Humanitarian Risk Analysis No. 9: Federal Republic of Yugoslavia

OCHA Belgrade
OCHA Belgrade issues a periodic "Humanitarian Risk Analysis", which provides an overall and impartial evaluation of the impact of the economic crisis, sanctions and the NATO intervention on the vulnerable sectors of the population in the Federal Republic of Yugoslavia (FRY) and of issues pertinent to meeting their humanitarian needs.

1. INTRODUCTION

From this issue, the Humanitarian Risk Analysis (HRA) will have an expanded focus, covering not only the socio-economic trends and their impact on the humanitarian vulnerability in the Federal Republic of Yugoslavia (FRY), but also other issues critical to meet humanitarian needs and address the challenges facing the international humanitarian community. It is, therefore, envisaged that each issue will focus on one humanitarian theme, which will be supplemented (as in the past) by a brief review of major socio-economic developments in the previous month, including the updated table on the OCHA shopping basket.

This issue of HRA provides an overview of the operating environment for non-governmental organizations (NGOs) in FRY (excluding Kosovo) It should be noted that OCHA Belgrade covers the humanitarian situation in FRY, excluding Kosovo (which is covered separately by UNMIK). Therefore, throughout HRA documents, "FRY" would refer to the Republics of Serbia and Montenegro, excluding Kosovo.. In Serbia (excluding Kosovo) Similarly, throughout HRA documents, "Serbia" refers to Serbia proper, unless otherwise specified. , the lack of federal legislation regulating international NGOs is leaving their status in a legal ambiguity. In addition to the need for an efficient legal framework for NGOs, this HRA examines a number of practical, operational obstacles facing NGOs in Serbia (as well as in Montenegro, to some extent) in their day-to-day work. The draft legislation on NGOs has been prepared, but still is pending at the Parliament. International humanitarian NGOs, whose contributions are crucial in meeting significant humanitarian needs in FRY, would benefit greatly from an early passage of the legislation which can create a favorable operating environment for them. Moreover, under a fair and equitable NGO legislation, the FRY Government would benefit from increased transparency and accountability of NGO activities. This HRA also outlines some key issues that would need to be addressed to this end.

2. NON-GOVERNMENTAL ORGANIZATIONS IN FRY

Reality and Challenges in their Operating Environment

There are currently 49 international NGOs in Serbia, of which 36 are operational - a very modest size of the NGO community in comparison with the significance of existing humanitarian needs. On the other hand, there are some 60 NGOs in Montenegro, and the number of NGOs in Kosovo has reached as many as 269. There is a more significant role NGOs can play in Serbia - larger and more populous than other areas of FRY, given that the level of suffering among the vulnerable groups is comparable or in some cases even worse. However, in order for this to be realized, the Government of FRY/Serbia needs to take steps to create a more favorable operating environment for NGOs.

2.1 What is the Reality Facing NGOs in FRY?

In Serbia, the current status of NGOs can be described as ambiguous. The federal Law on the Association of Citizens in Associations, Social Organizations, and Political Organizations, established in 1990 by the Socialist FRY, together with the 1982 Serbian Law on Social Organizations and Association of Citizens have regulated the establishment, practices, and work of NGOs. These laws have not been amended, despite the fact that the deadlines for their amendments have long expired.

Steps to redress the situation have been taken in independantly in Montenegro and Kosovo. Montenegro introduced a new law on NGOs in July 1999 (see the box in the right). In Kosovo, UNMIK issued, on 15 November 1999, Regulation No. 1999/22 on the Registration and Operation of Non-Governmental Organizations in Kosovo, which is widely seen as a "good model" of NGO regulations. However, in Serbia there is no legislation providing a legal framework for international NGOs, making it the only country in the region without such legislation. The FRY Government prepared a draft NGO legislation in late 1999, which remains pending at the Parliament.

Legal Status of National NGOs: The 1990 Federal Law on the Association of Citizens in Associations, Social Organizations, and Political Organizations provided the necessary procedures for the establishment of local NGOs. This is still in legal use and, over the last decade, has allowed national NGOs to legitemize their status. This law has not been adapted to the new Constitutions of FRY and of Serbia, as required since the breakup of Socialist FRY.

