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Federal Republic of Yugoslavia



 
 
The Federal Republic of Yugoslavia ( / Savezna Republika Jugoslavija) or FRY was a federal state consisting of the republics of Serbia
Republic of Serbia (federal)

The Republic of Serbia was a federal unit of the Socialist Federal Republic of Yugoslavia from 1990 to 1992, the Federal Republic of Yugoslavia from 1992 to 2003 and the state union of Serbia and Montenegro between 2003 and 2006....
 and Montenegro
Republic of Montenegro (federal)

The Republic of Montenegro was a federal unit of the Federal Republic of Yugoslavia and the state union of Serbia and Montenegro between 1992 and 2006....
 from the former Socialist Federal Republic of Yugoslavia
Socialist Federal Republic of Yugoslavia

The Socialist Federal Republic of Yugoslavia and in Slovene language: Socialisticna Federativna Republika Jugoslavija The Slovene language name also uses this Gaj?s Latin alphabet version with a slight difference in spelling....
 (SFRY), created after the other four republics broke away from Yugoslavia amid rising ethnic tensions. The state existed from 1992 to 2003, when it was reconstituted as a State Union of Serbia and Montenegro
Serbia and Montenegro

The State Union of Serbia and Montenegro , was a Political union of Serbia and Montenegro, which existed between 2003 and 2006. The two republics, both of which are former republics of the Socialist Federal Republic of Yugoslavia, initially formed the Federal Republic of Yugoslavia in 1992....
 which itself was dissolved three years later, when a referendum for independence in Montenegro resulted in the majority of Montenegrins supporting separation from Serbia.






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The Federal Republic of Yugoslavia ( / Savezna Republika Jugoslavija) or FRY was a federal state consisting of the republics of Serbia
Republic of Serbia (federal)

The Republic of Serbia was a federal unit of the Socialist Federal Republic of Yugoslavia from 1990 to 1992, the Federal Republic of Yugoslavia from 1992 to 2003 and the state union of Serbia and Montenegro between 2003 and 2006....
 and Montenegro
Republic of Montenegro (federal)

The Republic of Montenegro was a federal unit of the Federal Republic of Yugoslavia and the state union of Serbia and Montenegro between 1992 and 2006....
 from the former Socialist Federal Republic of Yugoslavia
Socialist Federal Republic of Yugoslavia

The Socialist Federal Republic of Yugoslavia and in Slovene language: Socialisticna Federativna Republika Jugoslavija The Slovene language name also uses this Gaj?s Latin alphabet version with a slight difference in spelling....
 (SFRY), created after the other four republics broke away from Yugoslavia amid rising ethnic tensions. The state existed from 1992 to 2003, when it was reconstituted as a State Union of Serbia and Montenegro
Serbia and Montenegro

The State Union of Serbia and Montenegro , was a Political union of Serbia and Montenegro, which existed between 2003 and 2006. The two republics, both of which are former republics of the Socialist Federal Republic of Yugoslavia, initially formed the Federal Republic of Yugoslavia in 1992....
 which itself was dissolved three years later, when a referendum for independence in Montenegro resulted in the majority of Montenegrins supporting separation from Serbia. This resulted in both Montenegro
Montenegro

Montenegro , Montenegrin language/Serbian language: ???? ????, Crna Gora , ) is a country located in Balkans. It has a coast on the Adriatic Sea to the south and is bordered by Croatia to the west, Bosnia and Herzegovina to the northwest, Serbia to the north, Kosovo to the east and Albania to the south....
 and Serbia
Serbia

Serbia , officially the Republic of Serbia , is a country in Central Europe and Balkans Europe, covering the southern part of the Pannonian Plain and the central part of the Balkans....
 becoming independent countries.

