Ivanka Milenkovic is feeling optimistic. Having studied in Holland, the Belgrade native returned to Serbia in the 1990s to work as a biologist. Today her business employs 12 people, producing 150 tonnes a year of oyster mushrooms, a patented gourmet food product, helped by funds from the European Union.
“I’ve been in the business for 25 years, and it is extremely rare that there are supports for SME development. The support has made a huge difference,” she says.
Milenkovic is one of many Serbian entrepreneurs benefitting from EU funds, as the Balkan country embarks on the long road to EU accession. Formal accession talks between the EU and Serbia began in January, after the country agreed to "normalise relations" with Kosovo under a EU- brokered deal. Serbia hopes to follow the path of neighbouring Croatia and become the bloc's 29th member in 2020.
Snap election
But 20 years on from the Balkan wars, significant challenges remain. Next Sunday, the country of seven million people goes to the polls after the Serbian Progressive Party called a snap election. The campaign has focused on Serbia's faltering economy, as the state struggles to cast aside the legacy of communism and war and fully embrace modern free-market capitalism.
With an official unemployment rate of more than 22 per cent, Serbia is battling with the economic reality of a bloated public sector, rigid labour laws and corruption. The grey economy is worth about 30 per cent of GDP, says Ana Trbovic of the University of Belgrade, while clientelism and excessive red tape is zapping the interest of foreign investors.
"Less than €1 billion of foreign direct investment is expected next year, but at least €3 billion is needed for minimal growth," she says. The once-thriving textile industry has given way to the inevitabilities of globalisation. Italian car-maker Fiat is one of the few examples of private enterprise – almost half the workforce is in the public sector.
Among ordinary Serbians the mood towards EU membership is mixed. Support has fallen to about 55 per cent, according to recent polls.
According to Trbovic, the impact of recent EU accession on countries such as Romania, Bulgaria and Croatia has been closely watched in Serbia and has failed to impress.
“People are not excited by the European Union any more. It’s no longer seen as the rich club we want to join.”
As with all former Soviet satellites there are plenty of contrarian voices eager to acclaim the benefits of Soviet- style socialism.
“At least we had jobs,” says a 33-year-old man, whose father, he explains, has borne the brunt of the “solidarity tax” introduced last year that on average knocked a third off public-sector incomes.
But Belgrade is also teeming with young, educated workers, born after the fall of communism and keen to make their mark in business. Many of these have been educated in the EU. (As part of the pre- accession process, Serbia already has access to the Erasmus programme and €200 million a year in EU “capacity-building” funds)
As the politics of the election campaign accelerates, Serbian officials are continuing to proceed with accession negotiations. The EU accession procedure involves 35 “chapters” covering everything from agriculture to environment, trade and regulation. The most contentious promise to be chapters 23 and 24, which deal with rule-of-law issues and the judiciary, and chapter 35, which covers Kosovo.
Kosovo
For ordinary Serbs, Kosovo remains a highly sensitive issue. Some believe the EU has prioritised the Kosovo issue to the neglect of everything else in its discussions with Serbia.
"In the eyes of some citizens, they see that the EU has in a sense blackmailed Serbia over the Kosovo issue" says Maja Bobic of the European Movement in Serbia. "Kosovo is undoubtedly the most important issue for the European Union."
Others point out that Serbia is facing much tougher requirements than other recent accession states, because of a belief among some member states that the EU was too lenient in its law and order standards during the last rounds of accession.
Despite the stated commitment of Serbia’s political parties to undertake the reforms necessary to join the EU, officials believe the view of their country is still coloured by the Balkans war.
"We don't have a champion in the EU. Croatia had Germany, Romania had France, the Baltics had the Scandinavians," says one Serbian official involved in the negotiations.
“We are lacking a champion. You need someone to put us on the agenda.”