Legal Status of International NGOs: In Serbia, there is todate no legislation in place regulating the status and work of international NGOs, leaving them to operate on the basis of "good will" alone. In such an environment, many international NGOs resort to various ad-hoc arrangements in order to be able to operate in Serbia. These include the following working arrangements:

a) Through local partners - Some international NGOs have established themselves, by finding a local partner willing to register a domestic citizens’ association. This, however, did not provide any benefits in terms of visas and resident permits for foreign staff. Though this had been an implicitly "accepted" practice, since the Kosovo crisis the FRY Government no longer accepts it.

b) As Implementing Partners of International Organizations -- International NGOs (mostly humanitarian) may operate in Serbia by entering into an arrangement with international organizations which enjoy diplomatic status, such as UNHCR, as implementing (executing) partner. This arrangement, however, still entails some practical and operational difficulties, in addition to NGOs perceiving it as somewhat limiting their independence. One such example is the registration of vehicles. Currently, the only available option for many NGOs (which are UNHCR’s implementing partners) is to register vehicles under UNHCR vehicle registration plates, since a vehicle with foreign plates cannot be driven by national staff. Recently, however, there has been an increasing concern over security incidents involving NGOs which appeared to have been identified by these distinctive plates. In the interest of security of NGO staff, the UN Humanitarian Coordinator, as well as UNHCR, requested the FRY Ministry of Foreign Affairs to issue NGOs with local tax-free (RP) plates, on which decision is still pending.

c) Through Formal Agreement with Government - There is an example of an international NGO which entered into an agreement with the FRY Government, thereby legitimizing its status. CARE signed a Memorandum of Understanding in November 1999. This Memorandum, however, seems simply an approval for CARE to be present and operate in FRY and does not specify obligations and right on either sides concerning more detailed operational matters. Still, such an arrangement, if it can be offered equally to other international NGOs, could serve as a temporary solution until the introduction of the NGO legislation.

d) Through Support by the Ministry of Foreign Affairs -- There are some international humanitarian NGOs present in Serbia, which are not exercising any of the above options. They operate on the basis of a tourist visa issued to international staff for first entry to FRY. Experiences so far indicate that after the visa expires, they tend to be given temporary residence for 3-6 months, which enables them to continue their humanitarian operations. However, their status is precarious, as the decision of granting visas/residence is at the discretion of the FRY Government (Ministry of Foreign Affairs).

The majority of international NGOs operating in FRY are humanitarian organizations. In 90 percent of the cases, the Government has allowed their presence and operations, through various ad-hoc arrangements described above (though reaction towards NGOs whose work is oriented towards civil society development, free media, or alternative education has not been as favorable). However, the legal status of many of these NGOs is ambiguous and, therefore, their operations, as well as their personnel, remain vulnerable.

2.2 Major Impediments for NGO Operations

Within this operating environment, NGOs, though implicitly "allowed" to operate in Serbia (some for as long as 10 years), encounter day-to-day operational difficulties, which make their work difficult and sometimes more costly. Some of the major problems facing NGOs in Serbia are listed below, which the international humanitarian community hopes will be addressed favorably in the pending NGO legislation. Also in Montenegro, though the NGO legislation does exist, it is generally felt that more practical, operational matters, including some listed below, have not been adequately addressed, raising a need for an additional regulation covering them.

a) Registration -- The previous section (2.1) described the difficulties in registering international NGOs due to the lack of legislation, pointing out that the establishment of simple and efficient registration procedures would create a supportive environment for NGOs. The ambiguity in NGOs’ legal status carries risks. For example, their operations may be arbitrarily banned or terminated, without prior notice or explanation. Another important issue related to registration is the level of the registration fee, which, if set too high, could disable many NGOs from operating in FRY.

