The state of the economy
Serbia is still a poor country, although GDP doubled between 2005 and 2010 before the subprime
crisis hit Europe. Since then, Serbia's economy has been on a rollercoaster ride, and in 2020 it has only just returned to its pre-crisis state. The government was heavily indebted in the period 2012-2016 and had to take drastic measures with the help of the IMF to turn things around. The Covid crisis that followed the 2008 crisis has so far rather spared the country and the recession has been very small.The Serbian economy is a service economy, which accounts for 65.20% of GDP. Despite this, industry at 25.20% of GDP is still very important and provides a lot of jobs. The industrial potential of the territory is considerable in view of the large reserves of raw materials in its subsoil, but there is a need to modernize production and obtain investment. At 9.6 percent of GDP, agriculture is the third largest economic sector in the country, concentrated in the rich Vojvodina, but it is also one of the healthiest. Serbia is self-sufficient and is Europe's leading exporter of raspberries.
On the ground, life is not always easier. While the standard of living is gradually improving (the Gini index of inequality is doing well), thanks to rising wages and an explosion in domestic consumption, it is accompanied by exponential private debt to banks and a marked deterioration in social protection. The liberalization measures of the SNS government have made drastic cuts in the robust Soviet-era health care system. The Dom Zdravlje, the health centres, are still in place, but the hospital system and the network of doctors is crumbling. The Serbs in difficulty are returning to the resourcefulness and parallel economy (in proportions that have nothing to do with the Yugoslav era) and often multiplying odd jobs.The political system and institutions
Presidency of Serbia. Prime Minister of the country since 2014 and leader of the Serbian Progressive Party (SNS), Aleksandar Vučić became on Sunday, April 2, 2017, president of Serbia. He was re-elected for one term on April 3, 2022, with 60% of the vote. Former collaborator of Slobodan Milošević, converted into a pro-European, he is now the strong man of Serbia
The Republic of Serbia has a government headed by Ana Brnabić and a National Assembly that also controls the institutions of the autonomous province of Vojvodina. The government directs economic policy and internal affairs
The National Assembly has 250 deputies, but has had difficulty getting elected in the recent past. After three aborted elections because the voter quorum of 50 per cent of registered voters was not met, the December 2003 election finally brought about the long-awaited renewal of the Assembly, thanks to a law abolishing the voter quorum.
Political parties
Political life is dynamic in this young country. Political parties are constantly changing, merging, fragmenting and today most do not exceed ten seats in the assembly. The only party that stands out is the overwhelmingly progressive SNS. It completely dominates political life, partly because of its authoritarian strategies. It was founded in October 2008 by Tomislav Nikolić and led by the current president of the Republic, Aleksandar Vučić. It is a nationalist, populist, Europhile party, in the manner of a Polish PiS.
After the 2019 elections, it leads a parliamentary coalition that holds 188 of the 250 seats in parliament, but it alone already has 157 MPs.
The opposition has been fragmented since the split of the ruling Democratic Party in 2008. It no longer has any influence in the assembly (it has a total of seven seats!) and struggles to make itself heard in a political environment increasingly locked in by the ruling coalition.International Policy
Serbia is slowly regaining its place on the world stage, after being left out during the time of Milošević. Two issues are intensely followed. The issue of Kosovo remains a thorn in the side of Serbian diplomacy, it must play appeasement to integrate while doing its utmost to cancel the independence. Sitting between Russia and Europe, Serbia plays both sides. Thus, it remained neutral at the time of the sanctions demanded by the European Community and is cautious in its relations with NATO (in any case little appreciated internally since the bombings). On the other hand, Serbia actively participates in EU programs and cooperates with its foreign policy objectives, for example, in the care of refugees on its territory. Recently, in the same spirit of neutrality, Serbia announced that it wanted to replace its old Russian Migs with French Rafales, in a lucrative contract... perhaps to better accept the opening of the Turkstream gas pipeline on its territory, at the heart of a new volley of tensions in Ukraine.
Challenges and issues
Difficult political reforms.
The two main issues in Serbian politics are sustaining its young democracy and joining the European Union.These two issues were on the table during the 2008 elections, after Kosovo's independence, when the pro-European Democratic Party (DS) gained control of the country from the nationalist Serbian Radical Party (SRS). The arrival in power of a former Radical Party member in 2012 raised fears of a reversal of fortunes, but it turned out that the new government decided to follow the path laid out by its predecessor. Despite the relief of the european partners at this reversal, in recent years the ruling coalition has taken an undemocratic turn and crushed any opposition in the 2016 and 2019 elections. The strongman of this system is Aleksandar Vučić, with increasingly controversial methods. For example, three days before the 2017 election ballot, seven national dailies agreed to print Aleksandar Vučić's initials on their front pages in a giant format. At the time, the journalists' association observed a "continuous trend towards a deterioration of freedom of expression in Serbia." The 2019 early parliamentary elections were held under conditions denounced by the opposition (which chose a boycott) and caused concern to the European Commission. Today, observers agree that the Serbian political system is not a democracy but rather a hybrid regime: there is political competition, but it is completely unequal and the ruling party mobilizes state resources to maintain itself.
Serbia's case for EU membership is more than ever supported by the international community following its marked efforts to cooperate with the International Criminal Tribunal in the prosecution of war criminals in Yugoslavia and the normalization of its relations with Kosovo. Finally, Serbia will get a good deal: EU candidate status as of March1,
2012, without having to officially recognize the independence of its province of Kosovo and without voting on sanctions against Russia, one of its most important international partners. The road ahead is still long and difficult, however, as the enlargement of Europe is no longer a real issue and Serbia is encountering blockages from certain member countries. Moreover, it is still far from having achieved its objectives of economic and social reforms necessary for membership, particularly in the field of ecology.Economic issues.
The main economic challenges are to complete the economic transition inherited from Yugoslavia and to renew the country's infrastructure, which is in a state of complete disrepair.To modernize its economy, the government needs liquidity and to attract capital and technology from abroad. Serbia's economic take-off has been based on generous privatization, which has worsened the social climate and weakened the population. The country is still well industrialized but is not very competitive, whether in heavy industry (steel, energy, mining) or in low value-added sectors such as textiles. These industries are still in danger of closing, threatening to add to the already high unemployment curve of 9%. The good news is that foreign investment is accelerating, helped by continued structural aid from the IMF and the European Union. A massive 500 million euro plan by Gazprom for the construction of the South Stream gas pipeline, which was to cross the country from south to north, was a symbol of a prosperous future... before it was cancelled in favour of the less grandiose (and less publicized) Turkstream, a 400 km section of which has just been inaugurated in Serbia. The crisis in Ukraine and the pressure to cut off Russian investments have led to an increase in the number of bilateral agreements between Serbia and other emerging states such as the United Arab Emirates and Azerbaijan. These projects do not meet with unanimous approval. The government is accused of selling its sovereignty to foreign states (led by Russia, the UAE and China) in exchange for vague and undemocratic megaprojects. This criticism is justified, but it is difficult to refuse the sums of money involved (the United Arab Emirates, for example, is promising $3.5 billion in investments for its real estate megaproject in Belgrade). On the investment front, it is to be hoped that a new conflict between Albanians and Serbs over Kosovo and "Greater Albania" will not cloud the picture.
The state of the infrastructure is problematic. Serbia produces only 25 per cent of its energy needs, and its thermal power plants (the main coal-fired generators at the Kolubara and Kostolac mines) are so outdated that they only operate at 65 per cent of their capacity to minimize the risk of accidents. The intermittent power outages are a reminder to all of the need for a project to renew the power infrastructure, which has not seen any new construction in 15 years.
