Serbia will face decline unless it resolves Kosovo issue

A study commissioned by the Open Society Foundation said Serbia risks a dramatic decline by the middle of this century if it fails to resolve Kosovo's situation, which could include the exchange of territory.

Serbia faces a bleak economic and demographic future if it fails to resolve the Kosovo conflict and if it does not join the EU, a new study by the Open Society Foundation in Serbia warns.

The implementation of the Brussels Agreement on normalisation of relations would ensure much smaller demographic and economic losses for Serbia than the scenario of not resolving relations, he adds, noting also that a widely imagined territorial exchange would benefit Serbia about 90m euros annually.

Because of improved economic climate and stabilisation of the political situation, the country's credit rating will increase, ensuring easier access to financial capital”, it said, stating that Serbia's external debt would drop from about 24 billion euros as it was in 2017 to 14.8 billion by 2030.

According to the report “Economic, demographic and social effects of various normalised relations scenarios between Belgrade and Pristina”, Serbia is facing disturbing demographic problems, with the population falling dramatically until 2060.

If relations with Kosovo were normalised, it is said that Serbia's population by that year would be around 5.57 million, compared to only 3.96 million if a “stager of the status quos” is realised.

The status quo assumes that Belgrade and Pristina will not normalise relations, thus preventing Serbia from closing Chapter 35 in its negotiations with the EU and thus will not become a member of the European club.

The projected low growth <x0).

He adds that this scenario would not be sustainable in a long-term period and would lead to a dramatic “form of currency reserves”.

A delay in Serbia's joining the EU would lead to a decline in foreign direct investments by EU members and other developed countries, as well as a decline in Serbia's living standards and credit rating, while unemployment would increase, the study says.

The study also widely examines proposals for a territorial exchange between Serbia and Kosovo, saying that if this is to be done, Serbia could expect a modest economic and demographic benefit.

Serbia's annual GDP will increase by 90m euros annually if it changes the majority Albanian municipality, Presevo with the mainly Serb areas of Zvecan, Zubin Potok, Leposaviqi and northern Mitrovica in Kosovo, the study said.

“This exchange is more favourable for Serbia for a number of reasons”, says the study of the Open Society Foundation, but does not enter if Kosovo would accept such an exchange.