been aligned, while orchard and vineyards surveys have yet to be
introduced. Supply balance sheets and agricultural price statistics need to be harmonised with
the acquis. The SORS continued to release data from the 2012 agriculture census.
As regards energy statistics, annual energy statistics are produced for all relevant energy
sources and are submitted to Eurostat. Environment statistics are partially in line with the
acquis. Waste and water statistics are collected but coverage has to be improved.
5.19. Chapter 19: Social policy and employment
EU rules in the social field include minimum standards for labour law, equality, health and
safety at work and anti-discrimination. They also promote social dialogue at European level.
Serbia is moderately prepared in social policy and employment. Some progress was made
on employment policy, social policy, and occupational health and safety. The preparation of
Serbia’s first employment and social reform programme is an important step in identifying
key challenges in employment and social policies and policy reforms to address them. These
areas continue to be affected by scarce public finances and insufficient institutional capacity.
In the coming year, Serbia should in particular:
46
→ ensure financial and institutional resources for employment and social policies;
→ significantly strengthen social dialogue at all levels.
On labour law, steps were taken to review alignment gaps in labour legislation. Labour
inspection activities have been intensified and better targeted, especially in relation to fighting
undeclared work. Alignment continues regarding health and safety at work. The
administrative capacity of the Labour Inspectorate needs to be increased.
With regard to social dialogue, consultation of the Socio-Economic Council on legislative
amendments remains limited. Walk-outs of representative trade unions from working groups
in charge of preparing important pieces of legislation are a concern. There has been little
further progress in developing tri-partite social dialogue at local level. Several sector
collective agreements remain to be concluded following the repeal of collective agreements in
January. Bipartite social dialogue remains weak. Initial steps were taken to revise the laws on
strike and peaceful settlement of labour disputes.
In the area of employment policy, employment rate continued to rise moderately to 42 %.
There has been a decrease in both unemployment rate and informal employment. The
proportion of young people not in employment, education or training while decreasing
slightly, remains high at 18.6 %. Half of the unemployed are below the age of 35. In 2015
fiscal consolidation measures and restructuring of socially owned enterprises are expected to
have a negative effect on overall employment. The government has set up a social fund for
severance payments. A package of active labour market measures has been earmarked to
target workers affected by restructuring of state owned enterprises. Serbia has prepared its
first employment and social reform programme. It identifies key challenges in employment
policy and sets out social policies and policy reforms to address them.
As regards preparations for the European Social Fund, high staff turnover is affecting IPA
management expertise in the Ministry of Labour, Employment, Veteran and Social Affairs
and in the National Employment Service. (See also Chapter 22 — Regional policy and
coordination of structural instruments)
On social inclusion, the second national report on social inclusion and poverty reduction was
adopted in October 2014. The third wave of the Survey on Income and Living Conditions was
completed in May and provides an important source of indicators used at EU level to monitor
poverty and social exclusion in light of the Europe 2020 strategy. The at-risk-of-poverty rate
was 25.6 % in 2014, up from 24.6 % in 2013. The availability and quality of community-
based services across the country remains uneven. The provision of social services is
additionally compromised by the lack of implementing regulations and ineffective distribution
of budget funds. Better enforcement of the regulatory framework is necessary. Only 17.8 % of
registered unemployed Roma were included in active labour market measures. Roma continue
to be excluded from a range of social services and their participation in the formal labour
market remains very low.
On social protection, the 2014 pension fund deficit remained large. As a part of fiscal
consolidation measures, all pensions above RSD 25 000 (approximately EUR 210) were
progressively reduced in November 2014. The measure affected about 39 % of pensioners.
Amendments to the Law on Pensions and Disability Insurance and the budget system law,
adopted in December, provide that pensions will not be raised until the ratio of pension
expenditure to GDP falls below 11 %.
On anti-discrimination policy, the Office of the Commissioner for Protection of Equality
continued to raise awareness and promote mechanisms for protection against discrimination.
The groups most discriminated against remain Roma, lesbian, gay, bisexual, transgender and
47
intersex people, people with HIV/AIDS, people with disabilities, and women. (See also
Chapter 23 — Judiciary and fundamental rights)
On equal opportunities between women and men, amendments made to the labour law in
July 2014 help to empower women at work, help working mothers to reconcile family and
professional life, and offer greater protection to pregnant workers. However, the legislation
needs to be fully implemented, particularly regarding the dismissal of pregnant women and
women on maternity leave, sexual harassment, the gender pay gap and inequality in
promotion, salaries and pensions. Women's participation in the labour market as well as the
gender pay gap need to be tackled further. (See also Chapter 23 — Judiciary and fundamental
rights).
5.20. Chapter 20: Enterprise and industrial policy
EU industrial policy enhances competitiveness, facilitates structural change and encourages
an enterprise friendly environment that stimulates small and medium sized enterprises.
Serbia is moderately prepared in enterprise and industrial policy. Some progress was made
with the adoption of a new strategy and action plan. The issue of construction permits was
also addressed. In the coming year, Serbia should in particular:
→ improve the business environment, especially for small and medium-sized enterprises
(SMEs), and facilitate their access to finance.
On enterprise and industrial policy, an enterprise and industrial strategy for 2015-2020 was
adopted in March, together with an action plan for 2015-2016. The strategy is in line with the
Small Business Act (SBA) principles. Serbia and the Commission agreed that the country
would participate in the EU competitiveness and SME programme (COSME) as of 2016.
On enterprise and industrial instruments, Serbia participated in the latest SBA
performance review which demonstrated that the national authorities improved the self-
assessment process. First policy results show improvements on several scores, particularly in
relation to bankruptcy, business support services and export promotion. However, support for
smoother and cheaper access to finance remains problematic. Fresh financial instruments need
to be developed and rolled out in order to reverse the long trend of credit stagnation. There
was some progress concerning late payments but full alignment with the EU directive remains
to be achieved.
As regards the business environment, the process of reviewing, updating and simplifying laws
stalled; regulatory impact assessment is not systematically respected. Company registration
has been simplified, but parafiscal charges continue to weigh on company operations. The
state has yet to propose a policy approach which would ensure some overview and control of
these charges, which are largely collected by municipalities and regulatory agencies.
In sectoral policies, the new law on construction permits adopted in late 2014 delivered good
results, as the number of construction permits tripled and the time taken to issue them fell.
5.21. Chapter 21: Trans-European networks
The EU promotes trans-European networks in the areas of transport, telecommunications and
energy to strengthen the internal market and contribute to growth and employment.
Serbia is moderately prepared for trans-European networks. Some progress was made and
work continued on the extension of Orient East-Med core corridor in the Western Balkans for
both road and rail. In the coming year, Serbia should in particular:
→ intensify its preparatory work for the gas interconnector with Bulgaria.
48
On transport networks, Serbia continued to participate in the South-East Europe Transport
Observatory and to implement the memorandum of understanding on the development of the
South-East Europe Core Regional Transport Network. The country played an active role in
the Western Balkans 6 connectivity agenda by endorsing the agreement on the regional core
transport network in Brussels in April, and the further agreement (in Riga in June) on the core
network corridors and on the list of projects to be implemented by 2020 (in Vienna in
August). The new law on planning and construction was adopted in December. It simplifies
permitting and spatial planning procedures, allowing quicker implementation of infrastructure
projects.
On road infrastructure on Orient East-Med core corridor, work is progressing on the E-75
from Niš to the border with former Yugoslav Republic of Macedonia, with work having
started on the Caričina Dolina to Vladičin Han segment in April. Work continues on the E-80
from Niš to the Bulgarian border (Prosek to Dimitrovgrad) and the Belgrade bypass.
Construction work on the Subotica to Kelebija (Y branch) segment has been temporarily
suspended due to insufficient funds. Work on Road Route 4 (Belgrade to Bar) is ongoing.
Work on railway Orient East-Med core corridor is ongoing.
On trans-European energy networks, Serbia continues to support the implementation of the
Gas Ring Project for South-East Europe. Preparatory work on the construction of the gas
interconnector between Serbia and Bulgaria needs to intensify to increase gas supply security.
Construction of the Resita-Pancevo electricity interconnection between Romania and Serbia
has started. Investment preparations for the project pipelines in transport and energy are
advancing well.
5.22. Chapter 22: Regional policy and coordination of structural instruments
The EU funds regional development in the Member States. Implementation is the
responsibility of the Member States that must have adequate administrative capacity to ensure
the good handling and sound financial management of the projects.
Serbia is moderately prepared in regional policy and coordination of structural instruments.
Some progress was made: Serbia is acquiring valuable experience of managing EU funds
under ‘indirect management’ through component I of the IPA. In the coming year, Serbia
should in particular:
→ ensure adequate capacity to implement ‘indirect management’ programmes.
The legislative framework is still not fully in line with the acquis, while the ability of the
budgetary system and resources to provide adequate financing capacity at aggregate level
remains to be tested. On the institutional framework, Serbia started to manage programs on
Transition Assistance and Institution Building (IPA component I). Work continued to align
the structures for programming and implementing national development policy and strategic
planning with those of EU regional policy, so that Serbia can increase its ability to absorb EU
funds and cofinance EU-funded programmes. On administrative capacity, further efforts are
needed to put in place a staff retention policy to cope with the anticipated workload and staff
turnover.
Notable efforts were made on programming and continued preparations for the ‘sector
approach’ used under IPA II. Potential final beneficiaries need to improve their ability to
produce project documentation in line with IPA requirements. On investment in transport,
energy, environment and business infrastructure, Serbia continued to make significant efforts
to establish a single project pipeline by preparing and using a methodology for selecting the
most relevant projects. As part of this, a National Investment Committee was set up in
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October 2014 and meets regularly. On monitoring and evaluation, sectoral monitoring
committees for all sectors of IPA components I and II are operational and meet regularly.
On financial management, control and audit, Serbia’s financial management and control
systems were further developed to comply with the indirect management requirements for
IPA components I and II (Cross-border cooperation). The capacity of the audit authority
remains an issue of concern which needs to be addressed adequately.
5.23. Chapter 23- Judiciary and fundamental rights
The EU's founding values include the rule of law and respect for human rights. A proper
functioning judicial system and effective fight against corruption are of paramount
importance, as is the respect for fundamental rights in law and in practice.
Serbia has achieved some level of preparation for the acquis and European standards in this
area and has made some progress. In September 2015 the action plan required for the
opening of rule of law Chapter 23 was successfully finalised. Improved rules for evaluating
prosecutors and judges were adopted and steps were taken to reduce the sizeable backlog of
cases. However, there is still scope for political influence over judicial appointments. The
national anti-corruption strategy has so far not yielded the expected results. Corruption
remains prevalent in many areas and continues to be a serious cause of concern. As regards
fundamental rights, conditions for the full exercise of freedom of expression are not in place.
Legislation to protect minorities is broadly in place but needs to be consistently implemented
across the country. In the coming year, Serbia should in particular:
→ consolidate the justice reform process, addressing existing gaps in the independence,
accountability and effectiveness of the judicial system and ensure its effective implementation
→ establish a track record of investigation, prosecution and final convictions in corruption
cases, particularly in high-level corruption cases;
→ ensure conditions for the full exercise of freedom of expression;
→implement the anti-discrimination framework more effectively, promote equality and
ensure the integration of persons belonging to the most vulnerable groups (Roma, LGBTI
persons, persons with disabilities, and persons with HIV/AIDS) and minorities.
(See also the specific recommendations on the judicial system, the fight against corruption
and the freedom of expression in sections 2.3 and 2.4.)
Functioning of the judiciary
Strategic documents
Serbia is implementing the action plan for the National Judicial Reform Strategy (NJRS)
2013-2018, although there have been some delays. The Strategy Implementation Commission
lacks a work plan and financial and administrative support, so it cannot drive implementation
effectively.
Management bodies
Only 9 out of the 11 positions on the High Judicial Council (HJC) are currently filled. The
work of the HJC should be more transparent. Agendas for its meetings are published, but not
the minutes. There was only one public session in 2014. The State Prosecutorial Council
(SPC) and HJC post annual reports on their websites, but there is little up-to-date information
on their activities. The councils urgently need to take over responsibility for the entire judicial
budget and for effective management of the judicial system.
50
Independence and impartiality
Various gaps in the independence of the justice system remain to be addressed by revising the
Constitution and the legal framework. The nomination procedure for judges and prosecutors
needs to be amended, as do the three-year probation period for candidate judges and the
composition of and method of election to the HJC and SPC. Representatives of the
government still publicly comment on ongoing trials/investigations, which undermines the
independence of the judiciary. Court rules provide for random allocation of cases, but not all
courts use this procedure and exceptions are frequent. Especially smaller courts assign cases
manually. This creates a risk for interference by the court administration or president. There is
no technology for allocating files randomly in prosecution offices.
