New US Sanctions on Companies and Persons from Serbia Related to Arms Deals

The US Treasury Department’s Office of Foreign Assets Control (OFAC) published, on 09.12.2019, as part of the International Anti-Corruption Day, a report “targeting corrupt actors and their networks in many countries in Europe, Asia and Latin America”.

OFAC administers and implements economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international drug traffickers engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the US national security, foreign policy, or economic system.

The report, called “Treasury Sanctions Corruption and Material Support Networks” outlines and describes the activities of six Serbian citizens in semi-legal arms deals with foreigners.

The report coincides with the arms trafficking affair in Serbia, which is alleged to have involved the father of the minister of internal affairs Nebojša Stefanović. Serbia’s opposition has disclosed inside information submitted by Aleksandar Obradović, a former worker at the Krušik Valjevo state-owned ammunition plant, for arms trade with countries subject to an arms embargo.

According to the opposition, “Slobodan Tešić donated two tractors to people in Kosovo on behalf of President Aleksandar Vucic, while at the same time Krušik was about to sign an arms deal in Armenia. At the last moment the deal was canceled and made available for the Slobodan Tešić’s company Vectura”.

The statement of the US Department of the Treasury shows that Tešić and his associates have been known for years by the US government.
During the presentation of the report, the Director of OFAC Steven Mnuchin stated that: “Corruption deprives people of their countries’ resources, essential services and economic opportunities while enriching selected individuals and facilitates environmental degradation, political instability and conflicts. On International Anti-Corruption Day, we target actors in Europe, Asia and Latin America who continue to undermine the foundations of stable, secure and functioning societies through their illegal activities.”

Following is the text of the report that refers to Serbian companies and citizens who will be sanctioned:

“Slobodan Tesic (Tesic) was identified in the annex of E.O. 13818 on December 21, 2017.  At the time of his designation, Tesic was among the biggest dealers of arms and munitions in the Balkans, spending nearly a decade on the United Nations (UN) Travel Ban List for violating UN sanctions against arms exports to Liberia.  In order to secure arms contracts with various countries, Tesic would directly or indirectly provide bribes and financial assistance. Tesic took potential clients on high-value vacations, paid for their children’s education at western schools or universities, and used large bribes to secure contracts. Four companies were concurrently designated for being owned or controlled by Tesic:  Preduzece Za Trgovinu Na Veliko I Malo Partizan Tech DOO Beograd-Savski Venac (Partizan Tech), Technoglobal Systems DOO Beograd (Technoglobal), Charso Limited, and Grawit Limited.

Following his designation, Tesic continued to engage in the arms trade and operate as a silent partner in companies he indirectly owns and manages.  In these instances, Tesic still controls many, if not all, aspects of the companies’ daily operations, including brokering deals and soliciting new business opportunities, though he relies on his trusted associates to sign the deals and to appear on all public documentation. Today’s action targets nine individuals that have acted or purported to act for or on behalf of, directly or indirectly, Tesic:

• Goran Andric (Andric) is one of Tesic’s closest associates and has represented Tesic in various international sales, including conducting contract negotiations on Tesic’s behalf while Tesic was on the UN travel ban list and unable to travel. In working for Tesic, Andric was involved in facilitating arms deals, including an occasion when Andric signed a contract on behalf of the designated entity, Partizan Tech. In addition, OFAC designated Velcom Trade D.O.O. Beograd, which is based in Serbia, for being owned or controlled by, or for acting or purporting to act for or on behalf of, directly or indirectly, Andric.

• Esad Kapidzic is the director and secretary of Cyprus-based Finrost Limited (Finrost), as well as the director and representative of Serbia-based Falcon Strategic Solutions D.O.O. (Falcon Strategic), two entities also designated for being owned or controlled by, or for acting or purporting to act for or on behalf of, directly or indirectly, Tesic. Finrost received and moved money on behalf of Tesic, and was used by Tesic for a weapons contract with a foreign government in Africa. Additionally, Falcon Strategic was established by Tesic immediately following his December 21, 2017 designation to avoid sanctions.

• Nebojsa Sarenac (Sarenac) is the managing director of both Technoglobal and Partizan Tech. Sarenac is Tesic’s nephew and one of his closest associates.

