ECONOMY AT ITS LAST GASP

Almost half of the population in Republica Srpska (420,000) are refugees. Out of that number, 62 per cent belong to the working age population, but only 9 per cent of them are employed. This is an alarming fact which opens the question of bare survival of the people.

Banja Luka, 12 March, 1997 (AIM)

The strike of teachers in Banja Luka, although the first protest of such proportions and intensity, predicted return to "normal" social trends, which is among the people articulated by the phrase - take care of number one. Constant increase of social tensions and everyday efforts to survive until the next day, brings the economic situation into the focus of "ordinary" people and of the public in general. And the economic situation is, mildly speaking, extremely critical and mostly determined by results of the four-year war, but also severe failures in the sphere of internal policy. The sum of these two factors conditions a depressing picture of the situation in the economy and non-productive branches of the economy in RS, and it is already clear that the process of high-quality changes will demand a long time, much patience and skill in alleviating painful challenges which are inevitable and brutal.

Some indicators of the economic situation reflect a catastrophic state the economy is in, since it is exploited only by ten per cent. The structure of enterprises which are partially working is such that it cannot ensure any exporting business deals, partially due to old-fashioned technology, and partially due to interrupted relations with foreign partners and countries which they worked with before the war. Humble export to Serbia and Montenegro is based mostly on selling raw material and semi-finished products in arrangements which are often used for debt clearance in compensation deals. There are mostly no investments for starting operation of industries, reconstruction of plants or modernization of production programs in state-owned enterprises, or they are on the level of maintaining simple reproduction. Placement of capital of foreign firms is sporadic and symbolic in relation to the needs, and investments in the privately owned sector are firmly limited to highly profitable services, with no systematic longterm investments in production.

Results of such circumstances are expressed in an exceptionally high unemployment rate which generates negative social processes of a broad spectre and destructive effects. Extensive migration of the population greatly contributed to an enormous increase of the number of the unemployed. Almost half of the population of RS (420 thousand) are refugees. Out of that number, 62 per cent belong to the working age population, but only nine per cent are employed. This is an alarming fact which opens the question of bare survival of these people. The grey economy is the only stronghold for survival of the majority of the population, burt also the factor of preserving social peace such as it is. This is the reason due to which the current regime is tolerating the semi-legal commercial flows and market, despite harmfulness of grey economy for stability of the economic ambience in general. Great care is, of course, taken that monopoly on turnover of goods and money remains in the hands of the privileged group which is either inside the administration or close to the top echelons of the pyramidal power, or just in the service of big business. Due to such disorders in the economy and outflow of money via illegal channels, budget users are constantly in an agony. Schooling system, pension and health funds, culture and all other segments which depend on the budget are in their poverty driven to the wall with no hope of improvement in the foreseeable future. Uneconomical operation of the state administration additionally burdens the budget so that all categories of the population whose main source of income relies on the budget have practically become cases for social welfare or are on the verge of poverty. In view of complete illiquidity of banks and complete standstill of all financial operations both with the economy and the citizens, those who will be dealing with the issues of overhaul of the economic and the social system in Republica Srpska will have a big problem solving the riddle where to begin.

In such circumstances, things break where they are the frailest. The already desolated Republica Srpska was hit by a new wave of departures of experts, of those categories of people without whom it is difficult to even imagine any revival of thew economy and social progress. The percentage of the highly educated population has dropped from seventeen to below twelve with a tendency of further decline. According to some competent western sources, twenty thousand applications from Republica Srpska are awaiting decision for emigration in embassies of Canada, Australia, New Zealand, South Africa and all other countries willing to accept Serb biological substance and knowledge. If war could have been marked as the pretext for the first wave of emigrants, the current peacetime hopelessness directly accuses the regime for catastrophic consequences of emigration of youth and brains.

Lack of healthy capital and absence of significant financial injections in the economy of Republica Srpska in the past eighteen postwar months is one of the main, if not even the first cause of widely spread depressing situation in most of the social strata. The agreement on special parallel relations between the RS and the FRY, among other, is aimed at raising false hopes and stabilization of economic circumstances with whole-hearted support of the parent country. It would probably be feasible to a certain extent if the situation in Serbia in many ways were not similar to that in RS. Isolation which lasted for years and the still persisting removal from world financial flows without a clear strategy for the necessary reform of the economy and the society, primarily in the sphere of property relations, have brought Serbia into a dramatic situation in which it is fighting for its last gasp. Many economic experts agree in forecasts that the banking and financial system there will collapse by the middle of the year with a threat of a repetition of the inflatory spiral.

Economically destroyed Serbia cannot be a reliable guarantor that RS will be reconstructed and economically dynamized. On the contrary, economic and social circumstances over here may be a stone around the neck of Serbia, but the whole arrangement was based on the concept of financial assistance to the economy of RS which could amount to about 600 million dollars in the course of this year. Certain dilapidated plants could be reactivated with that money both in Yugoslavia and in RS, which may act as a bypass until the end of the year, when according to optimistic forecasts, opening of the access to world financial institutions could be expected. From the other angle, however, hopeful glances are cast towards the global market of Bosnia & Herzegovina, which might become possible after establishing full diplomatic relations. This strategy will in the meantime encounter numerous challenges which will be caused by internal controversies both in Serbia and in RS. Elections on both sides of the Drina will confirm whether the planned concept is in compliance with international circumstances and the wishes of the weary people.

Mladen Krsmanovic

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