PROFILE

OFFICIAL NAME:
Serbia and Montenegro (formerly Federal Republic of Yugoslavia or F.R.Y.)

Geography
Area: Montenegro (13,938 sq. km.) is slightly smaller than Connecticut; Serbia (88,412 sq. km.) is slightly smaller than Maine. Combined, they are slightly smaller than Kentucky (102,350 sq. km.).
Cities: Capital of Serbia and Montenegro and Capital of Serbia--Belgrade; Capital of Montenegro--Podgorica. Other cities--Pristina, Pancevo, Novi Pazar, Uzice, Novi Sad, Subotica, Bor, Nis, Tivat, Kotor.
Terrain: Varied; in the north, rich fertile plains; in the east, limestone ranges and basins; in the southeast, mountains and hills; in the southwest, high shoreline with no islands off the coast.
Climate: In the north, continental climate (cold winter and hot, humid summers with well-distributed rainfall); central portion, continental and Mediterranean climate; to the south, Adriatic climate along the coast, hot, dry summers and autumns and relatively cold winters with heavy snowfall inland.

People (2001 est.)
Nationality: Noun--Montenegrin(s) and Serb(s); adjective--Montenegrin and Serbian.
Population: 8,029,345, (Montenegro 650,575); Serbia (not including Kosovo) 7,478,820 (2002 Republic census).
Population growth rate: -0.27%.
Ethnic groups: Serbian 62.6%, Albanian 16.5%, Montenegrin 5%, Hungarian 3.3%, other 12.6%.
Religions: Orthodox 65%, Muslim 19%, Roman Catholic 4%, Protestant 1%, other 11%.
Languages: Serbo-Croatian 95%, Albanian 5%.
Health: Infant mortality rate--17.42 deaths/1,000. Life expectancy--70.6 yrs., female 76.7 yrs.

Government
Type: Republic.
Constitution: Adopted April 27, 1992.
Independence: April 11, 1992 (Federal Republic of Yugoslavia formed as self-proclaimed successor to the Socialist Federal Republic of Yugoslavia). On February 4, 2003, the F.R.Y. Parliament adopted a new Constitutional Charter establishing the state union of Serbia and Montenegro.
Branches: Executive--president (chief of state); prime minister (head of government), Council of Ministers (cabinet). Legislative--Serbia and Montenegro union parliament. Judicial--Federal Court (Savezni Sud) and Constitutional Court.
Political parties: Serbia--Alliance of Vojvodina Hungarians (SVM), Christian Democratic Party of Serbia (DHSS), Civic Alliance of Serbia (GSS), Democratic Alternative (DA), Democratic Center (DC), Democratic Community of Vojvodina Hungarians (DZVM), Democratic Party (DS), Democratic Party of Serbia (DSS), League for Sumadija (LS), League of Social Democrats of Vojvodina (LSV), New Serbia (NS), Reformist Democratic Party of Vojvodina (LSV), Serbian Radical Party (SRS), Serbian Renewal Movement (SPO), Socialist Party of Serbia (SPS--former Communist Party), Yugoslav United Left (JUL); Montenegro--Democratic Party of Socialists of Montenegro (DPS), Liberal Alliance of Montenegro (LSCG), Party of Democratic Action (SDA), People's Party of Montenegro (NS), Social Democratic Party of Montenegro (SDP), Socialist People's Party of Montenegro (SNP).
Suffrage: 16 years of age if employed; universal at 18. 

Economy
GDP (2002 est.): $12.84 billion.
GDP growth rate (2002 est.): 4%.
Per capita income (2002 est.): $1,200.
Inflation rate (2002 est.): 20%.
Natural resources: Oil, gas, coal, antimony, copper, lead, zinc, nickel, gold, pyrite, chrome, navigable rivers.
Agriculture: 25% of GDP.
Industry: 50% of GDP.
Trade (2002 est.): Exports--$2.2 billion. Major markets--Russia, Italy, Germany. Imports--$5.6 billion. Major suppliers--Germany, Italy, Russia.