Accountability
The disciplinary prosecutor of the HJC started 42 disciplinary proceedings in 2014 and
submitted 19 proposals for dismissal. On proposal of the Disciplinary Commission 11 final
decisions were taken by HJC in 2014: five judges were dismissed, three judges resigned
before the end of the proceeding, two were fined and in one case the statute of limitation had
expired. In 2014, some 2 000 complaints against the work of judges and court presidents were
filed with the HJC (mostly on excessive length of hearings). The number of disciplinary
complaints against prosecutors and deputy prosecutors increased in 2014, but most were
dismissed and in the few cases where sanctions were applied, they were not deterrent.
Professionalism and competence
The current system of recruitment, transfer and promotion should be reformed to ensure a
transparent and predictable judicial career system. Clear rules and an efficient promotion
system need to be the norm. The HJC appointed 60 (permanent) judges at all levels in 2014-
2015 and proposed 49 new candidates to parliament. New rules for evaluating judges were
adopted in May. While most court presidents were approved by parliament in May, their
appointment is still pending in six courts. In 2014, the SPC selected 19 deputy prosecutors
and proposed candidates to parliament for 4 appeal prosecutors and 45 first-time deputies. In
May, the SPC adopted rules on evaluating prosecutors and on the election of public and
deputy public prosecutors. The recruitment and evaluation processes should include a greater
role for judicial education. Judges and prosecutors are appointed to specific offices. There is
no mechanism for transferring them elsewhere.
Quality of justice
The Judicial Academy continued to organise regular training in EU law, in-service training for
management posts in the courts, in-service training for specialised judicial posts and general
in-service training. The academy’s budget slightly decreased compared to previous year (EUR
1.5 million in 2014 and EUR 1.496 million for 2015). There is a need to increase the quality
and to ensure the academy’s capacity to become a proper entry point to the judicial
profession. A training needs assessment is urgently needed.
A new special law protecting the right to a trial within a reasonable time was adopted in May
and will come into force in January 2016. Some steps have been taken to monitor and
harmonise court practices. In May the Supreme Court of Cassation adopted an action plan to
monitor and harmonise case law more effectively. There is no comprehensive or effective
mechanism for this yet. Poor quality legislation can result in contradictory court rulings. Case
law, especially for the most important cases, and consolidated legislation should be accessible
online.
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Workload across the country remains uneven. The situation became critical in Belgrade’s
basic prosecution offices which process the majority of all cases and where new
responsibilities for criminal investigation have not been backed by the necessary staff and
resources. A case weighting system to calculate significant differences in workload between
and within courts is urgently needed.
The HJC and SPC continued to share budgetary authority with the Ministry of Justice.
Measures must urgently be taken to prepare the councils for taking responsibility for the
judicial budget by the end of 2015. Both the HJC and the SPC saw a decline in their
respective budgets. Specific financial, resource and infrastructure challenges for the
prosecution service, stemming from the introduction of a prosecutorial-led investigation
model, need to be addressed.
There is no centralised data collection system for the courts. The introduction of public
notaries, meant as an efficient way of relieving the burden on the judicial system, has proven
problematic. Selection and appointment procedures should be improved and the
implementation of the law should take into account the need to ensure quality services and
access to justice. The law on notaries was amended in September 2014 to remove the
notaries’ monopoly of real estate transactions. The adoption of by-laws on detailed
supervision/inspection of the work of notaries and private bailiffs has been delayed. The new
Law on Enforcement and Security has not been adopted. There is a need for broader
awareness raising and training of all stakeholders on alternative dispute resolution.
Automated information exchange is extremely limited across the sector and information and
communication technology is little used for sharing information on court practice and
accessing services. The performance of the system is difficult to measure as data is scattered
and based on insufficiently accurate manual collection of data.
Efficiency
The overall length of proceedings and the number of old cases registered as a backlog remain
of serious concern. A national backlog reduction programme is in place but the courts did not
meet targets set for 2014, partly owing to the lawyers’ strike. In 2014, the courts received
1 752 185 new cases and were able to settle 1 793 212, an improvement of 1 % compared to
2013. The court system remains clogged by extra-judicial duties, such as certifying
documents, and especially by 1.6 million enforcement cases, mostly related to civil claims. A
review of the legal framework is needed to allow older cases to be transferred to private
bailiffs, which would help reduce the massive backlog in court enforcement. In 2014, the
backlog in the Supreme Court increased (with a clearance rate of 80.7 %) while in the basic
courts, administrative courts and higher courts it fell (with clearance rates of 110 %, 103.74 %
and 108.47 %, respectively).
Anti-corruption policy
Track record
There is some initial track record of investigation, prosecution and convictions in cases
which are not considered high-level corruption. Sentences for corruption offences range
from 6 months to 12 years, but the law is not applied consistently. Procedures for
investigating corruption cases, particularly cases of high-level corruption, often take a long
time because capacity is lacking and shortcomings in the legal framework prevent effective
and systematic financial investigations and asset confiscations.
The specialist prosecution office for organised crime and corruption initiated investigations
against 86 persons for high level and severe corruption cases in 2014. The office raised
52
indictments or indicting proposals against 54 persons. Indictments were confirmed against 32
persons, and additionally the indicting proposals entered into force against 5 persons. So far,
there have been no final convictions for high-level corruption. The Prosecution Offices of
general jurisdiction raised indictments against 990 persons for corruption related cases in
2014, and against 204 persons indictments were confirmed. Against 147 persons proceedings
were discontinued and against 10 persons charges were rejected. In 2014, in one case of high
level corruption assets have been permanently confiscated. Leaks to the media about
ongoing investigations, in breach of the presumption of innocence, continue to be an issue of
serious concern. There have been no investigations of these breaches. A number of high
profile cases, including some in which evidence of alleged wrongdoing has been presented by
the media, have never been seriously investigated.
A track record of judicial follow-up to the Anti-Corruption Agency, in-depth checks of party
funding, conflict of interest and asset declarations still needs to be established. The Anti-
Corruption Agency received 1 481 requests to investigate conflicts of interest in 2014
(compared to 1 402 in 2013) and processed 1 286 cases (compared to 958 in 2013). This
resulted in 68 requests for misdemeanour proceedings (compared to 58 in 2013) and 43 first
instance judgments most of which were reprimands and fines.
The agency submitted 168 requests for misdemeanour proceedings relating to asset
declarations, of which 153 cases are for failing to submit reports on time. A total of 85 cases
resulted in convictions by misdemeanour courts in 2014. The agency also filed 14 criminal
charges in 2014 due to reasonable suspicion that a public official had not reported assets or
had given false information about assets with the intention of concealing the facts.
Proceedings are under way in 11 cases, a plea bargain is being negotiated in another, and in
two cases the criminal charge was dismissed.
As regards checks on the funding of political activities and elections, the agency submitted
33 requests for misdemeanour proceedings for violations of the law on financing political
activities. Misdemeanour courts handed down a larger number of sentences based on requests
made in previous years (125 compared with 28 in 2013), including 45 final sentences. In
2014, the agency published 31 decisions taking funds from public sources away from political
entities.
Institutional framework
Prevention measures
Serbia’s institutions for preventing corruption broadly meet international standards and have
shown good potential. However, human resources and cooperation need improvement. The
revised law enabling the Anti-Corruption Agency to enhance its role as the key institution
needs to be adopted urgently. The agency continued to perform well, in line with its mandate
and despite limited resources and both legal and institutional obstacles. The agency needs to
increase its ability to collect and analyse data and its access to relevant databases. Overall, it
must receive and maintain the capacity, tools and financial resources needed to carry out its
mandate. The requirements of the Law on Public Procurement and the national anti-
corruption strategy and action plan have yet to be fully implemented. Healthcare, education,
construction and spatial planning, infrastructure projects and the privatisation of public
enterprises remain particularly vulnerable to corruption. Independent supervision and capacity
for early detection of wrongdoing and conflicts of interest need to be further developed. There
should be greater accountability and transparency in the management of public enterprises.
The Anti-Corruption Council remained active in exposing and analysing cases of systemic
corruption, in its advisory role to the government. However, the government does not follow
53
up on its recommendations. The Council remains under-resourced and the appointment of
new Council members has been pending since 2013.
The institutional capacity of the Commissioner for Free Access to Information of Public
Importance and Personal Data Protection needs to be further increased to ensure effective
monitoring and adequate follow-up to the increasing number of requests for access to public
information. Requests for access to information that were refused mainly concerned
privatisation, concessions, public-private partnerships and other related procedures that have
an impact on the budget.
Law enforcement
Judges, prosecutors and investigators specialised in financial crime including corruption have
received further training but a more sustainable approach to specialist training at all levels is
needed. The specialist prosecution service for organised crime and corruption has
continued to process cases of high-level corruption. Comprehensive analyses of the risk of
corruption in justice and law enforcement have been carried out.
Interinstitutional cooperation, between law enforcement agencies and with the prosecution
service, has improved to a certain extent but requires further strengthening. The new financial
investigation strategy includes plans to reorganise the law enforcement authorities, increase
their level of specialisation, and recruit forensic accountants. However, funding has yet to be
allocated.
There is no secure platform for electronic data exchange or communication between the
prosecution service, the police, tax and other authorities. There is also no system allowing
statistical monitoring of criminal proceedings. Internal control departments continue to lack
equipment, resources and human capacity. Reform of the inspection services is needed to
increase their accountability. Effective supervision and deterrent sanctions in cases of
wrongdoing need to be applied. The independence and accountability of all investigative and
judicial bodies dealing with corruption needs to be strengthened to ensure efficiency.
Legal framework
The legal framework for the fight against corruption is broadly in place. Corruption
offences, including passive and active corruption, are defined in the Criminal Code. The
excessive recourse to the provision on abuse of office in the private sector in the Criminal
Code is harmful to the business climate and legal certainty. Amendments to the Criminal
Code are still under consideration to provide for a sustainable legal solution to effectively
prosecute cases of criminal economic offences. The Law on Civil Servants includes
provisions on a code of conduct for civil servants and monitoring mechanisms. Preventing
corruption in local government requires greater attention. The provisions in the current Law
on the Anti-Corruption Agency on preventing conflicts of interest and declaring and
checking on the assets of public officials should be amended to ensure its enforcement and
deterrent sanctions in cases of proven infringements. The law on financing political activities
is in place, but needs to be revised to ensure its penalty provisions are applied. The
OSCE/ODHIR recommendations on financing electoral campaigns have not yet been
addressed. Serbia should develop more robust legal provisions and ensure deterrent sanctions
are applied to proven infringements of the law on financing political activities, conflicts of
interest and declaration and verification of assets of public officials. The new law on whistle-
blower protection entered into force in June.
General shortcomings in Serbia’s laws and rules are conducive to corruption. The quality of
legal drafting on corruption-related issues needs to improve and further efforts are needed to
simplify procedures and clarify implementing rules.
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Strategic framework
Several important measures in the anti-corruption strategy and action plan for 2013-2018
are behind schedule, e.g. setting up efficient coordination and monitoring mechanisms.
Adequate resources and human capacity to fully implement the strategy and action plan have
not yet been allocated.
The inter-ministerial coordination group put in place in 2014 and chaired by the Prime
Minister met only once. There is an urgent need to ensure better working arrangements
between the Ministry of Justice and other institutions and bodies involved in combating
corruption. This applies primarily to relations with the ACA.
The government adopted a strategy on financial investigations in May which calls for
investigation of the money trail of crime alongside criminal investigations, and supports
investigation beyond the initial case. However, adequate resources have yet to be allocated
and no action plan has been adopted. The action plan for the public administration reform
strategy includes measures to increase accountability and transparency in the public sector
with a view to combating corruption, but needs to be adequately resourced.
Fundamental rights
Serbia has ratified all the main international human rights instruments. However,
implementation of the relevant international instruments needs to be improved and more
consistent. Since September 2014, the European Court of Human Rights (ECtHR) has
found that the country violated the European Convention on Human Rights (ECHR) in 14
cases relating mainly to the right to a fair trial and protection of property. A total of 1253 new
applications have been allocated to a decision-making body, bringing the number of pending
applications to 1494.
In relation to the promotion and enforcement of human rights, relevant state bodies such as
the Office for Human and Minority Rights, parliamentary committees, the Ombudsman, the
Equality Protection Commissioner and also civil society organisations continued to promote
awareness-raising on human rights, tolerance and non-discrimination. The role of the Office
for Human and Minority Rights needs to be strengthened.