Also designated today is Melvale Corporation D.O.O. Beograd (Melvale), which is based in Serbia, for being owned or controlled by, or for acting or purporting to act for or on behalf of, directly or indirectly, Sarenac, who is the owner and representative of Melvale.

• Zoran Petrovic is a managing director and principal of Partizan Tech, an entity designated in December 2017. Petrovic has negotiated with foreign entities on Tesic’s behalf.

• Nikola Brkic is a principal and a legal representative of Partizan Tech.

• Milan Subotic (Subotic) is the owner and managing director, and a representative of Serbia-based Vectura Trans DOO (Vectura Trans), an entity that is being concurrently designated today for being owned or controlled by, or for acting or purporting to act for or on behalf of, directly or indirectly, Tesic. Tesic utilized Vectura Trans to receive an approved license for exports, to complete arms deals, and to finalize weapons contracts with a foreign government.  Subotic was also listed as the point of contact for export permits related to Partizan Tech.

• Zelimir Petrovic is the owner, managing director, and representative of Serbia-based Araneks DOO (Araneks), an entity that is being concurrently designated today for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Tesic. Araneks was used by Tesic to finalize weapons contracts with a foreign government in Africa and in dealings with another foreign government.

• Sreten Cvjetkovic is a 50 percent owner and representative of Falcon Strategic.

• Ljubo Maricic is the director of Technoglobal and a former representative of Partizan Arms, predecessor to Partizan Tech.

In addition to the six entities named above, OFAC is targeting three additional entities for being owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, Tesic:

• The Cyprus-based Moonstorm Enterprises LTD, is an entity that is being concurrently designated today for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Tesic.

• Tesic also utilized Cyprus-based Tardigrade Limited (Tardigrade) to conduct business in third-party countries, particularly Arab and African countries. Tesic has also used his Serbian companies to sign contracts with Tardigrade before selling the goods to a final buyer.

• Tesic established Hong Kong-based Business Diversity Limited in order to conduct business with a European country. Tesic has used Business Diversity Limited in Euro denominated contracts to evade U.S. sanctions.”

Serbia Supports Russia Over UN Resolution on Crimea

Serbia was once again the only Balkan country to support Moscow during the voting on a resolution of the UN General Assembly calling on Russia to withdraw its forces from Crimea.

On Monday night (December 9th) at the UN General Assembly in New York, Serbia voted against a resolution calling on the Russian Federation “as an occupying power” to withdraw its military forces from Crimea and to end the temporary occupation of Ukrainian territory.

Serbia was the only Balkan state to vote against the resolution, with the rest voting “yes” except Bosnia and Herzegovina abstaining.

The document was adopted, with 63 countries in favor and 19 against.

The resolution, entitled “Problem of the militarization of the Autonomous Republic of Crimea and the city of Sevastopol, Ukraine, as well as parts of the Black Sea and the Sea of Azov” also calls on Russia to return all equipment and weapons to Ukraine taken from three ships seized by Moscow forces which were later returned.

It also condemned the visits of Russian officials to Crimea.

This is not the first time that Serbia is the only Balkan country to stand by Russia at the UN.

In December 2017, Belgrade also supported Moscow over a UN General Assembly resolution proposed by Ukraine condemning the human rights situation in Russia-annexed Crimea.

Russia and Serbia have historically had warm relations based on Slavic ethnic ties and common affiliation with the Orthodox Church.

Most Serbs perceive Russia as their biggest ally, especially in the fight to prevent international recognition of the independence of the former Serbian province of Kosovo.

Russia regularly denounces Kosovo’s declaration of independence from Serbia, adopted in 2008, and has since voted against Kosovo’s membership in international organizations, backing Belgrade’s policies.

Serbia, for its part, has refused to join Western sanctions against Russia for its role in fomenting the conflict in Ukraine, despite repeated calls from Brussels to remind Serbia that as a candidate country for membership, it must align its foreign policy with that of the EU.

At the same time, Serbian President Alexander Vucic at a press conference with his Russian counterpart, Vladimir Putin, in Sochi on December 4, said: “There is no document Russia can vote for if it is against Serbia’s interests, as Serbia does not and would not vote against the interests of Russia”.

