Serbia has a serious image problem. Shortly after moving to Belgrade last year your correspondent visited London, wearing a locally designed jacket. The garment attracted compliments galore – until people knew that it was made in Serbia and their admiration turned to revulsion: the images of 1990s Balkan butchery are apparently too potent to shake off. It is a scenario that well-travelled Belgrade-based photographer Olivera Indjic recognises all too well. “In Paris, I met some people from Slovakia and I told them they must come and visit,” she says, “but they asked, ‘is it safe?’” From where Indjic is sitting at a pavement café on the corner of Belgrade’s Students’ Square, the main hazard would appear to be sunburn.

A short walk across the blossom-strewn park, the Old Town’s main street, Knez Mihailova, is buzzing. Traffic-free since 1987, it runs for a thousand gallery, shop and restaurant-lined metres from the fountains at Republic Square to the beautifully shady Kalemegdan park, with its ancient fortress overlooking the confluence of the Danube and Sava rivers. The early spring temperatures nudge into the twenties, encouraging customers to linger al fresco over their lattes – and poking fun at those who confuse Serbia with Siberia. This raises a chuckle from Belgrade’s mayor, Dragan Djilas.

“Yes,” he says, “people around the world do not understand that Serbia is not Siberia. But when they come here, then they see it is different, that they can have the best time of their lives. Belgrade is an open city with open people and a lot of possibilities; our mentality is very Mediterranean, it’s just that we don’t have the sea.” Djilas is more than just a cheerleader for his city. Now into his second term as mayor, in the 1990s he was one of the leaders of the student protest movement against the autocratic Slobodan Milosevic, whose nationalist policies proved disastrous for Serbia and much of the former Yugoslavia.

After co-founding the independent broadcaster B92, Djilas moved into business through a successful media sales company before entering politics in 2004. Since November last year he has been the leader of the Democratic Party, which is now the main opposition. He likes to boast that in the middle of the worst economic crisis in a hundred years, Belgrade has been rebuilding.

An increasing number of flights are landing at the renovated Nikola Tesla Airport, which is compact, efficient and just a 20-minute drive from the city centre. A spectacular new bridge, the first for decades, links the Old Town and the business district in Novi Beograd. An electronic payment system, though unpopular with some residents, makes new trams and buses economically viable.

Djilas believes Belgrade has the potential to reclaim its place as the “centre of everything” in south eastern Europe, with Serbia as “the leader of the Balkans” providing the link between east and west. But he laments the lingering effects of the 1990s which turned Serbia into a pariah state and drove many of its best people away. “The whole of Europe was open, lots of money was being invested but in Serbia we were under UN sanctions. Between 1991 and 1999 about 300,000 quality people left – and we continue to pay for this today.” By some measures, Serbia is struggling. Average wages are low and unemployment is high. Many of the old state industries have gone without any private-sector equivalents replacing them, meaning new graduates struggle to find work.

But as Djilas notes, “When you have those social problems, the only way to survive is to be creative.” Younger Serbs are certainly doing that. Empty properties and low rents have established the perfect conditions for a new generation of well-educated people. Indeed, the cultural buzz around Belgrade has led Germany’s venerable Frankfurter Allgemeine newspaper to label the city “the new Berlin”.

Radomir Lazovic rolls his eyes at the description. “There’s always potential but we need realisation,” he says. An artist and designer, Lazovic co-founded Mikro Art, which installs art in public spaces. He is also involved in the Inex Film collective, which turned a derelict building into an art school with work spaces for architects, designers and other creative types. “There’s no enemy anymore, no Milosevic,” he says. “You have to do something yourself.”

This includes Street art gallery, in an alley near the former trade union hall in Belgrade city centre. Its success has led to Lazovic fielding requests from Serbia’s Museum of Modern Art and the National Museum to display some of their works while prolonged renovation continues at the institutions.