b) Visa -- Currently, there are no standard procedures for the issuance of visas and temporary residence, applicable to all humanitarian NGO workers. Many foreign NGO staff enter FRY on a short-term (often tourist and single entry) visa. After expiration, this can mostly be converted into a temporary residence permit for 3-6 months, which needs to be renewed regularly. However, their status (i.e., visa and residence permits) is dependant on the discretion of the FRY Government.

c) Import of humanitarian aid -- There is a concern that import procedures are cumbersome and require layers of intermediaries in the process. A guideline on the import of international humanitarian aid (covering food, clothing, hygiene kits, etc.) was issued in December 1999 by the Federal Ministry for Refugees, Displaced Persons and Humanitarian Assistance. Prior agreement of this Ministry must be obtained, based on an application requiring numerous documents, in order to import goods free of import duties. NGOs (unless independently registered) need to go through intermediaries to receive shipments, such as UNHCR (for its implementing partners) and YRC (for other NGOs). In case of medicines and medical supplies, the Federal Ministry for Labor, Health and Social Policy issued a guideline in November 1999. Upon entering the country, medicines are placed under surveillance in specialized customs storage for a considerable length of time, until necessary procedures are completed for quality certificate and approval for distribution. In addition to being time-consuming, these procedures tend to be subject to frequent revision, making operational planning difficult.

d) Taxation - There are no clear guidelines concerning tax exemption privileges. The Montenegrin Law on NGOs, for example, stipulates that "the Government shall provide tax and other exemptions and privileges for non-governmental organizations (Article 27),"while providing no further details. In Serbia, though duly-approved humanitarian goods are imported duty-free in principle, the December 1999 guidelines do not specifically mention such privileges.

e) Financial and Banking -- In the environment where sanctions are in place and the banking system is under duress, even a simple transfer of operating funds causes a serious headache for NGOs operating in FRY. The existence of the large disparity between the official and market exchange rates is another difficult factor, which could significantly increase the operating costs of NGOs.

f) Employment of National Staff -- In FRY, employers are required to pay to the Government taxes and other contributions (such as social, retirement, and health benefits). It is estimated that for international NGOs such payments to the Government could amount to as much as 120 percent of the salaries of local employees. This would substantially augment their operating costs and pose a significant financial difficulty to many NGOs.

g) Vehicle - NGOs in FRY, due to ambiguity of their status, are currently not able to register their vehicles on their own. Most of them opted to use UNHCR vehicle registration plates for their vehicles, which UNHCR issues to its partner NGOs, though this has caused difficulties (see also 2.1 (b) above). Similarly, the procedure for NGOs to import vehicles is also unclear and needs to be regulated in favorable terms.

3. OVERVIEW OF MONTHLY ECONOMIC TRENDS

Inflation rate remained very low in January and February 2000. According to the official statistics, it was 0 percent in January and 1.6 percent in February in Serbia (6.3 percent and 2.8 percent, respectively, in Montenegro). However, this low inflation trend may be difficult to maintain in the long run, especially after the official increase in the price of gasoline by 76 percent (from 10.5 to 18.5 dinars/liter) and the price of electrical energy by 9.5 percent. Monetary trends will also cause additional price increases. The much-reported input of cash from China, which had kept the dinar stable for the past few months, is beginning to lose its effect. The exchange rate now stands at 21.5 - 22 Dinars/DEM (changed from 20 Dinar/DEM).

On the other hand, the average salary decreased by 8.8 percent in January 2000, both in Serbia and Montenegro, compared with December 1999. The average salary in Serbia was 1,599 Dinars (80 DEM/40 USD), which also led to a decrease in the average January pension in Serbia by the same percentage. Despite the inflation which is artificially kept low, the gap is widening between the cost of living and the average salary in Serbia. The monitoring indicator, based on the OCHA shopping basket and the average salary, shows that in March 2000 it would require 2.2 times the average salary to purchase a shopping basket at grey market prices, and 1.7 times the average salary at state market prices. These figures represent a decrease in purchasing power by 69 percent on the grey market (and by 30 percent at the state market), compared to August 1999 when OCHA started the monitoring effort.