Policy Documentation Center

External trade price level and terms of trade, 2007-2008 (Statistical reflections)

Statistical Report, 4/2009

EU and Belarus in the Fourth Quarter of 2008: Analysis and Monitoring

  
 
A Russia Without Oligarchs 
Once the economic crisis ends, the Russian government will face the question of how to carry out 
privatization properly. 
 
As a result of the government's anti-crisis measures, its ownership in leading companies will certainly 
increase. But even if you go back several years before the crisis, it is clear that the government's 
nationalization measures have not made the economy more efficient. 
 
To be fair, the private sector was no better, particularly if you look at large enterprises. It is too early to 
draw any conclusions, but it is already evident that a few of the largest Russian financial and industrial 
conglomerates have added much value to the economy over the last decade. 
 
Moreover, thanks to cheap foreign credit and government support, a few large conglomerates are 
drowning in the huge debt they amassed. Nonetheless, with the help of their political influence, they are 
now seeking huge bailout assistance from the state. 
 
Once the crisis calms down, one of the most important questions will be how the state can conduct 
privatization so that private ownership gives the right motivation to managers while at the same time 
ensuring the end of the oligarch system in which the top businessmen have too much political influence.
 
The main problem in an oligarchic system is that a thin layer of top industrialists are able to seize their 
companies' profits due to the weak protection of property rights and ineffective and corrupt law 
enforcement agencies. They accumulate a controlling stake in the enterprises and gradually force out 
minority shareholders. The losses caused by ineffective and nontransparent corporate management will 
disappear only when a broad layer of mid-level and top managers are able to gain a majority of shares in 
the companies. 
 
There is no easy solution to this problem, but I can offer an idea that might help. Russia's top 
businessmen should be allowed to own single enterprises, but there should be strict controls to prevent 
them from building the oligarchic business empires that have defined Russian big business for so many 
years. It is no simple task for politicians with limited power to keep today's oligarchs in check, but if 
successful, this approach would eliminate the types of conflicts of political and business interests that 
exist in all oligarchies. 
 
At the same time, each individual business titan who owns a major enterprise -- even if he is a 
multibillionaire -- would be weak and insignificant in comparison to the government as a whole. This 
would clearly be better than having a few ruling oligarchs who understood that the most profitable 
investment was in politics. Once they were able to influence government policies, they set the country on 
a completely reckless, ineffective economic course. 
 
There is another measure that is crucial to prevent the emergence of oligarchic business empires: 
Oligarchs should no longer be able to control banks. At the same time, the government should help 
ensure that corporate lending comes from several major banks. In this kind of economy, Russian banks 
would play a role similar to that of banks in Germany, where the government, not individuals, holds 
controlling stakes in the banks. Over time, those banks would have a stabilizing influence on the 
economy. Because numerous businesses borrow from them, they would be less vulnerable to the 
demands of any single borrower. Sberbank is a good example of how a leading government-controlled 
bank can play a positive role in the economy. 
 
Konstantin Sonin, a professor at the New Economic School/CEFIR, is a columnist for Vedomosti 
March 12, 2009  
 
 
© Copyright 2007. The Moscow Times. All rights reserved.  
 
 


English

A Russia without oligarchs

 
July 2009 1 
BELARUSIAN MONTHLY 
ECONOMIC REVIEW 
• New trends in Belarus-US relations. 
• Growth of inventories in major industry branches. 
• Belarus took commitments on structural reforms. 
• The Fund of National Development is to be formed in 2009. 
Politics: New trends in Belarus-US relations 
In June, President A. Lukashenka met with a delegation of the 
US Congress, consisting of members of the Democratic and the 
Republican party. During the meeting A. Lukashenka paid prior 
attention to the issues of the economic cooperation and stated 
about the willingness to develop bilateral trade and attract 
American corporations to investment projects in Belarus. He 
also touched the issue of restoring full diplomatic attendance 
between countries. He stated that Belarus is ready for this, but 
sees cancellation of the economic sanctions and the American 
“Act on Democracy in Belarus” as preconditions for this step. 
American congressmen stressed the importance of the improv-
ing situation in human rights sphere and democratization in 
public sphere for the development of the bilateral relations. 
Just after the meeting A. Lukashenka signed an Edict, due to 
which American lawyer E. Zeltser was freed and which may be 
assessed as an act  of goodwill towards the USA. The fact of 
the meeting at the high level itself and its results might deter-
mine trends of improvements in bilateral relations and weaken-
ing economic sanctions from the US side, even leading to their 
cancellation. However, these improvements are likely to be 
gradual and the American side is likely to develop further po-
litical relations keeping on the “Act on Democracy in Belarus”. 
Real sector: Growth of inventories in major industry 
branches 
In Jan-May, real GDP grew by 1.4% yoy (1.2% yoy in Jan-Apr). 
The acceleration of growth was due to increased growth rate in 
agriculture (from 6.6 up to 6.8% yoy) and a more moderate 
development of the recession in industry (from -3.6 up to -
3.4% yoy). However, the growth decelerated in retail trade, and 
in transport branch the recession became deeper. From the 
demand side, investments that in Jan-May grew by 18.9% yoy 
still were the only factor of growth (the consumption is stagnat-
ing, while the drop of exports is bigger than those of imports). 
In industry, growth took place in two branches – fuel (due to 
oil-refinery, which grew by 21.3% yoy) and chemical and pet-
rochemical (due to the chemical industry, which grew by 
43.6% yoy). A rapid growth in chemical industry was entirely 
due to increase in production of varnish-and-paint goods by 7.7 
times yoy (since the middle of 2008 a couple of Belarusian en-
terprises started this production based on Russian raw materi-
als with further exports to Russia). Furthermore, the recession 
in the food industry seems to have been finished, since it grew 
by 0.9% yoy. However, in major industries – machinery and 
metal-working, ferrous metallurgy and light industry – the 
situation is still difficult and an increase in inventories can be 
observed (by more than 10% of the output in 2009). 
Structural trends: Belarus took commitments on 
accelerating privatization and other structural reforms 
In June, the Executive Board of the IMF approved a decision 
on expanding the financing to Belarus within the Stand-By 
Arrangement by SDR 651.4 m (about USD 1 bn). The IMF 
mentions that expanding the financing became possible due 
to a couple of commitments in the sphere of the structural 
reforms took upon itself by the Belarusian government. In  
 
