RUSSIA AGREES WITH SERBIA’S ARMS SALE TO ARMENIA, SERB PRESIDENT SAYS

International Herald Tribune, France
The Associated Press
Dec 29 2006

BELGRADE, Serbia: Serbia has secured Russia’s consent to proceed
with a planned arms deal with Armenia, defusing earlier objections
from Moscow that caused upheaval at a Serbian weapons manufacturer,
the president said Friday.

President Boris Tadic said "the issue has been successfully resolved"
in his meeting with Russia’s ambassador to Belgrade, Aleksander
Alexeyev, who has given "a positive response" to Serbia’s appeal that
the Zastava arms company is allowed to sell guns and rifles worth
US$2.55 million (~@1.94 million) to Armenia.

Earlier this month Zastava criticised the Serbian government for
withholding permission for its previously arranged sale to Armenia,
allegedly because Russia – Serbia’s traditional ally – objected to the
Serbian supplier venturing into a market usually supplied by Moscow.

Zastava, based in the industrial city of Kragujevac, 90 kilometers
(55 miles) southeast of Belgrade, is majority state-owned but its
management enjoys some autonomy in negotiating arms deals. Actual
exports, however, can be completed only with a government clearance.

Zastava’s unionized workforce of 2,600 has been on strike, demanding
financial compensation from the government because of the blocked
sale to Armenia. Defense officials have flatly rejected the demand.

The dispute deepened this week when 80 Zastava workers seized control
of Kragujevac city hall, saying they would keep up their protest
until the authorities either approve the export or cover any loss
caused by the ban.

There was no immediate comment to Tadic’s announcement from Zastava
managers or protesting workers.

The issue has become an embarrassment for Prime Minister Vojislav
Kostunica ahead of Jan. 21 parliamentary elections. Tadic is his
political rival, heading the opposition Democratic Party that currently
leads in opinion polls.