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November 15, 1993
. Vreme News Digest Agency No 112

Planned Chaos

by Zoran Jelicic

Although the national currency was significantly devalued, the new official exchange rate is much lower that the black market rate (on Tuesday evening a German Mark was paid 600,000 dinars on the streets), but, on the other hand, the black market rate was still lower than the price paid in the banks (the value of a Mark stood at over 2 million dinars in some banks before the devaluation). Nevertheless, the Federal Government decision has created a relative lull on the chaotic Yugoslav market, which was threatened with a physical disintegration. Like many other towns and cities throughout Yugoslavia, on Tuesday Belgrade resembled the city one day after the atomic explosion. Only few shops were opened; yet there were long queues in front of them as people waited to purchase a handful of items which were left on the racks. However, many more people queued in front of the banks, where the price of hard currencies rose by the hour.

The chaos started last weekend. Experts claim that the officials of the Serbian Government were allowed to leave work early on Friday so that they could buy whatever they needed with their cheques as an astronomic rise in the value of foreign currencies was expected. Since noon on Friday, when the banks were paying 350,000 dinars for a Mark, its value rose to over 2 million dinars in four days' time. On Saturday most people still failed to realize what was going on, but on Monday shops were stormed as everybody rushed to buy whatever could be found. It would perhaps be more precise to say that people took rather that bought the goods, since they paid by cheques that are cashed in three or four days at the earliest, which means that if one bought 1,000 DM worth of goods on Friday he had to sell only 150 DM to the bank on Tuesday in order to settle the debt on his bank account. Or, whoever was able to withdraw a large amount of dinars from the bank, he could make three times more money than he had invested in a single transaction due to the difference between the exhange rates on the streets and in the banks. Salespeople started closing the stores at noon on Monday, giving all kinds of explanations, or put the goods away in the warehouses. Fistfights over the last item of clothing, pair of shoes or piece of meat were not uncommon either.

Such unprecedented fall of the dinar was dictated by the biggest Serbian state bank (``Beogradska banka''), run by the man who enjoys confidence in the leadership of the Serbian government. Therefore, there is no doubt among the business and political circles that the authorities have deliberately caused the crash on the market. However, it is still uncertain what was to be achieved by this move and that's where speculations begin. It is a common knowledge that the hard currency reserves of Yugoslavia have almost hit the zero mark /the foreign trade deficit made in the nine months of this year exceeds the one made in the whole of last year/, which is the reason why it is assumed that the ultimate goal was to collect hard currency cash from the citizens as fast as possible. According to this version, the reason for cancelling the campaign was the fact that the offer of hard currency failed to live up to the expectations (``Beogradska banka'' bought about 150,000 DM over four days, while more than one billion DM is needed for import of the Russian oil and gas), in other words, the campaign was not cancelled because increasingly more dinars was needed for less and less hard currency nor because the shops were shut. Neither the mastermind not the intentions behind this weekend chaos may be revealed in a long time, but the lesson remains that even the chaos is the means of ruling.

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