H.E. Nikolaus Lutterotti, Ambassador Of Austria To Serbia

The much-discussed latest EC progress report should be considered by Serbia as a guide on how to proceed with reforms, says Austrian Ambassador Nikolaus Lutterotti. In this interview, he adds that Austria is ready to consider a proposal for Serbia to open a new accession negotiation chapter (the only one in 2020) by the end of the year. However, support is not unconditional and a green light would only arrive “as long as the overall balance of progress on fundamentals – such as the rule of law, press freedom or democratic institutions, and other more technical chapters – is not seriously compromised”.

Your Excellency, you commemorated Austrian National Day at the end of October. How do such celebrations look today, under the conditions of the COVID-19 Pandemic?

– Austrian National Day is 26th October. It was on this day in 1955 that the Austrian Parliament passed the constitutional law on permanent neutrality, a fundamental commitment to regain Austria’s full independence after WWII.

This year, due to the COVID-19 Pandemic, we will not host our traditional reception, which we’ve organised at Belgrade City Hall in recent years. It is not a time to celebrate. Instead, it is time to show solidarity with each other and adhere responsibly to the recommendations and rules necessary to minimise the spread of the virus and keep the healthcare system working properly. I hope that next year we will again invite fellow Austrians, Serbia’s national and local representatives, and many friends of Austria with whom we work together each year. This is a welcome occasion every year to thank Serbia, as our host country, and to highlight our excellent bilateral relations.

However, we will mark our National Day with an audio-visual 3D show on the Embassy’s building on Kosančićev Venac, for a period of three days. The show, which is the result of a hackathon that we organised with students at the Laboratory for Interactive Arts of the Faculty of Dramatic Arts, is inspired by this year’s 25th anniversary of Austria’s membership in the EU. The music of Ludwig van Beethoven will accompany the show, in honour of the 250th anniversary of his birth. I hope that many citizens of Belgrade will have the chance to enjoy the show and be inspired by Beethoven’s “Ode to Joy”, the anthem of the European Union.

Experts have been speaking about a new wave of the Pandemic, with the number of infections also rising in Austria. What kind of strategy are the Austrian authorities pursuing – the tightening of security measures or just increased precautions?

– The COVID-19 Pandemic is on the rise all over Europe again. Unfortunately, this is also the case in Austria, where we have seen a very worrying increase in new infections. Our healthcare system has so far remained well equipped: hospitals, including intensive care units, have the capacity to treat COVID-19 patients. The Austrian government’s primary focus is to stop and reverse the trend and bring new infections down again. Together with the nine federal states (Bundesländer), the government strengthened measures to achieve this goal, including extending the obligatory use of masks and increasing social distancing rules in public spaces, such as schools, restaurants, shops and on public transport. Even in private areas there is now a recommended limit of six persons at indoor gatherings. The government has also adopted a targeted strategy for testing to be as efficient as possible in containing the virus’s spread. Austria maintains travel restrictions that are subject to regular review. In order to simplify information and transparency, the Austrian government introduced a “COVID-19 traffic light system”.

Although difficult to predict, we hope that our bilateral trade will grow again next year. That will depend equally on our two countries’ economies and a global economic recovery, given the extent to which our companies are part of international production chains

You visited the University of Kragujevac recently. It has an existing bioengineering centre where a 3D printed medical respirator has been designed and produced. What led to you deciding to help the work of that centre, through the Austrian Development Agency?

– Serbia and Austria have communicated very well and supported each other during the COVID-19 crisis. Austrian Foreign Minister Alexander Schallenberg and European Integration Minister Karoline Edtstadler visited Serbia during their first foreign trip after the onset of the COVID emergency. We cooperated well in efforts to repatriate our respective citizens. The Serbian Ministry of Foreign Affairs was exceptionally helpful. Austria provided Serbia with basic medical needs for vulnerable groups and people in asylum centres, through the International Red Cross Austria, UNHCR and UNDP.

The work of the Centre for Bioengineering at the University of Kragujevac stands out due to the smart and innovative approach to develop a prototype 3D printed medical ventilator. It supports the local production of ventilators by enabling lower costs and shorter production times than the standard industrial method. Hence, this is a quick and affordable solution for Serbia’s healthcare system. We are therefore pleased to support this UNDP-led project with financial assistance from the Austrian Development Agency (ADA).

How much has the Coronavirus Pandemic impacted on the economic situation in Austria?

– The Coronavirus Pandemic has severe ramifications for the global economy. The Austrian economy has also been hit severely, although the third quarter of this year has shown some surprisingly good results. Projections are difficult given the uncertainties of the Coronavirus Pandemic. Nevertheless, Austrian research institutes estimate an economic contraction of around 6% this year, and a recovery of +4% next year. Our economy is very much export-driven.

Exports generate six out of every ten euros. As such, much will depend on the development of European and global markets. In his recent budget proposal, the Austrian Minister of Finance presented a sizeable financial package to support the economy and employment, improve education, strengthen the healthcare system and provide security.

Austria is among Serbia’s most important economic partners, which prompts the question of how much the situation with COVID-19 has impacted, and will continue to impact, on economic cooperation between the two countries and investment in Serbia?