As regards prevention of torture and ill-treatment, the Ombudsman’s Office acts as the
national preventive mechanism. It needs more human resources and a solid and permanent
internal structure. Penalties in the Criminal Code are not proportionate to the severity and
gravity of the crimes of ill-treatment and torture. Proper legal safeguards against torture and
abuse in social institutions have yet to be adopted. Overcrowding, especially in maximum
security wards, poor living conditions, difficult access to specialist treatment programmes and
inadequate access to healthcare in prisons are still matters of concern. Legislation covering
detention in police custody, the prevention of torture and the internal complaints system needs
to be amended to strengthen the rights of detainees in line with international standards. An
effective internal non-judicial mechanism for reviewing complaints has yet to be set up. There
has been no progress in changing the unlawful practice of using district prisons for police
detention.
Concerning the prison system, implementing legislation for new laws on criminal
punishment and on alternative measures and sanctions was adopted. Enforcement judges, in
their main capacity of protectors of prisoners’ rights, have been operational since October
2014. The probation service has expanded to 25 offices throughout Serbia.
A new law on personal data protection needs to be adopted to ensure full alignment with
EU standards. Video surveillance, biometrics, security of data on the internet, processing and
55
protection of sensitive data as well as direct marketing remain inadequately regulated, leaving
significant room for abuse. Legislation on processing sensitive data should be adopted
urgently. There is a need to boost capacity and funding for the Office of the Commissioner for
Free Access to Information of Public Importance and Personal Data Protection.
Freedom of thought, conscience and religion is guaranteed by the Constitution and
generally respected. Several religious organisations are registered. Incidents related to religion
have continued to decline. In addition to seven communities recognised as traditional
religious communities, several religious organisations have been registered. The lack of
transparency and consistency in the registration process continues to be one of the main
obstacles preventing some religious groups from exercising their rights. Contested provisions
of the rulebook on the register of churches and religious communities have not been changed.
Access to church services in some minority languages is not fully guaranteed across Serbia.
As regards freedom of expression, there were several cases of threats and violence against
journalists. Follow-up in terms of investigations, prosecution and final convictions has been
very limited. A number of critical discussion programmes have been cancelled or have had
their content and scope reduced. Statements by state officials in relation to investigative work
of journalists have not been conducive to creating an environment in which freedom of
expression can be exercised without hindrance. The commission tasked to look into
unresolved cases of murdered journalists from 1999 and 2001 has made further progress in its
work, with charges brought against several former security agency members for the murder of
a publisher. However, the investigation of two other prominent murders of journalists has not
progressed.
The three new media laws are being implemented, but their impact and effectiveness in terms
of achieving the goals of the 2011 Serbian media strategy remain to be seen. The introduction
of a media registry to bring more transparency to media ownership is at an early stage. The
Commissioner for Access to Information of Public Interest reported several cases in which
state bodies resorted to paying fines rather than disclosing the information requested. The
introduction of a registration requirement to access the online National Economic Registry
hampers the ability of journalists to research public information in confidentiality. The
process of privatising state- and municipally owned media was started, albeit with some delay
The Regulatory Body for Electronic Media has increased its monitoring of content., It has not
reacted to programme changes that could affect the broadcasters’ ability to meet the criteria
on the basis of which they were awarded the frequencies. The regulator’s independence needs
to be strengthened. The Press Council has been more active in disclosing and analysing cases
of breaches of professional journalistic standards and the Journalistic Code. The Press Council
has raised major concern towards practices contrary to the ethics of the profession and the
protection of privacy.
There is no consolidated record of the number of cases brought against the media for
defamation, and fines are very low. Media reporting based on anonymous or leaked sources,
detailing investigations, announcing arrests and quoting investigation documents continue to
undermine trust in judicial institutions, breach personal data laws and challenge the
presumption of innocence.
The internet is free and available with very little regulation. There has been no substantial
progress in investigations on hacking attacks against websites occurred in 2014. Efforts are
needed to identify and prosecute those suspected of violating internet freedoms.
56
Programming on public service broadcasters frequently features state officials from the
governing parties and equal minded analysts, while the presence of the opposition and critical
or independent commentators is less frequent.
Freedom of assembly and association is generally respected but the public assembly law
needs to be fully aligned with the Constitution. During Serbia’s hosting of the ‘16+1’ summit
of the states of Central and Eastern Europe and China in December, the authorities prohibited
demonstrations of members of Falun Gong, arresting and expelling a number of EU citizens.
A demonstration to commemorate Srebrenica was prohibited for security reasons. Activities
of extreme right-wing organisations and violent groups of so-called football fans continue to
be a cause of concern.
With regard to property rights, December 2014 amendments to the law on restitution
extended the deadline for the start of financial compensation for confiscated property to 2018
while the period of repayment was shortened from 15 to 12 years. The Agency for Restitution
had adopted around 34 000 opinions and first-instance decisions on the return of confiscated
property out of 76 000 submitted claims. Property with an estimated value of over 1 billion
euro has been returned to the original owners. A majority of the agency’s decisions were
approved by the Ministry of Finance as the second-instance decision body. The Ministry's
insufficient staff levels led to delays in processing complaints.
Serbia’s non-discrimination legislation is generally in line with European standards, with
further alignment needed in particular as regards the scope of exceptions from the principle of
equal treatment, the definition of indirect discrimination and the obligation to ensure
reasonable accommodation for employees with disabilities. The action plan for the anti-
discrimination strategy needs to be implemented. The office of the Commissioner for the
Protection of Equality still lacks adequate premises and its capacity needs to be strengthened.
The persons most discriminated against remain the Roma, lesbian, gay, bisexual, transgender
and intersex (LGBTI) persons, persons with disabilities and persons with HIV/AIDS who,
together with human rights defenders, often face hate speech and threats. Instigating national,
racial and religious hatred and intolerance is prohibited in the criminal code. Proper
investigation, prosecution and sanctioning of hate-motivated offences remains essential.
Concerning equality between women and men, a Coordination Body for Gender Equality
was set up in October 2014, replacing the Gender Equality Directorate in the Ministry of
Labour, Employment, Veteran and Social Affairs. A sustainable institutional set up for
promotion of gender equality with adequate resources needs to be ensured. (See also Chapter
19 − Social policy and employment). The increasing number of women killed by their partners
is of concern. Emergency protection orders are not issued promptly, the number of shelters is
insufficient and there is no state-run centre for victims of sexual violence and no national
women’s helpline. The protection of women against all forms of violence needs to be
strengthened and mechanisms for coordinating the collection and sharing of data between all
relevant actors in the system enhanced. Although the number of women members of
parliament increased to 34 %, women's participation in politics and in the private sector
remains very low.
The National Council on the Rights of the Child has restarted its work. Ensuring more
effective coordination of children’s rights and child protection systems should be prioritised,
including in national policies. Administrative data are still not disaggregated to enable the
status of vulnerable groups to be monitored, particularly with regard to Roma children and
children with disabilities. A new action plan for children and a new national strategy for the
prevention of and protection of children from violence are still needed.
57
The situation of children with disabilities in large institutions continues to be of concern.
Family and parenting support services should be prioritised to prevent placement in
institutional care. There is a need to further expand community-based services and ensure
more integrated service delivery. The rulebook on recognising discrimination in education
institutions needs to be adopted without further delays. Funding mechanisms for schemes to
divert young people away from crime need to be decided on as a matter of priority.
Mechanisms and services supporting asylum seekers need to be strengthened to become child-
sensitive.
Regarding integration of persons with disabilities, laws on the movement of persons with
disabilities with guide dogs and on the use of sign language have been adopted. Social
inclusion needs to improve significantly, particularly with regard to employment, education
and the availability of community-based services. The system of social services, including
those for elderly persons, is still largely institutionalised. The treatment of persons with
mental disabilities in institutions is still not regulated in accordance with international
standards. The procedure for depriving persons with psychosocial and intellectual disabilities
of their legal capacity should be aligned with international standards. (See also Chapter 19 −
Social policy and employment)
A number of activities have been conducted with the aim of promoting the rights of LGBTI
persons. Parliament has been active in hosting events related to rights of LGBTI persons.
Police officers in all regional police departments were trained on working with victims of
trans-/homophobic violence. Serbia was one of the signatories of the Joint Statement of
Ministers of the region at the 2015 IDAHO forum. A Pride Parade was held in Belgrade on 20
September without major incidents for a second year in a row. LGBTI persons and activists
often face hate speech and threats and in some cases physical violence. There is no centralised
official data on the number of crimes motivated by homophobia and transphobia. School
textbooks containing discriminatory content need to be repealed. Serbia has no procedures for
legal gender recognition in place, even in cases of gender reassignment. Greater political
commitment to promoting a culture of respect for LGBTI persons and to ensuring non-
discrimination at work, in the health sector and the education system is still needed.
Labour and trade union rights are guaranteed by the Constitution and broadly upheld.
However, the right to strike, collective bargaining and the functioning of social dialogue need
further strengthening. Poor respect of tripartite dialogue remains of concern. The procedures
and criteria for determining the representativeness of trade unions need to be agreed in a
transparent way. Consultation of the Socio-Economic Council on legislative amendments
remains limited. (See also Chapter 19 − Social policy and employment)
The 2011 Criminal Procedure Code contains provisions on procedural rights regarding
injured party and witnesses. However, the legal framework remains to be completed, in
particular when it comes to free legal aid, and the implementation of procedural safeguards
fully assessed to ensure an effective protection system, supported by adequate staff, training
and infrastructure. Support and protection for victims of crime is not in line with EU rules,
and effective mechanisms for protecting victims’ rights are lacking.
The legal framework for the protection of minorities and cultural rights is in place. Serbia is a
party to the Framework Convention on National Minorities. The legislation is being
implemented most effectively in the Autonomous Province of Vojvodina. It needs to be
further stepped up, particularly in other parts of the country. Elections to the National
Minority Councils took place in October 2014, when 20 national minorities elected their
councils. In April, the Republican National Minority Council was re-established. A
comprehensive revision of the Law on National Minority Councils to implement the relevant
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decision of the Constitutional Court and to ensure it is in line with laws on the media, culture
and education needs to be adopted. The State Fund for National Minorities is not operational
yet. Effective functioning of local councils for inter-ethnic relations needs to be ensured. The
legislation needs to be implemented consistently throughout Serbia, particularly in education,
the use of languages, and access to media and religious services in minority languages. This
should not affect learning of the official language, which is an important factor in the social
inclusion of minorities. The public service broadcaster RTS needs to ensure more consistent
access to information in minority languages. Following privatisation, public broadcasting
services in minority languages need to be made sustainable. Representation of national
minorities in public administration, particularly at local level, needs to be enhanced. Serbia is
preparing a dedicated action plan on the protection of national minorities throughout the
country by the end of 2015, as requested in the framework of chapter 23 negotiations.
The Autonomous Province of Vojvodina maintained a high degree of protection for
minorities. The inter-ethnic situation remained good overall. However, in October 2014
following an incident at a football match in Belgrade between the national teams of Serbia
and Albania, there were several attacks against the property of members of the Albanian
minority. The Provincial Ombudsman’s 2014 annual report noted that the law enforcement
authorities seemed to have failed to act preventively. Majority of cases concern general
discrimination on the basis of ethnicity.
Regarding the municipalities of Presevo, Bujanovac and Medvedja, the situation was
stable overall. The dialogue between the central authorities and local ethnic Albanian leaders
on a comprehensive programme of integration and economic recovery has not resumed. A
more constructive cooperation of all stakeholders is needed. In order to address the inaccurate
population figures resulting from the ethnic Albanians' boycott of the 2011 census and
consequences on planning, the government decided to adopt an estimation of the population,
with the help of independent international experts and in line with the recommendations by
the Advisory Committee of the FCNM. The government’s Coordinating Body continued
performing its activities efficiently. Its role should be supported. In October 2014, the fourth
generation of students was enrolled in the Department of Economics in Bujanovac and new
scholarships were provided for students from Presevo and Bujanovac studying at the
University of Novi Sad. Investment and grants to local entrepreneurs continued to be provided
by central government. The region remains severely underdeveloped and the ethnic Albanian
population continues to be underrepresented in public services.
The situation in the Sandzak area was mostly stable. The new Bosniak National Minority
Council was elected and started work, thus resolving a long-standing problem. A more
constructive cooperation of all stakeholders is needed on the ground. The Bosniak community
continues to be underrepresented in the local administration, judiciary and police. The area
remains among the most underdeveloped, with a high unemployment rate and a lack of
adequate infrastructure and investment.
