31.12.2009.
Minister Sutanovac’s interview to ECONOMIST magazine
It is not often that a "soldier" becomes awarded as one of the leading men in industry and one of the leading entrepreneurs in Serbia. This year Minister of Defence Dragan Sutanovac was presented with the special award of the Serbian Chamber of Commerce for his personal contribution to Serbian industry. The defense industry made a more than 300 million USD worth of exports this year and that it has already made arrangements for new export deals.
The defense industry is slowly making its comeback to the world market. It is necessary to improve the conditions of these factories, as Sutanovac says adding that this come back has been a grueling one. “These factories were destroyed in 19999 bombardment, thus becoming eradicated from the map of weapon exporters. In the last two year we returned to the markets where we were known before, and the leading world magazines on weapons and military equipment are again writing about our defense industry. Since the state owns these factories, the representatives expected us to buy the surplus of goods, unfortunately we did not have money for this, not to mention that this was not a good way to rehabilitate these factories. My main goal was to find new markets. I visited mostly Arabic countries, and I have had similar discussions with the European countries as well. The main purpose besides strengthening cooperation was to seek new markets for our defense products.The practice to educate foreign officers in our academies resulted in having ambassadors of sorts in these officers educated in Serbia, they advocate and support our cause in their homelands. What is more, they even speak Serbian, as the minister adds.
€:What is the worth of these arrangements?
D. Sutanovac: We are talking big deals here. The total worth is some 8 million USD, which is a huge result for Serbia. We are in search of deals which could get our industry working in the next five years or so. The last contracts to have been signed entails engagement of our defense industry in the next five years, and then supplying with repro-materials in the next 15 years. This means that some factories would have to expand their capacities and to employ new work force in order to realize their contracts. We even believe that this branch of industry could support our agriculture by placing our products on that market.
€:This is African market we are talking about?
D. Sutanovac: These are the markets of traditionally close and friendly countries. However, Serbia is exporting to USA and Far East too. There is an increased interest in the ammunition, predominantly in the ammunition of Uzice based “Prvi partizan” ammunition factory. Unfortunately, this factory does not have the capacities to supply the markets in quantities demanded. The quality of the good sis such that we can export them to USA which have the highest standards.
€:You announced the modernization of our defense industry. What do you think this industry should look like?
D. Sutanovac: The best advice I heard from a business man was “ Find me a market and I will make a factory”. We had projects that never saw the light of the day because they were futile or megalomaniac. Our idea is to base the market on what we can sell, that is, to suit it to the customers’ needs. SDPR developed “poga” howitzer, as one of the moist advanced and serious artillery projects along with the “lazar” combat vehicle. The key is to analyze the market carefully and to make a product that can sell.
€: What can the Serbian defense industry sell?
D. Sutanovac: We can sell ammunition of all calibers, ballistic vests. I am deeply convinced that such heavy artillery products developed by SDPR can find their buyers. When we se4ll something that is made according to the best NATO standard, then we have a pass for other defense markets in the world. We started selling “Lasta” training air crafts last year. Zastava has excellent infantry and hunting equipment.
€: Is there a possibility to start cooperation with Mile Dragic again?
D. Sutanovac: No one is excluded, anyone with a good product and a good price that is, anyone who winds the public bid is welcome. There is no possibility for anyone to pull a few strings and make a few phone calls and to win the bid for quipping, and then to sell the same equipment to MoD as was the case in previous years.
€:The fate of the military property has been under consideration for a very long time now. Will military compounds be privatized?
D. Sutanovac: .
If I were to make such speculation would be most provisional and not a smart thing to do. There is a list of property which has not been updated properly. The army was so powerful before, that some of its property was not registered in land books. Things are slowly changing now, and we are taking big steps towards alienating this property which is considered as not very valuable. Part of this has been sold, such as army domes, training grounds and so forth. It is important to say that this is not Belgrade compounds we are talking about, but rather storage facilities in Cacak, Sabac and Subotica. We cannot sell property in small town as we cannot find buyers so this mean we just have to find new forms of alienation.
€:What is the destiny of Karadjordjevo?
