Zorana Mihajlović, Serbian Deputy Prime Minister and Minister of Construction, Transport and Infrastructure

Firmly On Course For Reforms

We need to be aware of all the potential threats in our close environment. That is precisely why we need to have a stable political situation and to implement reforms firmly. This Ministry is completely devoted to it

We spoke with Serbian Deputy Prime Minister and Minister of Construction, Transport and Infrastructure Zorana Mihajlović about current political and economic issues.

You have announced tough times for the region, Europe and the world. What kind of threats and risks in the near future were you referring to and what are the challenges for Serbia?

– I am simply looking at what’s happening and thinking about what we should do to preserve what is most important and what is a condition for further progress in Serbia, and that is political stability. There will be many challenges. The election of the new US President Donald Trump is also an opportunity to try to change the deeply rooted image the world holds of Serbia. On the other hand we have to preserve and further improve the good relations that we have with Russia, and continue developing relations with China, Germany and other strong powers. But we must also be careful not to be the mouse that gets squashed when the elephants dance.

A great challenge will be the threat of terrorism, which is why there will certainly be less sleep for all, the security services in particular, and we will probably have to live with it. No less will be the growth of political populism and how to resist it. This populism in Europe has already brought Brexit, taken Italian Prime Minister Renzi and will have a major impact on the coming elections in France, Germany and the Netherlands. All this can determine our destiny too in terms of European integration and the standards to which Serbia aspires. For this, we do not need filigree management of foreign and domestic policies, but we do need people who know them and are capable of carrying them out.

Serbia must continue to develop in such a situation. The country must develop its economy and bring new investors, create new jobs and increase its standard of living.

In such a situation, what can be done by relying on our own strengths, and which countries do you see as allies in preserving the country’s stability and prosperity?

– I think the key lies in a good relationship with the most influential countries of Europe and the world, and ever better cooperation with countries in the region. Countries in the region have to cooperate with one another, so they need to work on ideas such as eliminating trade barriers. Then instead of having two border crossings with each neighbour, we could make one crossing, like Prime Minister Aleksandar Vučić advocates, so that the flow of goods can go as quickly as possible, lowering companies’ costs.

In conditions like these, how wise it is to hold parliamentary elections in addition to the presidential ones, despite the short time since the government obtained political legitimacy in the elections?

– It is certain that we will have presidential elections in the spring and the Serbian Progressive Party (SNS) is preparing seriously because we mustn’t allow any surprises. We haven’t discussed new parliamentary elections yet.

If you feel that Prime Minister Vučić would be the best president of the country in these difficult times, does that mean that you believe that most of the reforms tasks that the Serbian government took on are already complete and can be entrusted to another person in future?

– I think that Aleksandar Vučić should run for president as the SNS candidate, because he is the guarantor of a landslide victory, perhaps even in the first round, and he’d have the support of all parties in the ruling coalition. Zorana MihajlovicA convincing victory is also the best answer to what I was saying – maintaining the political stability of Serbia. Everything else brings great risk and danger.

As for the government, of course, the reform process is not complete, but the fact is that Prime Minister Vučić has carried out the hardest and least popular ones. Order and discipline have been established in public finances, our economy is recording growth, we are completing the largest infrastructure projects and launching some new ones, investment in infrastructure is increasing from year to year. We still need to carry out professionalisation of public enterprises and modernisation of the state administration. I am partly engaged in that work as President of the Ministerial Working Group on the World Bank’s Doing Business List, which measures business conditions: last year we were among the top 10 countries in the world for implementing reforms.

Where do you see your position in such a constellation?

– My job is practical; I want results and completed projects. My goal is primarily to finish Corridor 10 that we’ve been waiting for for over 35 years. I’d like to be there when this job is completed, I want to drive a car on this section and to say to myself: it was worth the huge effort! Of course, there is also Corridor 11 to the Montenegrin border.

Together with China we will work on the bypass around Belgrade and the motorway from Surčin to Obrenovac to connect Belgrade and Čačak with Corridor 11

What impact would possible parliamentary elections have on the pace of reforms, since the government announced in a new letter of intent to the IMF large-scale interventions in large enterprises, including those in your jurisdiction, and an acceleration of structural reforms?

– Let’s see first if there will be parliamentary elections. But I must say that last year’s elections didn’t stop any reform and that despite the campaigning Serbia passed all the IMF’s audits. This says how reliable a partner Serbia is. It was because of the reforms that the IMF was forced to raise its estimate of GDP growth in Serbia during the election year of 2016. And it was in that election year that we achieved huge success on the World Bank’s Doing Business List because we progressed 12 places: according to the criteria for issuing building permits we skipped 130 countries, and we entered the club of the top 10 reforming countries.