 
 
No. 7 (82) 
July 2009 
 
 
 
 
 
 
 
 
Population: 9.67 m 
Industry / GDP: 28.1% 
Agriculture / GDP: 8.4% 
Investment / GDP: 27.9% 
Export destination: Russia 32%, EU 44% 
Import origin: Russia 60%, EU 22% 
 
 
 
 
 
 
 
 
 
 
Real GDP growth 
5.8
4.7 5.0
6.8
11.4
9.4 9.9
8.2
10.0
0.0
0
1
2
3
4
5
6
7
8
9
10
11
12
00 01 02 03 04 05 06 07 08 09
% yoy
Source: Ministry of Statistics and Analysis. Forecast 
for 2008: IPM Research Center. 
 
 
 
 
 
 
 
 
 
 
IPM Research Center 
 
German Economic Team 
in Belarus  
 
50Б Zakharova St., Minsk 220088, Belarus 
Tel./fax (+375 17) 210 0105 
E-mail: bmer@research.by 
Internet http://research.by/ 
 
 
© IPM Research Center, 2009 
 
Belarusian Monthly Economic Review №7 (82) 
 
 
 
July 2009 2 
this field, the IMF pays a prior attention to privatization. Ac-
cording to the head of the IMF Resident Representative Office 
in Belarus N. Koliadina, the parties agreed on establishment of 
the Agency on privatisation and perfection of the correspon-
dent legislation. Some mass media reported that the Agency 
should select 5 large state enterprises for privatisation under 
international consultant control and the deal should be accom-
plished by February, 2010. According to the schedule of the 
Stand-By Arrangement, the provision of the last tranche of the 
IMF loan is planned just for this month, based on the review of 
the previous stages. Hence, it might be supposed that provi-
sion of the last tranche of the loan – under the condition of the 
huge current account deficit it seems crucial for macrostabilisa-
tion – will depend on the policy of the Belarusian authorities on 
the privatization scene. In the beginning of July, the govern-
ment amended the plan of privatisation till 2011, having in-
cluded two large state banks – Belinvestbank and BPS-bank 
that were stated eligible for privatization many times before – 
and doing other slight changes. However, the expediency of the 
huge privatization during the global crisis may seem question-
able, both from the view of most efficient owner and from the 
fiscal view. Hence, the perspectives of rapid and large privati-
zation in Belarus are not evident However, the IMF takes into 
account other structural reforms directed at reduction of price 
and wage controls, remove of the mandatory targets on pro-
duction and employment for private enterprises. Accomplish-
ment of such measures may be more effective in current condi-
tions both for macrostabilization and long-term development. 
Foreign trade: Protectionist measures by Russia 
In Jan-Apr the merchandise deficit amounted to USD 2.6 bn 
(18% of GDP), having increased by 1.9 times yoy. The drop of 
exports (by 48.6% yoy) was still much higher than those of 
imports (by 32.9% yoy). Average prices of exports dropped by 
31.4% yoy, while those of imports by only 20.3% yoy. Along-
side, physical volumes of exports and imports decreased by 
25.1 and 15.8% yoy correspondingly. The hugest decrease of 
exports prices took place in trade with non-CIS countries (by 
36.2% yoy) mainly consequent to the decrease of prices on oil 
products and ferrous metals. The deepest decrease of physical 
volumes in trade with non-CIS countries was peculiar to trade 
with potash fertilizers (by 4 times yoy). Because of price ten-
sions for Belarusian potash fertilizers, among 27 countries that 
purchased it in 2008, only 12 of them keep it on in 2009. Even 
under optimistic scenario, it is unlikely that in 2009 the volume 
of exports of the fertilizers will be comparable to those of 2008. 
In trade with Russia, the trade deficit reduced by 32.6% yoy 
and achieved USD 2.9 bn. The problems of Belarusian pro-
ducers at Russian markets are strengthened by protectionist 
measures. After the milk conflict calmed down, the Russian 
side made a couple of accusations of the supply of the Belaru-
sian agricultural machinery at dumping prices. In its turn, 
Belarusian authorities turned to use protectionist measures 
themselves. In June, an Edict was published that raises for 9 
months the custom duties on trucks and buses from 5-10% 
up to 25-50%. However, the effectiveness of this measure is 
doubtful, since the major part of the merchandise deficit is 
formed due to intermediary, but not investment imports. 
Public finance: Formation of the Development Fund 
Consolidated revenues in Jan-Apr amounted to 47.8% of 
GDP, having decreased by 8.3 percentage points in compari-
son to Jan-Apr 2008. Consolidated expenditures decreased 
much less – by 1.1 percentage points – and amounted to 
47.7% of GDP. Finally, in Jan-Apr a slight surplus of 0.1% of 
GDP took place(7.3% of GDP in Jan-Apr 2008). 
 
