Serbia vs. Hungary

The Kingdom of Serbs, Croats, and Slovenes was formed in 1918; its name was changed to Yugoslavia in 1929. Communist Partisans resisted the Axis occupation and division of Yugoslavia from 1941 to 1945 and fought nationalist opponents and collaborators as well. The military and political movement headed by Josip Broz "TITO" (Partisans) took full control of Yugoslavia when their domestic rivals and the occupiers were defeated in 1945. Although communists, TITO and his successors (Tito died in 1980) managed to steer their own path between the Warsaw Pact nations and the West for the next four and a half decades. In 1989, Slobodan MILOSEVIC became president of the Republic of Serbia and his ultranationalist calls for Serbian domination led to the violent breakup of Yugoslavia along ethnic lines. In 1991, Croatia, Slovenia, and Macedonia declared independence, followed by Bosnia in 1992. The remaining republics of Serbia and Montenegro declared a new Federal Republic of Yugoslavia (FRY) in April 1992 and under MILOSEVIC's leadership, Serbia led various military campaigns to unite ethnic Serbs in neighboring republics into a "Greater Serbia." These actions ultimately failed and, after international intervention, led to the signing of the Dayton Peace Accords in 1995.

MILOSEVIC retained control over Serbia and eventually became president of the FRY in 1997. In 1998, an ethnic Albanian insurgency in the formerly autonomous Serbian province of Kosovo provoked a Serbian counterinsurgency campaign that resulted in massacres and massive expulsions of ethnic Albanians living in Kosovo. The MILOSEVIC government's rejection of a proposed international settlement led to NATO's bombing of Serbia in the spring of 1999. Serbian military and police forces withdrew from Kosovo in June 1999, and the UN Security Council authorized an interim UN administration and a NATO-led security force in Kosovo. FRY elections in late 2000 led to the ouster of MILOSEVIC and the installation of democratic government. In 2003, the FRY became the State Union of Serbia and Montenegro, a loose federation of the two republics. Widespread violence predominantly targeting ethnic Serbs in Kosovo in March 2004 led to more intense calls to address Kosovo's status, and the UN began facilitating status talks in 2006. In June 2006, Montenegro seceded from the federation and declared itself an independent nation. Serbia subsequently gave notice that it was the successor state to the union of Serbia and Montenegro.

In February 2008, after nearly two years of inconclusive negotiations, Kosovo declared itself independent of Serbia - an action Serbia refuses to recognize. At Serbia's request, the UN General Assembly (UNGA) in October 2008 sought an advisory opinion from the International Court of Justice (ICJ) on whether Kosovo's unilateral declaration of independence was in accordance with international law. In a ruling considered unfavorable to Serbia, the ICJ issued an advisory opinion in July 2010 stating that international law did not prohibit declarations of independence. In late 2010, Serbia agreed to an EU-drafted UNGA Resolution acknowledging the ICJ's decision and calling for a new round of talks between Serbia and Kosovo, this time on practical issues rather than Kosovo's status. Serbia and Kosovo signed the first agreement of principles governing the normalization of relations between the two countries in April 2013 and are in the process of implementing its provisions. In 2015, Serbia and Kosovo reached four additional agreements within the EU-led Brussels Dialogue framework. These included agreements on the Community of Serb-Majority Municipalities; telecommunications; energy production and distribution; and freedom of movement. President Aleksandar VUCIC has promoted an ambitious goal of Serbia joining the EU by 2025. Under his leadership as prime minister, in 2014 Serbia opened formal negotiations for accession.

119 municipalities (opstine, singular - opstina) and 26 cities (gradovi, singular - grad)

