H.E.Nikolaus Lutterotti, Austrian Ambassador to Serbia – In these tough times we are together

If anything, the crisis caused by pandemic has highlighted even more how dependent we are and how much we need close cooperation and solidarity. In other words, for Austria EU-enlargement and Serbia’s accession process remain a top priority!

H.E.Nikolaus Lutterotti, Austrian Ambassador to Serbia

Austria has pursued a strategy of early and strict lockdown during the Covid-19 pandemic, followed by a controlled re-opening of public life. In fact, Austria has been one of the first European countries to respond with very restrictive measures to the pandemic through a policy of social distancing and self-isolation as well as the gradual closure of businesses, shops, schools, universities, restaurants and bars, sports facilities and parks.

“Seven weeks later it seems that our measures are paying off. Today, the situation in Austria looks promising: the epidemiological curve of new infections has flattened and over the last two weeks the number of new infections has been constantly less than 100 per day. These developments allowed the Austrian government to start with the next, equally challenging, phase of a controlled and gradual easing of measures on 14 April”, says H.E.Nikolaus Lutterotti, Austrian Ambassador to Serbia, to whom we talked in detail about the effects of a pandemic on a number of issues including bilateral relations with Serbia.

Naturally, the first question was related to the response of the Austrian government to the post-pandemic situation.

“The government has been very clear that it reserves the right to pull the “emergency brake” at any time and reverse the openings if the numbers demand it. So far, the numbers have been kept under control after the first lifting of measures. Together with the easing of measures, Austria is further strengthening its containment strategy. This means that we want to be more effective at contact tracking of newly infected people, to provide for more and easier access to testing as well as to receive test results much faster. Our government also decided right after the introduction of the lockdown measures on an economic support and recovery package in the amount of 36 bn € which equals almost 10% of our GDP: 4bn € for immediate emergency measures, 9bn € for state guarantees and liabilities, 15bn € direct support to businesses that have been hit particularly harshly and 10bn € for tax deferrals”, says the ambassador.

Which questions were in the focus of the Austrian – Serbian bilateral relations recently given the circumstances?

The COVID-19 crisis has obviously been at the centre of our bilateral relations in the past few weeks. I am happy to say that these relations have been extraordinarily good in the course of this crisis and marked by mutual support, good cooperation and understanding. On a political level, we have maintained a regular high-level engagement. On 17 March, Chancellor Kurz hosted a “Videosummit” with the Prime Ministers from the WB6 and EU-Commissioner for Enlargement, Oliver Varhelyi, which provided an important opportunity to exchange views and share strategies right at the beginning of the Covid-19 crisis in Europe. Our two Foreign Ministers recently spoke over the phone in which Foreign Minister Schallenberg assured Deputy Prime Minister Ivica Dacic of Austria’s continued support for Serbia. Besides providing for special equipment that Serbia had requested through the EU Civil Protection Mechanism, Minister Schallenberg also offered Serbia to transport and treat intensive care patients from Serbia in Austria if needed. Our respective Ministers for European Affairs, Minister Jadranka Joksimovic and Minister Karoline Edtstadler, were in direct contact to discuss the upcoming European Western Balkans “Videosummit” on 6 May as well as the general situation regarding Covid-19. Our two Ministers of the Interior have also spoken and we had regular exchange among police authorities. We worked very well together and managed to coordinate the movement of thousands of people travelling from Serbia to Austria and the other way round during the crisis. And I must say that it has been handled in a very constructive and professional way. The same is true as far as consular cooperation with the Serbian Ministry for Foreign Affairs is concerned, in particular efforts to repatriate citizens to Austria and Serbia from all over the world. Austria repatriated Serb citizens wherever and whenever possible. And so did Serbia with Austrian citizens that wanted to repatriate to Austria.

In the field of judicial cooperation, Austria early on shared expertise with the Serb authorities as far as upholding court procedures during the lockdown is concerned. Our Minister of Justice, Alma Zadić, initiated a video-call with all Ministers of Justice of the region to exchange views. And in the field of agriculture, for instance, we shared know-how and best practices to support smaller farmers in online-marketing and delivery services.

The Austrian business community has a great interest to see their businesses recover from the crisis and to support the Serbian economy to recover as soon as possible.

As far as our economic cooperation is concerned Austria has been one of the biggest investors in Serbia over many years. Around 450 Austrian companies with over 18.000 employees have shown great solidarity with the measures during the Covid-19 crisis; they were committed to keep their workforce employed and avoid lay-offs. The Austrian business community has a great interest to see their businesses recover from the crisis and to support the Serbian economy to recover as soon as possible. Beyond Austria’s bilateral assistance, of course, we are part of the EU and contribute to the funds that the EU has allocated for Serbia.  We are talking about a very significant emergency and recovery package by the EU for Serbia in the amount of 93,4 mn €. Out of 93,4 Mio €, 15 Mio € have been available immediately for medical supply and logistics. 78 Mio € have been allocated for the economic recovery program of Serbia. In addition, Serbia will benefit from further funding that the EU has allocated for the entire region. Overall, the EU has mobilised a package of over 3.3 billion EUR for the benefit of citizens of the Western Balkans.

Where Serbia stands today in terms of meeting EU criteria and to what extend if any the developments during pandemic affected the priorities in the EU integration process?

