LOST HOPES

Economic Balance Account of 1996 in FRY

After lifting of the sanctions, in FRY only 39.4 per cent is being produced of everything that industries of this country used to produce in the long bygone, prewar 1989. Despite that, the task of re-joining the international community, without which the Yugoslav economy stands no chance of revival, has been postponed for 1997 by the authorities

AIM Podgorica, 7 January, 1997

In the end of a great novel on war and peace the following has been written: "And life went on and one had to live". In the end of 1996, the year of definite "victory of peace over war", as regime propagandists write, the economists summarize the past year in almost the same words of quiet disappointment.

Last year had begun as the year of great economic ambitions and prodigious, not just pre-election promises. It had set out, as it seemed most important at the time, with suspension of the sanctions and announcements of the authorities about serious transitional aspirations. But, all that has been spent, promises about a reform have been eaten up, just as the economy, powerless to cut loose from politics, has been using its own substance during the entire year. The few achieved results were in the end, especially after election thefts in Serbia, discredited, so that 1997 is beginning with anxiety and general evaluation that in the economic sense it will be more difficult than the past. The somewhat different position of Montenegro in the table of Yugoslav economic developments can hardly change the general picture. Montenegrin participation in economic potentials and movements in the country is negligible, and its political influence on developments in FRY is the topic of numerous jokes, so that in general it contributes even more to the infamous reminder of the syndrome of a "statistical error".

But, first things first. The year began with awakened hopes due to suspension of the sanctions. After 1,253 days of isolation, on 22 November (it has not yet occurred to anyone to suggest this date to be a state holiday), the FRY received a ticket to enter the world. Therefore, the beginning of the year passed in thunderous victorious optimism of the authorities, but also the suddenly awakened expectations of the population. Suspension of the sanctions created hope in return to normal life, more regularly paid salaries, more secure employment, higher standard of living... Impoverishment of the population lasted too long, and social peace was preserved by fear of possible consequences of social disturbnces, especially by general complicity in failures and crimes of the regime, and of course, successful use of the sanctions as an ideal alibi for management and the authorities.

The leader of Montenegrin Trade Union, Danilo Popovic, assesses last year as follows: "Although official statistical indicators speak of successful increase of production in the economy of Montenegro in the course of this year, from the aspect of the trade union we cannot be satisfied. Statistics shows enormous shifts ahead in many sectors, but we are, unfortunately, witnessing social collapse of the workers. When in 1990, the known Rally of the Hungry was held in Niksic, the poverty coefficient in the country (share of the poor in the total population) was 14.1 per cent, and last year it was almost 30 per cent. This is the true picture of social decline which the society was struck by and, primarily, the employed part of the population. The consumer's basket was in the meantime reduced from 248 items to just 45 and now we are facing a severe battle to restore its previous content. In the total number of the poor in 1990, the 'proletariat from the pavement' formed 39 per cent, and now as much as 70.5 per cent. This means that the consequences of the war, the sanctions and transition were suffered the most by the workers

• our members".

Predrag Popovic, chief of the deputy club of the opposition coalition National Harmony, says that "in the beginning of the year revival of production and return of workers from the streets to factories, internal democratization, freedom of the press and human rights acquired a prominent place in programs of the ruling parties. We were promised the moon. The opposition which in due time warned that it would all remain just a dead letter, was proclaimed to be traitors. And then what happened? In the meantime, smuggling which made Montenegro a country of high risk for any kind of cooperation, became a predominant "economic" activity. Instead in factories, the workers are providing for themselves and their families by petty smuggling in the streets, and their directors, thanks to party affiliation and connections with state banks are becoming multimillionaires. The result of pursuing such policy is the increase of poverty and enlargement of wealth of a small number of people gathered around the political and police top echelons of the state."

