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Serbia Receives Vote of Confidence on Economic Reforms - 2003-04-02

Serbia's reformist government Tuesday received a vote of confidence from an American investor. The U.S. Steel Company is putting more than $150 million into the country's steel industry.

U.S. Steel executives were in Belgrade to sign the accord Tuesday for one of the biggest foreign investments in Serbia since the October 2000 ouster of Slobodan Milosevic. The American company is paying $23 million to take over Serbia's bankrupt Sartid mill 50 kilometers southeast of Belgrade. The company is the biggest steel producer in Serbia and Montenegro. It collapsed last year as the free market reforms of former Prime Minister Zoran Djindjic took effect.

Under the agreement, U.S. Steel has agreed to retain Sartid's 6,500 workers. The American firm will spend over $100 million to upgrade the Smederevo facility. U.S. Steel has also agreed to spend $1.5 million to promote foreign investment in post-Milosevic Serbia.

Analysts say the investment decision is good news for the government of new Prime Minister Zoran Zivkovic, who is promising to consolidate the market friendly policies of his slain predecessor.

U.S. Steel has been pursuing an aggressive European expansion program centered on its investment in a modern steel complex in east Slovakia. That facility has been consistently profitable since its purchase by U.S. Steel two years ago.

Serbia's economy is not performing as well as had been promised by government economic policy makers. Growth this year is expected to be two and a half percent instead of the four percent predicted earlier.

Serbia is actively encouraging foreign investment and is hopeful that major foreign firms will participate in the upcoming privatization of the state run tobacco company, the airline, the state oil company and other industrial firms. A Hungarian company is planning a chain of gas stations along major highways. And an American food company is planning to invest in a fruit canning company near Belgrade.