GDP and Industrial Output 
-5
0
5
10
15
Ja
n
.0
8
Fe
b.
08
M
ar
.0
8
A
p
r.
0
8
M
a
y.
08
Ju
n
.0
8
Ju
l.
0
8
A
ug
.0
8
S
ep
.0
8
O
ct
.0
8
N
ov
.0
8
D
ec
.0
8
Ja
n
.0
9
Fe
b
.0
9
M
ar
.0
9
A
pr
.0
9
M
ay
.0
9
real GDP growth
real industrial output growth
% yoy cum.
Source: National Statistical Committee. 
 
 
 
 
 
 
 
 
 
Merchandise Trade 
1000
1500
2000
2500
3000
3500
4000
4500
Ja
n.
0
8
Fe
b
.0
8
M
a
r.
0
8
A
p
r.
08
M
a
y.
0
8
Ju
n
.0
8
Ju
l.
0
8
A
ug
.0
8
S
ep
.0
8
O
ct
.0
8
N
o
v.
0
8
D
ec
.0
8
Ja
n.
09
Fe
b.
0
9
M
ar
.0
9
A
p
r.
0
9
-900
-750
-600
-450
-300
-150
0
balance (right axis)
exports
imports
USD m
Source: National Statistical Committee. 
 
 
 
 
 
 
 
 
 
Monthly Dynamics of Merchandise Trade 
(USD, m) and Coverage Coefficient* 
 Russia Non-CIS 
countries 
Coverage  
coefficient, % 
Jan -650.5 183.1 28.1 
Feb -655.1 -48.0 -- 
Mar -780.2 -27.4 -- 
Apr -796.3 -33.2 -- 
Jan-Apr -2882.1 74.5 2.5 
* - relationship of the surplus of trade with non-CIS 
countries to the deficit of trade with Russia, % 
Source: National Statistical Committee. 
 
Belarusian Monthly Economic Review №7 (82) 
 
 
 
