IS THERE A LIFE BELT?

Record Losses of Serbian Economy

The economy owes eight billion dinars, and this is twice more than there is all the money put together in the whole country. Payments for financing non-productive branches of the economy have been postponed. Health services are on strike, education workers are threatening with it, and the employees demand payment of salaries in arrears amounting to 40 billion dollars. The economists propose shortening of compulsory military service for the sake of saving money from the budget, and the army, after that of Albania, is the most poorly paid in Europe. Difficult consequences of the sanctions, even after they had been lifted, have left behind the bad practice of illegal trade which does not bring a single dinar for the budget

AIM Belgrade, 14 May, 1997

The latest data on business operation of the Serbian economy publicized by the Belgrade Economic Institute confirm doubts that it is in a catastrophic situation as it has never been before, and an extremely strained social situation of the population also indicates this. Employees of health services went on general strike, education workers to whom the administration is failing to meet promises concerning deadlines for paying salaries have not joined medical workers only for ethical reasons, so as not to endanger the end of the school year. Trade workers, almost hundred thousand of them are threatening with a strike, because they receive about a hundred odd marks a month.

Social tensions have resulted from record losses of the Serbian economy which amount to nine billion dinars, and this is double the amount of all the money there is. Out of 73 thousand enterprises, 15 thousand are in the so-called "sleeping" status, in other words exist but do not work. And while officials of the National Bank of Yugoslavia brag of having lowered the foreign currency rate on the black market almost to the level of the official one by monetary restrictions, the foreign debt of the country increased to 11 billion dollars and reached the value of the annual social product.

With such a black economic picture which appears as if affected by metastases of the worst type of cancer and social problems which result from them, the ruling party, together with the opposition which are entering the increasingly fierce pre-election struggle for power, has started resembling sadomasochists, because who in their right mind would fight for control of the Serbian ship which is full of holes. It seems that everything that was on this ship has not fallen to the bottom of the sea yet when the political parties are still fighting to get hold of the helm with a large dose of passion reflected in mutual abusive assaults and insinuations.

Carl Bildt, entrusted by the international community to supervise developments in neighbouring Bosnia & Herzegovina, is keeping a watchful eye on Serbia as well. He is concerned because of its staggering economy, and even more because of the conviction that it is controlled by the mob arisen as a result of several-years long sanctions Yugoslavia was exposed to by the international community. It seems that this Bildt's warning had reached the European Union which decided to introduce preferential treatment of Yugoslavia in export of its commidities to the Wester-European market and in this way offered an opportunity to it to raise above the tide which had reached its mouth and threatened to drown it. After the developments in Albania, it was observed in the European Union that Yugoslavia might be the next centre of crisis, so it was realized that it would be less costly to introduce preventive measures in the form of the mentioned privilege than to be forced to put out a fire later on, when it would need more material resources in order to prevent Yugoslav turbulent waves from reaching its borders, as it was in the case with Albanian emigrants.

Some of the analysts of the circumstances in Serbia believe that this safety belt has come much too late for at least two reasons. The situation in Serbian economy is such that it will hardly be able to use the privileges given to it, because it is unable to increase production, especially with commodities fit for the choosy European market. At this moment Serbia could appear at it with exported food, but its agriculture has been brought into a miserable situation, so that it is forced more to look up and hope for better climate conditions, than for financial support. The other weakness of the economy is the one Carl Bildt is calling the attention to, and this is that the economy has been stricken by the syndrome of mafia operation.

Such Bildt's conviction is founded on the fact that on the one hand Serbian health service has no money even for the bare necessities (pharmacies have no drugs, hospitals have no sanitary material for nursing their patients, employees receive half a salary a month), and on the other only 20 per cent of the determined obligations is paid to the health fund. The government has permitted private entrepreneurs a delay to pay their dues for this purpose until September, but has found no way to fill in the gap. The republican budget is planned to allocate 47 per cent of the social product for non-productive branches, but the productive part of the economy is not capable to meet these obligations. The record losses are sufficient evidence of its financial capabilities. As many as 22,500 enterprises are illiquid, lacking more than eight billion dinars to meet the obligations.

The regime seeks explanation for such a situation in results of long-lasting sanctions, but, observed isolated, it appears quite unconvincing, because the grey economic market is almost more powerful than the legal one. The worst thing about it is that the public is convinced that a parallel market exists and that it is cherished with the blessing of some of the state institutions or influential persons in them. Based on uncontrolled cigarette sale in the streets, from the turnover of which the state does not have a single dinar, it was determined that 180 trailer trucks full of smuggled cigarettes enter Yugoslavia each month. Similar is the situation with other kinds of goods which are sold outdoors, but everything is done under control of people who are linked to some of the authorities.

At the same time, trading companies have been driven to the wall, because they have been completed deserted. The average daily turnover in them per customer amounts to meagre 10 dinars, which means that that they sell nothing but bread and milk. Uncontrolled import which seemed as the only way out during the sanctions, because it supplied the Serbian market with banned goods, nowadays has turned into the factor which is stifling the economy the factories and plants of which are covered with thick web. The economists calculated that the Serbian economy needs 40 billion dinars for setting production into motion, and even twice as much in order to reach the level from the time before the sanctions.

Serbia, however, has no capital to help its economy, but it is forced to face all the consequences of drastic impoverishment of a large majority of its population. An intensified law-making activity has been observed in the ruling circles, aimed at attracting foreign capital. The Serbian parliament had adopted the law on concessions which offers the possibility to foreign partners to get involved in business in Serbia. The regime hopes that the Serbian infrastructure which is very attractive in this sense, will attract attention of foreigners. At the same time, the opposition is attacking the regime that it is putting the state itself on sale, leading it into a subordinate position just in order to gain an advantage in the forthcoming elections.

Regardless of the fact that the political parties in mutual squaring accounts mostly use political trump cards, conviction prevails among connoisseurs that a party or coalition which offers a convincing and beneficial socio-economic program can count on achieving greatest success among the electorate. At this nmoment on the political scene of Serbia, there is not a trace of anything of the kind. In such circumstances, initiatives on the need of self-organization of the population are increasing, and this might turn into some kind of the Albanian syndrome, in other words to anarchy because the political parties are mostly obsessed by the struggle for power and not for salvation of the population, which might soon be faced with an epidemics of hunger.

Bildt's warning refers to Serbian circumstances, but it was addressed to the ears of the international community which, if it misses the opportunity to take timely measures for recovery of the Serbian economy, might itself feel the results of instability of the central Balkan state. Not much should be expected from the authorities, regardless of who will come to power. It will be enough if it manages, and of course, if it wishes to, make the rules of the game for establishing legal security in entrepreneurship and all other spheres. For the time being, the regime is still using the sanctions as an alibi for the country being brought to the verge of an abyss.

Ratomir Petkovic (AIM)