Succession Back on the Agenda

After One Year

AIM Belgrade, November 14, 2000

After a year-long break, with the wave of change in Belgrade, the succession has again become the No. 1 topic on the territory of the former Yugoslavia. As opposed to the unsuccessful negotiations of the past eight years, this time around the position of the Yugoslav side should be completely altered. This is what Yugoslavia practically pledged to do at the time of its admittance into the U.N. and the OSCE. The division of the former country's assets among the five successor nations remains one of the major issues involved in Yugoslavia's acceptance into the international financial institutions, primarily the International Monetary Fund. Furthermore, succession has been assigned top priority by the new Belgrade authorities, as a precondition for bettering their relations with neighboring countries.

Thus, as far as the new Yugoslav authorities are concerned, the start of negotiations with the four other successors is practically a matter of days. The leader of the Democratic Party and one of the leaders of the Democratic Opposition of Serbia (DOS), Zoran Djinjic, said after his talks with the High Representative of the international community in Bosnia, Wolfgang Petritsch, that the DOS wants an urgent resolution of the succession issue and all other related matters as soon as the new Yugoslav government is formed, since "this is the door we have to enter if we are to go any further." Zarko Korac, the president of the Social Democratic Union, announced that Yugoslav President Vojislav Kostunica had already formed a Yugoslav team for the negotiations, and Yugoslav Prime Minister Zoran Zizic stressed that succession – the issue that according to John Skanlon, chairman of the American- Yugoslav Business Council, is a condition for lifting the outer wall of sanctions against the FRY -- is a priority of his cabinet.

The nature of the Yugoslav delegation's platform will be known rather soon. A meeting of all successors of the former Yugoslavia was scheduled to be held in Zagreb, on Nov. 17 to Nov. 19, on the fringes of a summit of Western Balkan countries. It is assumed that if nothing else, the five sides will at least establish a timetable for resolving the complicated issue of how to divide the common property and the former country's debts, its archives, as well as resolve other questions that do not directly concern the succession mass, but are part of the acquired rights of physical entities, such as citizenship and the payment of pensions, and of former large joint companies as well.

Four of the five successors -- Bosnia and Herzegovina, Macedonia, Croatia and Slovenia -- claim that the succession mass amounts to US$2.5 billion. Gold and hard currency reserves stored in the Basel- based Bank for International Settlements are estimated at being worth between US$700 million and US$1 billion. According to them, the hard currency reserves of the former Yugoslavia amount to US$5.5 billion, and real estate in foreign countries is worth US$250 million, though its market value is twice that much. The property of the Yugoslav People's Army was in 1990 some US$70 billion. According to the Badinter Commission in 1996, the assets of the former country were US$60 billion, of which 75 percent accounted for the property of the Yugoslav People's Army, whereas the gold and hard currency were estimated at US$1 billion. In April 1996, Slovenia claimed that the total value of the former Yugoslavia's property was US$94 billion, and the FRY said it was US$200 billion, having in view everything that had been built in the former country since 1945 using joint funds. There are those, however, who put the amount at hardly US$20 billion. As far as the debts are concerned, the Croatian government claims the portion that can be traced to the state and not to individual banks, amounts to US$4.1 billion, whereas the total debt is over US$13 billion. Slovenia also says that there is the issue of companies that were left on the territory of other former Yugoslav republics, and that in this respect, its claims from the FRY amount to US$1 billion. There is no precise data on the total value of such companies and their location. When the proposal on the division of assets is concerned, all the states, and at one point the FRY as well -- when Milan Panic was its prime minister -- accepted that the FRY should receive 36.52 percent, Croatia 28.49 percent, Slovenia 16.39 percent, Bosnia and Herzegovina 13.5 percent and Macedonia 5.4 percent of the total assets, and of the total debts as well.

For a full eight years the successor countries, however, could not even narrow their differences, not to mention reach any kind of accord either on this, or any other outstanding issue. The first negotiations began during the London Conference on the Former Yugoslavia, in 1992, when a Group for Succession was formed, that was later to become part of the Geneva Conference. Its operation was frequently stalled, mostly because the Yugoslav delegation insisted on the country's continuity with the former Yugoslavia, or because it rejected all official proposals. The delegation kept firmly refuting the decisions by the Badinter Commission and insisted that the issue of state property should be clearly defined and that the partition should not be carried out starting with the same date for all former Yugoslav republics.

After the Dayton peace agreement was signed, the dispute was transferred from Geneva to Brussels where it came under the jurisdiction of the Council to Implement the Dayton Accords, that is, its agency that tackled the former Yugoslavia's succession – the Committee chaired by High Representative Karl Bildt. This is when the chief negotiator, Sir Arthur Watts, began shuttling from one capital of the newly-founded states to another, and when representatives of the five states began arriving for a series of meetings in Brussels. It turned out that not had the position of the Yugoslav delegation failed to change, but that Yugoslavia was now refusing to allow the four other countries to have access to archives of the former state. On their part, they were becoming increasingly impatient and ever more unified in their demand that the only thing that could be done ought to be done. This involved the partition of that portion of the assets that were not disputed. Starting from that, Sir Arthur Watts proposed a "mini agreement" to regulate the division of diplomatic missions abroad, the gold stored in Basel, and the archives.