Along with architect and fellow Mikro Art member Iva Cukic, Lazovic travels the country with workshops, encouraging young Serbs to claim spaces for their own projects. While some are reluctant to step outside social norms, others are taking control of their own future.

Just around the corner, Aleksandra Lalic is an example of the entrepreneurial spirit that has flowered in recent years. She runs a small boutique, selling her own designs, in the Choomich Design District. Where once a derelict shopping precinct stood, now there are two levels of quietly chic ateliers. “We found an abandoned place and made a deal with the owners to get a low price,” she says. “The economic situation lowers the barriers for entry. We invented this place because it was in the city centre and abandoned after the 1990s – that was a great opportunity for us.”

Beyond start-ups and cultural projects, big business is returning to Serbia. Fiat has opened a new factory in Kragujevac (featured in issue 63) to replace the old Zastava facility which once turned out the much-loved – and derided – Yugo car. That’s pulling in not only additional automotive businesses but also other sectors catching on to Serbia’s attractions. “Salaries are cheaper. One company told me they can get 10 manufacturing employees here for the same price as one in Germany,” says Branko Vojnovic, a partner at the Serbian branch of auditors kpmg. “There’s the geographic location, a favourable tax system, free-trade agreements with Russia and the EU and some very knowledgeable people.” Vojnovic says the demise of Milosevic marked a “reset” for Serbia but acknowledges that the situation is far from perfect. He cites excessive red tape and the need for reforms to which he is keen to contribute.

But many Serbs cite corruption as their major concern – the country’s biggest problem after unemployment and poverty according to a 2011 UN survey. Well into the new century, state-owned interests were being sold off in a less-than-transparent way; that rankles with those who believe nothing came of it other than the creation of a well-connected tycoon class. Since last year, an anti-corruption campaign has made the Progressive Party leader, Aleksandar Vucic, the most popular and powerful politician in the country. Serbia’s richest man, Miroslav Miskovic, is among those who have been arrested – though sceptics note that most of the targets of the campaign had connections to the previous government, led by the Democratic Party.

Still, the climate in Serbia has changed enough to draw back some of those whose departures in the 1990s caused Djilas such regret. In his office-cum-workshop in central Belgrade’s Vracar district, Igor Gligorov is putting the finishing touches to an array of aluminium and acrylic components that together resemble an attempt at abstract sculpture. It is, in fact, a piece of high-end hi-fi equipment. This qualified engineer – and classical cellist – started designing turntables when he returned to the city after a decade abroad. Now his Soulines range is made in Serbia and exported to discerning listeners in Russia.

“From all the contrasts – low and high, black and white – you can get something good,” says Gligorov of Serbia’s emergence from the dark days that began with the break-up of Yugoslavia in the 1990s. Noting that “most of the people didn’t want war”, he says that relationships among those whose countries once comprised a single nation are once more becoming friendly.

“When we go skiing in Slovenia the people there are waiting for us. They’re so happy to see us, not just for the money but as a reminder of the good times.” Nikola Zivanovic agrees that it was “the chance to create something from nothing” that persuaded him to leave his City job in London to return home as a consultant to the National Bank of Serbia more than a decade ago. Now he runs a private financial consultancy, owns stakes in a number of restaurants and nightclubs and has “no regrets” about choosing to come back.

Sipping coffee at a riverfront restaurant that was until recently a derelict quayside warehouse, Zivanovic is nevertheless cautious about the progress that Serbia has made over the past decade. “There isn’t a critical mass of people with vision,” he says but acknowledges that things are much better than they were. The key to further progress, he believes, is finally to let go of the national myths of the “glorious Serbian past” and look to a future in the EU.

That is starting to look more likely as EU-brokered negotiations with Kosovo seek a normalisation of relations with the republic, which broke away from Serbia in 2008 – at last bringing down the curtain on the conflicts of the 1990s that cost this country so much. Then Serbia may finally be able to shake off an image that does no favours to its creative people, or those who wear their designs.