PEOPLE AND HISTORY

Serbia
The Serbian state as known today was created in 1170 A.D. by Stefan Nemanja, the founder of the Nemanjic dynasty. Serbia's religious foundation came several years later when Stefan's son, canonized as St. Sava, became the first archbishop of a newly autocephalous Serbian Orthodox Church (1219). Thus, at this time, the Serbs enjoyed both temporal and religious independence. After a series of successions, Serbia fell under the rule of King Milutin, who improved Serbia's position among other European countries. Milutin also was responsible for many of the brightest examples of Medieval Serbian architecture. Moreover, Serbia began to expand under Milutin's reign, seizing territory in nearby Macedonia from the Byzantines. Under Milutin's son, Stefan Dusan (1331-55), the Nemanjic dynasty reached its peak, ruling from the Danube to central Greece. However, Serbian power waned after Stefan's death in 1355, and in the Battle of Kosovo (June 15, 1389) the Serbs were catastrophically defeated by the Turks. By 1459, the Turks exerted complete control over all Serb lands.

For more than 3 centuries--nearly 370 years--the Serbs lived as virtual slaves of the Ottoman sultans. As a result of this oppression, Serbs began to migrate out of their native and (present-day Kosovo and southern Serbia) into other areas within the Balkan Peninsula, including what is now Vojvodina and Croatia. When the Austrian Hapsburg armies pushed the Ottoman Turks south of the Danube in 699, many Serbs were "liberated," but their native land was still under Ottoman rule.

Movements for Serbian independence began more than 100 years later with uprisings under the Serbian patriots Karageorge (1804-13) and Milos Obrenovic (1815-17). After the Russo-Turkish War of 1828-29, Serbia became an internationally recognized principality under Turkish suzerainty and Russian protection, and the state expanded steadily southward. After an insurrection in Bosnia and Herzegovina in 1875, Serbia and Montenegro went to war against Turkey in 1876-78 in support of the Bosnian rebels. With Russian assistance, Serbs gained more territory as well as formal independence in 1878, though Bosnia was placed under Austrian administration.

In 1908, Austria-Hungary directly annexed Bosnia, inciting the Serbs to seek the aid of Montenegro, Bulgaria, and Greece in seizing the last Ottoman-ruled lands in Europe. In the ensuing Balkan Wars of 1912-13, Serbia obtained northern and central Macedonia, but Austria compelled it to yield Albanian lands that would have given it access to the sea. Serb animosity against the Habsburgs reached a climax on June 28, 1914, when the Austrian archduke Franz Ferdinand was assassinated in Sarajevo by a Bosnian Serb, Gavrilo Princip, setting off a series of diplomatic and military initiatives among the great powers that culminated in World War I.

Soon after the war began, Austro-Hungarian and Bulgarian forces occupied Serbia. Upon the collapse of Austria-Hungary at the war's end in 1918, Vojvodina and Montenegro united with Serbia, and former south Slav subjects of the Habsburgs sought the protection of the Serbian crown within a kingdom of Serbs, Croats, and Slovenes. Serbia was the dominant partner in this state, which in 1929 adopted the name Yugoslavia.

The kingdom soon encountered resistance when Croatians began to resent control from Belgrade. This pressure prompted King Alexander I to split the traditional regions into nine administrative provinces. During World War II, Yugoslavia was divided between the Axis powers and their allies. Royal army soldiers, calling themselves Cetnici (Chetniks), formed a Serbian resistance movement, but a more determined communist resistance under the Partisans, with Soviet and Anglo-American help, liberated all of Yugoslavia by 1944. In an effort to avoid Serbian domination during the postwar years, Bosnia and Herzegovina, Macedonia, and Montenegro were given separate and equal republican status within the new socialist federation of Yugoslavia; Kosovo and Vojvodina were made autonomous provinces within Yugoslavia.

Despite the attempts at a federal system of government for Yugoslavia, Serbian communists played the leading role in Yugoslavia's political life for the next 4 decades. As the Germans were defeated at the end of World War II, Josip Broz Tito, a former Bolshevik and devout communist, began to garner support from both within Yugoslavia as well as from the Allies. Yugoslavia remained independent of the U.S.S.R., as Tito broke with Stalin and asserted Yugoslav independence. Tito went on to control Yugoslavia for 35 years. Under communist rule, Serbia was transformed from an agrarian to an industrial society. In the 1980s, however, Yugoslavia's economy began to fail. With the death of Tito, separatist and nationalist tensions emerged in Yugoslavia.