Belgrade, however, refused all these proposals. As far as the gold was concerned, its argument was that a better part of the gold originally belonged to the Kingdom of Serbia and could not be considered common property. The counter-argument of the other four was that the Kingdom of Serbia was deeply indebted when it entered the joint state. As far as the foreign assets were concerned, the Yugoslav side claimed that not all of the diplomatic missions were built by the former country, and that some of them were the property of Serbia and Montenegro. No agreement could be reached on the archives either. The documents cannot be partitioned, they have to remain where they are. About that time people in Belgrade began questioning how, for instance, would the cinematheque be split. Should the film Slavica be considered Serbian or Croatian? Should ownership be determined according to the ethnic origin of the film's director, or on the basis of who gave the money to make it? Certain canine experts asked who would be given the right to claim the famous shepherd breed from Mt. Sara as his.

Despite the difficulties he encountered, Sir Arthur Watts announced in mid-1996 that the issue of succession could end in two years, and that the delegations of all five countries would sit around the negotiating table in six months' time. In January 1997, a new round of negotiations was indeed organized in Brussels to discuss the criteria for identifying the state property, the former Yugoslavia's assets abroad and the archives. The Yugoslav side then announced that it considered the Krsko nuclear power plant and the pipeline on the island of Krk as property of the former state. The other four states remained true to their earlier position that state property was already partitioned by the 1974 Constitution, when national economies were created, and that the subject of partition should only be the assets left in the FRY and abroad -- the property of the Yugoslav People's Army, the archives, gold, embassies and other real estate in foreign countries. In July 1997, Sir Arthur Watts could but note that "the five successor states have remained deeply entrenched in their respective positions," and, after laying the entire blame on the FRY, added that "the situation shows no signs of moving forward." The then head of the Yugoslav delegation, Academician Kosta Mihajlovic, responded in kind by saying that "the Badinter Commission has sided with the secessionists, and that solutions are being forced on the FRY, though it is not a new arrival on the political scene." Mihajlovic was particularly angry with Croatia and Bosnia and Herzegovina, which demanded that the FRY pay war reparations to them. In such an atmosphere the third round of negotiations was held in Brussels, again showing no signs of progress, except for the expectations of Sir Arthur Watts that despite all the misunderstandings a Memorandum on Understanding would be prepared by the end of the year, envisaging a concrete plan for the process of dividing the former state's property.

The four other successor states saw their chance in a proposal that the agreement provided for the division of gold and the prevention of Yugoslavia from using its freshly thawed accounts in foreign banks. The Yugoslav side, however, came forth with its version of the Memorandum on Understanding, which was completely at odds with Watts' proposals. The idea to ensure some US$250-300 million on the basis of the division of the gold stored in Basel was thus rejected, though at that time Yugoslavia's trade deficit exceeded US$1 billion, and the budgets of the FRY, Serbia and Montenegro surpassed the sum of US$4 billion. All of the following year passed without any agreement, and the only change, except for the makeup of the Yugoslav delegation, was a statement made by Mihajlovic: "We aren't the only successors, though it is our view that the state and legal continuity is, in fact, ours." All rounds of negotiations in Brussels held in 1998 ended without a solution. The only interesting point was when Yugoslavia, as required, presented the National Bank of Yugoslavia's balance sheets, but the other four countries dismissed them as forgeries. Sir Watts was then forced to warn that the negotiations would be completed by May 31, in one way or another.

Somewhat later the negotiations were interrupted and arbitration was proposed instead. In this, official Belgrade was again on its own against the others. For Yugoslavia, the only credible instance was the International Court of Justice in The Hague, which the other four states a priori rejected. Another round of negotiations was attempted at the beginning of 1999, but later the issue of Kosovo, followed by NATO intervention came to the forefront, fully marginalizing the issue of succession. Meanwhile, the four rivals of Yugoslavia, in line with the Badinter key, joined all international financial institutions, taking it upon themselves to repay their respective portions of the former Yugoslavia's debt while not abandoning their claims to the common property.

Now that there is a clear will on the part of the FRY to openly discuss all matters of dispute linked to the succession issue, as Zarko Korac, a DOS leader, put it, "first the easier ones, and then the others," there is also a possibility of resolving this matter, which usually accompanies the falling apart of countries. In talks with his Macedonian counterpart, Aleksandar Dimitrov, in Belgrade, Yugoslav Foreign Minister Goran Svilanovic confirmed that Yugoslavia was ready for dialog. Yugoslav economists, especially those making up the G-17 Plus group, do not hide that it would be extremely useful if the first agreement concerned the gold stored in Basel. The portion that Yugoslavia is entitled to, worth some US$250-300 dollars, could help to resolve the acute problems the country is currently facing. Since Yugoslavia is in a hurry, and the other successors closed a deal on the partition of the gold years ago, there is no reason why, when the former country's succession is at issue, reports that one open issue after another has been resolved should not finally start coming in, instead of monotonous reports of the failure of talks.

Tatjana STANKOVIC

(AIM)