U.S. Steel introduced Serbian Ambassador Ivan Vujacic to customers and suppliers in Pittsburgh yesterday, one step in the steelmaker's effort to promote economic development in the war-torn Central European country.

Lake Fong, Post-Gazette Serbian Ambassador Ivan Vujacic talks to reporters yesterday. Click photo for larger image.

The steelmaker hopes to match its success in the Slovak Republic, where the purchase of that country's troubled steel producer four years ago has paid handsome dividends for U.S. Steel and revitalized a stagnant economy. "We expect the same kind of results in Serbia," executive vice president John H. Goodish said at a press conference.

In many ways, the task is more challenging in Serbia, still reeling from 10 years of civil war and genocide under the regime of former president Slobodan Milosevic. U.S. Secretary of State Colin Powell recently suspended $26 million in promised reconstruction aid because of Serbia's lack of cooperation in prosecuting war criminals.

U.S. trade relations with Serbia and Montenegro, which were combined after the breakup of Yugoslavia, were normalized in December.

"We expect this to be a major boost to the economy," Vujacic said.

He said the Balkan wars of the 1990s resulted in a 50 percent decline in the country's gross domestic product and the unemployment rate is about 30 percent. Unemployment is overstated because many work in Serbia's black market, one of the many problems being addressed, Vujacic said.

He said reforms necessary to attract foreign investors are well under way, including stabilizing exchange rates, privatizing businesses, reducing tariffs and export/import quotas and retooling the banking industry.

U.S. Steel acquired Serbian steelmaker Sartid in September for $33 million, including $23 million in cash, $6 million in transaction costs and $4 million in pension and other employee-related liabilities. The mill is only operating at about a third of its annual production capacity of 2.4 million tons.

"As our steel plant there becomes stronger and produces more product ... that will generate other jobs in the country," Goodish said.

The purchase agreement requires U.S. Steel to invest $157 million over the next five years to rehabilitate the mill and for economic development. It also promised to keep 9,000 employees over the next three years, excluding attrition and workers terminated for cause.

Goodish said economic development efforts will center on connecting companies that have invested in Serbia with potential investors. The companies carry more credibility when answering questions about Serbia's political stability, the quality and reliability of the work force and other issues, Goodish said.

Among those attending a reception for Vujacic last night were officials from Tube City, a U.S. Steel scrap vendor based in Glassport that has set up operations in Serbia, Goodish said.