With the separation of other republics from the former SFRY, the FRY was far more ethnically homogeneous. The state's two main ethnic groups, Serbs
Serbs

Serbs are a South Slavs people living in the Balkans and Central Europe, mainly in Serbia, Montenegro, Bosnia-Herzegovina, and, to a lesser extent, in Croatia....
 and Montenegrins
Montenegrins

group=Montenegrins|pop=800,000|region1=|pop1=267,669 198,414 |ref1=|region2=|pop2=69,049 ca. 200,000 |ref2=|region3=|pop3=30,000:...
, were almost ethnically and culturally identical, though nationalist strains amongst Montenegrins claim that they constitute an ethnic derivative of their own, while others, especially those who support union with Serbia claim that Montenegrins are a sub-group of Serbs. Ethnic minorities included Albanians
Albanians

The Albanian people , from southeast Europe, live in Albania and neighbouring countries and speak the Albanian language. About half of Albanians live in Albania, with other large groups residing in Kosovo, the Republic of Macedonia, Serbia, and Montenegro....
, Hungarians, Romanians
Romanians

], 26 Nov 2004. Reprinted at , retrieved 18 Dec 2005.External links *...
, and other smaller groups. Ethnic tensions and conflict between Serbs and ethnic Albanians in the province of Kosovo
Kosovo

Kosovo is a disputed region in the Balkans. Its majority is governed by the partially-recognised Republic of Kosovo . Serbia does not recognise the secession of Kosovo and considers it a United Nations-governed entity within its sovereign territory, the Autonomous Province of Kosovo and Metohija that was re-created by Slobodan M...
 was a serious and ongoing problem in the FRY throughout its existence.

The state was not recognized as the official successor to the SFRY and remained unrecognized until 2000. From 1992 to 2000, countries like the United States referred to the FRY as "Serbia and Montenegro" and was often called by its synecdoche
Synecdoche

Synecdoche is a figure of speech in which:* a term denoting a part of something is used to refer to the whole thing , or* a term denoting a thing is used to refer to part of it , or...
 "Serbia" due to Serbia having dominant influence in the affairs of the FRY, especially under Slobodan Miloševic
Slobodan Miloševic

Slobodan Milo?evic, whose last/family name sometimes is transliteration as Miloshevich was President of Serbia and of President of Yugoslavia....
 who, during his term as Serbian President, appeared to have more influence over FRY affairs than the Yugoslav president. Opponents of Miloševic and opponents of the rise of Serb nationalism under his leadership, claimed the FRY under Miloševic was a "Greater Serbia
Greater Serbia

The term Greater Serbia or Great Serbia applies to the key current within Serbian nationalism.The postulated borders for the proposed state incorporate one vast and continuous stretch of land across southeastern Europe....
".

History

With the collapse of the Socialist Federal Republic of Yugoslavia
Socialist Federal Republic of Yugoslavia

The Socialist Federal Republic of Yugoslavia and in Slovene language: Socialisticna Federativna Republika Jugoslavija The Slovene language name also uses this Gaj?s Latin alphabet version with a slight difference in spelling....
 in 1991 and 1992, only Serbia
Republic of Serbia (federal)

The Republic of Serbia was a federal unit of the Socialist Federal Republic of Yugoslavia from 1990 to 1992, the Federal Republic of Yugoslavia from 1992 to 2003 and the state union of Serbia and Montenegro between 2003 and 2006....
 and Montenegro
Republic of Montenegro (federal)

The Republic of Montenegro was a federal unit of the Federal Republic of Yugoslavia and the state union of Serbia and Montenegro between 1992 and 2006....
 agreed to maintain the Yugoslav state, and established a new constitution for a new Yugoslavia in 1992. With the collapse of communism across Eastern Europe, the new state followed the wave of change, and did not revive Communist party structure (which had already been dissolved in 1990). It abandoned communist symbolism: the red star
Red star

The five-pointed red star, a pentagram without the inner pentagon, is a symbol of communism as well as broader socialism in general. It is sometimes understood to represent the five fingers of the Labour hand, as well as the Continent#Number_of_continents....
 was removed from the national flag, and the communist coat of arms was replaced the with a double-headed eagle with the arms of both Serbia and Montenegro within it. Further changes included the subsequent rebranding of the police, from Milicija (????????) as they were hitherto known (lit. militia) to Policija (????????); the two republics would each have their respective force. The new state also abandoned the collective presidency of the former SFRY and replaced it with the system consisting of a single president, who would be democratically elected, as well as a democratically elected parliament.