You recently somehow relativised the completion of Corridor 10. What could lead to a new prolongation of deadlines?

– What is most important is that there is no question that Serbia will complete both branches of Corridor 10 towards Bulgaria and Macedonia. There is no possibility that the works will remain unfinished. There are certain problems because of natural obstacles and landslides that occur in the field, and with individual contractors and employers, but there is a working group in charge of reports on these problems to get them solved. However, for projects of this size, it is all going as it should, because don’t forget that we are working on the hardest section through Grdelica gorge, which is described by experts as currently the most demanding works in Europe. We are still sticking to the deadlines for completion that were given in the Prime Minister’s keynote address.

In addition to the modernisation of the Belgrade-Budapest railway, you announced modernisation of the Belgrade-Bar and Belgrade-Niš railways. What are realistic deadlines for the start of works on these lines since the financial structure even for the first one is not yet certain?

– All the projects that this government has contracted have been completed, and we will continue in the same way with those projects. The works on the lines Belgrade-Budapest, Belgrade-Bar and Belgrade-Niš will be carried out concurrently. For the section Stara Pazova – Novi Sad we signed an annexe to the Russian loan, so I expect that the works will commence in the middle of this year. As for the railway Belgrade-Vrbnica border with Montenegro (Bar), the works on the section Resnik-Valjevo are financed from the Russian loan. They began in July 2016 and are planned to be completed in September this year. We are trying to provide funds for the continued reconstruction of the Bar railway.

For the Belgrade-Niš section covered by the Russian loan, we completed the reconstruction of the two northern sections, Mala Krsna-Velika Plana and Sopot Kosmajski –Kovačevac and two southern sections, Vranjska Banja – Ristovac and Bujanovac-Bukarevac. The completion of the southern section Vinarce-Đorđevo, also financed from the Russian loan, is expected in 2017.

Zorana MihajlovicIn 2016, we completed the double-track section Gilje-Ćuprija-Paraćin from the EIB loan. In July 2016, we were granted funds for the reconstruction of section Staničenje-Dimitrovgrad of the main railroad Niš-Dimitrovgrad from the WBIF fund, from which we obtained a €43.6 million donation with the obligation to take a €36.7 million loan from the EIB. In December we applied for funds from WBIF for the electrification of the main railway line Niš-Dimitrovgrad, which is the only non-electrified section of Corridor 10.

At the same time, preparations are underway for the construction of a bypass line around Niš, for which we can apply for funds after the next WBIF call. In January 2017 a contract was signed for the reconstruction and modernisation of Rasputnica G-Rakovica-Resnik (EBRD). I expect the works to begin in the first quarter of this year. Finally, reconstruction of the section Mala Krsna-Jajinci and Mala Krsna station renovation, financed by the EBRD loan, will also start this year.

Drafting project documentation is underway for modernising the existing track and construction of a second one on the Stalać-Đunis section of the Belgrade-Niš railway, for which we must find financing. Also, significant funds were provided from IPA 2015 to finance the modernisation of the section Niš-Brestovac, with works scheduled to begin next year.

So this Ministry has recently made important progress a planned with regard to these projects and the effects are already visible, since we are working in parallel. Where there are no funds provided, we make every effort to get them and I am confident that we will solve this. The aim is to electrify Corridor 10 with double tracks and speeds up to 200 km per hour where this can pay.

The introduction of electronic building permits was really a spectacular reform, and I have to admit that we will not have the opportunity to record such drastic jumps again

Serbia is one of the ardent advocates of linking the Western Balkans, but sometimes our strategic priorities remain unclear to a wider audience. What, for example, makes the government think about the port of Durres compared to Bar, for example, or the port of Piraeus, which is a logical continuation of works on the Belgrade-Budapest railway?

– The condition of the Pan-European railway Corridor 10 and Route 4, the Montenegrin border-Vrbnica-Belgrade-Pančevo-Vršac-Romanian border passing through Serbia, is of great importance for our country and for the whole of the Western Balkans. These rail links are a connection between the EU and the Western Balkans.