In 1989, riding a wave of nationalist sentiment, Serbian President Slobodan Milosevic reimposed direct rule over the autonomous provinces of Kosovo and Vojvodina, prompting Albanians in Kosovo to agitate for separation from the Republic of Serbia. Between 1991 and 1992, Slovenia, Croatia, Bosnia and Herzegovina, and Macedonia all seceded from Yugoslavia. On April 27, 1992 in Belgrade, Serbia and Montenegro joined in passing the Constitution of the Federal Republic of Yugoslavia. In March 2002, the Belgrade Agreement was signed by the heads of the federal and republican governments, setting forth the parameters for a redefinition of Montenegro's relationship with Serbia within a joint state. On February 4, 2003, the F.R.Y. Parliament ratified the Constitutional Charter, establishing a new state union and changing the name of the country from Yugoslavia to Serbia and Montenegro.

Montenegro
Montenegro's history is almost inextricably tied to Serbia's. Similarly to Serbia, Montenegro was under the rule of the Ottoman Turks for the duration of their reign in the Balkans. When the Turks were removed from the area, Montenegro became an independent principality within the Austro-Hungarian Empire but did not become an independent, sovereign state until 1878.

During World War I, Montenegro fought on the side of the Allies but was defeated and occupied by Austria. Upon Austrian occupation, the Montenegrin king, King Nikola I, and his family fled to Italy. Consequently, the Serbian king, Petar Karadjordjevic, was able to exploit the chaotic conditions in Montenegro at the war's end, paving the way for the violent and unwanted Serbian annexation of Montenegro.

Montenegro was the only Allied country in World War I to be annexed to another country at the end of the war. The majority of the Montenegrin population opposed the annexation and on January 7, 1919, staged a national uprising--known to history as the Christmas Uprising--against the Serbian annexation. The uprising became a war between Serbia and the Montenegrins that lasted until 1926. Many Montenegrins lost their lives, and though many hoped for an intervention by the Great Powers to protect their sovereignty, none came and Montenegro was effectively absorbed into the new kingdom of Yugoslavia.

When Yugoslavia was invaded and partitioned by the Axis powers in April 1941, Montenegro was appropriated by the Italians under a nominally autonomous administration. This caused a great divide within the Montenegrin population. Many nationalists who had been frustrated with the experience of Yugoslav unification supported the Italian administration. But there were advocates of the union with Serbia who began armed resistance movements as well as many communists who, by nature of their political beliefs, were opposed to the Italian presence. As war progressed, the local strength of the communists grew and Montenegro served as an effective base for communism in the region; it was an important refuge for Tito's Partisan forces during the most difficult points in the struggle. After the war, the communist strategy of attempting to unify Yugoslavia through a federal structure elevated Montenegro to the status of a republic, thus securing Montenegrin loyalty to the federation.

The breakup of the Yugoslav federation after 1989 left Montenegro in a precarious position. The first multiparty elections in 1990 showed much public support for the League of Communists, confirming Montenegrin support for the federation. Montenegro joined Serbian efforts to preserve the federation in the form of a "Third Yugoslavia" in 1992. Though Montenegro reaffirmed its political attachment to Serbia, a sense of a distinct Montenegrin identity continued to thrive. Outspoken criticism of Serbian conduct of the 1992-95 war in Bosnia and Herzegovina boosted the continuing strength of Montenegrin distinctiveness. Both the people and the government of Montenegro were critical of Yugoslav President Slobodan Milosevic's 1998-99 campaign in Kosovo, and the ruling coalition parties boycotted the September 2000 federal elections, which led to the eventual overthrow of Milosevic's regime. The Belgrade Agreement of March 2002, signed by the heads of the federal and republican governments, set forth the parameters for a redefinition of Montenegro's relationship with Serbia within a joint state. On February 4, 2003, the F.R.Y. Parliament ratified the Constitutional Charter which established a new state union and changed the name of the country from Yugoslavia to Serbia and Montenegro.

Kosovo
Before the conflicts of the 1990s, Kosovo was best known as the site of a famous 14th-century battle in which invading Ottoman Turks defeated a Serbian army led by Tsar Lazar. During this medieval period, Kosovo also was home to many important Serb religious sites, including many architecturally significant Serbian Orthodox monasteries.

The Ottomans ruled Kosovo for more than four centuries, until Serbia reconquered the territory during the First Balkans War in 1912-13. First partitioned in 1913 between Serbia and Montenegro, Kosovo was then incorporated into the Kingdom of the Serbs, Croats, and Slovenes (later named Yugoslavia) after World War I. During World War II, parts of Kosovo were absorbed into Italian-occupied Albania. After the Italian capitulation, Nazi Germany assumed control until Tito's Yugoslav communists reentered Kosovo at the end of the war.