July 2009 3 
Despite the financial stance of the enterprises is deteriorating, 
in 2009 the Fund of the National Development was formed at 
the expense of the previous year profits of the large state 
enterprises. Their payments to the Fund should amount to 
BYR 404.6 bn (0.3% of the 2008 GDP), while in the previous 
year the correspondent volume of the Fund was 0.5% of 2007 
GDP. The major contribution of 66.1% of this sum, similar to 
the year before, belongs to Belaruskaliy. However, oil-refinery 
enterprises have been freed from these payments; despite in 
2008 their financial stance was relatively good. 
Monetary policy: Deceleration of crediting 
In May, net foreign assets of the monetary authorities reduced 
by 6.2% mom (by USD 214.4 m). Alongside, some inflow of 
the ruble liquidity took place due to withdrawal of the govern-
ment’s ruble deposits at the NBB (decrease by 33.6% mom). 
Finally, in May base money reduced by 6.6% mom, while in 
annual terms it reduced by 13.3% yoy (3.6% yoy in April). 
Restriction of money supply by the NBB led to deceleration of 
granting loans to the real sector. In May, outstanding loans to 
the real sector were reduced by 1.8 percentage points down to 
52.2% yoy. The lack of resources substantially affects the de-
celerating of the credit boom. Since May, NBB has almost fro-
zen its refinancing, while the government restricts placing its 
funds in deposits at the commercial banks. Hence, banks had 
to attract funds at the deposit market more actively, raising 
interest rates. In May, ruble interest rates were either raised or 
kept at a rather high level. At the same time, banks reduced 
interest rates in foreign currency according to the recommen-
dation of the NBB. However, households who are the target 
group of this measure still preferred to save in foreign currency. 
The households’ deposits in foreign currency grew by 112.9% 
yoy, while in national currency it dropped by 2.3% yoy. Fur-
thermore, a decrease of the cash in circulation (by 10.2% yoy) 
at the background of decelerating growth of real money income 
took place. Finally, ruble money grew by 0.7% mom, while in 
annual terms it decreased by 3.5% yoy. Broad money grew by 
0.5% mom and in annual terms by 19.4% yoy. 
Consumer prices in May grew by 0.3% mom and in annual 
terms inflation ammounted to 13.6% (14.7% in April). During 
May-June the value of the Belarusian ruble was within the 
target corridor to the NBB currency basket. As of June 30, its 
exchange rate was 2837 USD/BYR. 
Banking sector: Stimulation of the economy through 
concessional consumer loans 
According to the President’s Edict in 2009-2010 concessional 
consumer loans will be provided for households’ with a low level 
of income. The function of providing such loans was assigned 
to four large state-owned banks – Belarusbank, Belagroprom-
bank, Belinvestbank, BBS-bank. It is envisaged, that the gov-
ernment will compensate the difference between market and 
concessional level of interest rates through budget funds. It 
should be emphasized, that under the approved criterion of be-
longing to the low-income category (not more than BYR 1.1 m 
for each family member), the target group of this Edict is about 
90% of the population. Hence, the prior task of this measure is 
stimulating the domestic demand through consumption. From 
this view, it might be effective in order to prevent a recession 
in the economy. However, artificial expanding of the domestic 
demand may finally cause the growth of the current account 
deficit. Furthermore, directive crediting hampers the banks’ 
possibilities on crediting potentially more effective projects un-
der the liquidity deficit. Thus, at the current stage the effec-
tiveness of this instrument seems to be ambiguous. 
Consolidated Budget 
20
30
40
50
60
70
80
90
Ja
n.
0
8
Fe
b.
0
8
M
ar
.0
8
A
p
r.
0
8
M
ay
.0
8
Ju
n
.0
8
Ju
l.
0
8
A
u
g
.0
8
S
ep
.0
8
O
ct
.0
8
N
o
v.
0
8
D
e
c.
08
Ja
n
.0
9
F
eb
.0
9
M
a
r.
09
A
pr
.0
9
-40
-30
-20
-10
0
10
20
30
balance (right axis)
revenues
expenditures
% of GDP
Source: calculations based on the National Statistical 
Committee data. 
 
 
 
 
 
 
 
 
 
Monetary Base and СPI 
-15
0
15
30
45
60
75
Ja
n
.0
8
Fe
b.
08
M
a
r.
0
8
A
p
r.
0
8
M
ay
.0
8
Ju
n.
08
Ju
l.
0
8
A
u
g.
0
8
S
e
p.
08
O
ct
.0
8
N
ov
.0
8
D
e
c.
08
Ja
n
.0
9
Fe
b.
09
M
a
r.
0
9
A
p
r.
0
9
M
ay
.0
9
6
8
10
12
14
16
18
CPI (right axis) monetary base
% yoy eop % yoy
 
Source: calculations based on the National Statistical 
Committee and the NBB data. 
 
 
 
 
 
 
 
 
 
Refinancing rate 
8
9
10
11
12
13
14
15
16
Ja
n
.0
8
Fe
b
.0
8
M
ar
.0
8
A
p
r.
0
8
M
ay
.0
8
Ju
n
.0
8
Ju
l.
0
8
A
u
g
.0
8
S
ep
.0
8
O
ct
.0
8
N
o
v.
0
8
D
ec
.0
8
Ja
n
.0
9
Fe
b
.0
9
M
ar
.0
9
A
p
r.
0
9
M
ay
.0
9
-6
-5
-4
-3
-2
-1
0
1
2
real (right axis) nominal
% per annum
Source: calculations based on National Statistical 
Committee and the NBB data. 
 