The adoption of a new Roma strategy and action plan remains outstanding. The third Roma
seminar, held in June, concluded that good progress had been made with regard to civil
registration but in all other areas progress was slow and uneven. The subsequent registration
of undocumented citizens led to a fall in the number of ‘legally invisible persons’. Systemic
solutions have been found to prevent future reoccurrence of such cases. Further efforts are
needed to ensure that children born to undocumented parents are registered immediately. The
Roma continue to face difficult living conditions and discrimination in access to social
protection, health, employment and adequate housing. Compliance with international
standards on forced eviction and relocation still needs to be ensured. Legalisation of informal
Roma settlements should be considered as a way of enabling them to be regulated and
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covered by urban planning. Additional teaching assistants and health mediators are needed to
address the high school drop-out rate among Roma children and poor access to healthcare.
Such positions should be included in the national qualifications framework. Measures to
address domestic violence in Roma families need to be stepped up.
According to the UNHCR, there are around 35 259 people who became refugees refugees and
203 140 internally displaced persons (IDPs) in Serbia as a result of the armed conflict in ex-
Yugoslavia during the 1990s, of whom approximately 90 000 with displacement related needs
and without a durable solution. The closure of the 10 remaining ‘collective centres’ hosting
227 refugees and 495 IDPs is a priority. The housing situation of displaced persons has
improved slightly. Many refugees and IDPs still suffer from difficult living conditions,
unemployment and poverty. Roma IDPs face double discrimination. The Law on Permanent
and Temporary Residence needs to be implemented more consistently to allow IDPs without
proper documentation to obtain basic rights. Serbia lacks a comprehensive strategy and action
plan for resolving the protracted displacement situation and assisting IDPs with finding
durable solutions.
5.24. Chapter 24: Justice, freedom and security
The EU has common rules for border control, visas, external migration and asylum. Schengen
cooperation entails the lifting of border controls inside the EU. There is also cooperation in
the fight against organised crime and terrorism, and judicial, police and customs
cooperation.
There is some level of preparation in Serbia to implement the acquis on justice, freedom and
security. In September 2015 the action plan required for the opening of rule of Chapter 24 was
successfully finalised. Some progress was made, particularly in areas such as the fight
against terrorism and drugs. Serbia is on the transit route for mixed migration of persons in
need of protection and economic migrants via Turkey and Greece, towards northern Europe.
The volume of mixed migration increased dramatically in the last year, weighing heavily on
the asylum and migration framework, which is generally weak. Serbia is actively involved in
international and regional police and judicial cooperation. In the coming year, Serbia should
in particular:
→ in close cooperation with EU Member States, continue its constructive approach in
providing urgent respond to the migratory crisis situation and significantly strengthen
migration management and asylum policies, with a specific focus on identifying people in
need of protection;
→ make significant further efforts to tackle the phenomenon of unfounded asylum
applications lodged by Serbia’s nationals in EU Member States;
→ establish a track record of proactive investigation, prosecution, final conviction and asset
confiscation in cases of organised crime, including money laundering, and smuggling of
people.
(See also the specific recommendations on the fight against organised crime in section 2.3.)
Legal and irregular migration
Serbia should be commended for its constructive approach in dealing with the migration crisis
until now. Given its geographical location at the EU external borders, Serbia faces increasing
mixed migration flows. The management of these flows, as well as ensuring borders
surveillance, is a considerable challenge for the Serbian administration. As an immediate
response to the crisis, Serbia made a substantial effort to ensure that third country nationals
receive shelter and humanitarian supplies with EU and international support. A one-stop
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centre in Preševo as well as refugee aid centers were established, close to the borders with the
former Yugoslav Republic of Macedonia, Hungary and Croatia. In June, a working group on
mixed migration flows was set up to elaborate a needs assessment. There has been a marked
rise in criminal charges for human smuggling. In June, Serbia arrested nine customs officials
suspected of letting people illegally cross the border with Hungary. 549 criminal charges were
filed against 816 persons facilitating irregular migration. In the first half of 2015, 5 576 cases
of illegal entry were detected at the common border with the former Yugoslav Republic of
Macedonia, of which 98 % were detected by Serbian border guards. The implementation of
the readmission agreement with the EU resulted in 2014 in the return of 6 962 people to
Serbia (compared with 6 239 in 2013). Reception and accommodation capacity needs to be
upgraded and adapted to increasing needs. Efforts are required to ensure that sufficient and
well-trained staff both at central and local level can respond to the challenges and
consequences of growing migratory pressure. Particular attention should be given to the needs
of minors and vulnerable groups. Better coordination is required among all institutions
involved in tackling irregular migration. Legislation on legal migration needs to be aligned
with the acquis.
Asylum
In September, the Serbian government adopted a "Response plan in the case of mass influx of
migrants", which aims at managing flows of third country nationals who intend to seek
asylum in the EU or in Serbia. Serbia's current accommodation capacity stands at 810 beds
and through the implementation of the plan could be extended substantially. In January the
Asylum Office was set up as a separate civilian unit within the border police directorate. It
will be responsible for determining refugee status in the first instance. Up to 29 staff are
planned with 19 positions occupied..
In 2014, Serbia faced some 16 500 intentions to apply (compared with 5 065 in 2013), but
only some 1 400 people were effectively registered for asylum and 400 submitted an
application. Only 18 interviews were conducted and 14 decisions taken, resulting in 8
rejections, 1 person granted recognition of refugee status and 5 people granted other forms of
protection. From January 2015 to September 2015, 169 156 migrants were registered when
transiting through the territory of the Republic of Serbia. Only 546 applied for asylum. In the
same period, 16 persons got asylum and 14 subsidiary protection. 28 received a negative
decision.
There is an urgent need for short-term measures to improve the processing of applications
including the establishment of a protection-sensitive screening mechanism within the asylum
procedure aimed at distinguish between third country nationals and persons in need of
international protection and increase accommodation capacity. Comprehensive, overarching
reform is urgently needed to rationalise the whole asylum system and bring it into line with
EU acquis and international standards. Serbia needs enough well-trained staff to handle the
increasing number of applications. Closer cooperation between the asylum bodies and the
border police is necessary. Allegations of corrupt practices and activities by organised crime
groups involved in people smuggling continue to be made.
Visa policy
Interconnection of the integrated Serbian Visa Information System with diplomatic and
consular missions and other relevant databases has yet to be completed. The list of countries
for which visas are required has not been fully aligned with the acquis. On implementation of
the visa-free regime with the EU, Serbia continued to take measures to address the
phenomenon of unfounded asylum applications lodged by Serbian nationals in EU Member
States and Schengen associated countries. Border controls and surveillance were stepped up
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and 12 criminal charges for facilitating the abuse of the right to asylum in a foreign country
were filed. The high number of unfounded asylum applications filed by Serbian citizens in EU
Member States and Schengen-associated countries continues to be a problem as the total share
of applications from Serbian citizens to the top five targeted destinations in 2014 is close to
44% (around 18 847 out of the total 42 840). Serbia continues to cooperate on measures to
reduce the number of unfounded asylum claims, partly through operational cooperation with
Member States and awareness-raising campaigns. Both operational checks on tourist agencies
and transport companies and border control and surveillance were improved. Policies to
improve the social and economic inclusion of the most vulnerable groups of the population
most likely to migrate, in particular Roma, need to be stepped up and systematically funded in
order to have a practical impact on the situation, albeit in the medium to long term. The
capacity and resources to allow returnees to reintegrate remain limited.
Schengen and external borders
Serbia continued to improve infrastructure and equipment at border crossing points. In
January a risk analysis unit was set up in the border police directorate with a total projected
staff of 14 (currently 12). It remains to be adequately staffed to become operational. In March,
a new head of the border police was appointed, after an eight-month gap. Coordination
between various border agencies needs to be improved. A new Integrated Border
Management (IBM) strategy, in line with the EU concept, remains to be adopted. Measures to
prevent corruption include shift rotations of border police officers carrying out border checks
and border surveillance.
Serbia intensified its regional cooperation on border management. However, these efforts
were overshadowed by the very sharp increase in the flows of third country nationals
transiting through the region. The Joint Centre for Police Cooperation between Bosnia and
Herzegovina, Montenegro and Serbia, in Trebinje, continued to work with liaison officers
from Bosnia and Herzegovina and Montenegro with a view to improving regional capacity to
counter cross-border crimes and illegal migration. However, Serbia needs to urgently appoint
a liaison officer. An agreement with Bosnia and Herzegovina to block alternative routes
across the state border is still pending. Cooperation with Montenegro in the area of border
management, including on identification of unauthorised border crossing places needs to be
stepped-up. Serbia continues to cooperate actively with Frontex.
As part of the dialogue on the implementation of the integrated border management (IBM)
protocol, Serbian authorities are cooperating on technical activities related to setting up the
six permanent IBM crossing points with Serbia/Kosovo. The first annual meeting on the rules
for travel across the administrative boundary line took place in March. In April, both sides
agreed to open two new border crossing points in Kapi and Izvor. In February, Serbia and
Kosovo began consultations on migratory flows. A second meeting was held in April.
Judicial cooperation in civil and criminal matters
Serbia needs to take measures allowing direct cooperation between Serbian and foreign courts
and centralising the receipt of requests to courts for international judicial cooperation.
Additional training is needed to improve knowledge of judicial cooperation and build the
necessary language skills. Specifically on judicial co-operation in criminal matters, Serbia
has not yet concluded a cooperation agreement with Eurojust because of the delay in updating
its legal framework for protection of personal data. As regards judicial co-operation in civil
matters, Serbia has not yet acceded to the 1996 Hague Convention on Child Protection.
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Fight against organised crime
Track record
In the reporting period, 277 criminal charges were brought against 516 people for illegal
crossing of the state border and people smuggling. In July 2015, an important drug lord was
convicted to 20 years imprisonment, together with some associates. There remain indications
that the network they belonged to, remains active in the smuggling of cocaine to Europe. In
2014, 2 138 criminal charges were brought for drugs offences. From January to May 2015,
22 kg of heroine, 8 kg of cocaine, 202 kg of marijuana and 8 kg of hashish were confiscated.
The total amount of heroin seized in 2014 (193 kg) was 3.4 times that seized in 2013
(56.6 kg). Twelve organised criminal groups involved in drug trafficking were dismantled..
Seven criminal charges on suspicion of human trafficking (involving 14 perpetrators and 16
victims) were filed from January to April 2015. In 2014, 98 final judgments on human
smuggling, convicting 142 people, were issued.
Precautionary freezing of assets at an early stage of an investigation is rarely applied. Assets
thus often disappear, which results in a poor track record of confiscating criminal assets at the
time of final conviction. The number of final convictions for organised crime activities
remains low compared to the estimated scale of the regional and domestic criminal market. A
track record of proactive investigation remains to be established. Final convictions and
effective dismantling of criminal organisations remain rare.
Institutional and operational capacity
Operational cooperation at bilateral and regional level further improved. In March, a first
meeting between the police directors of Serbia and Kosovo took place with the support of
EULEX. The police has access to Interpol databases of wanted persons, stolen motor vehicles,
documents and works of art. Cooperation with Europol has intensified but the liaison officer
in The Hague has not been appointed yet. Negotiations on cooperation with the European
Police College (CEPOL) were finalised in April and a working arrangement is under
preparation.
Three specialised units, for crime analysis; terrorism and extremism; and drug prevention,
addiction and repression need to be adequately staffed, trained and equipped. Further efforts
are needed to reform the organisation of the police. The level of inter-agency cooperation,
information flow and exchange between law enforcement agencies needs to be further
improved. A central criminal intelligence system and harmonised statistical data have yet to
be set up. Cooperation between the police and the special prosecutor’s office for cybercrime is
improving. The High-Tech Crime Unit remains understaffed, considering the wide range of
complex criminal activity it is expected to investigate. The accreditation process for the
forensic institute of the Serbian police was completed in November 2014. New DNA and drug
chemistry laboratories became operational in the Serbian National Crime Technical Centre.
Very few cases of trafficking in human beings have been successfully investigated, despite
Serbia being a source, transit and destination country for trafficked people and facing
increased migratory pressure. The draft anti-trafficking strategy and action plan are still
pending adoption. A comprehensive, multidisciplinary and victim-oriented approach to
human trafficking has yet to be developed. While Serbia has a coordinator for operational
cooperation in the Ministry of Interior, it has yet to appoint a national rapporteur on
combating human trafficking in line with the acquis. The Centre for Protection of Victims of
Human Trafficking needs to strengthen its capacity. No state-run emergency shelter is
available for the victims of trafficking and there is no appropriate centre for child victims.
Adequate funding needs to be earmarked for assisting victims of human trafficking; the
63
relevant fund has not yet been set up. There is a need to further improve identifying,
protecting and assisting victims of trafficking.