After World War II, Kosovo became a province of Serbia in the Socialist Federal Republic of Yugoslavia. The 1974 Yugoslav Constitution gave Kosovo (along with Vojvodina) the status of an autonomous province with nearly equal voting rights as the six constituent Republics of Yugoslavia. Although the Albanian-majority province enjoyed significant autonomy, riots broke out in 1981 by Kosovar Albanians who demanded that Kosovo be granted full Republic status.

In the late 1980s, Slobodan Milosevic propelled himself to power in Belgrade by exploiting the fears of the small Serbian minority in Kosovo. In 1989, he arranged the elimination of Kosovo's autonomy in favor of more direct rule from Belgrade. Belgrade ordered the firing of large numbers of Albanian state employees, whose jobs were then taken by Serbs.

As a result of this oppression, Kosovo Albanian leaders led a peaceful resistance movement in the early 1990s and established a parallel government funded mainly by the Albanian diaspora. When this movement failed to yield results, an armed resistance emerged in the form of the Kosovo Liberation Army (KLA). The KLA's main goal was to secure the independence of Kosovo.

In late 1998, Milosevic unleashed a brutal police and military campaign against the separatist KLA, which included atrocities against civilian noncombatants. For the duration of Milosevic's campaign, large numbers of ethnic Albanians were either displaced from their homes in Kosovo or killed by Serbian troops or police. These acts and Serbia's refusal to sign the Rambouillet Accords provoked a military response from NATO which consisted primarily of aerial bombing and lasted from March through June 1999. After 79 days of bombing, Milosevic capitulated and international forces moved into Kosovo.

After June 1999, Kosovo was made a UN protectorate, under the UN Mission in Kosovo (UNMIK) based in Pristina. Under UNMIK aegis and with NATO's Kosovo Force (KFOR) providing security, efforts to build a multiethnic and democratic Kosovo commenced immediately. From early 2001, UNMIK has been working with representatives of the Serbian and union governments to reestablish stable relations in the region. Kosovars elected a new assembly in November 2001, which formed a government and chose a president in early 2002. In spring 2002, UNMIK announced its plan to repatriate ethnic Serb internally displaced persons (IDPs). In 2003, UNMIK transferred certain governing competencies to ministries formed as part of the region's provisional institutions for self-government.  

GOVERNMENT AND POLITICAL CONDITIONS

State Union of Serbia and Montenegro
In February 2003, the Constitutional Charter was ratified by the Republic of Serbia, Republic of Montenegro, and the Yugoslav Parliament. The Constitutional Charter changed the name of the country from Federal Republic of Yugoslavia to "Serbia and Montenegro." Under the new Constitutional Charter, most federal functions and authorities devolved to the republic level. The office of President of the Federal Republic of Yugoslavia, held by Vojislav Kostunica, ceased to exist once Svetozar Marovic was elected President of Serbia and Montenegro.

Republic of Serbia
Even as opposition to the his regime grew in the late 1990s, Yugoslav President Milosevic continued to dominate the organs of the F.R.Y. Government. Although his political party, the Socialist Party of Serbia (SPS), did not enjoy a majority in either the federal or Serbian parliaments, it dominated the governing coalitions and held all the key administrative posts. An essential element of Milosevic's grasp on power was his control of the Serbian police, a heavily armed force of some 100,000 that was responsible for internal security and which committed serious human rights abuses. Routine federal elections in September 2000 resulted in a narrow official victory for Milosevic and his coalition. Immediately, street protests and rallies filled cities across the country as Serbs rallied around Vojislav Kostunica, the recently formed Democratic Opposition of Serbia (DOS, a broad coalition of anti-Milosevic parties) candidate for F.R.Y. president. Cries of fraud and calls for Milosevic's removal echoed across city squares from Subotica to Nis.

On October 5, 2000, Slobodan Milosevic was forced to concede defeat after days of mass protests all across Serbia. New F.R.Y. President Vojislav Kostunica was soon joined at the top of the domestic Serbian political scene by the Democratic Party's (DS) Zoran Djindjic, who was elected Prime Minister of Serbia at the head of the DOS ticket in December's republican elections. After an initial honeymoon period in the wake of October 5, DSS and the rest of DOS, led by Djindjic and his DS, found themselves increasingly at odds over the nature and pace of the governments' reform programs. Although initial reform efforts were highly successful, especially in the economic and fiscal sectors, by the middle of 2002, the nationalist Kostunica and the pragmatic Djindjic were openly at odds. Kostunica's party, having informally withdrawn from all DOS decisionmaking bodies, was agitating for early elections to the Serbian Parliament in an effort to force Djindjic from the scene.

