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Interview detail

Italian entrepreneurs, go to Serbia! This heartfelt appeal comes from Minister for Foreign Affairs Giulio Terzi di Sant’Agata, 66 years old, following a trip to Belgrade to meet with the country’s new leaders – some of whose curricula vitae have been cause for alarm among other governments. President Tomislav Nikolić, 60 years old and a former cemetery guardian (hence his “undertaker” nickname), was one of the founders of the ultra-nationalist radical party. He was charged with, but never convicted of, ethnic cleansing in Croatia, and today leads the Progressive party he founded and which is people with many faces from the past; Prime Minister Ivica Dacic, 46, was leader of the young socialists and spokesman for Slobodan Milosevic during the 1999 NATO bombardment. He never deserted his old mentor, who died in prison while on trial in The Hague.

Despite this unwieldy past, Terzi came away with an impression of “great reliability” and harbours no fear that Serbia could backslide, or that the ghosts of an ethnic exclusivity that left so many in mourning over the past two decades could re-emerge. On the contrary, Serbia could be what Romania has already been to us: a place to invest and do excellent business. Some of the data are encouraging. Italian firms already have interests in 500 companies that employ 20,000 people (2% of the total work force). The largest foreign investment is that of FIAT, which has put one billion euro into the Kragujevac manufacturing hub where the new “500L”, on the market starting in September, is built. Once fully up to speed, an annual total of 200,000 cars will be produced and 2,500 people employed. Intesa Sanpaolo and Unicredit occupy 25% of Serbia’s banking market, and Generali and Sai-Fondaria (traditionally oriented toward the Balkans) 45% of its insurance market. The Benetton Group produces 6 million articles of clothing annually at Nis, and other brands include Pompea, Golden Lady and Calzedonia. Italy is Serbia’s third largest commercial partner, after Russia and Germany. Bilateral trade rose by 15% in 2011, for an approximate total of 2 billion euro (we export €1.159 billion and import €855 million).

If so many captains of industry have been attracted to Belgrade, the reason is the low cost of labour – the average income is €352/month – and a favourable tax regime. Corporations are taxed at 10%, with total exemption for newcomers that invest more than €7.2 million and hire at least 100 employees. Many services (banking, insurance and financial) are VAT-exempt; there are seven free-trade zones and it takes about 13 days to open a business. On the downside, it is very difficult to obtain a building permit and the bureaucracy associated with paying taxes is oppressive.

Giulio Terzi has put a decidedly economic spin on the foreign ministry’s efforts, in support of Italian business interests abroad. For that reason Serbia, so nearby and with so many opportunities yet to be explored, to be cultivated, thanks to ancient diplomatic relations and a friendship that lasted even through Italy’s support for the NATO military intervention. In this interview for L’Espresso, the minister speaks mainly about the economy, but also in general on our policies in the Balkans.

Minister Terzi, why should President Nikolic be trusted despite his background?

«He gave me an impression of great reliability. His is a coalition government, and on the fundamental topic of European integration he gave me every assurance that this was the goal of his mandate, in seamless continuity with his predecessor Boris Tadic».

But this victory by the nationalists has led to deep concern in other governments, and some business persons are wondering whether their investments may be at risk.

«This new government represents a point of balance. Prime Minister Ivica Dacic spent four years in the Tadic government. He appears pragmatic and business-oriented, aware that businesses need guarantees. Foreign Minister Ivan Mrkic was himself an ambassador, a technocrat therefore, even though now a member of a political government».

If you will excuse a personal digression, is this something that you also could do after this experience in the Monti government? In other words are you considering a political career?

«After this I simply want to retire to my home in Bergamo [he smiles, editor’s note]».

Going back to Serbia. Would you advise investing in that country today?

«Yes, absolutely. There are no particularly important legal disputes under way, as there have been elsewhere».

And the famous Telekom Serbia case, rife with payoffs to the “Italians”, didn’t leave any scars?

«That was a difficult question, but it did not have a negative influence on our presence there, which is increasingly welcome. For the future we could try to take advantage of the large scale opportunities opening up in Belgrade».

In what sectors?

«The energy agreement signed in Rome on 25 October 2011 opened up some attractive prospects for the construction of hydroelectric plants on the Ibar and Drina rivers by the Italian firm Seci-Maccaferri in partnership with Serbia’s EPS. In June we also signed a memorandum of understanding for collaboration on energy and renewable sources, which the Serbian government has yet to ratify, but which I was assured would soon take place. Then the bidding is open on major structural projects such as the Belgrade underground and the modernization of the Belgrade-Bar railway, and major Italian groups are working on winning those contracts».


«Impregilo, Astaldi, all the big ones».

You tell us to go to Serbia. At this moment of serious economic crisis, the word delocalisation hasn’t such a nice ring to it if you are unemployed in Italy.

«Setting up manufacturing activities in nearby countries like Serbia, or distant ones like India or Vietnam, is often aimed at seizing development opportunities in markets where certainly local labour is used, but also generates considerable reinforcement for industries back in our own country. It’s what I call the positive aspect of delocalization. I wouldn’t want to be accused of over-optimism but this seems to me the best interpretation of a rapidly evolving phenomenon that deserves to be embraced.

We also should not forget that our exports have a dynamism completely different to the trends we are seeing in the domestic economy. Over the past decade exports have risen nearly 45% (86.6 in the farming/food sector) peaking at €376 billion in 2011– this compared with a GDP of practically zero in the same period. To draw a parallel, and in an effort to see the glass half full, the same thing goes for what is being called the “brain drain”, a phrase that is often experienced as offensive by those it concerns. The flip side of the coin is the fact that very often those researchers who go abroad maintain their ties with Italy, making the brain drain a growth factor at scientific levels for our entire country».

Your platform for the Balkans speaks of the need to reduce the presence of our soldiers. The Bosnia and Kosovo missions have been in place, respectively, since 1996 and 1999. Are we reducing the number of soldiers because they are no longer needed or because we can’t afford them any longer due to the constraints of the spending review?

«We will reduce them when they are no longer needed. Of course the financial burden is a heavy one, but the contingent’s presence has been decisive in preventing polarisation in the positions of former combatants and the possibility of sparking new conflict. Among other things, it is a well known fact that the Italian presence is appreciated by all the parties involved».