The New French Proposal for the EU Accession Process

At the end of October, France sent a non-paper to EU Member States, proposing to introduce the principle of “reversibility” in the accession process of the new candidates for EU membership from the Western Balkans. It should be applied by the European Commission (EC) when a state fails to meet certain criteria or suspends its obligations in the accession process, which would result in freezing of the negotiation process until the candidate country fulfills the conditions.

France urges EC to develop and publish new negotiation methodology by January 2020 which should be applied to the candidates for EU membership.

In the non-paper, France proposes that “once negotiations begin, the process not to be based on opening of chapters, but on several successive phases that form coherent blocks of policies and a framework drawn up by the EU that takes into account the specificities of each candidate country”.

The document calls for “the rule of law and the protection of fundamental human rights to be a prerequisite for the opening of accession talks as well as for the whole negotiation process”.

The current basic structure of the accession process should remain unchanged: during the negotiations, candidate countries must fully adopt EU legislation (35 chapters). Once the negotiations are completed, an accession treaty will be signed, with the country becoming a full member after ratification of the treaty by the parliaments of all member states.

The new moment in the French proposal is the process of membership negotiations to go through seven steps: the rule of law and fundamental rights; education and research;employment and social activities; financial activities; free market;agriculture and fisheries; foreign affairs and “others”. Following the fulfillment of the conditions in this seven stage process, the candidate countries will gain access to individual EU policies and programs. When a candidate country meets the conditions in step one, it will acquire access to Eurojust and Europol and, after step five, the country would be eligible to access EU structural funds.

The ultimate goal “must be full membership” and the whole accession process should be “gradual and more stimulating”. In this context, additional EU financial commitment is envisaged for the Western Balkans pre-accession process, with one option being to redirect part of the EU structural funds to the region.

The French document does not mention Turkey, with which accession talks were cut off three years ago, as well as any other country outside the Western Balkans.

The first discussion of the document proposed by France was expected to beheld on 19 November at a meeting of the EU General Affairs Council.

Kosovo Serb Politician Warns Victory of Serb List in the Elections is Not Credible

Kosovo Serb politician Aleksandar Jablanovic says (04.11) that the victory of the Belgrade-backed Serbian List at the latest Kosovo elections is doubtful.

Jablanovic, who is the leader of the Party of Kosovo Serbs, told local television in Gracanica that he was against Serb List because it is not a legitimate representative of Kosovo Serbs. According to him, 97% of the votes in the elections for Serb List were “stolen”. He added that his party has evidence of election fraud, which they will deposit to the Kosovo Central Election Commission.

Jablanovic warned that the Serbian community in Kosovo has been virtually ignored and cannot trust neither Belgrade nor Pristina. He considers, that the representatives of the Serbian community in Kosovo should acquire a direct access to the Brussels talks as it comes to their own future. “The dialogue between Belgrade and Pristina aims to protect the interests of Serbia in Kosovo, but it will also determine and future of Serbs in Kosovo”, adding that not everything that Belgrade negotiate is in the best interests of the Kosovo Serbs. According to him: “The negotiations aim to buy time and gain points that will facilitate Serbia’s path to the European Union”.

Zijin Buys Another Copper and Gold Mine in Serbia

The Chinese company Zijin Mining intends to buy the mines for copper and gold that its partner Freeport McMoran Inc. owns in Serbia. Zijin Mining will pay up to $390 million for the lower zone of the Timok copper and gold mine. The company already owns the upper zone. Zijin Mining will initially pay Freeport $240 million with subsequent payments of 0.4% of net sales revenue once production begins, up to additional $150million.

Zijin continues to strengthen its presence in the Balkans after taking over copper production at the RTB Bor Mining and Metallurgical Complex in Serbia in 2018. The company have said that with the acquisition of Freeport shares, it would increase its total controlled copper resources by 7.72 million tons (15.6%) to 57.24 million tons, while its gold resources will increase by 161 tons (9.3%), up to 1889 tons.

The development of the lower zone of the Timok mine is due to start after production commences in the upper zone, which is foreseen for 2021.

The copper mines around the towns of Bor and Majdanpek are the biggest polluters of the environment in Eastern Serbia, whose flotation waters run into the Timok River and then into the Danube. Eco-organizations have repeatedly warned about the periodic pollution of the Timok River, which borders Bulgaria and the destruction of the river flora and fauna.