D. Sutanovac: There is a residence and a military institution as a separate firm. This military firm has several thousand acres of land generating 400-700 million USD of loss. We are currently implementing rationalization of such firms including Karadjordjevo. Some 450 workers will be made redundant with a social resettlement program. We are currently considering the best model of sale for this property. Someone could cultivate this land better than the army. Then we have such institutions which at best do not generate losses, and this is the heritage from the period when we did not take care of our property and managed it poorly. Each year we have to compensate for the loss these firms make. I do not support this form of work in the future.
€: How much money can we make from the sales?
D. Sutanovac: MoD had its assessment which I considered to be wrong from day one in office. For example, if anyone can tell me the exact value of buildings in Kneza Milosa Street, then I can believe that there is a way to truly assess the property. Any kind of speculation is wrong, I even refused to take the assessment of the IRS as I thought they were too low. The only way is to go to the market in order to establish the value of the property. I will not support the idea of selling the property for pittance as it is a sort of a family heirloom that has to be traded for certain value.
€: You announced professionalization to be finished by the end of 2010. how may members will there be in the army and in peace missions?
D. Sutanovac: I want to finish this process by the deadline set by President Tadic back in 2003 when he was the minister of defense. There was no progress in 2004, 2005 and 2006 but 2009 saw crucial steps forward. Unless we encounter dramatic setbacks in the field of finance we expect to finish this process. I believe this to be one of the greatest reforms of the Serbian society.
€:Why all this hurry as many believe that we should prolong the deadline?
D. Sutanovac: If we behaved as those before us then this professionalization would not be finished by 2015. I believe that the deadlines should be met but not when it costs us quality. It is not our goal to make professionalization a marketing trick, but rather to make some true reform. The military profession’s repute has been restored, and the shadow of corruption following us has finally vanished due to many scandals.
€: How may soldiers will be deployed in peace corps?
D. Sutanovac: The total defense system is planned to have 36 000 people, 114 of whom will be civil servants. The reduction in MoD will be from 11600 down to 6500. This will result in an ideal officer pyramid. The plan is to have 10600 professional soldiers and 2000 for those who wish to serve voluntarily. We want to make the military calling very attractive and anyone serving the army will have benefits. Our participation in peace missions is our primary foreign political goal, as this is the way to raise the credibility of our army and also to train our army. The experiences our army will get come from the real life experience in the theatre. There is not a single developed country in the world that does not participate in peace missions. We hope to take part in Lebanon besides our engagement in Chad, Liberia, Cote d Ivoire.
€: How much will the professionalization cost?
D. Sutanovac: This year’s budget for MoD is 68 billion RSD 23 billion of which 23 billion will be allocated for the pensioners. The distribution of money is particularly problematic as 80 % of the budget is allocated for personal costs. Regardless of that, there are reforms which do not need much money. Modernization will cost, but some of the reforms could have been finished even during the times of greatest poverty.
There are several indicators which signal whether the state deals with MoD professionally and seriously or not, and the share of the military budget in GDP is one of these indicators. The memorandum of the Government of Serbia defines the military budget to be 2.4 % of GDP, where USA’s military budget is 4%. The structure of the budget is another indicator. If more than 609 % are personal costs then something is wrong , either there is a surplus of employees or a lack of money. Our budget has less than 20 % of budget allocated to investments and operational costs. Finances cause a problem. We will try to make greater revenues this year and to strengthen our funds in the budget.
€: Serbia has recently appointed an ambassador to NATO in Brussels, and many people saw this as a silent approximation to the North Atlantic Pact despite the Parliament’s declaration on neutrality.
D. Sutanovac: The natural consequence of our joining PfP in 2006 was to have an ambassador in NATO. Some people considered this Partnership a sort of a tool which would not be fully used but could help us meet our needs and requests. This does not work that way. The appointment of the ambassador is nothing new, we have been running late for three years now. The process of coming closer to NATO was most intensive and made greatest progress during the Government of Vojislav Kostunica which is the period when we joined PfP. What followed were minor steps.
€:We are surrounded by NATO member states or those that are yet to become members. Is it possible for Serbia to remain neutral?