The FRY and the Yugoslav Wars

The FRY was suspended from a number of international institutions. This was due to the ongoing Yugoslav wars
Yugoslav wars

The Yugoslav Wars were a series of violent conflicts in the territory of the former Socialist Federal Republic of Yugoslavia that took place between 1991 and 2001....
 during the 1990s, which had prevented agreement being reached on the disposition of federal assets and liabilities, particularly the national debt. The Government of Yugoslavia supported Croatian and Bosnian Serbs in the wars
Yugoslav wars

The Yugoslav Wars were a series of violent conflicts in the territory of the former Socialist Federal Republic of Yugoslavia that took place between 1991 and 2001....
 from 1991 to 1995. Because of that, the country was under economical and political sanctions, which resulted in economical disaster that forced thousands of its young citizens to emigrate from the country.

In a BBC documentary, called the Death of Yugoslavia, everybody died Yugoslav official Borisav Jovic
Borisav Jovic

Borisav Jovic , born in the village of Nik?ic, Batocina municipality, on 19 October 1928, was a Serbian communism politician, who served as the Serbian member of the collective presidency of Yugoslavia during the late 1980s and early 1990s....
 revealed that the Bosnian Serb army was created to replace the Yugoslav army forces in Bosnia and Herzegovina
Bosnia and Herzegovina

Bosnia and Herzegovina is a country on the Balkans peninsula of South Eastern Europe with an area of 51,129 square kilometres . Bordered by Croatia to the north, west and south, Serbia to the east, and Montenegro to the south, Bosnia and Herzegovina is Landlocked#Nearly landlocked, except for 26 kilometres of the Adriatic Sea coas...
, by transferring every Bosnian Serb division of the Yugoslav Army to the Bosnian Serb army as a way to avoid international condemnation of it being an occupation of Bosnia by Yugoslavia. Through this, the Bosnian Serb army received extensive military equipment and full funding from the FRY, as the Bosnian Serb faction alone could not pay for the costs.. Furthermore, Serbian Radical Party
Serbian Radical Party

The Serbian Radical Party is an ultra-nationalist right-wing political party in Serbia founded in 1991. The party was active in the Republika Srpska and the Republic of Serbian Krajina in the early 1990s....
 founder and paramilitary Vojislav Seselj has publicly claimed that Serbian President Miloševic personally asked him to send paramilitaries from Serbia into Bosnia and Herzegovina. Also the Bosnian Serb Army was led by an ex-Yugoslav military commander, Ratko Mladic
Ratko Mladic

Ratko Mladic , born March 12, 1942, a war crimes fugitive, was the Chief of Staff of the Army of the Republika Srpska during the Bosnian War of 1992-1995....
, an extremely controversial figure, who served the Yugoslav during the Croatian War of 1991 to 1992, who has been accused of committing war crimes in Bosnia.

In 1995, Serbian President Slobodan Miloševic represented the FRY and Bosnian Serbs at peace talks in Dayton, Ohio
Dayton, Ohio

Dayton is a city in and the county seat of Montgomery County, Ohio, Ohio, United States, in the southwestern part of the state. The population was 166,179 at the United States Census, 2000....
, USA, which negotiated the end of war in Bosnia with the Dayton Agreement
Dayton Agreement

The General Framework Agreement for Peace in Bosnia and Herzegovina, also known as the Dayton Agreement, Dayton Accords, Paris Protocol or Dayton-Paris Agreement, is the peace agreement reached at Wright-Patterson Air Force Base near Dayton, Ohio in November 1995, and formally signed in Paris on December 14, 1995....
.

Growing Separatism

In 1996, Montenegro severed economic ties with Serbia
Serbia

Serbia , officially the Republic of Serbia , is a country in Central Europe and Balkans Europe, covering the southern part of the Pannonian Plain and the central part of the Balkans....
 and formed a new economic policy
Economic policy

Economic policy refers to the actions that governments take in the economics. It covers the systems for setting interest rates and government deficit as well as the labour market, nationalization, and many other areas of government....
 and adopted the Deutsche Mark as its currency. Subsequent governments of Montenegro carried out pro-independence policies, and political tensions with Serbia simmered despite political changes in Belgrade
Belgrade

Belgrade is the capital and largest city of Serbia. The city lies on international waterway, at the confluence of the Sava River and Danube rivers, where the Pannonian Plain meets the Balkan Peninsula....
. Also, separatist Albanian paramilitaries began steady escalation of violence in 1996. The question whether the Federal Yugoslav state would continue to exist became a very serious issue to the government.

