Economic War between Serbia and Montenegro

Playing Hide-and-Seek

AIM Podgorica, 23 February, 1999

"Such degradation of the people is neither acceptable nor understandable any more", noted Vojin Djukanovic, minister of industries of Montenegro. The latest sudden leap of the value of the German mark on the black foreign currency market, according to the minister's words, was caused by financial machinations from Serbia. Not mentioning introduction of Montenegro's own currency, minister Djukanovic is not the only one who believes that "Montenegro must make radical moves".

The most recent statement of the Montenegrin official that "finally time has come for us to turn our backs to romantism and nationalism and head towards real economy" shows how vulnerable little Montenegro is to conduct of official Belgrade which it has started an open economic war with. President of Montenegro Milo Djukanovic, during his recent visit to London, publicly complained that at the time of the sanctions imposed by the international community, Montenegro was under additional sanctions of the bigger Republic - Serbia.

Asked what had brought about the commercial war between Montenegro and Serbia, president Djukanovic said to journalists that Milosevic devoted the biggest part of his office hours to the topic of how to do harm to Montenegro. "Ever since the time when Momir Bulatovic was appointed federal prime minister, not a single dinar has been paid into the account of the Republican pension fund, although it is an obligation by federal law. Since then, the federal government has not issued a single permit for import to manufacturers from Montenegro", said Djukanovic.

Besides, Montenegrin president admitted that it was an everyday phenomenon "to stop transportation of goods from Montenegro at the imaginary border crossing set up by Belgrade regime which is acquiring all the characteristics of a classical customs control between Serbia and Montenegro, regardless of whether the goods are imported or manufactured in Montenegro".

And while assumptions are made in Podgorica whether payment operations between Serbia and Montenegro will be interrupted altogether, leaders of Milosevic's branch office in Montenegro mostly organised in Social National Party claim that Montenegrin authorities are inventing a commercial war and by doing it "arousing hatred between the two nations".

Danilo Vuksanovic, federal vice prime minister, used his appearance in Montenegrin parliament in the capacity of a deputy to accuse Djukanovic's regime that by uncontrolled import and failure to pay customs and sales tax it was "stifling the economy of Serbia". His party colleague Dusko Jovanovic claimed that he had access to data which showed that in just a few years by "exporting" oil to Serbia the government of Montenegro had collected 500 million German marks, but that this money in hard currency was nowhere to be found.

On the Montenegrin side, however, it is stated that refineries in Serbia can meet just 20 to 25 per cent of local needs and that it is quite logical why large quantities of oil are imported via the Port of Bar, since it is more economical than to import it via the port in Salonika or to process oil in Serbian refineries. On the other hand, as long as the Federal Government is not meeting its legal obligations to Montenegrin pensioners, Montenegrin authorities are not paying customs duties into the federal budget. Montenegrin authorities are accusing Mihalj Kertes, director of the Federal Customs Administration, Milosevic's right hand, of having caused damage to the common cashbox of half a billion German marks by allocating the collected federal customs duties into the pension fund of Serbia.

While a fierce verbal war was going on, entrepreneurs felt all the consequences of strained political relations between Serbia and Montenegro. About ten days ago, Serbian police in cooperation with the Yugoslav customs administration "imprisoned" about hundred trucks which belonged to Montenegrin entrepreneurs.

And this was not the first time that Montenegrin goods were stopped at the border with Serbia near Prijepolje, or, like in the latest case, inside Serbia. The economists here claim that the damage done by the blockade just in the past year exceeded ten million German marks!

The latest blockade was the result of Kertes's decision to organise "thorough control of commodities on all major roads and railroads". But, this "thorough control" refers only to commodities arriving from Montenegro. The pretext for this restrictive measure was found by the federal administration in the decision of Montenegrin authorities reached last July. With that decision Montenegro took control over export-import business deals centralised in the jurisdiction of Momir Bulatovic's government which had failed to issue a single import permit to entrepreneurs from Montenegro. It is a completely different matter that federal ministers make enormous sums of money on permits for import of goods.

Liberalization of foreign trade business deals brought many Serbian companies to Montenegro. Thanks to lower taxes and excise duty, commodities imported by the smaller Republic were sold in the market of Serbia at significantly lower prices, and Montenegrin government made high revenue on it which again cut the budget deficit. It is claimed, for instance, that in 1998, Montenegrin ministry of trade issued 430 import-export permits. Based on them, commodities worth 87.6 million dolars were imported and 7.4 million worth of them were exported. Just in January this year, 67 permits were issued for import of more than fourteen-million dollar worth commodities.

From July last year to February this year, with minor incidents, federal authorities allowed Montenegrin importers to sell products in Serbia. However, once the business got into full swing, the known method of official Belgrade was applied - the goods were practically confiscated allegedly due to disorderly papers. Faced with the latest provocation of official Belgrade Montenegrin authorities are utterly helpless, threatening to make the long announced "radical move" in order to protect their interests.

"We do not recognise the so-called federal government and we have not communicated with it concerning these problems. Not even after this blockade shall we apply its measures which refer to foreign trade. Because they are contrary to market economy and they are anti-liberal, they are an attempt to centralise the entire flow of commodities and money", stresses minister of trade Ramo Bralic.

Ever since opening of the political conflict between Podgorica and Belgrade, by exerting economic pressure Milosevic is trying to discipline Montenegrin authorities. He used to succeed in it whenever Montenegro made moves on its own.

The problem is more complicated now: these latest measures are jeopardising Djukanovic's project "self-financing of Montenegro". Montenegro has linked its economic destiny to the market of Serbia, having previously, in alliance with Milosevic, broken economic links with the other former Yugoslav republics and the world. Now it is paying for the damage caused by that and it seems that there can be no changes in the economy of the two federal units in the foreseeable future, if official Montenegro does not decide to make some really radical moves.

Branko VOJINIC

(AIM)