municipalities: Ada*, Aleksandrovac, Aleksinac, Alibunar*, Apatin*, Arandelovac, Arilje, Babusnica, Bac*, Backa Palanka*, Backa Topola*, Backi Petrovac*, Bajina Basta, Batocina, Becej*, Bela Crkva*, Bela Palanka, Beocin*, Blace, Bogatic, Bojnik, Boljevac, Bor, Bosilegrad, Brus, Bujanovac, Cajetina, Cicevac, Coka*, Crna Trava, Cuprija, Despotovac, Dimitrov, Doljevac, Gadzin Han, Golubac, Gornji Milanovac, Indija*, Irig*, Ivanjica, Kanjiza*, Kladovo, Knic, Knjazevac, Koceljeva, Kosjeric, Kovacica*, Kovin*, Krupanj, Kucevo, Kula*, Kursumlija, Lajkovac, Lapovo, Lebane, Ljig, Ljubovija, Lucani, Majdanpek, Mali Idos*, Mali Zvornik, Malo Crnice, Medveda, Merosina, Mionica, Negotin, Nova Crnja*, Nova Varos, Novi Becej*, Novi Knezevac*, Odzaci*, Opovo*, Osecina, Paracin, Pecinci*, Petrovac na Mlavi, Plandiste*, Pozega, Presevo, Priboj, Prijepolje, Prokuplje, Raca, Raska, Razanj, Rekovac, Ruma*, Secanj*, Senta*, Sid*, Sjenica, Smederevska Palanka, Sokobanja, Srbobran*, Sremski Karlovci*, Stara Pazova*, Surdulica, Svilajnac, Svrljig, Temerin*, Titel*, Topola, Trgoviste, Trstenik, Tutin, Ub, Varvarin, Velika Plana, Veliko Gradiste, Vladicin Han, Vladimirci, Vlasotince, Vrbas*, Vrnjacka Banja, Zabalj*, Zabari, Zagubica, Zitiste*, Zitorada;

cities: Beograd, Cacak, Jagodina, Kikinda*, Kragujevac, Kraljevo, Krusevac, Leskovac, Loznica, Nis, Novi Pazar, Novi Sad*, Pancevo*, Pirot, Pozarevac, Sabac, Smederevo, Sombor*, Sremska Mitrovica*, Subotica*, Uzice, Valjevo, Vranje, Vrsac*, Zajecar, Zrenjanin*

19 counties (megyek, singular - megye), 23 cities with county rights (megyei jogu varosok, singular - megyei jogu varos), and 1 capital city (fovaros)

counties: Bacs-Kiskun, Baranya, Bekes, Borsod-Abauj-Zemplen, Csongrad-Csanad, Fejer, Gyor-Moson-Sopron, Hajdu-Bihar, Heves, Jasz-Nagykun-Szolnok, Komarom-Esztergom, Nograd, Pest, Somogy, Szabolcs-Szatmar-Bereg, Tolna, Vas, Veszprem, Zala

cities with county rights: Bekescsaba, Debrecen, Dunaujvaros, Eger, Erd, Gyor, Hodmezovasarhely, Kaposvar, Kecskemet, Miskolc, Nagykanizsa, Nyiregyhaza, Pecs, Salgotarjan, Sopron, Szeged, Szekesfehervar, Szekszard, Szolnok, Szombathely, Tatabanya, Veszprem, Zalaegerszeg

capital city: Budapest

Serbia has a transitional economy largely dominated by market forces, but the state sector remains significant in certain areas. The economy relies on manufacturing and exports, driven largely by foreign investment. MILOSEVIC-era mismanagement of the economy, an extended period of international economic sanctions, civil war, and the damage to Yugoslavia's infrastructure and industry during the NATO airstrikes in 1999 left the economy worse off than it was in 1990. In 2015, Serbia's GDP was 27.5% below where it was in 1989.

After former Federal Yugoslav President MILOSEVIC was ousted in September 2000, the Democratic Opposition of Serbia (DOS) coalition government implemented stabilization measures and embarked on a market reform program. Serbia renewed its membership in the IMF in December 2000 and rejoined the World Bank and the European Bank for Reconstruction and Development. Serbia has made progress in trade liberalization and enterprise restructuring and privatization, but many large enterprises - including the power utilities, telecommunications company, natural gas company, and others - remain state-owned. Serbia has made some progress towards EU membership, gaining candidate status in March 2012. In January 2014, Serbia's EU accession talks officially opened and, as of December 2017, Serbia had opened 12 negotiating chapters including one on foreign trade. Serbia's negotiations with the WTO are advanced, with the country's complete ban on the trade and cultivation of agricultural biotechnology products representing the primary remaining obstacle to accession. Serbia maintains a three-year Stand-by Arrangement with the IMF worth approximately $1.3 billion that is scheduled to end in February 2018. The government has shown progress implementing economic reforms, such as fiscal consolidation, privatization, and reducing public spending.

Unemployment in Serbia, while relatively low (16% in 2017) compared with its Balkan neighbors, remains significantly above the European average. Serbia is slowly implementing structural economic reforms needed to ensure the country's long-term prosperity. Serbia reduced its budget deficit to 1.7% of GDP and its public debt to 71% of GDP in 2017. Public debt had more than doubled between 2008 and 2015. Serbia's concerns about inflation and exchange-rate stability preclude the use of expansionary monetary policy.