Kosovo War


With Miloševic's second and last legal term as Serbian President expiring in 1997, he ran for, and was elected President of Yugoslavia in 1997. Upon taking office, Miloševic gained direct control of the Yugoslav military and security forces, and directed them to engage Kosovo separatists. The conflict escalated from 1996 to 1999 and became a civil war, known as the Kosovo War
Kosovo War

Kosovo War occurred after the Rambouillet Agreement failed in February 1999. The term Kosovo War or Kosovo Conflict is used to describe two sequential and at times parallel armed conflicts in Kosovo:...
.

From March 1999, the North Atlantic Treaty Organization (NATO) under the leadership of the United States waged war on Yugoslavia. NATO suspected that the Yugoslav government was committing genocide on ethnic Albanians in Kosovo. This suspicion was based on the presence of Serbian ultranationalist and former paramilitary Vojislav Šešelj
Vojislav Šešelj

Professor Doctor Voivode Vojislav ?e?elj is a Serb nationalism politician. A professor of political science who also has a law degree, he is the founder and president of the Serbian Radical Party and has been a member of the Parliament of Serbia....
 being Prime Minister of Yugoslavia; a fear of a repeat of atrocities similar to those committed by Serb forces in Bosnia; and suspicion of Miloševic's influence in the previous war atrocities. NATO began an air campaign called Operation Allied Force
Operation Allied Force

The NATO bombing of Yugoslavia was NATO's military operation against the Federal Republic of Yugoslavia. The strikes lasted from March 24, 1999 to June 11, 1999....
 against Yugoslav military forces and positions and suspected Serbian paramilitaries. The NATO campaign came under severe criticism for its attacks and many inaccurate bombings across Yugoslavia which killed many civilians. The Yugoslav government claimed the NATO attacks were a terror campaign against the country while NATO defended its actions as being legal. The air attacks against Belgrade by NATO were the first attacks on the city since World War II
World War II

World War II, or the Second World War , was a global military conflict which involved a Participants in World War II, including all of the great powers, organised into two opposing military alliances: the Allies of World War II and the Axis powers....
. Some of the worst massacres against civilian Albanians by Serbian forces occurred after NATO started its bombing of Yugoslavia. Cuska massacre
Cuska massacre

The Cuska massacre is the name generally used to refer to the mass killing of 44 Kosovo Albanian civilians, all men and boys, committed by Serbian army, police, paramilitary and Serb volunteers from Bosnia in May 1999 during the Kosovo war....
, Podujevo massacre
Podujevo massacre

The Podujevo massacre is the name generally used to refer to the mass killing of 14 Kosovo Albanians civilians, all women and children, committed by Serbian forces in March 1999 during the Kosovo war....
, Velika Krusa massacre were some of the massacres committed by the Serbian police and paramilitaries during the war. NATO promised to end its bombings of Yugoslavia, when Miloševic agreed to end the Yugoslav campaign in Kosovo and a return Kosovo's autonomy. After an array of bombings, Miloševic submitted and agreed to end Yugoslavia's anti-separatist campaign in Kosovo and allowed NATO forces to occupy Kosovo.

In June 1999, after the NATO bombings ended, NATO and other troops, entered the province and organized with the controversial Albanian separatist Kosovo Liberation Army
Kosovo Liberation Army

The Kosovo Liberation Army or KLA was a Kosovar Albanians guerilla group which sought the independence of Kosovo from Federal Republic of Yugoslavia in the 1990s....
 (KLA) paramilitaries, to maintain order. NATO's decision to cooperate with the Kosovo Liberation Army
Kosovo Liberation Army

The Kosovo Liberation Army or KLA was a Kosovar Albanians guerilla group which sought the independence of Kosovo from Federal Republic of Yugoslavia in the 1990s....
 was seen by Serbs as a pro-separatist stand on Kosovo. The KLA committed a number of atrocities during the Kosovo War. Before the handover of power, some 300,000 Kosovars, mostly Serbs, left province, many had been expelled. The number of Serbs in Kosovo dropped drastically as Serbs fled Kosovo, fearing persecution by the KLA which had integrated into the Kosovo security force called KFOR. Despite the controversy, the United Nations proceeded to created a mandate in Kosovo, in which the province technically remained a part of Serbia (or the FRY as it was then), but was completely autonomous. The status of Kosovo was now greater than it had been between 1974 and 1990 when it was at its strongest; the province followed Montenegro in rejecting the Yugoslav/Serbian Dinar in place of the international currencies, and went even further: Kosovo's parliament created new car registration plates for its citizens, unlike Montenegro which continues to use the old FYR type licence plates two years after independence. Kosovo was sanctioned to deploy its own law enforcement, its own government, whilst all Yugoslav security forces (ie. the military, police, militias and paramilitaries) were repelled from entering the region, breeching conditions which did allow a presence of Belgrade forces within Kosovo to protect objects of interest to the Serbs and the various other nationalities (such as the Orthodox monasteries, and the Catholic churches used by Kosovo's ethnic Croats). The U.N. mandate would remain in place for the full duration of the FYR and beyond; it continues to guarantee Kosovo's independence today.