On money laundering, Serbia’s capacity to run complex financial investigations alongside
criminal investigations needs to be stepped up. Law enforcement agencies and prosecution
services do not have access to relevant databases in line with data protection rules and inter-
agency cooperation. The directorate that manages seized assets lacks staff and capacity,
including storage capacity. An asset recovery office in line with the acquis still needs to be set
up. In order to handle money laundering and financial crime cases more efficiently, exchange
of data and pro-active co-operation between relevant agencies needs to be improved.
Legal framework
The ministry has started to reform its human resources system. This should contribute to
limiting the exposure of police staff to politically motivated decisions. The legal framework
for police cooperation needs to be further aligned with the acquis. The Public Prosecutor leads
both the pre-investigation and investigation phases of cases. It is important to streamline
cooperation between the prosecution and the police and improve the monitoring and
performance of criminal justice. Hence, a number of shortcomings in the investigation phase
need to be addressed through amendments to the Criminal Procedures Code, notably as
regards the timeframe and arrangements for using special investigative measures. The police’s
dependence on the security and intelligence agencies to carry out certain special investigative
measures in criminal investigations remains a matter of serious concern. The investigative
powers of the border police and customs remain limited. The law on confiscation of criminal
assets needs to be aligned with the acquis.
Strategic framework
In December, Serbia adopted a national strategy for the fight against money laundering and
terrorism financing. A financial investigation strategy was adopted in May. The draft anti-
trafficking strategy and action plan are still pending adoption. Serbia has no strategy on
cybercrime and has not yet developed the capacity to make a strategic analysis of the
organised crime situation on its territory based on Europol’s methodology for Serious and
Organised Crime Threat Assessment (SOCTA). Intelligence-led policing based on crime
mapping and systematic use of threat assessments has not been developed. Fighting organised
crime and corruption remains fundamental to countering criminal infiltration of the political,
legal and economic systems.
Fight against terrorism
In October amendments to the Criminal Code were adopted, criminalising the phenomenon of
foreign terrorist fighters in line with UN Security Council Resolution 2178 (2014). In the
reporting period, 21 people were convicted for terrorism. In January, a coordination group for
the fight against terrorism, prevention of radicalisation and extremism was set up. A new Law
on Limiting the Disposal of Assets to Prevent Terrorism was adopted in March. A single
national database, more efficient procedures for data exchange and better inter-agency
operational cooperation are still needed. Efforts need to be enhanced to identify, prevent and
disrupt the flow of foreign terrorist fighters traveling to conflict areas such as Iraq and Syria.
Cooperation in the field of drugs
Good international and regional cooperation continued on drugs, in particular with the seizure
of 168 kg of marijuana in a joint operation with the former Yugoslav Republic of Macedonia.
The national drug strategy and action plan were approved in December. Appropriate financial
resources are needed to ensure it is properly implemented. The Prosecutor’s Office for
64
Organized Crime initiated several investigations for the criminal offense of unauthorized
production and trafficking of narcotic drugs and criminal alliance. The national focal point for
cooperation with the European Monitoring Centre for Drugs and Drug Addiction was moved
from the Public Health Institute to the Ministry of Health. Transfer of know-how following
this move should be ensured. At interdepartmental level, there is a Commission for
Psychoactive Controlled Substances and the Office for Combating Drugs, which is still not
operational. As part of the national drug strategy, a clear definition of the responsibilities and
powers of the various institutions as regards inter-agency cooperation is needed. The
establishment of an early warning system is pending. Serbia will need to ensure proper
staffing of and smooth exchange of data between the various bodies and departments active in
this area. The lack of secure storage of seized drugs and precursors prior to destruction
remains an issue of concern. An appropriate process for the destruction of precursors has yet
to be set up.
Customs cooperation
Regional and international customs cooperation continued, including through joint actions
(see also Chapter 29 — Customs union). Serbia needs to ensure that the IT strategy for the
customs administration is fully aligned with EU legislation on the use of technology for
customs purposes. The investigative powers of customs officers and their ability to exchange
data with other agencies at the border need to be broadened.
For measures against counterfeiting of the euro, see Chapter 32 — Financial control.
5.25. Chapter 25: Science and research
The EU provides significant support to research and innovation. All Member States can
benefit from the EU’s research programmes, the more so where there is scientific excellence
and solid investment in research.
Serbia is at good level of preparation in science and research. Some progress was made in
improving the framework for science, research and innovation. In the coming year, Serbia
should in particular:
→ take actions to modernise organisation of research and innovation in line with the
European Research Area and Innovation Union;
→ stimulate cooperation between industry and academia and increase level of investment in
research.
Serbia participates in EU research and innovation programmes Horizon 2020. It has taken
measures to ensure good administrative capacity notably established a good network of
National Contact Points (NCPs), nominated representatives in the Horizon 2020 Programme
Committees and organised at regular intervals workshops and information days on Horizon
2020. Based on first Horizon 2020 statistics, participation is good. Serbia obtained for the first
time a grant from the European Research Council (ERC) which demonstrates scientific
excellence. Further efforts remain necessary in particular to increase participate in research
and innovation actions on societal challenges and involve private sector in research.
On the European Research Area, limited policy actions have been taken in the last year. In
2014, the level of investment in research decreased to 0.78% of GDP compared to almost 1 %
in 2013. The level is now substantially lower than Serbia's own national target. Serbia
nominated its representative in the European Research Area Committee (ERAC) and related
ERA advisory bodies and attends regularly the meetings.
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On measures for the Innovation Union, the Serbian Innovation Fund continues to be active,
and has successfully implemented 55 projects.
5.26. Chapter 26: Education and culture
The EU supports cooperation in education and culture through funding programmes and
through the open method of coordination. Member States must also prevent discrimination
and facilitate education of children of EU migrant workers.
Serbia is at good level of preparation in the area of education and culture. Some progress
was made with the adoption of an action plan for the implementation of the education
strategy. In the coming year, Serbia should in particular:
→ start preparations for establishment of a national Erasmus+ agency;
→ implement the action plan with education reforms according to schedule.
In education, training and youth, Serbia continued to participate successfully in Erasmus+.
Preparations for the opening of a National Agency, which is needed for full participation in
Erasmus+, have not yet begun.
Serbia adopted an action plan for the new education strategy in January 2015. However,
several measures have been delayed and need to be stepped up. Additional investment (human
and infrastructure) in education should target pre-school and basic education levels. Pre-
school education benefits about 50% of children under 6 years whereas the EU target for 2020
is 95%. Serbia, at 8.7% , has already met the EU 2020 target on early school leavers (<10%).
The reforms for the training of primary and secondary school teachers should be stepped up
and focused on student-centred teaching, developing basic and transversal skills in students.
Serbia ranked 43 out of 65 in the 2012 PISA evaluation. There was some progress in
reforming the vocational education and training system to better meet the needs of the labour
market. The National Qualifications Framework needs to be finalised and cross-referenced
with the European qualifications Framework. The ongoing reform of higher education needs
to put particular emphasis on the relevance of its study programmes, as the unemployment
rate for graduates with tertiary education (aged 19-24) stands at 40 % and emigration of
young and skilled people is high. The lack of an efficient system for the recognition of foreign
diplomas continues to be a serious impediment to graduates’ further study and employment.
A new strategy on youth 2015-2025 and action plan were adopted in February. Serbia
contributed to the new EU Youth report. It participates very actively in the Erasmus+ Youth
in Action strand.
On culture, Serbia ratified the European Convention for the Protection of Audiovisual
Heritage in May. It is participating successfully in the Culture sub-programme of the Creative
Europe programme and in Europe for Citizens. Serbia has made some progress in aligning its
legislation in the audio-visual media sector in order to be able to participate in the MEDIA
sub-programme of Creative Europe.
5.27. Chapter 27: Environment and climate change
The EU promotes strong climate action, sustainable development and protection of the
environment. EU law contains provisions addressing climate change, water and air quality,
waste management, nature protection, industrial pollution, chemicals, noise and civil
protection.
Serbia is at an early stage of preparation in the areas of environment and climate change.
Some progress was made in further aligning policies and legislation with the environment
and climate change acquis and civil protection in particular as Serbia submitted its intended
66
nationally determined contribution to the expected 2015 Paris climate agreement. In the
coming year, Serbia should in particular:
→ finalise the setting up of systematic strategic planning, and start implementing the
country's contribution to the expected 2015 Paris Climate Agreement;
→ consolidate its strategic planning and administrative capacity to further align its policies
with EU policies, and accompany this with substantial investment linked to strategic
priorities;
→ take measures to set up an effective and permanent financing system for environment and
climate action, including a stable financing of essential basic services, such as environmental
monitoring;
In the area of the environment, no progress can be reported on horizontal legislation.
Additional efforts are still required to improve reporting from agricultural and mining
operators. Serbia maintains a high level of timely and complete data delivery to the European
Environment Agency in the European Environment Information and Observation Network
(EIONET). It needs to boost capacity for effective public participation and consultation in the
environmental decision-making process, particularly at local level.
The annual update on air quality showed that seven of Serbia’s eight urban agglomerations
exceed the margin of tolerance of several pollutants. The air quality plan for Belgrade remains
to be adopted and air quality planning for the remaining agglomerations needs to be
accelerated. Work on a national emission reduction plan for the power sector was completed
but remains to be adopted. Serbia missed its Energy Community deadline to implement the
1999 Directive on Sulphur Content in Fuels.
On waste management, work started on the regional waste management centre for the
Subotica district, which will serve approximately 280 000 people. Non acquis compliant
landfills need to be closed more quickly. A regulation on the plan for reducing packaging
waste 2015-2019 was adopted in December. Additional efforts are needed to meet relevant
targets for glass- and metal-containing packaging waste. More national investment and
improvements to address systemic weaknesses in the implementation of environmental
projects will be needed if management of all special waste streams is to comply with EU
requirements. Full alignment with the Waste Framework Directive remains to be achieved and
enforcement of waste legislation needs to improve.
As regards water quality, no progress can be reported. A national strategy and action plan on
water protection have yet to be adopted. Priority should be given to aligning the legislation
with the acquis and implementing the code of good agricultural practice.
As regards nature protection, the implementing provisions of Annex VI of the Habitats
Directive have been included in Serbian fisheries legislation in October 2014. To overcome
the current standstill in Natura 2000, the institutional framework for designating and
managing future Natura 2000 sites needs to be streamlined and adequately resourced. The
legal base and administrative capacity for enforcement of the Convention on International
Trade in Endangered Species of Wild Fauna and Flora (CITES) needs to be improved.
Investments in hydropower need to comply with nature protection obligations.
As regards industrial pollution and risk management, amendments in March to the Law on
Integrated Pollution Prevention and Control defer the deadline by which existing installations
must hold a valid permit from 2015 to 2020. Serbia has not yet addressed the acquis
requirement of either a fully integrated permitting process covering all areas or formal
67
consultation between permitting authorities. Capacity constraints hamper progress in
implementing the legislation on prevention of chemicals accidents.
As regards chemicals management, March amendments to the Law on Chemicals and the
Law on Biocides provide for a clear delineation of previously overlapping inspection remits
between environment, market and sanitary inspections, and veterinary inspections for
biocides. Capacity for environmental inspection is adequate.
In civil protection, disaster risk reduction and disaster management need to be treated as a
matter of priority, particularly in the light of the severe floods in 2014. Serbia became the
33rd participating state in the EU Civil Protection Mechanism in July. Serbia needs to ensure
that the Niš Humanitarian Centre does not duplicate the role of the EU Civil Protection
Mechanism in the region. Serbia will also need to accomplish a countrywide risk assessment
and assessment of its risk management capabilities.
On climate change, work on a comprehensive countrywide climate policy and strategy
commenced. It needs to become consistent with the EU 2030 framework and it should be
well-integrated into all relevant sectoral policies. Serbia submitted its intended nationally
determined contribution (INDC) to the expected 2015 Paris Climate Agreement in June. The
INDC is an economy-wide emissions reduction target of 9.8% by 2030 in comparison to 1990
levels, and it also covers aspects related to adaptation to climate change. Legislation on
greenhouse gases emissions monitoring, reporting and verification for aligning with the EU
Emissions Trading System was prepared for adoption. Activities pertaining to the
establishment of a monitoring and reporting system for greenhouse gases emissions in line
with EU Monitoring Mechanism legislation kicked off in May 2015. Serbia moreover
implemented the first required measure of the Montreal Protocol, to freeze
hydrochlorofluorocarbons (HCFC) consumption at the baseline level in 2013. Serbia started
the preparation of a National Adaptation Plan. The National Committee for Environment and
Climate Change was established in November 2014. Considerable strengthening of
administrative capacities is needed as well as awareness raising activities.