Republika Srpska Intends to Reject Bonn Powers Granted to the Office of the High Representative for Bosnia and Herzegovina

Bosnian Serb leader and member of Bosnia and Herzegovina Tripartite Presidency Milorad Dodik said on 28.10.2019 that Republika Srpskaentity would reject the authority of the Office of the High Representative (OHR) for B&H and the High Representative himself, enshrined in the conclusions of the Bonn summit in 1997, as in his view these powers were given in violation of the 1995 Dayton Agreement, which ended the nearly four-year war in the country. According to Dodik, the OHR institution is an illegal instrument for the international monitoring of the civilian implementation of the Dayton Agreement. Dodik considers that all decisions of the High Representative for B&H based on the Bonn Powers should be annulled.

The Peace Implementation Council in B&H agreed at the meeting in Bonn in December 1997 to delegate its rights to the OHR for B&H with the aim to prevent nationalist leaders from delaying or hindering the implementation of the Dayton Agreement. By virtue of these rights conferred by the Peace Implementation Council, the OHR is authorized to act in the event that local parties are incapable or unwilling to act, including in regard of dismissing from public functions local officials who do not comply with the legal provisions of the Dayton Agreement.

According to the allegations of Dodik, the High Representative in B&H is “trying to shape the political system through fraud and Republika Srpska strongly rejects such an approach and model.” Milorad Dodik resents the latest decision by the OHR, part of the RS’s jurisdiction, to be transferred to B&H, which he says does not exist in the B&H Constitution.

He believes this is “a serious problem and Republika Srpska will not allow endangerment of its Constitutional positioning” as well as “to change the political system due to the behavior and lawlessness of the High Representative for B&H”, which equals to committing an international crime “intended to impose the Bonn Powers against Republika Srpska in violation of the Dayton Agreement.”

Dodik announced the convening of an extraordinary session of the parliament of Republika Srpska on November 5th this year, at which an answer should be given to a number of recent challenges, including to the Declaration of the ruling in B&H Bosniak Party of Democratic Action.

Conference Invitation

Bulgarian Hub for United Balkans and Dr.Andrey Kovatchev, MEP and Vice-Chair of the EPP Group in the European Parliament, are organizing a conference “Western Balkans after Sofia Summit 2018”, that will be held on 8th of November 2019 from 09:30 am to 15:30 pm. Venue of the event is the European Parliament Liaison Office in Sofia. The panelists will be leading experts from Bulgaria, Croatia and the Western Balkan countries. Working language is English. Those wishing to attend should pre-register at no later than 05.11.2019.

BHUB team

Results of a Poll Conducted by the Bureau for Social Research in Serbia

A study by the Bureau for Social Research (BIRODI), conducted in the periods April 22-25 and May 2-5, 2019, showed that 45.5% of Serbian citizens see Serbia’s EU membership as the country’s most acceptable foreign policy, while 17.6% believe Serbia should join the Eurasian Economic Union (EAEU).

Data released as late as October 21, 2019 shows that only 2% of citizens support Serbia’s NATO and EU membership, at the same time.

Serbia’s EU membership is a priority for most high school graduates, while the majority of citizens with higher education have stated that Serbia should stay away from any kind of “Eastern” or “Western” integration.

The results also showed that citizens living in Eastern and Southern Serbia, especially in the areas bordering Bulgaria and Romania, are most supportive of EU membership. At the same time, the support for Serbia’s government neutrality policy in these areas is significantly less than in other areas.

Belgrade citizens overwhelmingly support neutrality policy, but do not support Serbia’s membership in the Eurasian Economic Union.

Those citizens, who mainly watch the national RTS television, are more supportive of EU membership. The same result was obtained among viewers of Happy and Prva TVs (both nationally broadcast), while viewers of pro-government Pink TV, to a much lesser extent, support Serbia’s EU membership, but are also against membership in the Eurasian Economic Union.

Supporters of the ruling coalition between the Serbian Progressive Party and the Socialist Party of Serbia have given the following support: 45.1% are for Serbia’s EU membership, 29% are for neutrality and 25% are for the country’s membership of the Eurasian Economic Union.