The EU accession process of Serbia is not only in the interest of Serbia but also in the interest of the European Union and more specifically of my country Austria. The pandemic has not changed this fundamental set of interests.

President Vucic recently, during a meeting with EU Ambassadors, stressed in very clear terms that Serbia will remain on the EU path and that this is a priority. This is a very important and welcome message. The EU is by far the largest investor in Serbia, not only in terms of the economy but also in terms of European investments in strengthening Serbia’s system of justice, health, education, administration, local development, employment, and so on. The President, as well as the Prime Minister, have recognized the EU’s significant support for Serbia and particularly the enormous support that the EU’s taxpayers provided to Serbia as immediate emergency relief for Covid-19 and the economic recovery thereafter. Austria certainly encourages Serbia to continue and possibly intensify her reforms as soon as possible in order to advance on the EU accession path even further.

In which areas do you see the biggest space for advancement?

On substance, the areas where we see the biggest space for advancement to EU membership have remained the same. These are reforms on the so-called fundamental issues contained in chapters 23 and 24. There continues to be need to strengthen efforts for real reforms both on a legislative level as well as on the level of implementation. This is particularly true for the area of the independence of the judiciary, the fight against corruption, media freedom, the domestic handling of war crimes and the fight against organised crime. We are aware that this is a difficult and complex process. But for the advancement of Serbia’s path towards membership in the European Union, it is essential. Also, we hope to see the conduct of free and fair parliamentary elections which will lead to a new Parliament that provides the space for genuine political debate across the entire spectrum of political views and will strengthen the system of checks and balances in Serbia. At the same time, we are fully aware that Serbia is facing enormous challenges from the economic consequences of the Covid-19 pandemic which the government will have to address with determination. However, it is our firm belief that reforms in the area of rule of law are in no contradiction to addressing economic recovery, on the contrary, they will support and enhance further Serbia as a place for doing business and investing. The recovery of the EU’s economy will also play an important role in Serbia’s recovery given that 67% of Serbia’s trade is with the EU and 70% of all FDIs are from the EU. Therefore, there is a need to honor and strengthen this partnership with the EU and there is a lot of merits to stay focused on the EU accession path.

We hope to see the conduct of free and fair parliamentary elections which will lead to a new Parliament that provides the space for genuine political debate across the entire spectrum of political views

To what extent the Austrian support to the Serbian EU integration processes might be affected by the expected restrictions in communication and travel?

We have to realize that we are all in this together; we are all facing the consequences of the pandemic. We need to work together and we – the EU, and more specifically Austria – have demonstrated solidarity with Serbia and willingness for closer cooperation. In this sense, Austria will continue to actively support Serbia’s EU integration process. I do not see that Serbia’s EU integration process will be hampered because of Covid-19. As I have mentioned before, Austria and Serbia managed to keep a high-level political engagement throughout the crisis and this will continue. For the time being, there will be less of personal meetings and maybe less conferences with physical presence, but I am certain that this will have no detrimental effect on the EU enlargement process.

Given the current economic developments in Austria and Serbia, how would you assess the prospects of further trade exchange and investments coming from Austria?

Before the crisis hit us the outlook for developments in our bilateral trade was very promising. This obviously changed because of the economic effects of the Covid-19 pandemic. Many Austrian companies experienced problems in their supply chains, also in cases when they rely on their own overseas subsidiaries in the production chain. What we can reasonably expect is that Austrian companies will try to adapt their supply chains and to look closer at new production locations in Europe. Should that occur, Serbia will definitely be one of the top countries in their considerations. Regarding our bilateral trade, the same applies: logistics to and from oversea markets caused serious problems, while transportation to and from Serbia was managed on an acceptable level, despite some hiccups at the start of the crisis. In the upcoming months and years, there is a chance that Austrian companies may refocus their exports to their core markets closer to home, while at the same time building up new and promising business relations with Serbian suppliers and partners. In this sense, there is reason to believe that the crisis may turn out to be an opportunity for intensifying our economic relations.

How well Austrian companies in Serbia fared in the new circumstances and how they assess the measures introduced by the Serbian government?

Companies in the service industry were hit hardest by the crisis. Production facilities, on the other hand, were able to keep productivity at levels of around 70-80%. Our subsidiaries are committed to follow the advice of the Serbian government to keep their workforce employed. The fact that Serbia decided on a very significant recovery package was seen as a positive step among the Austrian business community. It is important to see the effective and transparent implementation of these measures. Serbian companies can easily apply for the measures and it is a good sign to both employers and employees that companies to be supported are those that keep their workforce employed. Nevertheless, a number of Austrian companies are classified as large entities and for them many financial measures do not apply which causes some concern in the Austrian business community. On the other hand, one can expect that many of their local customers and suppliers will recover quickly through this package which will eventually improve business prospects for all market players.

Which programs will be in the focus of the embassy in the period to come?

The Austrian Embassy’s activities will gradually adapt to the evolving situation which will depend on the developments with regard to Covid-19. We will certainly keep a focus on maintaining the high level political engagement which is very important. We will also continue to work on the programs we have been focusing on lately, such as dual education reform implementation in Serbia, fostering scientific and cultural exchange between Austria and Serbia, or cooperation in the field of environmental protection. We will continue to assist the Austrian business community as well as to support opportunities for further economic presence by Austrian companies in Serbia. And of course, we continue to be at the service of our Austrian citizens who require specific information and consular assistance.

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