Major economic challenges ahead include: stagnant household incomes; the need for private sector job creation; structural reforms of state-owned companies; strategic public sector reforms; and the need for new foreign direct investment. Other serious longer-term challenges include an inefficient judicial system, high levels of corruption, and an aging population. Factors favorable to Serbia's economic growth include the economic reforms it is undergoing as part of its EU accession process and IMF agreement, its strategic location, a relatively inexpensive and skilled labor force, and free trade agreements with the EU, Russia, Turkey, and countries that are members of the Central European Free Trade Agreement.

Hungary has transitioned from a centrally planned to a market-driven economy with a per capita income approximately two thirds of the EU-28 average; however, in recent years the government has become more involved in managing the economy. Budapest has implemented unorthodox economic policies to boost household consumption and has relied on EU-funded development projects to generate growth.

Following the fall of communism in 1990, Hungary experienced a drop-off in exports and financial assistance from the former Soviet Union. Hungary embarked on a series of economic reforms, including privatization of state-owned enterprises and reduction of social spending programs, to shift from a centrally planned to a market-driven economy, and to reorient its economy towards trade with the West. These efforts helped to spur growth, attract investment, and reduce Hungary's debt burden and fiscal deficits. Despite these reforms, living conditions for the average Hungarian initially deteriorated as inflation increased and unemployment reached double digits. Conditions slowly improved over the 1990s as the reforms came to fruition and export growth accelerated. Economic policies instituted during that decade helped position Hungary to join the European Union in 2004. Hungary has not yet joined the euro-zone. Hungary suffered a historic economic contraction as a result of the global economic slowdown in 2008-09 as export demand and domestic consumption dropped, prompting it to take an IMF-EU financial assistance package.

Since 2010, the government has backpedaled on many economic reforms and taken a more populist approach towards economic management. The government has favored national industries and government-linked businesses through legislation, regulation, and public procurements. In 2011 and 2014, Hungary nationalized private pension funds, which squeezed financial service providers out of the system, but also helped Hungary curb its public debt and lower its budget deficit to below 3% of GDP, as subsequent pension contributions have been channeled into the state-managed pension fund. Hungary's public debt (at 74.5% of GDP) is still high compared to EU peers in Central Europe. Real GDP growth has been robust in the past few years due to increased EU funding, higher EU demand for Hungarian exports, and a rebound in domestic household consumption. To further boost household consumption ahead of the 2018 election, the government embarked on a six-year phased increase to minimum wages and public sector salaries, decreased taxes on foodstuffs and services, cut the personal income tax from 16% to 15%, and implemented a uniform 9% business tax for small and medium-sized enterprises and large companies. Real GDP growth slowed in 2016 due to a cyclical decrease in EU funding, but increased to 3.8% in 2017 as the government pre-financed EU funded projects ahead of the 2018 election.

Systemic economic challenges include pervasive corruption, labor shortages driven by demographic declines and migration, widespread poverty in rural areas, vulnerabilities to changes in demand for exports, and a heavy reliance on Russian energy imports.

Serbia's integration with the EU helped regulator reforms and promotion of telecom; EU development loans for broadband to rural areas; pandemic spurred use of mobile data and other services; wireless service is available through multiple providers; national coverage is growing rapidly; best telecom services are centered in urban centers; 4G/LTE mobile network launched; 5G tests ongoing with Ericsson and Huawei (2021)

Serbia with several other states protest the US and other states' recognition of Kosovo's declaration of its status as a sovereign and independent state in February 2008; ethnic Serbian municipalities along Kosovo's northern border challenge final status of Kosovo-Serbia boundary; several thousand NATO-led Kosovo Force peacekeepers under UN Interim Administration Mission in Kosovo authority continue to keep the peace within Kosovo between the ethnic Albanian majority and the Serb minority in Kosovo; Serbia delimited about half of the boundary with Bosnia and Herzegovina, but sections along the Drina River remain in dispute

bilateral government, legal, technical and economic working group negotiations continue in 2006 with Slovakia over Hungary's failure to complete its portion of the Gabcikovo-Nagymaros hydroelectric dam project along the Danube; as a member state that forms part of the EU's external border, Hungary has implemented the strict Schengen border rules