FY 2010 Foreign Operations Appropriated Assistance: Serbia

Bureau of European and Eurasian Affairs

Performance Report Highlights: Serbia

FY 2010 Foreign Assistance Goals

Serbia’s sustained progress on democratic reform and economic advancement is essential to its own stability and important for that of the entire region. U.S. Government (USG) assistance programs foster democratic governance, promote economic growth, build capacity in the government, and move the country toward lasting stability. Success in these areas will encourage productive regional partnerships and help expedite Euro-Atlantic integration. Significant steps have been taken to combat corruption, strengthen the rule of law and encourage a more active role for civil society in public decision making.

Total FY 2010 Foreign Operations Appropriated Assistance: $51.56 million*

Date: 2011 Description: Serbia -- Total FY 2010 Foreign Operations Appropriated Assistance: $51.56 million. - State Dept Image

(*Foreign Operations funding appropriated for FY 2010, not including centrally managed, regional Foreign Operations funding that is not budgeted for specific countries.)

Highlights of FY 2010 Performance by Area of Focus

Peace and Security

-- During FY 2010, USG-supported trainings were designed to teach Customs and Border Police officers how to: identify and interdict WMD-related nuclear, radioactive and chemical materials; investigate and prosecute violations of Serbia’s export control law; conduct undercover and controlled delivery operations; assess cargo shipments and target riskier shipments for more intensive inspection; assess passengers as potential traffickers; use basic inspection/detection equipment and train others how to use that equipment; and operate and maintain patrol boats.

-- Serbian Border Police continue to capitalize on USG-provided training and equipment to enhance their enforcement capabilities. The Border Police have mounted successful interdiction operations on the Sava and Danube Rivers and elsewhere in Serbia, and continue to advance their control capacity. In FY 2010, USG assistance included a U.S. Border Patrol-conducted border assessment to plan further related assistance and training. Serbian Customs has made progress in improving its enforcement capabilities. The new senior Customs leadership has been transparent and responsive to collaborative efforts to enhance the interdiction capabilities of its officers. Serbian Customs has placed increased emphasis on personnel development and, to this end, has increased its efforts in curriculum planning and development.

-- The USG assisted Serbia in fighting corruption and organized crime, addressing terrorist threats, and promoting accountability for war crimes. USG experts mentored and trained the Organized Crime Unit of the Ministry of Interior (MOI). This technical assistance led to arrests of several major narcotics traffickers and organized crime figures, including the discovery of 20 kilograms of heroin at the Gradina border crossing and identification and arrest of members of 20 suspected organized crime groups throughout Serbia. The most notable of these is the Balkan Warrior case, in which US assistance contributed to case development and international cooperation resulting in the seizure of 2.8 tons of cocaine by the Uruguayan police, and to filing a complex indictment against 20 persons. Other significant projects include the EUCOM-funded secure Criminal Intelligence Network that links all 27 Police Directorates located in Serbia to MOI headquarters, and the Zylab software project, funded by the USG and OSCE, which will improve the capacity of the War Crimes Police to use information from the International Criminal Tribunal for the Former Yugoslavia (ICTY) in their investigations.

-- In anticipation of the passage of a new Criminal Procedure Code and the introduction of prosecutor-led investigations, the USG implemented programs that emphasized the need for police-prosecutor cooperation and introduced the taskforce approach to law enforcement. The aforementioned Balkan Warrior case is a prime example of the improved cooperation between police and prosecutors. USG assistance also facilitated a study visit to California for three MOI officials to give them a firsthand perspective on the formation, supervision, and operation of interagency narcotics task forces and related police operations. Support continued to strengthen the institutional position of police and prosecutors and to help ensure their professional independence and freedom from political influence.

-- Of 183 students that have completed USG-supported military training, three officers graduated from the National Defense University’s International Counter-terrorism Fellows Program; two officers from the National War College at the National Defense University (NDU); one officer from the Army War College; one officer from the Air War College; four officers from the Army Command General Staff College; four officers from the Air Command Staff College; and two NCOs from the Sergeants Major Academy, of whom one was inducted into the Academy's Hall of Fame. Additionally, some 70 NCOs have completed the Warrior Leaders Course, with 7 placements programmed for FY 2011.