Belarusian Monthly Economic Review №7 (82) 
 
 
 
July 2009 4 
Economic Trends  Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 
Mar 
09 
Apr. 
09 
May 
09 
GDP growth % yoy 8.9 8.4 7.3 10.9 10.1 11.2 7.5 1.1 -- --  
GDP growth % yoy cum. 8.6 8.4 8.2 10.9 10.4 10.7 10.0 1.1 1.1 1.2 1.4 
Industrial Production % yoy cum. 7.7 8.2 8.5 14.7 13.0 13.1 10.8 -4.5 -4.5 -3.6 -3.4 
Agricultural Production % yoy cum. 5.2 5.6 4.1 6.8 5.4 6.9 8.9 6.3 6.3 6.6 6.8 
CPI % yoy eop 7.2 9.0 12.1 13.2 16.0 16.3 13.3 15.5 15.5 14.7 13.6 
PPI % yoy eop 13.6 16.8 17.1 13.5 16.2 18.5 14.2 21.4 21.4 19.2 16.5 
Merchandise export (USD)* % yoy 23.3 18.5 44.4 69.2 56.0 44.9 -11.6 -48.8 -50.1 -47.8 -- 
Merchandise import (USD)* % yoy 23.7 23.8 42.4 56.5 55.3 53.1 -1.5 -32.0 -31.6 -35.3 -- 
Merchandise trade balance 
(NBB data) 
USD m cum. -1563 -2304 -3858 -647 -2049 -3835 -6104 -1779 -1779 -2496 -3081 
Current account USD m cum. -1152 -1652 -2944 -433 -1411 -2920 -5049 -1866 -1856 --  
Current account % GDP cum -5.8 -5.1 -6.6 -3.6 -5.5 -6.6 -8.0 -18.2 -18.2 --  
International reserves USD m eop 2344 2155 4182 4746 4618 4120 3061 3955 3955 3565 3238 
Monetary base % yoy eop 29 25 38 59 54 48 12 -14.2 -14.2 -3.6 -13.3 
Lending rate** % p.a. aop 11 12 12 11 10 11 14 17 16 17 16 
Exchange rate 
(official) 
USD aop 2145 2147 2152 2148 2136 2114 2147 2772 2845 2829 2778 
Exchange rate 
(official) 
EUR aop 2890 2948 3115 3215 3339 3183 2827 3614 3704 3732 3782 
* Growth rates in value terms (source: Ministry of Statistics and Analysis). 
** Nominal rate of commercial banks for new loans for legal entities in national currency. 
Sources: Ministry of Statistics and Analysis, NBB. 
 
Key Economic Indicators 2002 2003 2004 2005 2006 2007 2008 
Nominal GDP* BYR trn 26.613 36.565 49.991 65.067 79.231 97.165 128.828 
Nominal GDP** USD bn 14.5 17.7 23.1 30.2 36.9 45.2 60.3 
GDP Growth % yoy 5.0 7.0 11.4 9.4 9.9 8.6 10.0 
Industrial production % yoy 4.5 7.1 15.9 10.5 11.3 8.5 10.8 
Agricultural production % yoy 0.7 6.6 12.6 1.7 6.1 4.1 8.9 
CPI % yoy aop 42.6 28.4 18.1 10.3 7.0 8.4 14.8 
CPI % yoy eop 34.8 25.4 14.4 8.0 6.6 12.1 13.3 
PPI % yoy aop 41.4 37.5 24.1 12.1 8.3 16.2 15.6 
PPI % yoy eop 42.7 28.1 18.8 10.0 8.5 17.1 14.2 
Exports (gs, USD) % yoy 9.8 24.4 35.7 15.8 21.8 24.3 35.5 
Imports (gs, USD) % yoy 9.0 25.1 40.3 3.0 33.0 27.9 37.6 
Current account USD m –311 –424 –1206 510 –1512 -2944 -5049 
Current account % GDP –2.1 –2.4 –5.2 1.7 –4.1 -6.6 -8.0 
FDI (net) USD m 453 170 163 303 351 1770 2143 
International reserves USD m 457 474 770 1297 1383 4182 3467 
Fiscal balance % GDP –0.2 –1.6 0.0 –0.6 2.2 0.6 0.9 
Domestic public debt % GDP eop 5.4 5.5 5.7 5.8 6.5 6.4 6.7 
External debt (total) % GDP eop 27.0 23.7 21.4 17.9 18.6 28.4 24.6 
Monetary base % yoy eop 32 50 42 74 20 38 12 
Exchange rate (official)* USD aop 1784 2075 2160 2154 2145 2146 2136 
Exchange rate (official)* USD eop 1920 2156 2170 2152 2140 2150 2200 
Exchange rate (official)* EUR aop 1690 2353 2684 2681 2692 2937 3135 
Exchange rate (official)* EUR eop 1989 2695 2956 2550 2817 3167 3077 
* On January 1, 2000 the Belarusian ruble was denominated 1:1000. All figures for 1999 are given in ‘new’ Belarusian rubles. 
** For the period of 1999–2000, GDP in USD is calculated by using the market (unofficial) exchange rate (source: IPM Re-
search Center). 
Sources: National Statistical Comittee, Ministry of Finance, NBB, IPM Research Center. 
 
