Economy: Buying Social Peace
Heaven for Madmen
Administrative control of prices of the staple agricultural products means further exploitation of the branch of the economy which has preserved power for Milosevic in the past ten yeats. Serbia is threatened by a new catastrophe and shortages in the market
AIM Podgorica, 8 December, 1999 (By AIM correspondent from Belgrade)
Serbia's prime minister Mirko Marjanovic was awarded by Becej agricultural complex a gold medal and a letter of thanks on the anniversary of this company for all the good the state has done for development of agriculture in the past years. Having praised his hosts for vitality, Marjanovic did not fail to praise the state personified by his government which "created the economic system as the ambience for the agriculture to successfully develop even in difficult years of isolation and war".
Only ten days prior to that, at the session of the Agricultural Comittee of the Chamber of the Economy of Yugoslavia, deputy director general of Becej complex Jovan Glavaski declared that inadequate measures of economic policy were forcing producers of food to transfer from the legal to the grey market, to reduce the quantity and the quality of the produced goods. "Producers are on the verge of endurance", Glavaski lamented.
What this "successful" state policy in the field of agriculture is like is evident, among other, from the fact that was stated a few days ago by two eminent experts from Novi Sad Stevan Jeftic and Milorad Rajic - "Yugoslavia will not have enough bread until the next harvest and many propose that corn be added to wheat bread which has not been done in our country since the Second World War". Production of food is the sore point of Slobodan Milosevic's administration all over again. When there is not enough bread, meat, milk, oil and sugar, the stories about reconstruction and construction of new bridges, roads, hospitals and schools, with which Serbia is in official propaganda resisting emprisonment by the new world order are simply not worth anything at all. The official state television, as the key "brain eliminator" of an average Serbian can carry shots of patched up bridges every day, but it can in no way show pictures of a store which sells oil, sugar or milk.
That is why high officials of the administration in Belgrade resort to rhetoric abundance and the past few press conferences of government clerks were devoted to virtual prosperity which only in the imagination supplies store shelves with staple agricultural products. Republican minister of agriculture Jovan Babovic claimed that there was twice more milk than the usual consumption in the shops in the course of November and that 260 tons of fresh meat and 300 tons of meat products were delivered every day. And Babovic's colleague, minister of trade Zoran Krasic tried to convince the citizens that they need not pile provisions because the market is supplied every day with 440 tons of oil and 500 tons of sugar. However, noone obeyed him and as soon as any of these items arrive in a grocery store, comsumers immediately queue and buy them regardless of whether they already have oil and sugar at home. Noone believes the athorities any more because the experience acquired in previous years is still fresh in people's memories, so everybody (when they can and have the money) piles up provisions at home.
Such "parallel" stream of consciousness" on the food market was the immediate cause for one of the greatest experts among Serbian economists, Professor Ljubomir Madzar, to observe that Serbia was "a paradise of madmen in which according to the words of the persons from the regime stores are very well supplied, and every citizen can see with his/her own eyes that there is no oil, sugar, milk, meat..."
It is very simple to explain the "paradise of madmen". Except for ideological unity of the "leadership, the army and the people", the regime needs to preserve social peace because the minute ordinary people become famished they are not interested any more in "unity in reconstruction like it existed in defending the country from NATO aggression". That is why Milosevic's administration set out to a new ruthless exploitation of the branch of the economy which during all this time in the past ten years preserved its power. After unsuccessful patriotic appeals, the state started threatening producers of food with sentences in prison, and when even that failed, the regime decided to put prices of all key agricultural products and food under control of the "iron fist of bureaucracy".
The regime does not wish to hear warnings of the producers that they are facing collapse and that the only solution is free pricing. When they do the calculations of production expenses, producers of milk, for example, believe that a litre of milk should cost 9 dinars. At the current price of 3.7 dinars per litre, it produces a loss of 2.5 dinars, which induced director of Vizelj company from Belgrade Rajko Latinovic to state that "there is not a single producer of milk and beef who can meet the demands of the inspectorate and prescribed prices". Meat producers claim that this year production has decreased by 15 per cent in comparison with the previous year and they warn that in neighbouring countries meat is between 50 and 100 per cent more expensive than here which implies that many of them are transporting porkchops and beefsteaks secretly across the border. When they fail in this undertaking, they resort to petty foul dealings such as classifying beef (the price of which is controlled) as veal (with no maximum price) and sell it at a double price (instead of 90 they charge 180 dinars for one kilo on the average).
Faced with chaos on the market and growing shortages of foodstuffs which might cause grumbling of the people, Serbian government decided to take the tested step quite contrary to the market logic with which it admitted impotence of its economic policy: it introduced administrative pricing of meat, oil, sugar and milk.
Economic researcher Slobodan Milosavljevic from the Institute of Market Investigation claims that by its shortterm buying of social peace Serbian government will inflict enormous damage to producers of food. He warns that price freezing will trigger the deja vu scenario in Serbia - shortage of goods on the legal market and their transfer to grey economy. "Nothing will be achieved by punishments because that kind of compulsion cannot remove the systematic disturbances that lasted for years", Milosavljevic assessed.
Former governor of the National Bank of Yugoslavia and one of the best known Serbian oppositionists Dragoslav Avramovic is not an optimist either. "We the citizens have already experienced this, only clerks in Serbian government change, but they all think that they are the wisest to resort to the measures from the arsenal of administrative price control", says Avramovic. He warns that every such measure ends with a catastrophe, decline of production and shortages of goods in the market. "If you want to take the quickest way to catastrophe, then you choose price control", Avramovic observes.
"The regime is threatening that it will punish and arrest directors of companies which produce food. As long as there are 4 to 5 per cent delinquents in the economy of a country it is not a problem, but when this number rises to 20 per cent, this is an infallible sign that this country has a wrong economic system", claims former governor of the NBJ Dragoslav Avramovic.
According to forecasts of Belgrade economic institutes, the rise of prices will continue, purchasing power of the citizens will continue to decline and at the same time, the number of illiquid companies will increase. In order to cover monthly expenses an average family needs 3,460 dinars, and its average income does not exceed 2,537 dinars. And in the end of October (these are the latest data) there was 25 thousand illiquid companies whose unmet obligations have reached the sum of 31.5 billion dinars.
Misa Brkic
(AIM)
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