SERBIA: 1,253 Days Later…

By Vesna Peric Zimonjic Reprint | | Print |

Vesna Peric Zimonjic

BELGRADE, Nov 24 1995 (IPS) - In Serbia now, it is time to remember things as they used to be.

Reminder number one: “The funny looking house in your neighbourhood, where the lights were out for years and now flash joyfully, with funny cubicles in the front, is called a gas station.”

Number two: “You park your car there. A man comes out and helps you fill your tank. He does not have a plastic bottle. He uses a hose.”

A third: “Do not leave without paying him, but don’t worry if you don’t have german marks. You can pay in dinars. Don’t leave immediately, as the hose is not a part of your car”.

Reminder number four: “Enter your home. Do not jump to the first electric heater you see and don’t turn it on. You’ll find out that your home is already warm. It’s because the funny things under your windows are also warm. Congratulations, your central heating is on again, after several winters.”

On the airwaves of radio station B92, on Thursday, the day after international sanctions were suspended against rump Yugoslavia, the announcer was saying these things to make a joke.

But some people could only manage a wry smile. For this is Serbian reality. Throughout the years of the crushing sanctions, using German marks to buy petrol packed in plastic soft drink containers, or facing the biting cold in homes wiuthout central heating, had become the norm.

For 1,253 days, since May 1992, Serbia faced a total embargo on foreign trade and oil and gas imports, due to its role in the war in Bosnia-Hercegovina. After the peace accords were signed in Dayton, Ohio, the United States last Tuesday, the U.N security council suspended the sanctions on Wednesday.

Analysts in Belgrade say suspension of U.N sanctions will provide desperately needed relief for a country that now lives from hand to mouth, with many inhabitants depending on smuggling – or worse – for survival.

Since sanctions were imposed, most factories have ground to a halt for lack of parts or raw materials. Formal economic activity was replaced by the smuggling of fuel, property speculation, foreign exchange fraud and tax evasion.

Gross Domestic Product (GDP) amounted to 20 billion US dollars in 1991 – according to official statistics. This fell to less than nine billion in 1994. The grey economy is estimated to account for half of Serbia’s shrunken GDP.

The only sector that remained almost intact was agriculture. It was output from Serbia’s farms that enabled ordinary people to surrive. Serbia’s huge hydro-power dams and good coal reserves also enabled it to survive the harsh winters of below-zero temperatures when electricity was used mainly for heating in households.

Almost 80 percent of homes in Belgrade are connected to the huge gas pipeline running from Russia. However, gas imports were forbidden and the meagre domestic gas production was not enough for basic needs. Belgrade has more than two million inhabitants.

“It’s good that industry was practically not working, so people could use electricity for heating and not freeze in their homes,” commented the weekly magazine Vreme.

The government turned a blind eye to many forms of economic crimes, rather than risk major unrest by cracking down.

This enabled smugglers to sustain the ‘grey’ economy. Belgrade has a superficial air of opulence. Expensive goods are displayed in shop windows at prices only the “new-rich” class – many of whom are suspected of links to the underworld – can afford.

For those on fixed incomes, and unable to become involved in the ‘grey’ economy, sanctions were devastating. A recent study by the sociology department of Belgrade university concluded that Serbia’s middle class had virtually disappeared during the years of sanctions.

“Ninety percent of people have become poor, and 10 percent have become rich. Out of the 10 percent, half are enormously rich compared to world standards,” said the study, titled ‘The Destruction of Society’.

“Every society tends to look, listen and nourish its middle class,” said the study.

“We have become the society that is to be led by several dozens of enormously rich families that will control our lives and re-distribute the material wealth and political power among themselves.”

Average wages are now estimated at only 100 dollars per month – compared to more than 300 dollars before the sanctions were introduced – which puts the country on a par with many Third World nations. Inflation is running at 200 percent a year.

Experts and analysts agree suspension of sanctions will not by itself bring instant relief, despite the optimistic way it has been cast in the official media.

Serbia has lost many of its former trading partners. It has missed out on technological changes. Economists say the effects of the sanctions will be felt for years to come. Serbia and tiny Montenegro – which together make up the rump Yugoslavia – are counting on asistance from France and Germany to aid recovery.

These two countries have expressed a strong interest in helping modernise road, rail and telecommunications links, and in rebuilding derelict industries such as chemicals, farming and tourism.

The country is also hoping that some four billion dollars of Yugoslav assets held abroad will now be speedily unfrozen. Around half of the cash is held in the United States. It is estimated that about one billion U.S dollars of the amount actually belongs to Serbia and Montenegro. The rest would go to the former republics of Yugoslavia which started to disintegrate in 1991.

The ex-federation is yet to face the complicated legal procedure of international arbitration on remaining foreign debts, joint funds and property, head of the central bank, Dragoslav Avramovic, warned on Thursday.

“I’m a cautious optimist,” Avramovic told journalists here. “We have to wait and see what happens to the membership at the International Monetary Fund (IMF) and World Bank and our debts that were frozen at the moment the sanctions were introduced.

Before the war, Yugoslavia was the most market-oriented economy in Eastern Europe. Then it disintegrated. The ruling Socialist Party of Serbia has a cautious stance on privatisation, despite the virtual collapse of many industries and rampant unemployment.

Serbia (and Montenegro) will have to scrap the old planned economy and embark on ambitious free-market reforms if they want to attract sorely needed foreign investment and loans from internatio-nal financial institutions, experts say.

Dragan Tomic, minister for economic coordination of the Serbian government, admitted on friday that not all the problems can be solved with the suspension of sanctions.

“The government will do its best to help both domestic and foreign business adjust to the new conditions” he told Belgrade radio. To most of the analysts, the sentence meant that the old- new rules will come back into operation.

SERBIA: 1,253 Days Later…

By Vesna Peric Zimonjic Reprint | | Print |

Vesna Peric Zimonjic

BELGRADE, Nov 24 1995 (IPS) - In Serbia now, it is time to remember things as they used to be.
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