ONLY UNCERTAINTY IS CERTAIN

The Economy of the Republic of Srpska

The Republic of Srpska has inherited 330,000 work places out of which 85 percent are vacant, as well as USD 600 million of old foreign currency household deposits, USD 800 million of the SFRY foreign debt, 170,000 pensioners, 40,000 beneficiaries of disability allowances for war veterans.

AIM, Beograd, March 20, 1996

Only several days after firing a burst into the air to welcome the peace reached in Dayton, a Serbian fighter, Nikola Udovicic, all covered up with snow on the Vlasic front asked himself - What next? "Both I and this state were better off while I carried my gun. Now I don't know what to do and how to support my family, and the state does not know what to do with me. With what and where to occupy me", wonders this fighter.

The Republic of Srpska (RS), the state Udovicic is referring to, has not dared yet to publicly ask this question which is troubling those returning from the war. In return it has offered a partial inarticulate answer which requires less courage than earnest concern. It was not once that the Bosnian Serb leaders intervened in the economy only verbally, with empty phrases suggesting that the overall economy of the RS will be privatized "according to the Czech model", which should mean an ideal per capita division of the state wealth. (Incidentally, the Czechoslovakian Prime Minister Mechiar stopped the implementation of this model on the day he assumed office.)

Even if this is not demagogy, if it is not a case of appeasing one's own guilty conscience and the dissatisfaction of others, in other words even if this truly comes about - what would in that case the shareholder Udovicic, who has not managed to properly clean the mud off his uniform, be able to do when he gets his package of shares? Surely not to collect dividens. Since the capital in his hands is dead capital, with very bleak prospects of revival.

When the border lines were being drawn someone calculated that within the RS the Serbian entity retained 55% of the overall agricultural land, about 50% of high quality forests, 35% of power installations, half of the transportation network...What once represented the industrial power of the unified Bosnia and Herzegovina has not been calculated yet, but the RS officials are satisfied that they did not end up with socialist "giants" of the Zenica and Tuzla type "which require enormous state investments, cannot be privatized, and which the state will not have enough strength to carry on its shoulders" (Dr.Mladen Ivanic).

But what can reassure suspicious Nikola Udovicic and his fellow combatants that if they truly get them, then they will indeed have healthy shares which will bring them dividends?

The Chamber of Commerce of the RS has registered 2184 pre-investment economic projects, from which it has to select candidates to be presented to international financial institutions which will participate in the reconstruction of Bosnia and Herzegovina. The region of Banjaluka nominated 73% of all the programmes, while the most ambitious in the economic sphere is the agricultural complex which is represented with 500 programmes. All projects taken together require a financial injection of approximately three billion and 240 million USD. This figure is almost equal to the total funds for the reconstruction of Bosnia amounting to 5.1 billion USD, and by more than a half exceeds the part of that cake intended for the RS - 1.4 billion USD. It should also be recalled that these are funds that Bosnia and Herzegovina is supposed to receive within the next four years.

In the atmosphere of panic caused by the limited monetary resources extended over a too long time framework and the exhausted and overextended local funds for the revival of production, of little comfort are the words of Professor Mladen Ivanic of the Banjaluka Economic Faculty which warn that no illusions should be entertained that the world will simply allow "us to decide at our own discretion how to use that money".

Before anything comes to Bosnia and Herzegovina, a "consolidation" of energy capacities will first have to be carried out. And in the RS they are in a disatrous state. Dr.Milorad Skoko, Minister of Industry and Energy in the Government of the Bosnian Serbs said to the Belgrade press that the power generation capacities have not been overhauled for five years and that they "represent a limiting factor in the revival of production". Apart from electric power plants, the high-voltage transmission line network also requires extensive repairs. According to Skoko, USD 200 million are necessary for the rehabilitation of the overall energy system: 70 for transmission, 80 for distribution and 50 for generation.

Development plans for the RS power industry are based on concessions and foreign investments, but as the Serbian Minister is aware, it will not be easy to attract foreign investors to a politically unstable region. The starting of basic economic capacities will hinge on political wisdom or at least political opportuneness, which was in political practice to date only the subject of scorn.

Apart from the electric-power plants with a total installed power of 1,300 MW, the fate of other capacities which were once considered "vehicles of development" - "Birac" in Zvornik, "Incel" and "Cajavec" in Banjaluka, the refinery in Bosanski Brod, the iron ore mine in Ljubija - depends on the degree of demonstrated political wisdom (or at least opportuneness). These are capacities which, together with other issues are an argument to support the claim that the Serbs did not fare badly in the division of property.