D. Sutanovac: Serbia will be part of NATO even if not a member, we have such examples in Austria. This public debate will take place in 2010 and we will have to consider the options on final introduction of Serbia into European integrations which entail European set of values and Euro Atlantic security policy. Serbia is yet to make several steps when it comes to the Partnership for Peace Program, so we are not considering NATO membership at the moment.
€: What is your opinion?
D. Sutanovac: My view is very clear on that matter, and I follow the Parliament’s decisions. I want our defense system to be harmonized with NATO standards which are the best in the world.
€: Can neutrality slow down the development of our defense industry, as can be heard often from those who support the possibility of joining NATO?
D. Sutanovac: Many people who oppose further Euro-Atlantic integrations under the influence of emotions advocate that Serbia should isolate itself for patriotic reasons which makes it a good way to score some political points. But at the same time we should calculate what economic benefits we could get is we were to proceed with integrations. The defense system could also benefit greatly from further integrations.
€: On the other hand we have Russia which has suggested a new security concept, and the Russian President Medvedev sent a clear message that Serbia is expected to remain outside NATO. Do you see Serbia as part of this security concept?
D. Sutanovac: Serbia should follow those trends our regions will find itself in. Russia is not our neighbor therefore all cooperation is geographically set towards NATO. Even the Russian gas will come across Bulgaria, a NATO member state. Globally speaking Serbia is too small to be an important player in the world, but in the region it can be a significant partner. Our main goal is to stabilize relations in the region.
€:The plan is to open the Emergency Interventions Center in cooperation with the Russian Ministry for Emergency Situations. Since we are familiar with the resources this ministry possesses, does this include the presence of Russian military in Serbia?
D. Sutanovac: This project has nothing to do with the Ministry of Defense, it belongs to the Police. However, anything that would contribute to humanitarian interventions is more than welcome, but it should rely on our legal system too. If this is a regional center, then I suppose that the countries in the region would support this too. But let me repeat once again, foreign military bases are not welcome in Serbia, and this will not mean military activity of a foreign force.
€: There has been a shift in the political power, as the Serbian Progressive Party (SNS) has won over almost all the electorate body of the Serbian Radical Party. Local elections in the Belgrade part of Vozodovac point to this fact, that the progressive party is becoming a rather powerful political factor in Serbia. Do you, as the Vice president of DS, expect new elections in 2010?
D. Sutanovac: If you mention our loss in Vozdovac, then I should remind you of our victory in Vrbas. Such regrouping of opposition does not make me consider elections, nor can this cause any rifts in the Government. I am of the opinion that the Government’s policy is what we offered before the elections, and such accomplishments as the liberalization of the visa regime, defreezing of the Interim Trade Agreement, only show that we keep our promises. It is good that the leaders of SNS have changed their rethoric, yet I am not convinced that it is truthful, but it most certainly adds to stabilization of political circumstances in Serbia. I was glad to hear that SNS would not organize a rally if we were to apprehend the ICTY fugitive Ratko Mladic, since we will have enough time to compare our results with theirs.
€:Can you picture the progressive party as political partners in the future government?
D. Sutanovac: I am not considering this option at the moment, as I believe it to be a rather rare situation in the world, to have the right-wing party join in coalition with the democrats. It is not natural in politics. I see Serbia as bipolar in political terms, with DS on one end, and SNS on the other. It is ideologically unnatural to have these two poles join in coalition.
€:IN the last few days once again we have heard of speculation about rifts in DS, the occasion being the fact that President Tadic did not appear at the ceremony where the Statute of Vojvodina was declared. The speculations focus on rather poor relations between Tadic and Prime Minister of Vojvodina Pajtic?
D. Sutanovac: I do not think that this is of any consequence, since the President had other obligations that day. Nothing would have changed even if he had been in Novi Sad on that day. I have excellent cooperation with Bojan Pajtic, and he is one of the more respectable politicians who has managed to do many things in Vojvodina. When something like this happens, two speculations usually come up: either he is a secessionist, or he is breaking DS. It is obviously hard for some people to accept that Vojvodina is the best developed region in Serbia, that is taking big strides towards EU standards, which makes it hard to accuse him of corruption of poor situation in Vojvodina. What is next?
Of course, the rift in DS. There are no disagreements in DS, we are all joined in our efforts to work as one, and when the time comes you will see how we will present our results to the public.
