KOSOVO - ALIBI FOR POVERTY

Economy in the Shadow of War

Although Serbia is pressured by numerous problems of economic and social nature (prices are soaring sky-high, and the salaries are paid irregularly), the country is socially peaceful, because the population is scared by the developments in Kosovo. Despite poverty, both physicians and teachers decided not to go on strike. Fear of something even worse happening creates the illusion that Serbia is governed by peace.

AIM Belgrade, 2 September, 1998

No matter how badly the armed conflicts in Kosovo disturbed the Serbian public, the impression is that their climax is welcomed by the Serbian regime, because they served it to divert attention from other developments which also cause fear of the population. Starting from the difficult economic situation which gives rise to unemployment, decline of the standard of living, nominal and actual decline of pensions, their irregular and uncertain payment, miserable position of education and health protection, all the way to big business scandals which caused several-million worth of damage to state property. For example, the former vice-president of the Yugoslav Left, Nenad Djordjevic, is accused of embezzlement of ten million dollars from the Republican Health Fund. The public is certain that there are plenty of similar examples, but another high official of the Yugoslav Left, who is also vice prime minister in the Government of Serbia, Milovan Bojic, made it clear to the public that a change of priorities has occurred on the "Serbian top list".

"Until now, priority was given to order, work, discipline amd reform, but as of now, Kosovo is number one because it implies salvation of the cradle of Serbia, and even the state as a whole", Bojic unambiguously said appealing to the population to sacrifice itself for high causes. By means of such and similar everyday statements of high Serbian officials, climate was cretaed in which anyone who gives priority to other things risks to be classified in the category of national traitors and fifth-columnists. Such labels have already been pinned on certain media, university professors, and individuals who are aware of the full danger of the conflict in Kosovo flaring up, but who are not ready to close their eyes to other risks because of it.

Kosovo was also the alibi for preventing health workers to go on strike, and the teachers were pacified with accelerated payments of their delayed salaries, although their demands have remained unfulfilled. Those who keep calling the state to account are reproached that it is inappropriate to insist on having their individual interest satisfied while members of the police and army are killed in conflicts in Kosovo every day.

Fear prevails in public that conflicts will last, and Serbia has no economic force to keep the frontline in Kosovo open for a long time. The price of engagement there is very high as it is and it amounts to between one million German marks and two million dollars per day, depending on the source which makes the evaluation. Data on other economic indicators are more precise. It was officially stated that inflation rate in the first eight months amounted to 28 per cent and that the cost of living has gone up that much as well. Only in August, in reference to July, prices have gone up by 4.4 per cent despite the fact that the prices on the green market have gone down. Prices of everything except vegetables have gone up: milk and milk products, oil, sugar, water, meat, drugs, phoning...

On the other hand, value of salaries has gone down, which reflected on the decline of May pensions (that are just being distributed) by 10.3 per cent, while their purchasing power has gone down by 15.5 per cent. The average pension is below 150 German marks, and as a result a few newly established organizations of pensioners have appeared which have political ambitions. In all previous elections, pensioners offered their unreserved support to the regime, while their children, university students, most consistently criticised the authorities. The existing social movements seem to be announcing reconciliation of parents and their children because the regime cannot be sure any more that it will win pensioners' votes.

Abolishment of preferential treatment of Yugoslav export by the European Union has brought about its deviation from the planned results. Economic documents planned increase of export by 28 per cent, but it is decreasing month after month so that in July export remained at the level of a meagre increase of five per cent. As a result, the foreign trade deficit increased to 2.5 billion dollars. In order to interrupt its increase, the federal government introduced measures to reduce the import, so that possibilities for various speculations were created. Acquisition of an importing permit is a great privilege, because of the poorly supplied market where imported goods can be sold at high prices, so that profit is enormous. Just less than a year ago, the federal government marked privileged import as one of the main generators of grey economy which reached almost half of the value of annual social product. In view of the fact that no tax is levied on it, it is clear how high the damage is that the state and benefactors of its budget are suffering.

Such economic circumstances were used as an announcement of a tumultous social autumn. It seems that even the regime has become aware of it, so along with the use of Kosovo as a means for keeping up tensions, it was forced to buy peace by accelerated payment of pensions and other perquisites. The economists of the known "Group 17" arrived at the data that in July money supply increased by half billion dinars and in August by just as much. Unsecured, of course. The bill which will have to be paid for this, in the form of incresead inflation is expected to arrive by the end of October at the latest, exactly as last year when results of money issue for the needs of elections were manifested three months later by the sudden decline of the value of the dinar on the black foreign currency market.

Despite the issued billion dinars illiquidity has not been eliminated. The executive council of the Belgrade city assembly demanded that Beobanka pay to the city assembly 25 million dinars collected from the tax levied on all products and services for maintenance of public utilities. The entire power, however, is concentrated in the government of Serbia which practically controls Serbia's economy. Vice prime minister Dragomir Tomic explained that changes in the economic system which would open the door to foreign capital should not be expected. In our enterprises, Tomic says, Serbian language will be spoken, showing in this way that patriotism is more important than survival of the population, because with no foreign capital which is showing less and less interest in investing in Serbia's economy, there is no chance to change the unfavourable economic structure.

Metal industries which used to work for the entire market of former SFRY and were one of the pillars of the economy of Serbia, has been completely neglected and without large investments it is quite inoperative. The best example is the Zastava car factory which used to produce 300 thousand cars a year and nowadays hardly ten odd thousand are annually assembled in its plants. In the meantime, about two thousand highly qualified workers left the factory so that only those remained who are not exactly up to the task of car manufacturing. For a few years already Serbia has been trying to sell this factory to a foreign car factory, but interest is very poor. It is possible to hear nowadays that the factory should be given away as a present under the condition that the workers remain employed.

The invalid economy is not capable of covering expenses for gas, electric power and other, and even the press inclined to the regime warns against possible shortage of power, which means that Serbia is threatened by darkness and cold. Fear of that is veiled by anxiety caused by the developments in Kosovo. And thus the rule of the regime continues which avoids reactions of the population to "minor" problems by great fear and in this way maintains social peace.

Ratomir Petkovic

(AIM)