After the initial euphoria of replacing Milosevic's autocratic regime, the Serbian population, in reaction to this political maneuvering, was sliding into apathy and disillusionment with its leading politicians by mid-2002. This political stalemate continued for much of 2002, and reform initiatives stalled. Two rounds of elections for the republic presidency in late 2002 failed because of insufficient voter turnout (Serbian law requires participation by more than 50% of registered voters).

On March 12, 2003, Serbian Prime Minister Djindjic was assassinated. The Serbian government and the newly formed union government of Serbia and Montenegro reacted swiftly by calling a state of emergency and undertaking an unprecedented crackdown on organized crime which led to the arrest of more than 4,000 people. Zoran Zivkovic, a vice-president of Djindjic's DS party, was elected Prime Minister in March 2003. A series of scandals plagued the Zivkovic government through the second half of 2003, ultimately leading the Prime Minister to call early elections.

The Republic of Serbia presidential elections were held on November 16, 2003. These elections were also declared invalid because of insufficient voter turnout. Parliamentary elections held on December 28, 2003 yielded the following results:

Four democratically-oriented parties (DSS, G17+, DS, and SPO/NS) are now negotiating the creation of a coalition government, which is expected to form sometime in early 2004.

Republic of Montenegro
Although threatened by Milosevic throughout the last years of his rule, Montenegro's democratization efforts have continued. In January 1998, Milo Djukanovic became Montenegro's President, following bitterly contested elections in November 1997, which were declared free and fair by international monitors. His coalition followed up with parliamentary elections in May 1998. Having weathered Milosevic's campaign to undermine his government, Djukanovic struggled to balance the pro-independence stance of his coalition with the changed domestic and international environment of the post-October 5, 2000 Balkans. In December 2002, Djukanovic resigned as President and was appointed Prime Minister. The new President of Montenegro is Filip Vujanovic.

Kosovo
Kosovo is an international protectorate administered by the United Nations. While technically still a part of Serbia and Montenegro, the supreme legal authority in Kosovo is the UN Interim Mission in Kosovo (UNMIK). UN Security Council Resolution 1244 (passed June 10, 1999) authorizes UNMIK to establish "substantial autonomy and self-governance" in Kosovo and, eventually, to facilitate a political process to determine Kosovo's future status. The senior international official in Kosovo is the Special Representative of the Secretary General (SRSG), who has sweeping legal authority to govern Kosovo. In August 2003, UN Secretary General Kofi Annan selected former Finish Prime Minister Harri Holkeri to be SRSG.

Resolution 1244 also authorizes a NATO-led force (Kosovo Force, KFOR) to provide for a safe and secure environment in Kosovo. Over the course of 2003, KFOR was gradually reduced to 17,500 international troops in KFOR, including approximately 2,250 U.S troops (down from over 50,000 international troops in 1999). KFOR numbers are expected to steadily decline as the security situation improves.

In 2001, the SRSG promulgated a "Constitutional Framework for Provisional Self-Government in Kosovo." This document established a Kosovo Assembly and new Provisional Institutions of Self-Government (PISG). In November 2001, Kosovars held their first free and fair elections for the Kosovo Assembly. The main political parties included the Democratic League of Kosovo (LDK), led by Ibrahim Rugova; Democratic Party of Kosovo (PDK), led by former KLA political chief Hashim Thaci; the Alliance for the Future of Kosovo (AAK), led by former KLA commander Ramush Haradinaj; and the Serb coalition party Povratak. The LDK won the elections with 46% of the vote, and the PDK came in second with 26%. They were followed by Povratak at 11% and the AAK at 8%.

After significant political wrangling, Kosovo's politicians agreed to establish a coalition government in March 2002. As part of the agreement, the Assembly elected Bajram Rexhepi (PDK) as Prime Minister and Ibrahim Rugova (LDK) as President. In 2002, the Kosovo Assembly began to function and pass its first laws. Also in 2002, the Provisional Institutions of Self-Government were formed, with ministries allocated to the parties according to the March 2002 power-sharing agreement. During 2003, UNMIK transferred a significant number of governing competencies to these ministries. UNMIK will retain many powers associated with state sovereignty, including foreign affairs and security, until Kosovo's final status is decided.

