Outsmarting the Sanctions

Sanctions have been practically in effect since November 1991 when the European Community unilaterally suspended all trade agreements with the Socialist Federal Republic of Yugoslavia. After this, UN Security Council resolution 757 (May 1992) introduced sanctions against Yugoslavia and aggravated them with resolutions 787 (November 1992), 820 (May 1993) and 871 (October 1993). If the period of sanctions is seen to have begun with Serbia's decision to introduce sanctions against Slovenia (and then against Croatia) in late November 1989, it can be said that Serbia's economy has not been working under normal conditions for the past five years.

The drop in Yugoslavia's national product in the past four years is just a partial illustration of the disaster that has struck Yugoslavia's economy. In 1990 the national product dropped by 8.9%, in 1991 by a further 8% and it fell by a further 26% in 1992. In 1993 it plummeted by another 30%. The disintegration of Yugoslavia, civil war, sanctions and a primitive economic policy have resulted in Yugoslavia's per capita national product dropping from 2,083 to 908 dollars in the past four years (official data).

Milosevic, the war, and the sanctions allowed the preservation of the socialist economic, property and political structures, thus laying the ground for the explosion of hyperinflation.

During the past 25 months we have survived an average monthly inflation rate of 615.9%, while the total for the period amounted to 2.35 x 1021 (the name for this number cannot to be found in any single language). Economist Nebojsa Savic, a member of the government's team of economic experts, claims that this is the second highest inflation rate in world economic history.

Power in Yugoslavia is concentrated around President Milosevic who has manipulated the UN-imposed sanctions in various ways. In the beginning, when the war goals in Bosnia had not yet been achieved, sanctions were belittled and Radoman Bozovic, Serbian Prime Minister at the time, even drew up a program for "running them down" (current Yugoslav National Bank Governor Dragoslav Avramovic took part in the program). Prior to the early elections in December 1992, Milosevic launched the thesis that sanctions were "a chance for development" (alluding to the possibility of a general "substitution of imports"). At the time, the formula: "Sanctions can't do us any harm for the next one thousand years" was greatly abused. After the success of Avramovic's program of economic recovery in January of this year, the following assessment made its debut: "We have managed to outsmart the sanctions!"

As things currently stand, we will live to see Milosevic appropriating the easing and lifting of sanctions and proclaiming them great policy achievements.