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.

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

Advisory board assembly

In accordance with the growing obligations of the international projects implementation, on the 5th  September 2019 was held a meeting of the “Bulgarian hub for united Balkans” advisory board, on which new members were admitted to membership in order to optimize its functionality.