Kosovo's uncertain final status is the key political dynamic in Kosovo. Virtually all Kosovo's Albanians continue to advocate independence, which Serbia finds unacceptable. The international community believes that neither Kosovo nor the region is ready to address the status issue. In early 2002, former SRSG Michael Steiner first articulated a policy of "standards before status," whereby Kosovo's final status will not be addressed until and unless Kosovo meets certain internationally endorsed standards for the establishment of rule of law, functioning democratic institutions, minority rights, and economic development.

A major political focus in Kosovo is the status of Kosovo's minority communities, especially the Serbs. Kosovo's small Serb community suffers restricted freedom of movement and sporadic acts of inter-ethnic violence. After the war, more than 100,000 Serbs and other non-Albanian ethnic minorities fled Kosovo. As a matter of principle, the international community has encouraged their return, although results have been disappointing.

Relations between Kosovo Albanians and Serb authorities remain frosty, and there is little contact between them. In 2003, the international community pressed leaders in Belgrade and Pristina to begin a dialogue on practical issues of mutual concern, such as transportation, electricity, and the return of displaced persons.

Legislature
The union Parliament is the lawmaking body of the Government of Serbia and Montenegro. The Republic of Serbia and Republic of Montenegro are governed by their respective republic parliaments.

Principal Government Officials
Serbia and Montenegro President and Prime Minister--Svetozar Marovic
Serbia and Montenegro Foreign Minister--Goran Svilanovic
Serbia and Montenegro Defense Minister--Boris Tadic
President of Serbia--vacant
President of Montenegro--Filip Vujanovic
Serbian Prime Minister--Zoran Zivkovic
Montenegrin Prime Minister--Milo Djukanovic

Serbia and Montenegro maintains an embassy in the United States at 2134 Kalorama Rd., NW, Washington, DC 20008 (tel. 202-332-0333).

DEFENSE
Military branches include the Army of Serbia and Montenegro (VSCG), which includes ground forces with internal and border troops, naval forces, and air and air defense forces, and Civil Defense. Civilians fit for military service are estimated at about 2,088,595 (2001 est.). The 2002 estimate for military expenditures as percent of GDP is 3.6%. Following the assassination of Serbian Prime Minister Zoran Djindjic in March 2003, the Ministry of Defense has undertaken significant reform initiatives, which have been successful in moving Serbia and Montenegro closer to Euro-Atlantic integration.

ECONOMY
The economy of Yugoslavia entered a prolonged decline in 1998. Exacerbated by international sanctions imposed in response to President Slobodan Milosevic's actions in Kosovo, the F.R.Y. economy's downward spiral showed no real sign of recovery until 2001. A vigorous team of economic reformers has worked to tame inflation (non-energy inflation is less than 9% in 2002, down from over 45% 3 years earlier) and rationalize the Serbia and Montenegro economy. GDP, although only half of its 1997 level, is projected to increase steadily in the near future.

The F.R.Y.'s monetary unit, the dinar, remained volatile throughout the Milosevic regime. Alarmed F.R.Y. officials took several steps to tighten monetary policy in 1998, including ruling out a devaluation in the near term, increasing reserve requirements, and issuing bonds. During this period, Montenegro rejected the dinar and adopted the German mark (now the Euro) as its official currency. As 1999 began, the damage control operations had succeeded in returning the exchange rate to reasonable levels. However, it was not until 2002, after intense macroeconomic reform measures, that the dinar became convertible--a first since the Bretton Woods agreements laid out the post-World War II international exchange rate regime.

Privatization efforts have not succeeded as well as macroeconomic reform. The process of privatization is not popular among workers of large socially owned companies, and many citizens appear to believe the tendering process is overly centralized and controlled from Belgrade. Furthermore, international investment is still lagging in Serbia and Montenegro, as a result of both domestic and international investment climates. Managers tend to blame the dearth of interest on the current negative business climate in Serbia and Montenegro. The Kragujevac-based automobile plant--heavily damaged during the 1999 NATO bombing--remains the most publicly discussed large privatization candidate, but efforts to sell the plant for as little as $1 have failed.