Notes: 
aop average of period gs goods and services 
avg average trn trillion 
bn Billion NBB National Bank of Belarus 
cum. cumulative p.a. per annum 
eop end of period yoy year-on-year 
m million ytd year-to-date 
 


Belarusian Monthly Economic Review, \u21167(82), July 2009

Human rights documentation and advocacy

Nabucco\u2019s Ankara rain at the height of the south stream activity

The actual realization of the EU Eastern Partnership depend on stability of multilateral dimension

  
 
1 
 
 
The International Institute for Middle-East and Balkan Studies (IFIMES) in 
Ljubljana, Slovenia, regularly analyses events in the Middle East and the Balkans. 
IFIMES has analysed events in Serbia after the European Parliament (EP) at its 
plenary session held on 15 January 2009 in Strasbourg adopted the Resolution on 
Srebrenica  recognising July 11 as the day of commemoration of Srebrenica genocide 
throughout the EU. The most relevant parts of the comprehensive analysis 
“ADOPTION OF RESOLUTION ON SREBRENICA ACCELERATES 
SERBIA'S EU ACCESSION PROCESS” are given below. 
 
 
SERBIA: 
 
 ADOPTION OF RESOLUTION ON SREBRENICA 
ACCELERATES SERBIA'S EU ACCESSION PROCESS 
 
 
The delay and standstill in Serbia's EU accession are not the consequence of barriers 
imposed by the EU, but by the country's unwillingness to co-operate with the Hague 
Tribunal and its delays in implementing the promised reforms.  Such behaviour of 
Serbia and its political leaders has often been criticised by EU Commissioner for 
Enlargement Olli Rehn and other members of the European Commission, the 
Hague Tribunal chief prosecutor Serge Brammertz and even European 
Parliament's Rapporteur for Serbia Jelko Kacin who advocates Serbia's accession to 
the EU and believes Serbia will be the central state and the engine of development for 
the West Balkans. " »…As the largest country and economy in the region Serbia has 
the greatest potential and administrative capacity as well as a clear advantage in 
accelerating or slowing down EU accession process in the wider region of south-east 
Europe. Serbia has not had its final say yet and it can do much more for itself and for 
the region…," Kacin said. 
 
Serbia has to resume Stabilisation and Association Agreement (SAA) as soon as 
possible while taking into account commissioner Rehn's advice not to submit its 
application for EU membership this year. In spite of clear warnings sent by the EU, 
Serbian Foreign Minister Vuk Jeremić insists on applying for membership already 
during the Czech EU presidency. However, the apprehension of Ratko Mladić and 
Goran Hadžić remain the condition for Serbia's EU accession. 
 
  
 
2 
The IFIMES International Institute is of the opinion that it is too early and unrealistic 
for Serbia to consider submitting application for EU membership this year. Instead it 
should devote all its efforts to achieve the abolition of the visa regime. The country's 
one-sided submission of application and lack of positive reaction by the EU will 
create further frustration in the Serbian public which will be led to believe that 
Europe has slowed down its EU accession. This in fact represents wilful political 
manipulation carried out by Serbia's political leaders, which will harm Serbia and its 
reputation and jeopardise the EU's role in the process of democratisation and 
promotion of comprehensive development of the country. 
 
IT IS SERBIA'S TURN NOW 
 
Overcoming the Netherlands's blocking of the Stabilisation and Association 
Agreement with Serbia requires a different and  flexible response and a change in 
Serbia's behaviour in order to improve its credit rating. Unless Ratko Mladić is 
arrested, there is only one way to persuade the Netherlands and the Hague Chief 
Prosecutor to continue co-operation with Serbia – with the adoption of the 
Resolution on Srebrenica in the National Assembly of the Republic of Serbia.  
 
The decision of the Serbian National Assembly to start commemorating July 11 as the 
day of mourning for the victims of genocide in Srebrenica would send a clear signal to 
the EU, and especially to the Netherlands and the Hague Tribunal Chief Prosecutor 
Brammertz, as they would not be able to ignore the act which would clearly increase 
reputation and credibility of Serbia.  This would lead to a fast deblocking and at least 
bilateral implementation of trade agreement if not of the complete Stabilisation and 
Association Agreement.  
 
IMPORTANT ROLE OF NON-GOVERNMENT ORGANISATIONS 
 
Both Serbia and the EU should pay attention to the initiative of a group of Serbian 
NGOs and their open letter to Serbia's President Boris Tadić calling the National 
Assembly to adopt a resolution on Srebrenica on the basis of the Resolution adopted 
by the European Parliament on 15 January 2009 and to start commemorating July 11 
as the day of mourning for the victims of genocide in Srebrenica.  
 
The NGO initiative is of immense importance as it paves a different way for Serbia's 
EU integration by adopting the European value system and recognising historical 
facts. The appropriate respect of international law and court decisions will enable the 
country to eliminate negative stereotypes of Serbia and limit the liability for war 
crimes to the responsible individuals. This would make an important contribution to 
  
 
3 
reconciliation in the region and a decisive step towards deblocking the SAA and 
accelerating Serbia's EU accession process. 
 
