BELGRADE – Foreign funds could flow into Serbia if a European Union report next month gives the green light for closer ties with the bloc, the head of the European Bank for Reconstruction and Development (EBRD) said. Belgrade hopes to get a positive feasibility study in March allowing it to start talks on a Stabilization and Association Agreement, the first step to eventually negotiating full EU membership. EBRD head Jean Lemierre told Reuters in an interview that the bank was firm in its belief in Serbia, but a positive nod from the EU would still make a difference. The EBRD, the development bank for Eastern Europe and the former Soviet Union, has committed 650 million euros to Serbia since 2001 and plans to invest 200 million in 2005. «Our commitment is strong… a positive feasibility study will not so much change EBRD’s commitment to Serbia, but it will change the attitude of the people we work with,» Lemierre said. «It is clear that a positive EU feasibility study will change the attitude of investors and create a new environment, it will drive a reform agenda,» he said. The main obstacle on Serbia’s path to the EU is Belgrade’s failure to hand over war crimes suspects to the UN court in The Hague. Prime Minister Vojislav Kostunica has urged those indicted by the court to surrender but has said he will not arrest them for fear of public unrest. The surrender of an indicted general last week was seen as a goodwill gesture ahead of the EU report, but many other suspects remain at large, including the court’s top fugitive – Bosnian-Serb wartime army commander Ratko Mladic, wanted for genocide. «It is clear that a negative report will have an impact on the business climate and on investments. There is a clear understanding of the difficulties,» Lemierre said. He added that as long as there was no target that the Serb people could work toward, like eventual EU membership, it was hard for economic reforms to take off, and such an incentive could come from the EU feasibility study. Lemierre was in Belgrade to check preparations for the annual meeting the bank will hold in May in the Serbian capital, the first major financial event in the city in 30 years. The meeting, which should attract thousands of investors, officials and journalists, is seen as a chance for Serbia to showcase its commitment to further reforms, which slowed down substantially after the killing of reformist Prime Minister Zoran Djindjic in March 2003. “The first period of reforms was achieved by Serbia very quickly… in the first two years Serbia achieved more than many countries in 10 years, and then what happened? The challenge now is to restart the process,» Lemierre said. Serbia’s toughest challenge is the restructuring of socialist-era monopolies in energy, railways, air transport and telecommunications. The drive to boost efficiency could cost 60,000 people their jobs in a country with a 35 percent jobless rate.