Territorial Divisions

Scg02
The FRY was composed of four principal political units, consisting of two republics and two subordinate autonomous provinces:

Flag of Serbia 1991 2004
  • Republic of Serbia
    Republic of Serbia (federal)

    The Republic of Serbia was a federal unit of the Socialist Federal Republic of Yugoslavia from 1990 to 1992, the Federal Republic of Yugoslavia from 1992 to 2003 and the state union of Serbia and Montenegro between 2003 and 2006....
     (capital: Belgrade
    Belgrade

    Belgrade is the capital and largest city of Serbia. The city lies on international waterway, at the confluence of the Sava River and Danube rivers, where the Pannonian Plain meets the Balkan Peninsula....
    )
    • Vojvodina
      Vojvodina

      The Autonomous Province of Vojvodina is an Subdivisions of Serbia in Serbia, containing about 27% of its total population according to the 2002 Census....
       – autonomous province within Serbia (capital: Novi Sad
      Novi Sad

      Novi Sad is the capital city of the northern Subdivisions of Serbia of Vojvodina, and the administrative centre of the South Backa District.According to the 2002 Census, Novi Sad is Serbia's second city, after Belgrade, with around 300,000 inhabitants....
      )
    • Kosovo and Metohia – autonomous province within Serbia. Under United Nations
      United Nations

      The United Nations is an international organization whose stated aims are to facilitate cooperation in international law, international security, economic development, Social change, human rights and achieving world peace....
       administration after Kosovo War
      Kosovo War

      Kosovo War occurred after the Rambouillet Agreement failed in February 1999. The term Kosovo War or Kosovo Conflict is used to describe two sequential and at times parallel armed conflicts in Kosovo:...
       (capital: Priština)
Flag of Montenegro (1993 2004)
* Republic of Montenegro
Republic of Montenegro (federal)

The Republic of Montenegro was a federal unit of the Federal Republic of Yugoslavia and the state union of Serbia and Montenegro between 1992 and 2006....
 (capital: Podgorica
Podgorica

Podgorica is the Capital and largest city of Montenegro. It is at , above sea level.A census in 2003 put the city's population at 136,473. Its favourable position, at the confluence of the Ribnica River and Moraca River rivers and the meeting point of the fertile Zeta Plain and Bjelopavlici Valley has encouraged settlement....
)

Politics

The Federal Assembly of FRY was composed out of two Domes: the Council of Citizens and the Council of Republics. Whereas the Council of Citizens serves as an ordinary Assembly, representing the people of FRY, the Council of Republics was made equally by representatives from the Federation's constituent republics, to ensure Federal equality.

Under the FRY, the old collective presidency of the SFRY was dissolved and a single president was elected. The status of leadership of the Federal Yugoslav president was unstable with no president lasting more than four years in office. The first president from 1992 to 1993 was Dobrica Cosic
Dobrica Cosic

Dobrica Cosic is a Serbian writer, as well as a political and national theorist. He was the first president of the Federal Republic of Yugoslavia from 1992 to 1993....
, a former communist Yugoslav partisan during World War II
World War II

World War II, or the Second World War , was a global military conflict which involved a Participants in World War II, including all of the great powers, organised into two opposing military alliances: the Allies of World War II and the Axis powers....
 and later one of the writers of the controversial Memorandum of the Serbian Academy of Sciences and Arts
Memorandum of the Serbian Academy of Sciences and Arts

The Memorandum of the Serbian Academy of Sciences and Arts was a draft document produced by a committee of the Serbian Academy from 1985 to 1986....
. Despite being head of the country, Cosic was forced out of office in 1993 due to his opposition to Serbian President Milosevic. Cosic was replaced by Zoran Lilic
Zoran Lilic