However, the country also needs a clear incentive from abroad which would make it 
easier for Belgrade to realise that the confirmation of the Resolution on Srebrenica 
would facilitate and accelerate the positive assessment of Serbia's efforts and 
progress in the eyes of Chief Prosecutor Brammertz and the Dutch government. On 
this basis eventual apprehension and extradition of Ratko Mladić would be attributed 
a different meaning and much greater gravity. That would be the fastest and most 
successful way to start the SAA ratification process in the European Parliament and 
EU member states. 
 
The European Union, and especially Serbia, should not forget the important message 
from the proposal for the resolution on Srebrenica submitted by EP Vice-President 
Diana Wallis and Slovenian MEP Jelko Kacin  (Alliance of Liberals and Democrats 
for Europe) which was also stated during the plenary discussion in the European 
Parliament: "This resolution is not intended for the past. Although it also 
speaks about the dead, it is intended for those who still live and for their 
better future." 
 
Ljubljana, 16 February 2009                                                              
                                                                      International Institute for Middle-East 
                                                                      and Balkan Studies (IFIMES) – Ljubljana 
                                                                      Directors: 
                Bakhtyar Aljaf                                                                
                Zijad Bećirović, M.Sc. 
 
 
                                                    
 
 
 
 


Adoption of resolution on Srebrenica accelerates Serbia's EU accession process

  
 
1 
 
The International Institute for Middle-East and Balkan Studies (IFIMES) in 
Ljubljana, Slovenia, regularly analyses events in the Middle East and the Balkans. 
Below we have provided the most relevant and interesting sections from the 
comprehensive analysis entitled "Israel between the peacemakers and the 
warriors" which was carried out in the light of the early parliamentary elections in 
Israel scheduled for 10 February 2009. 
 
 
ISRAEL AND 2009 PARLIAMENTARY ELECTIONS 
 
 
ISRAEL BETWEEN THE PEACEMAKERS AND 
THE WARRIORS 
 
 
On 10 February 2009 Israel will hold it eighteenth (early) elections to the Israeli 
parliament (Knesset) since the country proclaimed its independence in 1948. The 
elections are based on a proportional electoral system in which the entire country 
constitutes a single electoral constituency.  
 
 The 5,278,985 eligible voters will cast their votes at 9,263 polling places (including 
194 hospitals and 56 prisons) in order to elect 120 members of the single-chamber 
parliament. 34 political parties and party lists will be competing for seats in the 
parliament. The main political parties or coalitions are:  Kadima, Likud, Labor, Israel 
Beytenu, Shas, Mafdal, Meretz, Gil, the Arab List etc.  
 
This year's early elections, which are the fifth during the past 12 years, were triggered 
when Kadima Chair and Foreign Minister Tzipi Livni failed to form a coalition 
government and after she did not give in to the blackmail exerted by the Shas 
religious party which demanded greater social support and exclusion of the 
Jerusalem status from negotiations with the Palestinians.  
 
Analyses of the last three elections have shown that the direct reason for the 
dissolution of governments and early elections was always related to the Palestinian 
issue. After the last elections in 2006 and the historical one-sided withdrawal from 
Gaza the then Prime Minister Ariel Sharon was not able to calm down the spirits 
within his own party. Together with his followers within Likud (Ehud Olmert, Tzipi 
Livni) he founded a centre-right party Kadima.   
 
The 2001 elections were the consequence of Prime Minister Ehud Barak's failed 
negotiations with the Palestinians (Camp David II). A similar episode happened in 
  
 
2 
1998 to the then Prime Minister Benjamin Natanyahu after the negotiations with the 
Palestinians in Way River failed. 
 
 
CONTINUED CRISIS OF ISRAELI POLITICS  
 
Generally, it has been observed that the Israeli politics have been facing a continued 
crisis since the peace agreement with the Palestinians was concluded in early 1990s. 
The Israeli electoral body is very fragmented and at the same time bipolar, i.e. black 
and white. Politicians are divided into two blocks: those striving for peace and those 
trying to prevent it. Notably, their political parties offer no alternative programmes 
for the social, economic and employment-related problems. 
 
The forthcoming elections differ from the previous ones in the following: 
 
1.  Lack and disappearance of the charismatic historical politicians with the 
second- and third-rate politicians coming to the forefront 
2. Non-existence of joint projects and programmes – there are 34 political parties 
and lists competing for the seats in the parliament. In comparison, from among the 
30 competing parties in 2006 only 12 were elected with the lowest turnout ever 
(64%). 
3. The traditionally largest parties will find it difficult to form the government on 
their own. The relative winner of previous elections was Kadima although it was 
founded in the same year as the elections were held (2006). 
4. Israeli elections have turned into a referendum on foreign policy (especially on 
relations with the Palestinians) at the detriment of the country's internal affairs and 
the deteriorating economic crisis. 
 