Whether "Incel" will be anything more than a producer of toilet paper which is smuggled to Belgrade flea markets, will primarily depend on the ridding of the economy of political will imposed by the three Bosnian-Herzegovinian entities, coupled with the voluntarism of the official Belgrade and Zagreb. (If we keep within the borders of the former SFRY.) Suspecting which direction economic issues may take, the here frequently cited Dr.Mladen Ivanic with his characteristic realism, warns that the framework for the economic reconstruction is Bosnia and Herzegovina, which should not be overlooked "as long as it exists".

The Pale Minister of Industry and Energy Dr.Milorad Skoko ignores stands like those of Dr.Ivanic. "It is envisaged (by the Dayton Agreement; note of the author) that railways, electric-power systems - the infrastructures of the entities should mutually be linked through public corporations into a unified economic space...We shall oppose such plans with our strategy", stated Skoko to the Belgrade "Politika". He notes that one of the conditions for the approval of the promised credits is incorporation in the unified financial system of Bosnia and Herzegovina, but, as he promises, "we shall not give in and will therefore have to rely on ourselves".

If it faces bare reality the RS shall, inter alia, have to realize that it has no foreign exchange reserves, that it has inherited 330,000 work places (280,000 in production) which are filled 15% at most, that from the former SFR of Yugoslavia it has inherited about 800 million USD of external debt, about 600 million USD of old foreign currency household deposits, that it has 170,000 pensioners, and as reported by "Vecernje Novosti" - 40,000 beneficiaries of disability or widow's allowances for war veterans. To rely on oneself either means not to see oneself or to have such selfconfidence that is verging on arrogance. To rely on the Republic of Serbia means practically the same. Mostly due to the war in Bosnia, Serbia is collapsing. Even if it were not so, economic (as well as political) reliance on the official Belgrade means placing oneself into an economic (and political) colonial position. As it has been confirmed by years of practice, the official Belgrade does not know how to rule but through arrogant centralization, colonizing even the city of Belgrade itself, not to mention Sumadija, Vojvodina or the Republic of Srpska.

Anyway the RS felt the pathological political jealousy and insatiable urge for possession when on August 4, 1994 Serbia imposed an embargo on the Drina river. As of that date its businessmen waited for the lifting of trade barriers which finally happened on February 28, the same date the Security Council suspended the sanctions, and two days after Russia did the same. However, the lifting of the sanctions on the Drina river did not bring anything particularly new. True, unified payment operations were introduced, but the regime of the movement of goods remained the same: the right to exports and imports, same as under the sanctions, is granted to a specific number of firms, between five and ten of them. The choice of firms and individuals depends on Belgrade's preferences. In the exchange of "material goods", Serbian firms were always more inclined to importing raw materials, than to investing in the reconstruction of plants for final production. The most illustrative example is the "Mitros'" 150 grams liver paste which, as the Banjaluka mayor Predrag Radic put it in those war times, was paid with 2.5 kilos of liveweight of fattened stock from Levca Polje.

The regimes of both Belgrade and Pale demonstrated the same inclination: to resisit the economic collapse and lack of any prospects by illusions. In the thickest fog Belgrade promoted delusions on the construction of a "Beopolis" which should allegedly attract no less than USD 10 billion in foreign investments. Pale offered the project of a New Serbian Sarajevo, which cynics have already christened "Palepolis", as well as of new - Serbian - Mostar, Kljuc, Petrovac, Krupa on Una...According to expert estimates from the Banjaluka Economic Institute all these projects can be kissed goodbye. As it has been calculated, only 350,000 flats, 60 sqm on the average, which the imagined New Sarajevo with 140,000 inhabitants would require, would cost USD 4.2 billion, while the whole city with the designed infrastructure would swallow up the entire fifteen year national product (together with its projected growth).

But, what to offer to our hero Nikola Udovicic and his fellow-combatants?

They do not believe that they would ever be able to return to their textile factory in Sanski Most, and the road on the left bank of the Drina river, where the installations the Serbs managed to pull out of the Sarajevo industrial complex are located, seems long and uncertain. While he has no particular opinion of the "Palepolis", work in the forest economy is hard and he was not fortunate enough to get a job in Djukic's private oil company...There is nothing else to do but wait and hope. The most certain chance he had till now was to get a part of the forest, which the authorities promised to give every fighter, but decided against it in the end. Chances to feed his family with his own hands are but few and meager. It seems that the first foreign capital will come from Italy to the enterprise "Serbian Forests". Great cautiousness is present in the case of larger and longer term investments.

For the time being one of Udovicic's fellow-combatants from Banjaluka has decided to save what has remained and therefore asked a British tank driver from the IFOR units who was just getting inside through the turret: "Hey, why are you destroying our roads? Who will pay for the damage?" Several moments later, an interpreter's head popped out: "He told you not to worry. Track trails on the asphalt are nothing compared to what you yourselves have destroyed in your country".

(AIM) Perica Vucinic