The key problem last year was that the expected effects of suspension and later on lifting of the sanctions failed to occur. The resolution which suspended the sanctions did not enable reception (the authorities say "return") of the country into international political and - which is in this context even more important - financial institutions. Therefore, the badly exhausted economy was additionally burdened by expectations that it could set manufacturing inro motion again without foreign financial support. Not in the least an easy task. And, therefore, it hardly had any success in resolving it. Indeed, the authorities preferred to window-dress success, and that is why they forced statistical indicators about increased production, import and export. But, when one takes into account that the reference point was the catastrophic 1995, it becomes quite clear that optimism based on these statistical data is unfounded. The current level of production, as official statistical data testify, will bring just 39.4 per cent of what industries of this country produced way back in the pre-war and comparatively stable year of 1989.

Becoming a member of the world financial institutions was for this country (and unfortunately still is) the most important condition for its economy to acquire the necessary resources for re-start and modernization of production, in other words for entrance of foreign capital into the process of privatization of social ownership. At the same time, since in order to enter the world it is necessary first to meet certain conditions - starting from the political ones, such as the question of cooperation with the Tribunal in the Hague, of democratization, problem of Kosovo and - imagine - just elections, all the way to the economic ones which refer to liberalization of the economic system, import, customs regulations, clear and firm program of privatization, the regime was at a loss. On the one hand, becoming part of the world was necessary for it, because with no external financial assistance it could not maintain the economic and the social life, and on the other, it did everything it could to prevent it because it would mean destruction of the very foundation on which its rule is resting. The abyss widened between the need for world capital and manipulations with the "world conspiracy" and political need for continuity with the former SFRY. Former governor of the National Bank of Yugoslavia, Dragoslav Avramovic, had to pay for this ambivalence of the political program. Instead of him, the letter by which all conditions the International Monetary Fund had set for Yugoslavia way back in December 1992 was recently signed by Radoje Kontic himself. In the meantime, demonstrations of the people began in Serbia, so that the letter became irrelevant, like many other things done by the Federal Government. The economic life, however, balanced during the entire year between an almost desperate effort of the authorities to maintain monetary stability and occasional money issue necessary to ensure social peace. Insolvency of the economy and the banks was the price paid for stability of the dinar, while the unrealistic exchange rate of the German mark was maintained by introducing money previously taken abroad into the monetary system. Uncertainty concerning further endurance of the system increased, so Montenegrin Prime Minister, Milo Djukanovic, admitted in the end: "If high-quality reintegration into the international community does not happen soon, already in the course of 1997, our political and economic circumstances will deteriorate and become extremely strained."

The attitude to becoming part of the international community gradually grew and became the central cause of a growing controversy between stances of the official Serbia and that of Montenegro. The story about "Sloveniazation" of Montenegro developed, and its epilogue is not yet in view. Thanks to bargaining about Avramovic, the Democratic Party of Socialists (DPS) managed in the beginning of this summer to obtain federal permits for independent development of Montenegro as a free economic space and for continuation of its own model of transformation of social ownership which in the meantime got into bad trouble of administrative evaluations and management monopoly of funds. Laws about it were adopted just in time - before the beginning of the election campaign, and their complicated implementation has not practically even begun yet. The story about two systems in the same state became more and more authentic, but the economists warn that huge and loudly stressed differences in economic life of Serbia and Montenegro, actually concealed numerous essential similarities. While economic life of Serbia was ruled by the so-called central coordinating teams, the unquestioned power of Montenegrin economy was taken over by management boards formed by personnel of the ruling DPS. These similarities, this closeness of stances, as the politicians would say, inspires a new force into operation of the ruling coalition in the country.

Whether this is a matter of logical political conflicts which break out due to different economic interests of Serbia and Montenegro, or whether this is just a matter of focusing on economic issues in order to conceal essential political disagreements of their political elites, it is difficult to say, but the fact remains that the economy is still ruled by politics. Increasing warning from the top of the DPS that it would "activate the constitutional capacity for direct re-establishment of relations with the international institutions" gained weight after the latest announcements about issuing a separate currency (in case of a new super-inflation initiated fom Serbia).

The continuity of the economic crisis has therefore extended into 1997 and quite clerly coincided with the crisis of political continuity of this country.

Dragan DJURIC AIM Podgorica