5.28. Chapter 28: Consumer and health protection
EU rules protect consumers in relation to product safety, dangerous imitations and liability
for defective products. The EU also ensures high common standards for tobacco control,
blood, tissues, cells and organs, patients’ rights and communicable diseases.
Serbia is moderately prepared in consumer and health protection. Some progress was
made, notably with the establishment of the Consumer Council. In the coming year, Serbia
should in particular:
→ strengthen the administrative capacity of relevant authorities for consumer protection;
→ work on strengthening the overall financial sustainability of the public health system.
On consumer protection, in December, the Consumer Council, was set up to encourage
cooperation between consumer protection organisations. The National Consumer Complaint
Register is operational, but not publicly accessible. The number of complaints filed by
consumers has increased. The Rulebook on the operation of alternative dispute settlement
entities was adopted in August. Cooperation between the line ministries and consumer
organisations needs to increase, as does cooperation between consumer protection
organisations. The administrative capacity of the authorities for consumer protection and
market surveillance needs to be further strengthened.
On product safety-related issues, the new law on Safety Items of General Use has not been
adopted. Alignment with the General Product Safety Directive should be further improved
68
through amendments to the law on product safety. On non-safety-related issues, the
amended Law on Protection of Users of Financial Services was adopted in January, further
aligning legislation with the acquis.
In the area of public health, the newly established e-Health Unit in the Ministry of Health is
not operational. The EU-funded centralised electronic health record system is not yet fully
integrated. A new law on health records was adopted in November. The poor financial
situation of the public health fund puts the sustainability of the sector in question. Shortages
of medical and administrative staff in primary healthcare centres pose difficulties, especially
in rural areas. Greater human resource management and organisational capacity is needed,
and a national plan for human resources in the health sector needs to be implemented. New
programmes of specialisation and professional development should be developed. No
progress was made in the preparation of a new strategy on tobacco control.
On communicable diseases, surveillance and response capacity remain limited and require
modernisation. Further alignment of the national legislation with the acquis is required. A
centralised health information and communication system has to be developed. More attention
needs to be given to effective, sustainable financing of disease-specific strategies, including
the national HIV/AIDS strategy and awareness-raising, notably on the importance of child
vaccination. Additional work is needed in particular on surveillance of antimicrobial
resistance and inter-sectoral cooperation.
On blood, tissues, cells and organs, alignment with the acquis and development of
administrative capacity are still at an early stage. The administrative and technical capacity of
the Directorate for Biomedicine needs strengthening and a legislative framework that outlines
its competences and responsibilities in terms of oversight of the sector needs to be established.
Overall, EU based quality and safety standards and proper inspection services of the sector
need to be developed.
A number of rulebooks were adopted in the field of pharmaceuticals, in particular the
rulebook on conditions for importing medical products and devices lacking marketing
authorisation. Community-based mental health services still need to be developed.
On drug abuse prevention, the government office for the fight against drugs is not yet
operational. In December, the government adopted the strategy for drug abuse suppression
(2014-2021) and an action plan (2014-2017). On rare diseases, the Law on the Prevention
and Diagnosis of Genetic Diseases, Genetic Anomaly and Rare Diseases was adopted in
January. Continued efforts are needed to facilitate implementation.
5.29. Chapter 29: Customs union
All Member States are part of the EU customs union and follow the same customs rules and
procedures. This requires legislative alignment as well as adequate implementing and
enforcement capacity and access to the common computerised customs systems.
Serbia is moderately prepared for the customs union. Good progress was made on transit,
with the adoption of the amended customs law. In the coming year, Serbia should in
particular:
→ upgrade or renew the customs declaration processing system and integrate the risk
management;
→ enhance and modernise management of the customs administration.
As regards customs legislation, an amended customs law was adopted in March, introducing
a legal basis for use of the EU’s new computerised transit system (NCTS). The customs tariff
69
has been aligned with the 2015 EU Combined Nomenclature. Simplified procedures for
express shipments have been introduced. However, the law on the customs administration has
not yet been adopted and legislation on cash controls, cultural goods and duty relief on
imports of new production equipment still needs to be aligned with the acquis. Legislation on
customs-related security initiatives has yet to be implemented. As of February, the rules of
origin under the Stabilisation and Association Agreement have been harmonised with the
Convention on Pan-Euro-Mediterranean preferential rules of origin.
The customs administration continued to strengthen its administrative and operational
capacity. In 2014, a 12 % increase in customs duty collection was achieved. At unilateral
basis, Serbia ratified the convention on the simplification of formalities in trade in goods and
the convention on a common transit procedure in June 2015, as part of its preparations to
accede to both conventions. The national NCTS is fully operational. A new centralised system
for the management of bank guarantees is operational. The customs declaration processing
system was further upgraded. Strategic and modern management techniques, including quality
assurance and change management, are lacking and the IT strategy needs to be updated. Work
on setting up a functional, interconnected IT system progressed, but the IT division continues
to lose competent staff.
Risk management systems needs to be strengthened and harmonised. Integrity among customs
officials was addressed by opening 99 disciplinary procedures against 113 customs officers
for serious breaches of official duty. The customs laboratory needs to be further equipped.
Serbia participates in the Customs 2020 programme.
Customs procedures were implemented without incident at the crossing points between Serbia
and Kosovo. Closing the illegal crossing roads / by-passes between Serbia and Kosovo would
help reduce illegal trade and smuggling of petrol and other goods.
5.30. Chapter 30: External relations
The EU has a common trade and commercial policy towards third countries, based on
multilateral and bilateral agreements and autonomous measures. There are also EU rules in
the field of humanitarian aid and development policy.
Serbia is moderately prepared in the area of external relations. Some progress was made,
with Serbia joining the EU Civil Protection Mechanism. In the coming year, Serbia should in
particular:
→ stop applying safeguards on selected agriculture products, which are not justified under the
Stabilisation and Association Agreement and which point to weaknesses in administrative
capacity to implement trade policy.
On the common commercial policy, no progress was made with Serbia’s accession to the
World Trade Organisation. WTO membership remains dependent on the adoption of a WTO
and EU acquis-compliant law on genetically modified organisms and on the completion of
market access negotiations with a number of WTO members.
On administrative capacity, a formal coordination structure for trade policy issues exists,
consisting of relevant government services. In 2015, Serbia took safeguard measures on EU
imports of milk, cheese, butter and pork. Consultations with the authorities on the justification
for these measures were not conclusive. Serbia should therefore discontinue the safeguard
measures without delay and avoid applying such measures unless fully justified. The capacity
to collect market statistics and consult stakeholders remains weak.
The government updated the regulation on dual-use goods and adopted a regulation on
customs control of exports and imports which could be used for capital punishment, torture or
70
other degrading treatment. Serbia would benefit from joining some of the international
regimes overseeing national export control systems, such as the Wassenaar Arrangement.
As concerns bilateral agreements with non-EU countries, Serbia is still negotiating a free
trade agreement with Ukraine. The Serbian parliament ratified a bilateral investment treaty
with Canada in April.
Some progress has been made on development policy and humanitarian aid. Serbia acceded
to the EU Civil Protection Mechanism in 2015 and set up a national system for disaster relief.
5.31. Chapter 31: Foreign, security and defence policy
Member States must be able to conduct political dialogue in the framework of the foreign,
security and defence policy, to align with EU statements, to take part in EU actions and to
apply agreed sanctions and restrictive measures.
Serbia is moderately prepared in foreign, security and defence policy. Some progress was
made as Serbia continued to participate in civil and military crisis management missions. In
the coming year, Serbia should in particular:
→ improve alignment with EU declarations and Council decisions;
→ adopt legislation on the tracking mechanism for the implementation of EU restrictive
measures.
Regular political dialogue between the EU and Serbia on foreign and security policy
continued. On the common foreign and security policy (CFSP), a law on implementation
and tracking of the enforcement of restrictive measures has yet to be adopted. Serbia aligned
itself, when invited, with 26 out of 40 EU declarations and Council decisions (representing
alignment of 65%, compared with 62 % reported last year).
Serbia did not align itself with Council decisions, including EU restrictive measures on the
illegal annexation of Crimea by Russia and events in eastern Ukraine. Nor did Serbia align
itself with such Council decisions on Bosnia and Herzegovina, or Moldova.
High-level contacts with Russia continued. Russia’s President visited Serbia in October 2014.
Serbia’s President attended the celebration of Victory Day in Moscow and members of the
presidential guard participated in the military parade. Serbian and Russian airborne forces
held joint military drills in November 2014 and together with Byelorussians forces in
September 2015. Contacts with Ukraine were also strengthened. Serbia continued to support
the territorial integrity and sovereignty of Ukraine, including Crimea. Serbia's Prime Minister
and the Ukrainian President exchanged invitations for reciprocal high-level visits and Serbia
delivered humanitarian assistance to Ukraine in April. In July, Serbia's Minister of Foreign
Affairs visited Kiev in his capacity as OSCE chairman in office. Serbia also further
strengthened its relations with China. China's Prime Minister visited Belgrade on the occasion
of the’16+1’ summit of the states of Central and Eastern Europe and China in December.
Serbia's President attended the celebration of victory in World War II in Beijing together with
the Serbian military, who participated in the parade. Serbia's Prime Minister visited the
United States in June and September 2015.
On non-proliferation, Serbia ratified the UN Arms Trade Treaty in October. A new law
providing for amnesty and legalisation of illegally possessed weapons and ammunition
allowed the handing over of more than 2000 weapons, 160000 ammunitions and 1000
explosives, while nearby 4500 requests for registration of illegally held weapons were
submitted. Serbia adopted a new law on trade in arms and military equipment. Serbia’s 2008
application to join the Wassenaar Arrangement on export controls for conventional arms and
71
dual-use goods and technologies is pending. Ratification of the Additional Protocol to the
Nuclear Non-Proliferation Treaty is still pending.
Serbia continued to engage actively in cooperation with international organisations. In
January, it took the chair of the Organisation for Security and Cooperation in Europe (OSCE).
Serbia increased its cooperation with NATO by adopting an Individual Partnership Action
Plan in December and expressed willingness to engage in regular political dialogue.
Serbia continued to participate in civil and military crisis management missions under the
common security and defence policy (CSDP), in particular EU NAVFOR Atalanta, EUTM
Somalia, EUTM Mali and EUFOR RCA. In June, parliament approved Serbia’s participation
in EUMAM RCA. Furthermore, Serbia took part in UN operations, in particular UNIFIL,
UNOCI, MONUSCO, UNFICYP, UNMIL, UNTSO and MINUSCA. It also approved
Serbia’s participation in the following UN operations for 2015: MINURSO, MINUSMA,
UNMOGIP, UNMISS, UNAMID, UNISFA, UNDOF and MINUSTAH.
5.32. Chapter 32: Financial control
Based on international standards, EU financial control rules promote sound financial
management of national income and expenditure. They also protect the EU's financial
interests against fraud in the management of EU funds and the euro against counterfeiting.
Serbia is moderately prepared in this chapter. Good progress was achieved in the past year,
especially in external audit and protection of the EU’s financial interests. However, managerial
accountability principle is not yet fully embedded in the management culture and
responsibilities are not delegated. Significant efforts are needed to implement public internal
financial control (PIFC) at all levels of administration and in state-owned enterprises. In the
coming year, Serbia should in particular:
→ improve implementing legislation for PIFC in line with the international standards;
→ adopt and start implementing the new PIFC strategy and systematically ensure
implementation of the government's recommendations on the annual report on PIFC;
→ resolve impediments to further capacity development of the State Audit Institution.
Public internal financial control
Serbia needs to adopt a new public internal financial control strategy and action plan for
2015-2020. The action plan is to be embedded in the wider public financial management
reform programme.
The Central Harmonisation Unit (CHU) should ensure a consistent approach to PIFC by
ensuring better coordination and guidance for public-sector organisations. The CHU has
prepared an annual review of implementation of PIFC in the public sector since 2012, but it
neither provides a comprehensive analysis of systemic weaknesses nor proposes corrective
measures. The future reporting would benefit from an assessment of implementation of the
PIFC strategy and the State Audit Institution’s findings on public-sector internal control.