– Austria has been among the biggest investors in Serbia for decades. More than 400 Austrian companies are invested in Serbia and employ around 21,000 people. Experience has shown that Austrian companies in Serbia pursue a long-term perspective and retain their locations and employees even during difficult times. I have no indication that things will be any different this time around. Despite all the uncertainties related to the pandemic, most investors assume that there will be a robust economic recovery in Serbia in 2021.

Regarding the development of bilateral trade, we registered an all-time high of 1.5 billion euros in 2019. However, this year we witnessed a decline due to the pandemic. Based on the latest data – covering the first six months of this year – our bilateral trade has fallen by roughly 17%. All the product groups have been impacted, which reflects the overall contraction of demand in Europe. Against this general trend, we witnessed an increase in Austrian shipments of pharmaceuticals to Serbia, while Serbia exported almost twice as many frozen fruits as last year during the same period. Although difficult to predict, we hope that our bilateral trade will grow again next year. That will depend equally on our two countries’ economies and a global economic recovery, given the extent to which our companies are part of international production chains.

A crucial element of the Plan for the Western Balkans is the option to reward successful, determined reform efforts by a countries’ “phasing in” to selected EU policies and programmes, even before achieving membership

The EU’s Economic and Investment Plan for the Western Balkans envisages nine billion euros for the region from IPA funds. On top of that, the ambition exists to encourage banks and investors from the EU to contribute to Balkan economies, so that they could receive up to 20 billion euros in donations and loans. Do you believe this is a realistic expectation?

– The Economic and Investment Plan for the Western Balkans is a powerful instrument to spur long-term economic recovery, boost economic growth and support the socio-economic convergence of the region’s countries with the EU. If you count the nine billion euros earmarked from IPA funds for the next seven years, together with the 20 billion euros that the Commission hopes to mobilise through guarantee schemes, we have a total of 29 billion.

For a region with a total annual GDP that amounts to about 100 billion euros, this is certainly a more than respectable amount, and – if spent wisely – could be a game-changer. The main point is not so much the sums of money involved, but rather the strategic approach of smart, forward-looking investments in critical areas, such as infrastructure, energy, environment, digital transition, SMEs and the region’s integration into EU value chains. A crucial element of the Plan for the Western Balkans is the option to reward successful, determined reform efforts by a countries’ “phasing in” to selected EU policies and programmes, even before achieving membership.

Another essential aspect to keep in mind is a country’s capacity to absorb and implement financial support programmes. Hence, the reform of public administration will be a critical issue for Serbia, as outlined in the European Commission’s report.

The European Commission presented its annual report on Serbia at the same time. Do you agree with the general assessment that Serbia is making progress in the economic domain, but not when it comes to fulfilling the so-called political criteria for EU accession? The report notes a lack of progress in the fields of the judiciary, election legislation and media freedom. What attention will be paid to such assessments in Austria?

– The country report is a fair and objective assessment of the situation in Serbia. We agree with its conclusions: the need for more tangible progress on reforms and the implementation of reforms on so-called fundamental issues.

Here I’m referring primarily to the rule of law, the independence of the justice system, the fight against corruption, media freedom, and the functioning of independent institutions and public administration. The report also recognises that Serbia has made progress in harmonising its legislation and adapting legal standards, particularly economic issues. In our view, the Serbian economy has demonstrated a good performance in recent years, thanks also to a mix of government measures that led to high fiscal discipline and macroeconomic stability.

Austria has great respect for these reforms. In our view, the report provides a fair picture of Serbia’s accession process. More importantly, it acts as a useful guide for the Serbian government regarding priority areas for reforms that would accelerate the accession process.

In the case that the proposal of Olivér Várhelyi, European Commissioner for Neighbourhood and Enlargement, is accepted, Serbia could open its first new accession negotiation chapter in 2020 during the coming months. Will Austria support such a proposal?

– There is still some time for such a decision in December. EU member states will first discuss the country report on Serbia in more depth. It will be crucial to see the new government’s firm commitment to EU-related reforms based on the report’s recommendations. Austria is ready to consider opening chapters case-by-case, as long as the overall balance of progress on fundamentals, such as the rule of law, press freedom or democratic institutions, and other more technical chapters, is not seriously compromised.

Has the Coronavirus crisis impacted on the arrival of migrants in Austria, and does cooperation still exist between the Austrian and Serbian police when it comes to preventing illegal border crossings?

– The Pandemic has impacted on migration and the arrival of migrants and asylum seekers. Looking at the numbers, we can see a drop of about 31% in asylum applications in the EU compared to the preceding years. In Austria we have 9,400 asylum seekers this year, which is only 0.6% less than the figures for 2019. However, many refugees and migrants still use the Western Balkans as a major transit route. Serbia plays an important role in coping with these challenges and assisting this very vulnerable group of people.

And Austria continues to cooperate very closely with Serbia on this. Based on the Police Cooperation Convention for Southeast Europe, Austria and Serbia signed a Memorandum of Understanding on enhanced internal security cooperation in 2015, and then signed a renewed MoU again this year. In 2015 there were 10 Austrian police officers who were engaged for six months to support Serbian border police in preventing illegal border crossings. Since the beginning of August this year, 10 Austrian police officers with technical equipment have supported Serbian border police at the border to North Macedonia.