From the above facts it may be concluded that the forthcoming elections represent 
the continuation of the radical political turnover which has lasted since 1977 when 
Likud defeated the Labor Party which had been in power since 1948. The turnover 
was repeated in 1992 when the Labour Party regained the leading position in the 
Israeli politics. 
Likud, which disintegrated in 2005, is expected to return to the political scene with 
this year's elections , though only as a relative winner since it will not be able to form 
the government on its own. The forthcoming elections will draw a new political map 
of Israel and determine the destiny of the three main parties (Kadima, Likud and 
Labor).  
 
It is not only the destiny of Minister Tzipi Livni at stake but also that of Kadima 
which has opted for the centre-oriented path and selected some important 
personalities from the right and the left wing. The voters will be deciding also on the 
destiny of the Labor party which has been present in the political scene for years. 
  
 
3 
Analysts are forecasting the party's stagnation due to a lack of ideological and social 
identity in the Israeli society.  
 
The question is whether Likud will become the first or the second largest party and 
whether Benjamin Natanyahu will become the "formateur" or part of the coalition 
under Kadima's leadership. There is a theoretical possibility that Likud may compose 
the government without Kadima and Labour if it gains support from religious and 
immigrants parties (Shas,  Israel Beytenu, Mafdal) and from Gil. 
 
POLITICAL FAVOURITES AND THE PEACE PROCESS 
  
All political parties, especially the major three, have put the Palestinian issue and the 
peace process high on the agenda of their political programmes, without any 
significant differences among them.  
 
The Labour party which is the oldest political party in Israel (established in 1930) has 
a rather realistic attitude to the peace process. During its government the Peace 
Accords were signed between PLO and Israel in Oslo in 1992.   
 
The Labor party is committed to peace and it is ready to talk not only to the 
Palestinian self-government, but also to Hamas under three conditions: 1. Hamas 
must recognise Israel; 2. disarmament; and 3. recognition of peace agreements 
concluded between Israel and the Palestinian self-government. However, Labor will 
probably not be able to compose the government on its own and will have to be a part 
of a wide coalition. Its approach to the peace process will depend on its main 
coalition partner. 
 
Likud was founded in 1973. Its ideological roots date back to the liberal and 
nationalistic movement Betar led by Ze'ev Jabotinsky. It represents the main 
opposition to Ben Gurion's party Mabai (today's Labor party). The party won power 
in 1977 when Menahim Begin defeated Shimon Peres and the Labour party for the 
first time since the state of Israel was established in 1948. Likud traditionally opposes 
Israel's withdrawal from the occupied territories, although it was the first party to 
sign peace agreement with Egypt in 1979. Similarly in 2005 the then Prime Minister 
and Likud leader Ariel Sharon one-sidedly withdrew Israeli troops from Gaza. Likud's 
present leader Benjamin Natanyahu is very uncompromising on the Palestinian 
demands although that will not necessarily be his position if he wins the elections – 
during his term of office in 1998 he entered into serious negotiations with  Yasser 
Arafat. 
 
Kadima (in Hebrew it means "forward") was established four years ago. During a very 
short period of time it became one of the largest political parties in Israel's political 
scene. The party is committed to the peace process and the peace plan. It believes 
that the one-sided withdrawal from Gaza in 2005 opened the door to the 
  
 
4 
continuation of the peace process. Kadima's victory at the elections will mean that 
Israel will continue one-sided withdrawals from some West Bank areas and finally 
draw the eastern borders of Israel. Kadima opposes any form of co-operation with 
Hamas in the peace process. 
 
 
PUBLIC OPINION POLL 
 
Data on the sample: 
• The sample: random, three-stage 
• Size of the sample: 1,123 respondents (male and female citizens of lawful age) 
• Methodology: telephone survey 
• Period: 18th to 23rd January 2009 
• Degree of reliability: 95% 
• Control: 10% of the sample 
• Standard deviation +/-3 
• Territory: State of Israel 
 
- WHO WOULD YOU VOTE FOR IF PARLIAMENTARY ELECTIONS 
WERE HELD TODAY IN ISRAEL? 
 
LIKUD                                       25,8%    
KADIMA                                   20,1% 
ISRAEL BEYTENU                  10,0% 
LABOR                                        8,4% 
SHAS                                           7,5% 
MAFDAL                                    5,8% 
GIL                                              3,6% 
THE ARAB LIST                       3,5% 
OTHER                                      15,3% 
 
 
0
5
10
15
20
25
30
LIKUD KADIMA ISRAEL BEYTENU LABOR SHAS MAFDAL GIL THE ARAB LIST OTHER
 
  
 
5 
Ljubljana, 02 February 2009                                         
                                                     
                                                                      International Institute for Middle-East 
                                                                      and Balkan Studies (IFIMES) – Ljubljana 
                                                                      Directors: 
                Bakhtyar Aljaf                                                                
                Zijad Bećirović, M.Sc. 
 
 
                                                    
