POLITICS-SERBIA: Only Soccer Sanction Threat Disturbs Serbs

By Vesna Peric Zimonjic Reprint | | Print |

Vesna Peric-Zimonjic

BELGRADE, May 4 1998 (IPS) - Hit by a new round of sanctions and facing war in its southern Serbian province of Kosovo, the Belgrade authorities advised Serbs everywhere — to take a long May Day holiday weekend.

“Serbia has been paralysed by holidays since Thursday,” grumbled a Belgrade resident, “like we all live in a rich country, without problems.”

These problems increased last week when a gathering of the Contact Group of big powers decided that Belgrade had not done enough to foster peace in Kosovo. The six-nation Group, with Russia demurring, ordered a freeze on remaining Serbian assets abroad and foreign investment in the country’s privatisating industries.

The reaction of Belgrade was routine, or as an observer noted, “careful not to spoil the holidays”. The Contact Group countries were accused of “encouraging separatism and terrorism in Kosovo,” where a majority population of ethnic Albanians are facing down a minority Serb populace who rule the province with an iron hand.

A Serbian national referendum soundly rejected foreign intervention, as demanded by Kosovo’s Albanian leadership, on Apr. 23. Most Kosovo Albanians want independence from Serbia, which sees the province as the cradle of their national identity.

Skirmishes between Serbian security forces and alleged members of the clandestine Kosovo Liberation Army, have been followed by Yugoslav Army operations to stop arms smuggling from neighbouring Albania. Dozens have been reported killed in the last two weeks along the 195 mile Yugoslav-Albanian border.

According to state media at least ten Albanians were reported killed after militants attacked a police patrol Sunday and wounded four Serb policemen in Ponosevac, 40 miles south west of the province capital Pristina.

“Milosevic seems to be in stronger position on Kosovo than during the wars in former Yugoslavia (Croatia and Bosnia- Hercegovina), when many people and opposition politicians were against his policies,” says analyst Dejan Djordjevic.

Even opposition parties that have criticized Milosevic’s policy on Kosovo, such as Zoran Djindjic of the Democratic Party, warned that sanctions “will punish people, not the regime”.

Economic experts here say the latest round of international sanctions will have little immediate impact, but the long term effects on the economy could be serious.

Many anticipate the return of hyper-inflation. Serbia’s foreign currency reserves are estimated at about 200 million dollars, barely equal to one month’s losses to the trade deficit. At the height of U.N. sanctions on Serbia, in 1993, the inflation rate rose to a statistical 300 billion percent.

“The National Bank of Yugoslavia will soon have to print extra money so that the state can cover its expenses, which would be a prelude to hyper-inflation,” economist Mladjan Dinkic warns.

The ban on foreign investments in the country is seen as a particularly damaging step. Despite its poor economic performance, serious foreign debt and the ‘outer wall of sanctions’ that barred it from International Monetary Fund and World Bank funds, Yugoslavia took in some two billion dollars in foreign investment last year.

Most of this was raised by selling off 49 percent of Serbian Telecom to the Italian STET and Greek OTE telecoms companies for more than 1.2 billion dollars in June 1997. Most of this was spent immediately on payment of deferred wages and pensions.

“The sale of Telecom bought months of social peace in this country,” says Bojana Jager, economics columnist at the daily Nasa Borba newspaper. “Milosevic was planning to do the same with (the electricity utility) EPS and (the state oil concern) NIS, and buy more time. He won’t be able to do it now.”

A Yugoslav government source believes that the freezing of assets abroad will not have much effect, as there was now “not much left to be seized”. The U.S. already holds 600 million dollars in frozen Yugoslav assets from 1992.

The source added that the state controlled banks had been removing deposits from foreign banks for weeks ahead of the Rome meeting of Contact Group countries. The money is now in accounts which cannot be traced to the Serbian state, he claimed.

The Contact Group sanctions also exclude Montenegro, which is still federated with Serbia under the name Yugoslavia. Since January Montenegro has been headed by reformist president Milo Djukanovic, a stiff critic of Milosevic.

But Nebojsa Medojevic, head of the agency for privatisation in Montenegro, told independent B92 radio this week that the move “will open possibilities for Serbian private companies to transfer their capital to Montenegro to avoid the effects of sanctions”.

In fact of all the international actions threatened or imposed on Serbia by the world community, only one has really had a visible public effect — a call by Ibrahim Rugova, leader of Kosovo’s ethnic Albanians, for football’s governing body FIFA to ban the Yugoslav national team from the World Cup football championships in France next month.

The Yugoslav national football team, ranked eighth in FIFA’s April list, is taking part in a World Cup for the first time since it was banned in 1992 in line with U.N. sanctions imposed on Belgrade for its part in fomenting the war in Bosnia-Hercegovina.

The United States has also called for the exclusion of Yugoslavia from all international sporting competitions including the World Cup, but French officials have already described such initiatives as “unrealistic”.

“Only such a move could have shaken Serbs from their lethargy,” says Zoran Sekulic of the Belgrade independent news agency FoNet. “Football is the most important small thing in the world for them”.