Supporters of the opposition Alliance for Serbia have given the following support: 53.5% are in favor of Serbia’s EU membership, while 38.6% are in favor of neutrality.

European Council Meeting on 17-18 October 2019

The event, which has generated widespread resonance among Western Balkan countries and the EU, was the failure of the EU summit to agree on a date for the start of accession talks with Republic of North Macedonia and Albania.

France and the Netherlands have urged Skopje and Tirana to meet almost all conditions for opening negotiations, although most member states have declared themselves in favor of starting talks with both sides.

Bulgarian Prime Minister Boyko Borisov has warned that postponing the start of negotiations with the Republic of North Macedonia and Albania risks further expanding the influence of Russia, China and Turkey in the Western Balkans.

The inability to reach consensus met the sharp but understandable statement of the Prime Minister of the Republic of North Macedonia Zoran Zaev, who also underlined that he was ready to even resign. Zaev insists on holding snap parliamentary elections in the Republic of North Macedonia as a matter of urgency, with the aim of finding support among the broad part of the electorate for the country’s current SDSM policy.

Senior representatives of the outgoing EC issued clear warnings against delaying the start of negotiations, which would slow the pace of integration processes in the Western Balkans.

EC President Jean-Claude Juncker called the EU decision “a serious historical mistake”, while MEP Tanja Fajon accused Paris of “playing a dirty game”. EU Enlargement Commissioner Johannes Hahn said he was disappointed with the decision to postpone negotiations with the two Balkan countries. The President of the European Council Donald Tusk also thinks it is a mistake to postpone the start of accession talks, as most EU countries were in favor of such a step. Greek Prime Minister Alexis Tsipras also gave strong support for the start of EU-North Macedonia-Albania talks, calling the settlement of the 27-year-old dispute over the name of the former Yugoslav republic, a historic move.

Results of the Kosovo Snap Elections

Kosovo Central Election Commission (CEC) announced on Tuesday October 8th  the preliminary results of the snap parliamentary elections after counting 100% of the votes cast on the territory of Kosovo.

Two opposition parties received the most support from Albanian voters. Albin Kurti’s Self-Determination Party is leading among the political forces with 25.48% (202968 votes), followed by Isa Mustafa’s Democratic League of Kosovo (LDK) with 24.82% (197702 votes).

Kurti perceives Isa Mustafa as his coalition partner and if the two parties reach a coalition agreement, they have the potential to form an independent government, without seeking support from other political forces. Isa Mustafa, the leader of the oldest Kosovo party – LDK, underlined that his party has no intention of re-entering coalition relations with the Democratic Party of Kosovo. He extrapolates that the priority of the new government should be to improve the economic situation, which he believes is the main reason for the massive emigration of young Albanians to Western Europe.

Hashim Thaci’s Democratic Party of Kosovo (PDK), which has ruled during the last 12 years, remained in third place with 21.24%, while the coalition between the Alliance for the Future of Kosovo (AAK) of the former Prime Minister Ramush Haradinaj and Shpend Ahmeti’s Social Democratic Party of Kosovo (PSD) occupies the fourth position with 11.57% (92149 votes).

The election results show a significant decline in the electoral support for Ramush Haradinaj’s AAK, although prior to the elections he entered in a coalition with PSD of Shpend Ahmeti, a former member of the leadership of Self-Determination Party. This coalition was backed by the businessman Florin Krasniqi, a former Self-Determination MP who returned from the United States specifically to participate in the election campaign.

Serb List receives 6.61% support (52620 votes), mainly from Northern Kosovo voters, which will allow them to have 10 seats in the future Kosovo parliament.

Self-Determination Party leader Albin Kurti, who could be nominated for Prime Minister, said after the election that his party would not be coalitioned with the Serb List, and underlined his firm position that tariffs on Serbian goods in Kosovo would not be abolished. Kurti has repeatedly stated that his party supports a unification between Kosovo and Albania even before full membership in the EU is achieved.

 The turnout was 43.2%, which represents 796380 out of the 1937868 voters. In the context of the increased turnout in Northern Kosovo, the rest of the electorate, especially the Kosovo Albanians, have demonstrated their disappointment with the current political reality in the country.