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Radovan Jelasic: We have to do business on the basis of cultural similarities

Published on , , Istanbul, Sofia

I meet Radovan Jelasic at the conference "A Soul for Europe" in Istanbul. I am surprised to see the former Governor of the National Bank of Serbia to participate in discussions about cultural policy. It even became clear that it is not his first appearance in this forum. Perhaps because he has a very provocative thesis: to "turn off" the politicians and give a greater role to cultural proximities between countries and peoples. In the Balkans we eat the same dishes and we sing the same songs, this is a better basis for cooperation rather than political relations, he says. Not only the statements, but also the presence of Mr Jelasic are not those of a typical banker. (He was Governor of the National Bank of Serbia for 6 years, from 2004 until this July and previously he had worked in Germany for many ears). To my question what is he doing now, he replies with a smile that he is actively relaxing, because at least six months are needed to recover after governing the Serbian Central Bank.

euinside:Why do you say that we have to "turn off" the politicians for a while and give a greater role to cultural similarities?

Radovan Jelasic: I think it is very important to see that our political ties and the quality of our political ties are not the same as the quality of business ties. So for Serbia, for example, we have a trade surplus with Montenegro, Bosnia and Herzegovina, Macedonia, Kosovo and definitely our political ties are not the best with those countries, meaning that I would like to see business putting more pressure on politics, regarding how good the ties should be. The same thing is about Kosovo. I mean Serbia has trade surplus of some $300 million, our businessmen are very interested in being present there as well, and we do hope, personally, that this will impact once the political decisions are made as well.

euinside: Do you mean that politicians should recognise Kosovo’s independence because of the business?

Radovan Jelasic: I’m not saying that they should recognise, but I think that they should be more pragmatic, they must take into account that substantial amount of new jobs are created in Serbia because of these business relations - these are the things that Germans would call 'realpolitik'. The politicians have to take it into consideration once they make political decisions as well. I'm not saying this is going to be the excuse, but definitely this has to be taken into consideration as well. Once again, business relations are much better than political ones in the region and I do hope that business relations will have a positive impact on improving political relations in the region as well.

euinside: What kind of support do you expect from the EU?

Radovan Jelasic: First of all, the EU is providing some support to Serbia as part of an IMF programme, we are talking about macroeconomic assistance, these are loans to the budget, but what I was pleading is that every support from the EU has to be strictly conditioned. We all know that in the Balkans only “the carrot-and-the-stick” policies works. Our politicians are masters to find excuses why they cannot do something, compared to what they should do in order to implement the really necessary reforms all over the region. So, I think that when the EU provides money it has to be more restrictive and put not only economic, but also political preconditions for the support, because this is the only way to bring the country forward.

Needless to say, I think it is very good that some regional projects will be financed by the Brussels administration as well, because definitely our countries in the region are very close to each other, psychologically, geographically - if you look at the ties that you have on the level of simple things like folklore, culture, books, etc. But all of us are focusing and looking to Vienna, looking to Berlin, looking to Paris and hardly anybody looks to the neighbouring countries and I think that Europe and Brussels should support these activities as well.

euinside:What can Bulgaria and Serbia do together, for example?

Radovan Jelasic: I was very surprised when I was last time in Bulgaria, at the invitation of my colleague Ivan Iskrov [the governor of the Bulgarian National Bank]. I was able to dance a lot of Bulgarian songs, a lot of things that I ate were very similar to what we eat in Serbia as well. So I think that there should be much more opened cultural ties regarding this. Basically the governments should support cultural exchange. I think there are also couple of political issues from our recent past that should be solved. I would like to see historians to sit down and discuss things that happened between our two countries during the 20th century. I think there are a lot of lessons that need to be learned from that past as well. And last, but not least – economy is also very important. I know that Serbia specifically is talking about eventually providing some financial assistance to your new nuclear power plant (Belene NPP), because Serbia is definitely interested to buy some of the electricity that is going to be produced there as well.

euinside: But we are talking about a very little share.

Radovan Jelasic: I think it is very important to start from somewhere and I think there is big pressure on Serbian government locally, regarding the electricity price, regarding reliability. So I think there is a chance that this stake can increase. We used to have one nuclear power plant in former Yugoslavia - in Slovenia, in Krsko. Serbia was not actually even thinking about building a nuclear power plant, if you look at our fiscal balance, if you look at our public debt that this definitely will be an overstretch. But I think it is very wise to say that if Bulgaria is already planning, Bulgaria already has intentions, you know, maybe the support of Serbia should be much bigger if somebody is already doing something like that. Because I hope, we don't need a nuclear power plant in a single country in the Western Balkans. But I'm not commenting your decision, if it's good or bad for Bulgaria.

euinside: What is the actual fiscal situation in Serbia?

Radovan Jelasic: The Serbian budget foresees a budget deficit of approximately 4.5% of GDP for this year, current account deficit has improved substantially - instead of 17% in 2009, it will probably go down by 6.0-7.0%. Unfortunately, the public debt is increasing: we are very close to the level of approximately 40% of the GDP. Serbia is still not over indebted country, but the public debt is increasing relatively fast. What is good is that Serbia has a programme with the IMF, it is a stand-by arrangement, and compared to the original 3.0 billion we were planning to take form the IMF, we are probably not taking more than 1.6 -1.7 billion euro, proving that the macroeconomic situation is much better than originally planned.

euinside: As a banker, what do you think about the European plans to tax banks with FTT or FAT?

Radovan Jelasic: I think that politicians are over blaming bankers and the banking sector. We would not have had this great GDP increase, great wealth creation in Europe and in the world during the last ten years without an efficient banking sector. Definitely, things are changing and have to change in the future as well, but I don't think that making the movement of money more expensive, making it more restrictive, taxing that in addition, will contribute to the creation of more well-being in the future. So once more, I think that we should think about how to make banks more stable and not how we are going to tax them in order to fill the budgetary gaps, because of the polices that are not ready to face reality.

Politicians should go back and see how much pensions they can pay, how much money for education they can allow, how many hospitals they can finance and not go to the ones who still have money, those are bankers playing a “Robin Hood”-style of politics and saying: “Hey, those guys have money, let's take it from them, so we don't have to go and cut expenses”. Because the real challenge is the adjustment, moreover the adjustment through cutting expenditures.

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