Serbia 2014

sets a deadline for media privatization for July 1st 2015. On the other hand, the problem of party financing has not been considered to be a serious one. A law concerning this matter was passed in 2010 but hasn’t been implemented yet. Vote-buying occurs more or less in the whole Western Balkans region (maybe with the exception of Croatia). The underlying problems are the (previously mentioned) deficient rules regarding party financing and poverty. This makes some parts of the Serbian population on the fringes of society (e.g. the Roma minority) prone to selling their votes. However, vote-buying has so far not proven to be able to influence election results on the national level and remains more of an issue in local and regional elections.

institutional structures in Kosovo have been abolished. The Orthodox Church rejects the concept of an independent Kosovo state and is set to disrupt the normalisation process. Recent opinion surveys indicate that the SOC is losing prestige, as a series of unearthed affairs is implicating high-ranking church officials to misconduct and sex scandals. Some analysts suggest that the current reformist government might use those scandals to leverage the SOC in line. Extreme nationalist and ultra-right organisations in Serbia are growing in influence. Old ties to the political elite continue to exist, further strengthening confidence of those organisations. Some have branched out into politics, nearly entering parliament in the parliamentary elections of 2014. The military complies with the rules set by a civilian government. However, it lacks transparency regarding structure, authority, activity and funding of different sectors and secret services. A potential role of military structures in protecting International Criminal Tribunal for the former Yugoslavia (ICTY) fugitives remains unclear. The military is trying to restore public confidence, also by engaging in public relations.

criticism of inefficient, under-professional, obviously corrupt or biased legal institutions. Somewhat better efficiency in the most notorious criminal cases, at least as regards prosecuting and indicting, was achieved at a high cost of executive power interfering (through back channels) into the work of the bodies in charge. The extent of the presidential pardons and parliament`s amnesty since mid-2012 was huge indeed, which visibly impacted crime rates and their structure. The backlog of cases in most courts, including the constitutional court, is enormous. As many as 82% of citizens (asked by the Transparency International`s Global Corruption Barometer 2013) found the judiciary corrupt, more than for any other state institution. In the Serbia Progress Report 2013, the EU noticed a gigantic backlog of cases, but showed lots of restraint, even bureaucratic approach in commenting the extraordinary political or other social developments in Serbia relevant for the situation in judiciary. Among recommendations, the Judicial Academy was invited to become the mandatory entry point for new judges. According to the EU, impartiality of judges “continued to be broadly ensured”. Nevertheless, hard facts and figures indicated at the return or even upward mobility of a number of judges who had violated professional ethics during 1990s or prior.

Details of giant public-private partnerships (in energy, urban infrastructure, car industry, etc.), especially when based on inter-governmental, or agreements with foreign companies, are kept confidential and are declassified only partially and upon public pressure. Despite improvements in public procurement due to implementation of a new law (transparency of procedures, fresh rules for the low-value procurements, publishing the assessed value of procurements and new rules on contracts with same suppliers), there is still plenty of room for increasing transparency. Lobbying is not regulated. Implementation of the law on financing of election campaigns is scarce. The law on whistle-blowing is still in draft status. The executive branch and independent anti-corruption regulatory bodies play the blame game. The legal system needs more consistency and more participation of citizens in the phase of drafting the laws (especially in identification of the corruption-vulnerable areas). Very good news has been the adoption of the new law on media, stipulating the retreat of the government from the ownership in media, coupled with more transparent and scarce – temporary and project-based only – public financing of the broadcasters. Promising - on a longer run though – also are the visible changes in the mindset of the leading transparency-monitoring (and some other) NGOs, who increasingly, however cautiously, accepted liberal approach and rhetoric on combating corruption. However, parallel to that, the “National Strategy for the Struggle Against Corruption”, adopted in 2013, fell short of noticing the links between economic dirigisme and corruption, in spite of the otherwise strong pro-market rhetoric of the current Government. The country`s CPI has, amid all those divergent and turbulent developments, shown considerable improvement, from 39 in 2012 to 42 in 2013, placing Serbia next to BiH. Both are ranking as 72nd of 177 countries of the world.

unexplained. A draft law is expected on opening of the secret files. Restitution of private property continues in spite of sabotage attempts by interest groups within the government. War crimes trials continued, amid new discoveries of mass graves in Serbia and Bosnia. Nevertheless, fears remained over future government policies on human rights, mainly caused by obtrusive leadership and debating style of the PM Vučić and his SNS peers. Arbitrary arrests and police brutality are still a huge problem in Serbia. Whereas the judiciary is devastated (slow, inefficient, biased, corrupted) it has been hard to tell which particular arrests had been indeed arbitrary and who was to blame for keeping in custody people who were later acquitted. Besides, there were cases of ill treatment in custody. As a new disturbing moment, during the spring 2014 flooding there were several arrests due to “spreading false rumors” on the number of casualties via online social networks. Online media who had published disturbing claims about government officials` mismanagement or unsuitability were hacked, but perpetrators were rarely discovered. In spite of the law against discrimination, or because of its inconsistency with other laws, treatment of new or small or alternative religious communities is unequal. Romany, LGBTs and leading human rights` NGO activists are at the top of those endangered: defamed in government-proxy tabloids without opportunity to defend, be cleared and compensated, they subsequently are often attacked, or their premises vandalized. The LGBT Pride rally in Belgrade, as perhaps the key litmus test of the respect of human rights, exactly because it is so unpopular, was year and again banned for security reasons, or it was ordered to stay indoors. In September 2014, it was held, under heavy police protection.

Furthermore, corruption within the public sector is widespread, including the judiciary. The most affected area are public procurements. It is estimated that one third to one quarter of total procurement expenses on consolidated level is connected to corruption. The new Law on Public Procurement whose implementation began in January of 2013 has provided some improvement in this regard, but not as much as envisaged.

government owned unreformed enterprises alongside companies in unfinished privatization and restructuring processes, demand high pecuniary supplements to cover high losses. The transfers are usually subject to political influence, nontransparent and unaudited. Corporate and top marginal income tax rates are at 15% (few citizens actually pay it, since it is applied to very high yearly wages only). Low income tax therefore must be accompanied by very high payroll taxes which amount to 47.8% of gross wage and additional 15% capital gains tax. This high tax wedge is the main reason for high shadow economy activities – either working completely without contract or applying only minimum wage only while the rest of the salary is paid in cash. High tax costs of legal business and rigid regulation with complicated red tape further fuels this situation.

regulations are not promoting new employment. Collective bargaining does not represent a high burden to business in the private sector, although the extended validity of collected bargaining remains a problem. Collective bargaining in the public sector involves higher public expenditures, with 30% higher wages on average than in the public sector. Although starting a business alongside tax compliance costs does not provide significant obstacles in Serbia, the business environment is not business friendly due to extremely complicated and slow administrative procedures, very high bureaucracy costs and endemic corruption. An extremely bad example are construction permits, where Serbia ranks 182 out of 189 countries in World Bank's Doing Business report.