Governing Justly and Democratically

-- In FY 2010, the USG provided technical assistance to Serbia’s new High Court Council (HCC) to build its capacity to manage its own budget and conduct strategic planning for the court system – capacities that are critical to enhancing judicial independence. The USG assisted in staff development plans for a new HCC budget office to handle the finances of the courts and helped with preparations for court system-wide training on strategic planning. These reforms were part of a systemic judicial reform initiative undertaken by the Government of Serbia in 2010.

-- In FY 2010, USG assistance to the court system also facilitated the appointment of Serbia’s first Court Administrator to the Belgrade Court to help improve court management. USG support paved the way for the appointment of an additional 11 Court Administrators throughout the country. With Administrators in place to assist court management, Serbia’s courts are expected to operate more efficiently, transparently, and with more accountability. During the reporting period, U.S. experts completed the orientation curriculum on court management for court presidents and administrators assigned to new court units. This curriculum includes an introduction to the new Book of Court Rules drafted to reflect the court system reorganization undertaken in FY2010 and will be implemented by the Judicial Academy in early 2011. USG technical assistance also helped a select number of courts to achieve a reduction in their case backlog of up to 20 percent.

-- USG assistance supported the drafting and finalization of a complete new Serbian Criminal Procedure Code (CPC), which the Ministry of Justice adopted at the end of FY 2010. The law is now undergoing a period of public comment and debate in anticipation of its introduction and enactment in early 2011. The new CPC will foster a more effective and efficient criminal justice system by introducing many innovations, which include prosecutor-led investigation and adversarial proceedings at trial. While there were some delays in the Serbian process of preparing this draft Code this year, enactment is still expected in the spring of 2011, with an effective date in early 2012.

-- USG experts delivered advanced courses on the new Law on Asset Forfeiture, which took effect in early 2009. These courses significantly strengthened the relevant prosecutors’ offices, which have already seized more than €200 million ($279 million) worth of assets derived from organized crime and corruption, out of which approximately €1 million has been forfeited to the state by legally binding decisions. U.S. specialists also drafted manuals and training courses on the new law on Criminal Liability of Corporations, which will contribute to better understanding and implementation of this significant new law.

-- The USG’s capacity-building assistance, including trainings, study visits, legal advice and mentoring on the most complex and sensitive cases, has resulted in numerous major prosecutions and judgments in cases involving war crimes, organized crime, and corruption. Key achievements for FY 2010 include the organized crime indictment of 20 members of a narcotics smuggling gang for trafficking more than 2.8 metric tons of cocaine from South America to Europe (as mentioned in the previous section), and the subsequent indictment of nine members of the same gang for laundering €20 million ($27 million) in drug proceeds. Regarding war crimes, an indictment charged eight Serbian defendants with war crimes committed against Kosovo Albanians in 1999. In addition, the Organized Crime Prosecutor’s Office capitalized on the 2009 amendments to the Law on Organized Crime, which were supported by the USG, to commence an investigation against five top officials of a medical institute and five representatives of international drug companies. The officials were accused of taking bribes. US advisors were instrumental in facilitating regional cooperation (resulting in several war crimes and organized crime indictments) and international legal assistance.

-- USG assistance helped the National Assembly establish its own professionally staffed budget office and undertake strategic planning – both capacities critical to the strengthening of the Assembly relative to the Executive. The USG helped foster improvements to the Assembly’s website and conducted trainings and strategic planning sessions. Strengthening the Assembly further will require more difficult reforms that have not yet been endorsed by political leaders, including electoral system reform, as well as staffing and accounting changes that would require greater accountability on the part of Assembly members and staff.