Financial management and control (FMC) in Serbia is regulated in line with the Committee
of Sponsoring Organisations (COSO) model and the guidelines of the International
Organisation of Supreme Audit Institutions (INTOSAI). The implementing legislation still
needs to be strengthened with regard to managerial accountability and management of
irregularities. The focus is still on the legality and regularity of financial transactions. Risk
management is not applied systematically and will need to be further developed. A key
challenge is also to ensure appropriate internal control in smaller institutions and at local
72
level. Senior public-sector managers will need to be trained to understand their specific role
and responsibilities on FMC. The centralised budget inspection function still needs to be
regulated, taking account of compatibility with PIFC requirements
Internal audit in the public sector is still developing as a profession. Further efforts are
required to ensure that senior management understands the purpose of internal audit and
actively supports it so that it can add value to the organisation. The situation across the public
sector is diverse in terms of staffing, functional independence, audit planning, management
acceptance and types of engagement. Most of the central institutions have an audit charter and
they perform audits according to strategic and annual audit plans. Many auditors are still
asked to perform additional duties that jeopardise their professional independence. The lack of
fully developed internal control in the organisations limits the type and scope of internal audit
engagements and their added value to management. The role of internal audit needs to be
strengthened as well as management acceptance of this function.
External audit
The constitutional and legal framework is in line with the INTOSAI standards. The
independence of the State Audit Institution (SAI) is anchored in the Constitution. The SAI
law provides for an exhaustive audit remit and guarantees the SAI’s functional, organisational
and financial independence.
On institutional capacity, the SAI is governed by a Council, which has five members,
including a president, nominated by parliament. The SAI has been allocated 431 posts in total.
At the moment, the SAI has 251 employees, and 212 audit staff. Lack of adequate premises is
preventing further recruitments and is limiting the SAI’s ability to fulfil its audit mandate. The
responsibility assigned by the law to the SAI to detect errors and file with competent
authorities misdemeanour, economic offence and criminal charges against individuals further
constrains the SAI's limited audit resources. The SAI is implementing its 2011-2015 strategic
development plan. The SAI has an internal audit function with one auditor. Remaining two
posts are to be filled to meet international standards.
To enhance the quality of audit work the SAI adopted in April financial and performance
audit manuals based on the INTOSAI’s professional standards (ISSAI) framework. In July it
set up a specific sector for audit methodology and quality control. However, only one out of
nine staff members has been appointed so far. Performance audit work is gradually
expanding. However, parallel reforms are needed in Serbia’s overall public financial
management system so that the SAI can meaningfully audit economy, efficiency and
effectiveness of government spending of public money.
On the impact of audit work, the SAI has proactively contributed to improvement of the
public-sector internal control standards in Serbia. The SAI’s annual audit report to parliament
is discussed in the Committee for Finance, the Budget and Control of Public Funds. The SAI
improved its cooperation with stakeholders and increased its communication with the media.
Protection of the EU’s financial interests
As regards acquis alignment, the national legislation incorporates the main components of
the Convention on the Protection of the EU’s Financial Interests and the three protocols to it,
and lays down the obligation to safeguard evidence. The national anti-fraud coordination
service (AFCOS), has been set up as an independent unit under the Minister of Finance, with
an appropriate legal basis in the budget system law and Ministry of Finance Systematisation
Act. AFCOS’s capacity has yet to be proven in practice. An AFCOS network involving other
relevant authorities needs to be set up. No national anti-fraud strategy has been adopted yet.
73
On cooperation with the European Commission, a track record of reporting suspected cases
of irregularity and fraud needs to be developed. A Cooperation Agreement with the European
Anti-Fraud Office (OLAF) has yet to be signed. Serbia has set up basic procedures for
reporting of irregularities and suspected fraud cases. An online reporting has also been
established through the OLAF Irregularity Management System.
Protection of the euro against counterfeiting
The national legislation is aligned with the acquis, except for authentication of euro coins and
handling of euro coins unfit for circulation. Serbia still needs to ratify the 1929 International
Convention for the suppression of counterfeiting currency and to implement the relevant
parts. Technical analysis of counterfeit money, including euro banknotes and coins, is
performed by the National Bank, which has a dedicated department with 13 staff. Employees
are regularly trained. The National Bank concluded formal cooperation agreements with the
European Commission on coins in 2013 and with the European Central Bank on banknotes in
2014. Cooperation has started with neighbouring countries. At national level, cooperation
between the National Bank and the Ministry of Interior has been formalised on transfer of
suspected counterfeit money.
5.33. Chapter 33: Financial and budgetary provisions
Rules for funding the EU budget provide for contributions based mainly on the gross national
income of each Member State as well as from value-added tax and customs duties.
Serbia is at an early stage of preparation with regard to financial and budgetary provisions.
No progress was made. In the coming year, Serbia should in particular:
→ set up the administrative body which will coordinate various institutions involved in the
own resources system.
There were no developments in the fields of traditional own resources, the value added tax-
based resource or the gross national income-based resource. (For progress in individual
areas, see: Chapter 16 — Taxation, Chapter 18 — Statistics, Chapter 29 — Customs Union,
Chapter 32 — Financial control).
Regarding administrative infrastructure, the administrative capacity of the institutions in
charge of the relevant policy areas needs to be further strengthened and developed. A
coordinating agency tasked to ensure the correct calculation, accounting, forecasting,
collection, payment, control and reporting to the EU on the implementation of the EU’s own
resources rules still needs to be set up. Despite some improvements in the reporting period,
instruments to fight and reduce tax evasion, fraud and the informal economy need to be
further strengthened.
74
Annex I - Relations between the EU and Serbia
Within the framework of the accession negotiations, the analytical examination of the EU
acquis, was successfully completed in March 2015. So far, 14 screening reports have been
tabled in the Council. The action plans for chapters 23 and 24 have been finalised, sketching
out a comprehensive reform agenda in the area of the rule of law. Further to its negotiating
position on chapter 32 last year, Serbia was invited to table four other negotiating positions on
chapters 5, 13, 20, 25 and 26.
Serbia is participating in the Stabilisation and Association Process. Serbia has continued to
build a track record in implementing the obligations of the Stabilisation and Association
Agreement (SAA). The protocol on the adaptation of the SAA, to take account of Croatia’s
accession to the EU, was ratified by Serbia in October 2014. Invoking Article 23 of the SAA,
Serbia took safeguard measures against imports from the EU of dairy and pig products in
February and June 2015. Consultations with the Serbian authorities on the justification for
such measures were inconclusive. Serbia should discontinue the safeguard measures as soon
as possible and should avoid applying safeguards unless the circumstances can be fully
justified. Further efforts are needed in particular in the area of state aid, especially to ensure
the operational independence of the Serbian Commission for State Aid Control, to repeal the
exemption of enterprises under privatisation from state aid rules and to demonstrate the
compatibility of the aid given to the steel mill Smederevo with Protocol 5 of the SAA.
Regular political and economic dialogue between the EU and Serbia has continued. Meetings
of the Stabilisation and Association (SA) Council and Committee took place in December and
February, respectively. Seven sub-committee meetings were held, together with two meetings
of a special group on public administration reform. The SA Parliamentary Committee met
twice. Serbia continues to participate in the multilateral economic dialogue with the
Commission and EU Member States to prepare for participation in multilateral surveillance
and EU economic policy coordination. As part of the new approach to economic governance,
Serbia adopted its first economic reform programme in March 2015 and has taken important
steps to start implementing reforms recommended by the Economic and Financial Affairs
Council.
Visa liberalisation for citizens of Serbia travelling to the Schengen area has been in force
since December 2009. As part of the monitoring mechanism in place since visa liberalisation,
the Commission has been regularly assessing the progress made by the country in
implementing reforms introduced under the visa roadmap. The Commission submitted in
February 2015 its post-visa liberalisation monitoring reports to the European Parliament and
the Council. A readmission agreement between the European Union and Serbia has been in
force since 2008.
Under IPA II, Serbia continues to benefit from pre-accession assistance with a total
indicative allocation of € 1.5 billion for the period 2014-2020. The IPA National Programme
2014 amounts to € 115 million overall, with most of the funding supporting public
administration reform, justice and home affairs, competitiveness, education and energy.
Following the floods that occurred in May 2014, the Commission designed a special
programme on flood recovery and risk management, allocating € 62 million exclusively to
Serbia. In October 2015, the Commission adopted a special measure on strengthening the
response capacity of the most affected countries in the Western Balkans to cope effectively
with increased mixed migration flows of an amount of € 10 million, focusing primarily on
Serbia and the former Yugoslav Republic of Macedonia.
75
In order to be able to implement in indirect management IPA II assistance the procedure for
the entrustment of budget implementation tasks needs to be finalised. Urgent action is needed
from Serbia to strengthen the Audit Authority, which remains critically weak. This led to the
suspension of assistance and the freezing of payments to Serbia related to the implementation
of IPA 2013 National Programme under decentralised management. Serbia continues to
benefit from support under the IPA multi-country and regional programmes and to participate
in cross-border cooperation programmes with neighbouring Western Balkan countries and
with Member States and in European Regional Development Fund trans-national cooperation
programmes.
Serbia participates in the following EU programmes: Horizon 2020, Erasmus+, Creative
Europe - Culture Sub-Programme, Employment and Social Innovation, Europe for Citizens,
Customs 2020 and Fiscalis 2020. Serbia became member of the EU Civil Protection
Mechanism in June. Serbia has applied for observer status in the EU Fundamental Rights
Agency.