FOREIGN RELATIONS 
From the breakup of the Socialist Republic of Yugoslavia in 1989, the foreign policy of the F.R.Y. was characterized primarily by a desire to secure its political and geopolitical position and the solidarity of ethic Serbs in the Balkan region through a strong nationalist campaign. The F.R.Y. supported and exploited the expansion of violent conflicts--in Bosnia and Herzegovina, Croatia, and its own province, Kosovo--in order to advance its policies. Since October 2000, the F.R.Y./Serbia and Montenegro has all but eliminated its nationalist rhetoric and has worked to stabilize and strengthen its bilateral relationships with neighboring countries. In spring and summer 2002, F.R.Y. resolved its longstanding border dispute with Macedonia and established full diplomatic relations with its neighbor and former adversary Croatia. Although a difficult political issue domestically, Serbia and Montenegro has established a solid working relationship with UNMIK and has released all disputed ethnic Albanian prisoners from Kosovo to the competent UN bodies.

In 2002, the F.R.Y. Government established a commission to coordinate cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) and began serving warrants for the arrest of indicted war criminals who have sought refuge in the country. The crackdown on organized crime following the assassination of Serbian Prime Minister Djindjic also resulted in the apprehension and transfer to The Hague of several persons indicted for war crimes.

Immediately preceding the NATO bombing campaign of the F.R.Y. in spring 1999, the U.S. and most European countries severed relations with the F.R.Y., and the U.S. Embassy was closed. Since October 5, 2000, foreign embassies, including that of the U.S., have reopened, and the F.R.Y./Serbia and Montenegro has regained its seat in such international organizations as the Organization for Security and Cooperation in Europe (OSCE) and the UN and is actively participating in International Monetary Fund (IMF) and World Bank projects. As of summer 2003, Serbia and Montenegro has been admitted to the Council of Europe and has indicated that it wishes to join NATO's Partnership for Peace.

Foreign Aid
Subsequent to the outbreak of hostilities between NATO and the F.R.Y. in 1999, Belgrade received no foreign aid from the United States and other west European countries. Since October 2000, however, European Union aid has steadily increased, and U.S. restrictions on aid have fallen away as the F.R.Y./Serbia and Montenegro stepped forward to meet its international obligations. In June 2003, U.S. Secretary of State Colin Powell was able to certify that Serbia and Montenegro's relationship with the Republika Srpska was consistent with the Dayton Accords, had released all political prisoners, and was cooperating with ICTY. As a result, the United States is now free to release aid money and support Serbia and Montenegro in international financial institutions, such as the IMF and World Bank. Total U.S. aid to Serbia and Montenegro, including debt forgiveness, exceeded $180 million in fiscal year 2002. The U.S. is the single largest donor of aid to Serbia and Montenegro.

U.S.-SERBIA AND MONTENEGRO RELATIONS
Since the outbreak of war between NATO and the Federal Republic of Yugoslavia in the spring of 1999, the United States and the F.R.Y. severed diplomatic relations. In response to the events of October 2000, the United States reestablished a diplomatic presence the following month. The U.S. Embassy reopened in May 2001, and Ambassador William Montgomery presented his credentials to F.R.Y. President Kostunica on January 4, 2002. The Serbia and Montenegro embassy in Washington and the U.S. Embassy in Belgrade have reestablished bilateral relations and provide a full range of consular services. Serbia and Montenegro currently enjoys good diplomatic relations with all of its neighbors.

Principal U.S. Embassy Officials
Ambassador--William Montgomery
Deputy Chief of Mission--Robert Norman
Public Affairs Counselor--Allen Docal
Political-Economic Counselor--Bert Braun
Consul General--Ann Sides
Regional Security Officer--Marian Cotter
Defense Attache--Col. Michael Martinez
Foreign Commercial Service--Patrick Hughes
USAID--James Stephenson

Consulate Podgorica, Montenegro
Principal Officer--Hoyt Yee
Public Affairs Officer--Aaron Schwoebel
Political-Economic Officer--Tom Brennan

U.S. Office Pristina (Kosovo)
Chief of Mission--Marcie B. Ries
Deputy Principal Officer--Robert Sorensen
Political-Economic Section Chief--Kirk McBride
Political-Economic Section Deputy Chief--Phil Kosnett
Public Affairs Officer--Michael McClellan
Defense Attache--Col. Michael Carlson USAID--Dale Pfeiffer

The U.S. Embassy in Serbia and Montenegro is located at Kneza Milo�a 50, 11000 Belgrade (tel. 381-11-361-9344).

For the most current version of this Note, see Background Notes A-Z.