-- The USG supported the drafting of a Political Party Financing law which is likely to be passed in 2011 and which will make political party fund raising more transparent. USG assistance also helped small, regional, and ethnic minority parties to improve their organizational capacities, mobilize their democratic electorate, and improve their coalition-building capacities. Public outreach activities to minorities included work to register participants and promote turnout in the establishment of National Minority Councils (NMC). Through the NMCs, assistance was provided to improve the communication and other capacities of the various Serbian minority communities. Initial estimates were that only one or two of a total of 19 potential Councils would register a high enough percentage of their populations to directly choose their representatives. With USG assistance, 16 NMCs qualified for direct elections. Originally tasked with assisting only the Albanian, Bosniak, Hungarian, and Roma minority councils, USG assistance was expanded to other minority councils, resulting in over 35,000 new registered voters.

-- New funds for USG-funded exchange alumni yielded new partnerships as young people and professional groups combined their newly acquired skills from the United States in support of volunteerism and advocacy in Serbia. Alumni from both youth and professional exchange programs focused on a number of projects to advance environmental protection, through campaigns to raise general awareness of threats to the environment and to encourage recycling. These activities helped create opportunities for internships and in-service training for university students, potentially leading to job opportunities. They also promoted mutual understanding among people of different ethnic, religious, and social backgrounds.

Investing in People

-- In FY 2010, USG programs provided more than 3,000 young Serbian citizens with improved educational access and opportunities to learn English. U.S. resources supported 28 students attending 16 different higher education institutions who returned to benefit their communities. By encouraging English language learning, scholarly exchange and education options in the United States, U.S. programs helped promote better understanding and appreciation of U.S. values. In addition, the USG-funded Academic Advising Center reached over 5,000 students through direct and online advising and testing.

Economic Growth

-- USG assistance helped the government of Serbia (GOS) enhance its capabilities in monetary policy and improve its application of information technologies to government financial operations. Assistance to the National Bank of Serbia (NBS) increased the quality of its inflation report and external communications aimed at improving public perceptions about inflation expectations. In the area of pension reform, assistance helped the Ministry of Finance and the NBS amend the Law on Voluntary Private Pension Funds which improved transparency, increased competition, decreased costs, enabling a foundation for these funds to become a viable Pension Pillar in the future.

-- During FY 2010, the supervisory and regulatory capacity of the NBS was strengthened with USG assistance. The banking regulatory framework was enhanced through harmonization of local regulations and practices with European Union (EU) Directives and Basel Core Principles. Changes to regulations and supervisory practices allowed credit to continue flowing to the real economy without jeopardizing the health of the banks. Those regulatory changes also required banks to further strengthen their risk management capabilities. The International Monetary Fund (IMF)/World Bank Mission for the Financial Sector Assessment Program review concluded that the NBS has made substantial progress in implementing the Basel Core Principles, maintained a vibrant banking sector, responded effectively to the crisis, and is making progress toward Basel II implementation. During FY 2010, IMF and World Bank reports confirmed the strength of the Serbian banking sector and the timely actions of the NBS that have supported financial stability.

-- In FY 2010, the USG supported initiatives to develop private laboratories to provide phytosanitary and origin certifications and to support pilot farms to introduce new plant varieties. Through participation in trade fairs, new markets were identified and marketing channels established. By the end of FY 2010, a cumulative total of $73 million in new client sales had been reported by project beneficiaries over the past three years.

-- Through a USG funded program, 32 municipalities competed in early 2010 in demonstrating their improved business enabling environment. Their marketing efforts were assessed and verified both internally (by USAID) and externally (by the public and private sector), serving as best practice examples to all local communities in Serbia. All 32 participating local governments achieved progress in their capacities for investment promotion and attraction and in partnering with the private sector. Thirty-two USG-supported Local Economic Development Offices were established at the municipal level, $1.6 billion in new investment was attracted, 16,500 new jobs were created, and 491 new businesses were established as a result.

-- In FY 2010, USG assistance facilitated 134 business contracts between Serbian suppliers and international buyers totaling $97.4 million in sales and exports. The film and convention tourism sectors continued producing the most significant portion of these results, but this year, the construction sector made significant gains as companies became compliant with FIDIC standards and were able to reach new export markets. The USG also assisted 250 beneficiaries in getting the necessary training to attain international certifications and standards. Forty percent of the participants were women.