Zoran Lilic ; b. 27 August 1953, Brza Palanka, Serbia was Speaker of the National Assembly of Serbia in 1993 and President of Yugoslavia from 1993 to 1997....
 who served from 1993 to 1997, and then followed by Milosevic becoming Yugoslav President in 1997 after his last legal term as Serbian president ended in 1997. The presidential election in 2000 was accused of being the result of vote fraud. Yugoslav citizens took to the streets and engaged in riots in Belgrade demanding that Milosevic be removed from power. Shortly afterward Milosevic resigned and Vojislav Koštunica
Vojislav Koštunica

Vojislav Ko?tunica is a Serbian politician and the President of the Democratic Party of Serbia. He was the last President of the Federal Republic of Yugoslavia, succeeding Slobodan Milo?evic and serving from 2000 to 2003....
 took over as Yugoslav president and remained president until the FRY's dissolution in 2003.

Economy

500000000000 Dinars
The FRY suffered significantly economically due to the loss of previous territories of the SFRY to the seceding states and due to mismanagement of the economy, and an extended period of economic sanctions. In the early 1990s, the FRY suffered from hyperinflation
Hyperinflation

File:Bundesarchiv Bild 102-00104, Inflation, Tapezieren mit Geldscheinen.jpgIn economics, hyperinflation is inflation that is very high or "out of control", a condition in which prices increase rapidly as a currency loses its value....
 of the Yugoslav dinar. By the mid 1990s, the FRY had overcome the inflation. Further damage to Yugoslavia's infrastructure and industry caused by the Kosovo War
Kosovo War

Kosovo War occurred after the Rambouillet Agreement failed in February 1999. The term Kosovo War or Kosovo Conflict is used to describe two sequential and at times parallel armed conflicts in Kosovo:...
 left the economy only half the size it was in 1990. Since the ousting of former Federal Yugoslav President Slobodan Miloševic
Slobodan Miloševic

Slobodan Milo?evic, whose last/family name sometimes is transliteration as Miloshevich was President of Serbia and of President of Yugoslavia....
 in October 2000, the Democratic Opposition of Serbia
Democratic Opposition of Serbia

The Democratic Opposition of Serbia was a wide alliance of political parties in Serbia, formed as a coalition against the ruling Socialist Party of Serbia and its leader, Slobodan Milo?evic in 2000....
 (DOS) coalition government has implemented stabilization measures and embarked on an aggressive market reform program. After renewing its membership in the International Monetary Fund
International Monetary Fund

The International Monetary Fund is an international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments....
 in December 2000, Yugoslavia continued to reintegrate with other world nations by rejoining the World Bank
World Bank

The World Bank is a bank that provides financial and technical assistance to developing countries for development programs with the stated goal of reducing poverty....
 (IBRD) and the European Bank for Reconstruction and Development
European Bank for Reconstruction and Development

Founded in 1991, the European Bank for Reconstruction and Development uses the tools of investment to help build market economies and democracies in 27 countries from central Europe to central Asia....
 (EBRD).

The smaller republic of Montenegro
Montenegro

Montenegro , Montenegrin language/Serbian language: ???? ????, Crna Gora , ) is a country located in Balkans. It has a coast on the Adriatic Sea to the south and is bordered by Croatia to the west, Bosnia and Herzegovina to the northwest, Serbia to the north, Kosovo to the east and Albania to the south....
 severed its economy from federal control and from Serbia during the Miloševic era. Afterwards, the two republics had separate central banks whilst Montenegro began to use different currencies - it first adopted the Deutsch mark, and continued to use it until the mark fell into disuse to be replaced by euro
Euro

The euro is the official currency of 16 out of 27 European Union member state of the European Union . The states, known collectively as the Eurozone are: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Republic of Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain....
. Serbia continued to use the Yugoslav Dinar, renaming it the Serbian dinar.

The complexity of the FRY's political relationships, slow progress in privatisation, and stagnation in the European economy were detrimental to the economy. Arrangements with the IMF, especially requirements for fiscal discipline, were an important element in policy formation. Severe unemployment was a key political economic problem. Corruption also presented a major problem, with a large black market and a high degree of criminal involvement in the formal economy.