Balkan Political Economy

The way things are at the moment between Macedonia and FR Yugoslavia, it is more likely that a small economic war will break out than that the duty free zone will start operating by New Year's Eve as planned

AIM Skopje, 11 December, 1998

The latest statistical data published in Macedonia show that the Federal Republic of Yugoslavia still firmly holds the second place, immediately after Germany, among foreign trade partners of this country. Macedonian entrepreneurs have exported to Yugoslavia about 130-million dollar worth of various goods, and they have imported eight-million worth less. Such good economic cooperation is due to geographic vicinity of the two markets, of course, and traditional connections, but also to great preferences regulated by interstate agreements. More than two years ago the two countries signed an agreement on free trade. According to the wording of this agreement, most of the goods are transferred without customs dues, only the compulsory customs registration is paid for them amounting to the minimum of one per cent.

Only a few products which are considered by both parties to be of strategic importance are subject to limitations and exchanged based on mutual accord and mostly with compensation. The two countries have also signed an agreement according to which the border should have been eliminated by 1 january 1999, when trade is concerned, and the first duty free zone in the Balkans should have become operational. All things considered, however, despite the signed agreements, it is more likely that a small economic war will break up here than that the joint ambition of entrepreneurs on both sides of the border will be achieved.

As it usually happens at this cursed part of the planet, the pernicious politics blocked the way to prosperous economic cooperation. Macedonia has agreed that NATO forces for backup of international verifiers in Kosovo be deployed on its territory, and this seems to be the reason for specific economic sanctions imposed on it by its northern neighbour. A month ago, the Yugoslav government addressed a sharp note of warning to Macedonian foreign ministry in which it said that the stand of official Skopje concerning deployment of forces for quick intervention was contrary to behavior of a friendly country and that it might reflect on good neighbourly cooperation. In certain circles in Macedonia, Yugoslav demarche was interpreted as a normal reaction used by diplomacy over there to "save its name" in the eyes of its own public. Some, however, immediately established that economic sanctions might follow, and it seems that their assumptions were founded.

In the very beginning of the "crisis" with installation of "extractors" in Macedonia, a discreet message arrived from Belgrade that there will be no duty-free zone. Allegedly, the mentioned interstate agreement means that something like that is possible but not at any cost, not if necessary economic conditions have not been met. The Macedonians believed that there was no economic reason to postpone implementation of this very high form of cooperation between two sovereign states. If media in Skopje which refer to competent sources are to be believed, official Belgrade quickly began effectuating its intention. Macedonian goods, especially persihable foodstuffs started being held up at the customs for additional sanitary control which of course reflected on their quality and the possibility of reaching the end users. Besides, a 250-mark tax per truck has been introduced for Macedonian transporters, which significantly raised the price and discouraged export. The relevant union immediately initiated introduction of counter-measures for the Yugoslavs, but it did not happen.

Just a few days later, Yugoslav government passed a regulation pursuant which every importer should deposit 50 per cent of the total value of the goods. This regulation referred also to Macedonian companies which have offices in FR Yugoslavia and operate by means of the so-called non-resistent accounts, although according to the agreement on free trade, turnover between the two states should not be additionally burdened. Macedonian chamber of the economy was surprised by such development and immediately demanded that the problem be discussed at the joint inter-state coordinating committee, but obviously the problem has not been resolved yet. Although it was announced that counter-measures might be introduced for this too, the public in Macedonia has not been informed whether this has actually happened.

The latest move of the Yugoslav party approximately coincided with the final decision of the Macedonian government about stationing of international troops and in this way removed the last formal obstacle for the beginning of deployment of NATO soldiers in the field. "Truck drivers" again bore the brunt of the attack. For all those who transport goods to or from Slovenia, a "fine" of neither more nor less than 10 thousand German marks was introduced. Yugoslav ambassador in Skopje Zoran Janackovic, immediately did his best to deny obvious facts by giving a statement to Macedonian media that there were no problems on Macedonian-Yugoslav border. Judging by allegations of Macedonian politicians, the government of the northern neighbour in the name of which the trustworthy intelligence officer is sitting in the capitl of Macedonia need not even know that this tax exists because it was introduced by the customs administration which has always manifested a high level of "autonomy".

The entrepreneurs in Macedonia unofficially learnt that Kertes' team was instructed to give the Slovenians tit for tat because they are charging the same sum of money for transfer of Yugoslav goods through Slovenia on their way to Italy. Macedonian transporters would not be surprised if this "retaliation" referred only to Slovenian transporters who deal with Macedonia, but they are surprised by the fact that they are affected, too. Of course, there were new proposals of counter-measures. Minister Nikola Gruevski proposed that at its next session the government reach a decision on an urgent meeting with the Yugolav party and that abolition of the enormously high tax be demanded. The official Skopje, despite the mentioned proposals for introduction of counter-measures, did not make a single move which would aggravate the situation, but does not seem to be sitting on its hands, either.

At the same session when it approved stationing of forces for quick intervention in Kosovo, the government of Ljupce Georgievski instructed all entrepreneurs who deal with northern neighbours to carefully register all losses caused by the mentioned measures. This very fact speaks of the viewpoint of official Skopje that this is economic sanctioning of Macedonia by FR Yugoslavia, in connection with its attitude to international obligations and resolutions of the Security Council which refer to the crisis in Kosovo. There are even opinions here that reactions similar to those of Yugoslavia might come from Russia, which is another country with which Macedonia has a high level of economic exchange. The government is probably hoping that, if need arises, some day it will make out an account to the international community, because it is cooperative at its own expense. Whether its calculation will turn out profitable, time will tell. Just as a note it should be said, though, that during the very strict sanctions introduced against Yugoslavia a few years ago Macedonia was hoping that the same international community would compensate for the damage caused by them which are expressed in billions of dollars. So far it did not receive a single cent. It has the right to hope, though.

AIM Skopje

BUDO VUKOBRAT