Payment Operations Interrupted

Belgrade "Sucking Out" (German) Marks from Podgorica?

Official Podgorica believes that the decision of Serbia to interrupt payment operations with Montenegro is politically motivated with the intention to further exert pressure and unstable Montenegro

AIM Podgorica, 7 November, 1999

After Montenegrin government had introduced the German mark as the legal payment facility, Belgrade swiftly reacted. The National Bank of Yugoslavia, as its governor Dusan Vlatkovic said, "took the measure by means of which transfer of money by order of legal subjects from Montenegro to legal subjects in Serbia shall be prevented". Translated to everyday language this means that enterprises from Montenegro can no more pay for the goods to enterprises from Serbia in dinars.

The explanation of this decision is almost identical to the one used to justify the interruption of payment operations with the Republic of Srpska in November last year. At the time, like now, interruption of payment operations was officially justified by the need "to prevent possible uncontrolled money issue". Such concern for monetary stability of the remainder of Yugoslavia was supplemented by reasons of different nature: "The National Bank of Yugoslavia (NBY), that is the Bureau for Accounting and Payments", it is said in Vlatkovic's statement, "is prevented to carry out regular control of payment operations in the Bureau for Payment Operations on the territory of Montenegro".

The first commentaries about this decision of NBY were made by Montenegrin monetary experts. Dimitrije Vesovic, director of Montenegrin Bureau of Payment Operations, gives the following explanation how Belgrade controllers were prevented to do their job. "Immediately after the decision on introduction of the parallel currency, a couple of controllers came from Belgrade to carry out control of our vault and all the accounts. I did not receive them because I think that it is not their job, but of the National Bank of Montenegro", said Vesovic.

"It is just a pretext, as a matter of form, because it is absurd to claim that we from Montenegro, with our monetary mass, can make an incursion into the payment operations of Serbia", says Vesovic, adding that Montenegro has at its disposal only five per cent of the total mass of money. "We neither issue dinars nor marks. Everybody knows where the issuing centre is, so this is obviously a malicious decision".

The president of the newly established Monetary Council of the National Bank of Montenegro, Dr Bozidar Gazivoda, who is also the former vice-governor of the National Bank of Yugoslavia and whose signature was on the banknote with the largest number of zeroes, as if by prearrangement, also points out to maliciousness of the federal monetary authorities. According to his interpretation, the decision of the governor of the National Bank of Yugoslavia on unilateral interruption of payment operations with Montenegro was after all expected, but "the malicious explanation of the decision of the governor of NBY causes concern, because he claims that this is supposed to prevent some kind of uncontrolled issue of money from Montenegro, although everybody knows that the only place money is issued in is Belgrade". Gazivoda points out that Montenegro was indeed forced to introduce the two-currency system due to money issue in Belgrade. "Inflation is produced in Belgrade where there are no our representatives, where for a long time already Montenegrins do not participate in creation of monetary policy nor in its implementation", he stresses.

The experts in Belgrade have not much understanding for the decision of governor Vlatkovic either. Professor of the Economic Faculty in Belgrade Nebojsa Savic said in a statement for Radio-Television Montenegro that by limiting payment operations with Montenegro the National Bank of Yugoslavia wished to make it clear that in the future Serbia would accept German marks from Montenegro, but not dinars. Although, Savic thinks, there is no actual danger of a large quantity of dinars entering Serbia from Montenegro because the National Bank of Montenegro does not issue dinars. The editor of MAP of the Belgrade Institute of Economic Sciences Stojan Stamenkovic also expected the decision of NBY, but he did not consider it to be a specially sensible one.

By adopting the German mark as the official and legal payment facility Montenegro has just, Stamenkovic believes, de iure recognised what has already existed in the whole country. "Montenegro has just introduced the fluctuating exchange rate which I had been advocating for a long time and now we actually have two exchange regimes: the fluctuating one in Montenegro and the fixed one in Serbia according to which nobody either sells or buys anything".

Prime minister of Montenegro Filip Vujanovic also joined in the debate. "It is evident that this decision has solely political motivation. There is no monetary sense in it and to anyone who has even the fundamental knowledge of our money market it is absolutely clear that there is no danger of a monetary coup from Montenegro on the territory of Serbia", said prime minister Vujanovic in a statement for London BBC.

Vujanovic thinks that the decision of the governor of NBY Dusan Vlatkovic to unilaterally abolish payment operations of Serbia with Montenegro is solely politically motivated with the intention to further exert economic pressure and unstable Montenegro. He nevertheless assesses that this decision will not have severe consequences and that it will not last long because it will be abolished by internal pressure from inside Serbia.

"We will continue with our project of monetary protection, and there is no doubt that it has proved to be quite justified, because even this act confirmed that the central bank in Belgrade is under complete pressure and influence of politics", emphasized Montenegrin prime minister.

Assuming that the decision of Belgrade will mean interruption of commodity exchange in the direction from Montenegro towards Serbia, Vujanovic said that it had been very reduced as it is, primarily due to very poor transportation communications. "We have in the meantime secured alternative markets for our commodities and significantly reduced the dependence on Serbia. However, we think that it will cause the same or even greater damage to Serbia which communicates only with us. I believe, therefore, that they will not be able to resists for long the internal pressure and that commodity exchange will soon be restored", said Vujanovic.

Somewhat less optimism was expressed only by chairman of the assembly of Montenegro Svetozar Marovic, who warned against the danger of "sucking out" of Montenegrin marks by Serbia in order to weaken the foreign currency potential of Montenegro. In his interview to Podgorica journal called Polis he estimated that there would be various attempts to jeopardise introduction of the parallel currency, primarily by "those who care less for the interests of the people and more for unstabling the regime". According to his words, "it is possible that in order to discredit the regime newly produced dinars will be introduced and mechanisms already exist for that".

That is how official Montenegro is trying to develop optimism, decrease the significance of the adopted measures and free the citizens of additional worries and nervousness which is beginning to be felt. The mark has not been put in circulation in Montenegro yet, so that the citizens do not see the results of monetary conflicts of the two republics either in stores or in their pockets. That is why announcements of the newly established Montenegrin monetary authorities about introduction of reciprocity, that is, that accepting of dinars from Serbia for payment for commodities to enterprises from Montenegro will be banned, are not considered to be a special problem. Indeed, the German mark has for a long time already actually been the only relevant payment facility, both in Montenegro and in Serbia.

Dragan DJURIC

(AIM)