Subsidized Truth

There is some crazy logic behind the fact that the Serbian government's campaign to implement the economic program and cut prices back started with a catastrophic shortage of newsprint on the free market which paralyzed virtually all the newspapers and magazines the state doesn't subsidize. Prime Minister Mirko Marjanovic keeps saying "there must be no shortages", but last week most weeklies and "nonexistent dailies" were wondering how they could get their hands on a truckload of paper. The Independent Borba - Special Issue wasn't published for a couple of days, VREME and Huper issued statements saying they were late, NIN is looking around for its own paper and worrying about an anniversary issue. TV Revija, Bazar, Ana, Svet Kompjutera also weren't printed. To make the seeming paradox greater, the loudest protest against Matroz, the only Serbian paper factory came from Politika who receives deliveries of newsprint secured by the state (equal to half the newsprint produced in the country) at half price (compared to the lowest world price).The fact that the Serbian government made sure uncritical daily newspapers get guaranteed amounts of newsprint at the "old price" of 800 dinars a ton (subsidizing them with 400 dinars a ton and saving them at least another 400 off the market price) allows the dailies, which their managements say are operating solely on market principles, to try to absorb the entire daily newspaper market. The government quotas leave practically nothing to other newspapers. Even though the Serbian and federal information ministers failed to inform the public about the quotas, and although the figures are hard to come by and even harder to check, the information that has been published and information VREME has, show that most of the daily newsprint production goes to Politika and Vecernje Novosti (the logic is probably: one leader, one faith, one party, one paper in the morning, one in the evening). The state approved 40 tons of subsidized newsprint a day to Politika, and 20 to Vecernje Novosti. The list includes Politika Ekspres, Dnevnik, Jedinstvo, Pobjeda, Magyar Szo and now Brcin's Borba with around 15 tons. All in all, the average 83 tons of daily production (when Matroz works at full capacity) includes 75 tons reserved by the state, costing taxpayers at least 11 million dinars a year (directly) and another 22 million (indirectly) to keep Matroz going. Politika director Hadzi Dragan Antic said he refuses to submit to blackmail and is prepared to sell his daily at 0.30 dinars when it costs 1 dinar to produce, in support of the economic program. It wasn't by accident that minister Dragan Tomic cited Matroz as an example when he announced the latest political offensive against inflation. He said Matroz had made sure that newspapers were getting newsprint at old prices and were organizing production to prevent dailies from costing more than 0.3 dinars. So what are the economic measures?

The secret lies in the fact that some of the press gets Matroz newsprint at subsidized prices, while others pay the market (double) price. The Serbian government's economy boils down to the fact that uncritical dailies become state mercenaries which costs taxpayers a lot, even taxpayers who read other newspapers. There isn't a foundation in the world that can compare to the Serbian government in its care for its dailies. Not even Soros can compete with Tomic.When you ask someone in Matroz why there isn't enough newsprint in Yugoslavia, they'll say they have produced more than they planned. Despite outdated technology, Matroz has managed to produce an average 2500 tons a month in 1994. It planned to produce 2400 tons and in the last few months of the year it produced even more. Mention Matroz faxes moaning that there's a shortage of gas (4000 cubic meters an hour instead of the planned 4500 or 5000 they really need) and you'll be told that there isn't a state in the world that kept all its promises and the factory can't keep all its promises. If you mention rumors that the factory is barely operating because of the sanctions you'll be told that's right, but production is at top level. Namely, the projected production is 35-36,000 tons of paper a year, with 10-15% of quality loss. Production was an economic problem last year. Since the factory had problems with its pulp mills they had to use more cellulose (which raised costs) but that it is running out because the cellulose production line is down for a while. And when you note that Matroz is having serious problems with wood which it first bought from Hungary then from Bosnia, that means going back to cellulose production. Finally, when you note that Matroz machinery is over 20 years old and add that some ecology experts feel it's much cheaper in the long run to close it down and build a new one, Matroz spokesmen will tell you that there has always been enough fuel to produce paper while the state reprogrammed their debts and allowed imports. When you ask what happened to the republican goods reserves and the paper that's supposed to be there, Matroz spokesmen will say there are no reserves. The state still pays for a lot of paper, this prevents upsets in advance, but makes the shortage chronic. To what extent preventive intervention is employed by the authorities is shown by a small detail. A six hour session of the Forum Novi Sad newspaper publishing house management board was attended by Vojvodina information secretary Ljubomir Lukic. The meeting debated whether they should agree to print Independent Borba or not, even though their printing works can easily do it. None of the Forum managers would say anything about the meeting, but other employees said that Lukic had recommended that the workers should refuse the job and added that he wouldn't be issuing any written orders. They agreed to print Borba in the end but newsprint is still going to be a problem.The fact is, that Matroz can't meet all the needs of the Serbian press even if the Serbian government didn't intervene. That's why we need free imports of newsprint. There's nothing specific on that issue yet, but federal foreign trade minister Djordje Siradovic said the state won't clamp controls on all imports.The government price cut policy has a popular demagogy smell to it, but it reveals itself in the case of newsprint. Forced price cuts are always linked with subsidies for some producers or exchange rates for some consumers. And when the press gets some privilege from the authorities, the authorities expect favors in return.