76
Annex II – Statistical Annex
STATISTICAL DATA (as of 7.09.2015)
Serbia
Basic data Note 2002 2010 2011 2012 2013 2014
Population (thousand) 1) 7 502 7 307 7 254be 7 219e 7 184e 7 149e
Total area of the country (km²) 77 474 77 474 77 474 77 474 77 474 77 474
National accounts Note 2002 2010 2011 2012 2013 2014
Gross domestic product (GDP) (million national
currency)
2) 1 037 8
97
3 067 210 3 407 563 3 584 236 3 876 403 3 878 02
4e
Gross domestic product (GDP) (million euro) 2) 17 100 29 766 33 424 31 683 34 263 33 059e
GDP (euro per capita) 2) 2 280 4 082 4 619 4 400 4 781 4 635e
GDP (in Purchasing Power Standards (PPS)
per capita)
2) 3) : 9 000 9 500 9 700 9 800 9 500
GDP (in Purchasing Power Standards (PPS)
per capita), relative to the EU average (EU-28
= 100)
2) 3) : 35 36 37 37 35
Real GDP growth rate: change on previous
year of GDP volume (%)
2) 7.1 0.6 1.4 -1.0 2.6 -1.8e
Gross value added by main sectors
Agriculture, forestry and fisheries (%) 2) 15.0 10.2 10.7 9.0 9.4 9.7e
Industry (%) 2) 27.0 22.7 23.5 24.9 26.6 24.6e
Construction (%) 2) 5.3 5.7 6.0 5.4 5.1 5.2e
Services (%) 2) 52.7 61.4 59.8 60.7 59.0 60.5e
Final consumption expenditure, as a share of
GDP (%)
2) 96.9 96.5 95.3 95.7 93.1 94.4e
Gross fixed capital formation, as a share of
GDP (%)
2) 16.2 18.6 18.4 21.2 17.2 17.2e
Changes in inventories, as a share of GDP (%) 2) 5.0 -0.1 1.7 -0.2 0.4 -1.6e
Exports of goods and services, relative to GDP
(%)
2) 20.6 32.9 34.0 36.9 41.2 44.3e
Imports of goods and services, relative to GDP
(%)
2) 38.7 47.9 49.4 53.6 51.9 54.3e
Business Note 2002 2010 2011 2012 2013 2014
Industrial production volume index (2010 =
100)
98.6 100.0 102.5 100.2 105.6 98.8
Number of active enterprises (number) : : : : : :
Birth rate: number of enterprise births in the
reference period (t) divided by the number of
enterprises active in t (%)
4) 9.9 10.2b 9.3 : : :
Death rate: number of enterprise deaths in the
reference period (t) divided by the number of
enterprises active in t (%)
4) 6.3 9.8b 10.3 : : :
People employed in SMEs as a share of all
persons employed (within the non-financial
business economy) (%)
: : : : : :
Value added by SMEs (in the non-financial
business economy) (EUR million)
: : : : : :
Total value added (in the non-financial
business economy) (EUR million)
: : : : : :
Inflation rate Note 2002 2010 2011 2012 2013 2014
Consumer price index (CPI), change relative to
the previous year (%)
16.6 6.5 11.0 7.8 7.8 2.9
77
Balance of payments Note 2002 2010 2011 2012 2013 2014
Balance of payments: current account total
(million euro)
5) -672 -1 887 -2 870 -3 176 -1 585 -1 985
Balance of payments current account: trade
balance (million euro)
5) -3 399 -4 581 -5 318 -5 480 -3 978 -4 111
Balance of payments current account: net
services (million euro)
5) 135 8 163 156 334 465
Balance of payments current account: net
income (million euro)
5) -74 -670 -758 -799 -1 095 -1 343
Balance of payments current account: net
current transfers (million euro)
5) 2 665 3 356 3 043 2 947 3 153 3 003
of which government transfers (million euro) 5) 519 193 206 151 131 89
**3 year backward moving average of the
current account balance relative to GDP (%)
5) -1.3 -11.2 -7.1 -8.3 -7.7 -6.9
Net inward foreign direct investment (FDI)
(million euro)
5) 500.1 860.1 1 826.9 241.9 768.5 1 236.3
Foreign direct investment (FDI) abroad (million
euro)
5) 21.2 143.0 122.0 42.3 10.0 264.2
of which FDI of the reporting economy in the
EU-28 countries (million euro)
5) : 37.2 100.2 22.3 19.8 35.4
Foreign direct investment (FDI) in the reporting
economy (million euro)
5) 521.3 1 003.1 1 948.9 284.1 778.5 1 500.4
of which FDI of the EU-28 countries in the
reporting economy (million euro)
5) : 820.9 1 710.3 96.4 575.9 1 109.3
**Net international investment position, relative
to GDP (%)
: 85.0 81.3 95.1 90.1 99.5
Year on year rate of change in gross inflow of
remittances (in national currency) from migrant
workers (%)
5) : -9 -13 -6 11 -13
Public finance Note 2002 2010 2011 2012 2013 2014
***General government deficit / surplus,
relative to GDP (%)
: -4.6 -4.8 -6.8 -5.5 -6.7
***General government gross debt relative to
GDP (%)
71.9 40.8 43.3 55.8 59.0 68.9
Total government revenues, as a percentage
of GDP (%)
: 41.7 40.0 41.1 39.7 41.8
Total government expenditure, as a
percentage of GDP (%)
: 46.3 44.8 47.9 45.1 48.4
Financial indicators Note 2002 2010 2011 2012 2013 2014
Gross foreign debt of the whole economy,
relative to GDP (%)
56.7 79.0 72.2e 80.9 75.1 78.1
Gross foreign debt of the whole economy,
relative to total exports (%)
310.5 247.1 216.5 223.6 184.7 178.7
Money supply: M1 (banknotes, coins, overnight
deposits, million euro)
6) 1 525 2 401 2 807 2 715 3 387 3 563
Money supply: M2 (M1 plus deposits with
maturity up to two years, million euro)
7) 1 803 3 891 4 663 4 227 4 776 5 078
Money supply: M3 (M2 plus marketable
instruments, million euro)
8) 3 113 12 899 14 339 14 438 14 976 15 422
Total credit by monetary financial institutions to
residents (consolidated) (million euro)
3 519 17 544 18 995 19 783 19 261 19 708
Interest rates: day-to-day money rate, per
annum (%)
: 12.02 8.46 9.81 7.04 9.45
Lending interest rate (one year), per annum
(%)
15.20 14.00 12.25 13.75 12.00 10.50
Deposit interest rate (one year), per annum (%) 3.80 9.00 7.25 8.75 7.00 5.50
Euro exchange rates: average of period (1
euro = … national currency)
9) 60.694 103.043 101.950 113.128 113.137 117.306
Trade-weighted effective exchange rate index
(2005 = 100)
10) 93.7 115.4 127.1 118.3 126.4 123.7
Value of reserve assets (including gold) (million
euro)
2 186 10 002 12 058 10 915 11 189 9 907
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External trade in goods Note 2002 2010 2011 2012 2013 2014
Value of imports: all goods, all partners (million
euro)
: 12 475 13 706 13 522 13 345 13 512
Value of exports: all goods, all partners (million
euro)
: 7 067 8 058 8 251 10 413 10 562
Trade balance: all goods, all partners (million
euro)
: -5 408 -5 648 -5 271 -2 933 -2 950
Terms of trade (export price index / import
price index * 100) (number)
101 115 119 122 122 122
Share of exports to EU-28 countries in value of
total exports (%)
: 61.8 62.9 62.5 63.8 65.7
Share of imports from EU-28 countries in value
of total imports (%)
: 57.2 55.9 58.5 55.7 57.1
Demography Note 2002 2010 2011 2012 2013 2014
Crude rate of natural change of population
(natural growth rate): number of births minus
deaths (per thousand inhabitants)
-3.3 -4.8 -5.2 -4.9 -4.8 -4.9
Infant mortality rate deaths of children under
one year of age (per thousand live births)
10.1 6.7 6.3 6.2 6.3 5.7
Life expectancy at birth: male (years) 69.7 71.4 71.6 72.2 72.5 72.6
Life expectancy at birth: female (years) 75.0 76.6 76.8 77.3 77.7 77.7
Labour market Note 2002 2010 2011 2012 2013 2014
Economic activity rate for persons aged 20–64:
proportion of the population aged 20–64 that is
economically active (%)
: 63.7 64.1 64.3 66.0 66.2
*Employment rate for persons aged 20–64:
proportion of the population aged 20–64 that
are in employment (%)
: 51.2 49.2 48.9 51.2 53.5
Male employment rate for persons aged 20–64
(%)
: 59.2 56.8 56.7 59.5 61.2
Female employment rate for persons aged 20–
64 (%)
: 43.5 41.7 41.1 43.1 46.0
Employment rate for persons aged 55–64:
proportion of the population aged 55–64 that
are in employment (%)
42.0 32.8 31.4 31.6 34.3 35.9
Employment by main sectors
Agriculture, forestry and fisheries (%) : 22.3e 21.2e 21.0 21.3 21.1
Industry (%) : 21.0e 21.5e 21.3 21.1 20.0
Construction (%) : 5.0e 5.3e 5.2 4.8 4.4
Services (%) : 51.7e 52.0e 52.6 52.9 54.5
People employed in the public sector as a
share of total employment, persons aged 20–
64 (%)
: 31.0 31.5 32.6 32.6 31.6
People employed in the private sector as a
share of total employment, persons aged 20–
64 (%)
: 65.5 65.8 65.1 65.2 66.4
Unemployment rate: proportion of the labour
force that is unemployed (%)
14.5 19.2 23.0 23.9 22.1 18.9
Male unemployment rate (%) 12.9 18.4 22.4 23.2 20.8 18.3
Female unemployment rate (%) 16.5 20.2 23.7 24.9 23.8 19.6
Youth unemployment rate: proportion of the
labour force aged 15–24 that is unemployed
(%)
45.3 46.2 50.9 51.1 49.4 47.1
Long-term unemployment rate: proportion of
the labour force that has been unemployed for
12 months or more (%)
9.9 13.3 16.9 18.6 16.8 12.8
Unemployment rate for persons (aged 25–64)
having completed at most lower secondary
education (ISCED 0–2) (%)
: 16.7 21.6 23.4 21.3 18.1
Unemployment rate for persons (aged 25–64)
having completed tertiary education (ISCED 5
& 6) (%)
: 17.7 21.3 22.3 20.9 17.7
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Social cohesion Note 2002 2010 2011 2012 2013 2014
Average nominal monthly wages and salaries
(national currency)
11) 13 260 47 450b 52 733 57 430 60 708 61 426
Index of real wages and salaries (index of
nominal wages and salaries divided by the
inflation index) (2000 = 100)
11) 154.9 277.4b 277.9 280.4 275.0 271.0
GINI coefficient — see definitions : : : : 38.0 38.7
Poverty gap : : : : 36.6 39.9
*Early leavers from education and training:
proportion of the population aged 18–24 with at
most lower secondary education who are not in
further education or training (%)
: 8.2 8.5 8.1 8.7 8.3
Standard of living Note 2002 2010 2011 2012 2013 2014
Number of passenger cars relative to
population size (number per thousand
population)
179.1 214.3 230.5 239.2 246.5 :
Number of mobile phone subscriptions relative
to population size (number per thousand
population)
322.5 1 357.0 1 399.4 1 261.9 1 280.9 1 307.6
Infrastructure Note 2002 2010 2011 2012 2013 2014
Density of railway network (lines in operation
per thousand km²)
49.2 49.3 49.3 49.3 49.3 49.3
Length of motorways (kilometres) 370 495 595 607 607 607
Innovation and research Note 2002 2010 2011 2012 2013 2014
Public expenditure on education relative to
GDP (%)
3.7 4.6 4.5 4.5 4.3 :
*Gross domestic expenditure on R&D relative
to GDP (%)
0.35 0.74 0.72 0.91 0.82 :
Percentage of households who have internet
access at home (%)
: 39.0 41.2 47.5 55.8 62.8
Environment Note 2002 2010 2011 2012 2013 2014
Energy intensity of the economy (kg of oil
equivalent per 1 000 euro GDP at 2005
constant prices)
3) 917.7 696.1 711.5 648.8 652.9e :
Electricity generated from renewable sources
relative to gross electricity consumption (%)
: 31.4 22.6 24.8 32.1 :
Road share of inland freight transport (based
on tonne-km) (%)
12.1 27.8 30.5 44.8 43.1 44.1
Energy Note 2002 2010 2011 2012 2013 2014
Primary production of all energy products
(thousand TOE)
12) 11 739 9 876b 10 504 10 105 11 442 :
Primary production of crude oil (thousand TOE) 12) 782 929b 1 111 1 224 1 263 :
Primary production of hard coal and lignite
(thousand TOE)
12) 8 679 7 226b 7 822 7 276 7 668 :
Primary production of natural gas (thousand
TOE)
12) 364 342b 449 472 470 :
Net imports of all energy products (thousand
TOE)
12) 4 741 6 320b 5 048 4 179 3 760 :
Gross inland energy consumption (thousand
TOE)
12) 15 760 15 093b 15 749 13 997 15 172 :
Electricity generation (thousand GWh) 12) 35.1 38.0 38.6 36.8 39.9
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Agriculture Note 2002 2010 2011 2012 2013 2014
Agricultural production volume index of goods
and services (at producer prices) (previous
year = 100)
97.0 103.2 96.4 80.5 121.8 102.1
Utilised agricultural area (thousand hectares) 13) 5 071 3 521b 3 528 3 462 3 491 3 507
Livestock numbers: live bovine animals
(thousand heads, end of period)
1 112 938b 937 921e 913 920
Livestock numbers: live swine (thousand
heads, end of period)
3 634 3 489b 3 287 3 139e 3 144 3 236
Livestock numbers: live sheep and live goats
(thousand heads, end of period)
1 685 1 712b 1 699 1 867e 1 841 1 967
Production and utilisation of milk on the farm
(total whole milk) (thousand tonnes)
14) 1 596 1 498b 1 474 1 486e 1 467 1 514
Harvested crop production: cereals (including
rice) (thousand tonnes)
13)
15)
8 298 9 694b 9 538 6 355 9 091 10 848
Harvested crop production: sugar beet
(thousand tonnes)
13) 2 098 3 551b 3 004 2 483 3180 3 507
Harvested crop production: vegetables
(thousand tonnes)
13) 1 340 1 117b 1 024 936 1 062 965
: = not available
b = break in series
e = estimated value
* = Europe 2020 indicator
** = Macroeconomic Imbalance Procedure (MIP) indicator
*** = The government deficit and debt data of enlargement countries are published on an "as is" basis and without any
assurance as regards their quality and adherence to ESA rules.
Footnotes:
1) Break in 2011 due to the introduction of a new estimation method.
2) Based on ESA 2010.
3) Source: Eurostat.
4) 2002: includes all entities in administrative registers (legal units).
5) 2014: based on balance of payments manual edition 6 (BPM6).
6) The money supply M1 consists of currency in circulation and funds in giro, current and other accounts belonging to the
owners of money balances in banks' liabilities, including money balances in the accounts of local government bodies, i.e.
accounts from which payments can be made without any restrictions.
7) The money supply M2, in addition to M1, includes other dinar deposits, both short-and long-term.
8) The money supply M3, in addition to M2, includes short-and long term foreign currency deposits (without the so-called frozen
foreign currency savings).
9) Arithmetic mean of official middle exchange rates of the dinar against the euro on working days.
10) Index of nominal effective exchange rate adjusted for the ratio of domestic consumer price index to the weighted sum of
indices of consumer prices in the euro area and the United States. Calculation based on geometric average.
11) 2002: wages and salaries paid to employees of legal entities. 2010–14: wages and salaries paid to employees of legal
entities and of unincorporated enterprises.
12) 2002: source, Eurostat.
13) In 2014, a new method of data collection including sample surveys was set up. Time series have been revised back to 2007.
14) In million litres. Milk from cows, sheep and goats used for human consumption or processing. 2002: excluding milk from
goats.
15) 2002: excluding triticale.