In addition to this, the importance of these corridors is reflected in connecting the ports of Piraeus, Bar and Durres with the EU, which would allow imports from Eastern countries to the EU and Western Balkan countries to go through Serbia. The ports of Piraeus, Bar and Durres are important ports for the region, where goods from countries that gravitate towards those ports get unloaded. For these reasons and since Serbia is a transit country, reconstruction and improvement of these corridors are very important. There is no higher or lower priority, that’s why we are working in parallel to make the best connections with these ports.

The motorway from Niš to Priština is also important for us. It would build on the existing motorway to Tirana and Durres and this is a project we’re working on together with the EU. This road is important for Kosovo Serbs to have a good connection with Serbia, and it is very important for peaceful coexistence between Serbs and Albanians in Kosovo. Transport is for the EU one of the main engines of development in the Western Balkans and the fastest way to join the single European market. That’s why the EU accepted the projects in the Western Balkans as a priority, opening opportunities for new sources of funding.

In addition to Corridor 10, what do you consider the most important task for your department in 2017?

– For this year we made an ambitious yet realistic plan given the current results of the department that I head. In addition to the construction of Corridors 10 and 11 this year, one of the biggest infrastructure projects will certainly be the construction of the high-speed rail line Belgrade-Budapest. In this project, we cooperate with Chinese partners, and at the Summit between China and 16 countries of Central and Eastern Europe in Riga, we signed a commercial agreement for the construction of the Belgrade-Budapest railway. Together with China, we will work on the bypass around Belgrade and the motorway from Surčin to Obrenovac to connect Belgrade and Čačak with Corridor 11. Speaking of motorways, we will build the Morava corridor from Preljina to Pojate that would connect the two major routes, Corridor 10 and Corridor 11.

In Vojvodina, our priority is the modernisation and reconstruction of the railroad Stara Pazova – Novi Sad that we are financing from the Russian loan, but we are completing documentation for the Fruška Gora corridor or a fast road Novi Sad – Ruma. We will finish the Žeželj Bridge in Novi Sad, but also at the other end of Serbia, the bridge on the Drina between Ljubovija and Bratunac with access roads and a joint border crossing.

Do you think that the announced regulation of the cadastre could again move Serbia forward on the Doing Business List as spectacularly as was the case with the issue of building permits?

– The introduction of electronic building permits was really, as you well noted, a spectacular reform, and I have to admit that we will not have the opportunity to record such drastic jumps again. For comparison, only in this area, Serbia jumped 150 places in 2014 because we were almost the last ones, ranked 186th out of 190 countries, and today we are in 36th place. Sometimes building permits were waiting for an average of 259 days, and now you can get an electronic building permit in a week’s time.

Cadastral reform is also very important for us, it is important both for investors and citizens. We want a modern, fast, efficient cadastre, an e-cadastre updated in real time, a cadastre without all the administrative procedures where registering property takes just a few days. Of course, we expect this reform to further improve the position of Serbia on the Doing Business List.

You are also in charge of gender equality, about which much has been spoken but little achieved. For example, the percentage of women in the government in the past few versions is stagnant. Why is there no major shift?

– I would not agree that there is no shift. The Coordination Body for Gender Equality which I head has made serious steps towards improving the position of women in Serbia. In the last two years, gender equality has been a priority for public policies and structural reforms. We prepared a draft umbrella law on gender equality, we adopted the National Strategy for Gender Equality and an Action Plan for its implementation, we developed the index of gender equality, which makes us the only country outside the EU to do so.

In the field of economic empowerment of women, we have launched the process of gender-responsive budgeting. The Coordination Body is the holder of the project “Integrated Response to Violence Against Women”, implemented with UN agencies and national partners. So progress has been made, but we’ll not stop there. Women make up a quarter of the government and 34.8% of MPs in parliament, and I am sure there will be even more.

You recently said that “Serbia needs to continue towards the EU, but it needs to think about itself too”. Why is it in your opinion that between EU integration and Serbia’s welfare there is no equals sign?

– The EU is our largest foreign trading partner, the EU has helped us most, most of the grants we have received are from the EU. The goal of Serbia is to introduce European standards and join the EU, because no matter what else is said there is no better organisation than the EU today, and we share their values. I want Serbia to become an EU member so that tomorrow my child can live in this country just as children live in other EU capitals, and be able to live and work in Belgrade, but also in Vienna and Prague.

But we must look to the future and what tomorrow brings. We cannot fail to see the divisions in the EU on the issue of the migrant crisis, we cannot ignore this lack of solidarity and the closure of individual countries within their borders, we can’t help seeing the announcements of introducing “mini visas” for Serbian citizens. The EU has its own problems that we must understand seriously and treat them as responsible people.

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