1989 Slobodan Milosevic makes a notorious speech in Kosovo promoting Serb nationalism, just as Kosovo’s long-standing autonomy is being restricted.
1991 War begins in Croatia and, a year later, in Bosnia. Serbia’s involvement as the Federal Republic of Yugoslavia results in international sanctions.
1995 The Dayton Peace Accords end the Bosnian war but only after Serb forces massacre 8,000 Muslims at Srebrenica. Serbs flee Croatia during the Operation Storm bombing campaign, many never to return.
1999 Nato bombs Serbia for 79 days over abuses against Kosovo’s Albanians.
2000 Widespread demonstrations topple Milosevic. Reforming new prime minister Zoran Djindjic heralds a new era.
2001 Serbia hands Slobodan Milosevic over to the Hague war crimes tribunal.
2008 Kosovo unilaterally declares independence, which Serbia, backed by Russia and China, refuses to recognise.
2012 Nationalist parties gain power for the first time since Milosevic was ousted.
2013 Serbia agrees a deal to normalise relations with Kosovo. The European Commission recommends the start of EU membership talks with Serbia.

If Serbia hired me to advise them, first I’d tell them: “Relax. Most people can hold several contradictory associations with a country simultaneously. Marketers don’t give humanity enough credit on that but it’s true and that’s lucky for you.”

Then I’d go hunting for positive associations with Serbia that could be engineered, cajoled and invited. The greatest single asset at that country’s disposal is the capital Belgrade; every foreigner I’ve met who’s visited the city likes it and sometimes flat-out loves it. So Serbs should work at creating an understanding that “Serbia is the country with Belgrade in it.” That’s hard on other parts of the country but we must start somewhere.

Most of all, I’d try to bring a tonne of visitors to Belgrade on the premise that anyone who visits Serbia’s capital gains an instant fondness for Serbia. Here’s how I’d do that (it’s a bit fancy so bear with me): When I visited Serbia, I repeatedly heard locals call Belgrade the “Barcelona of the Balkans”. This is wonderful because it helps make Belgrade both legible and attractive. If there’s a shred of validity in that comparison it could be tremendously useful for marketing; but how much stronger the claim would be if made not only by Belgraders but also by Barcelonans.

Specifically: what if Belgrade were able to seduce the Barcelona city council into officially anointing Belgrade as the “Barcelona of the Balkans”? Then Belgrade can market itself strongly in Barcelona; just forget all other target markets and lay on direct flights, good advertising and intensive promotion for a few years until, say, 50 per cent of all Barcelonans who take city breaks have spent a weekend in Belgrade.

Barcelona is exceptionally brand savvy (in 2008, the municipality cut a formal deal with Mango for the retailer to refer to itself as Mango Barcelona), so the possibility of an endorsement deal with Belgrade, a fellow European city, doesn’t seem farfetched. If I were advising Serbia, I’d tell them to go for it.
Jeremy Hildreth, nation-branding expert

1. Increase transparency
   Serbia was blighted by a series of sell-offs over the past two decades. State-owned assets passed into private hands with little benefit to most people. Following through on the current anti-corruption drive would be a start but, in the long term, reforms are needed to make sure there is no repeat.
2. End tit-for-tat politics
   There is a tendency for whichever party is in power to target its opponents and their allies with legal action. It is not quite at Bangladesh levels but does little to help develop Serbia’s young democracy.
3. Renovate the railways
   The network is dilapidated after decades of neglect, limiting Serbia’s connections to its neighbours. A forthcoming billion-euro, Russian-funded renovation needs to be only the start of serious investment.
4. Cut red tape
   A problem not only for locals but for foreign prospective residents, too. Gaining residence can involve half a dozen visits to the police and an old-school grilling on the applicant’s personal history. A friendlier system would attract investment and talent.
5. Reopen the galleries
   Serbia has a fine international art collection but nobody can see it. The National Museum has been closed for renovations for a decade, the Museum of Contemporary Art since 2008. Reopen them and Serbia will have two more jewels.