Robbed, Freezing, Deceived and Poor

A number of media on Monday night or Tuesday morning published the shocking news: a citizen exchanged 200 US dollars at the "Jugobanka" branch office in Kotor. At the official exchange rate, of course, which is three times lower than that on the black market. The director of the "Jugobanka" office refused to reveal the citizen's name, but there is doubt whether he was trying to protect him from psychiatrists or mockery.

Many years ago, between the two world wars, editors of certain Belgrade newspapers used to throw away young journalists' articles about such and such honest citizen who found another person's wallet and returned it to the owner - they explained that honesty was not rare so it was no news. It is reasonable to believe that not everyone was honest in the past and that people who respect law can easily be found nowadays, especially if one does not search among the ruling circles. No doubt, a large part of the population lives beyond the law. The proportions of the "grey economy" are obvious even if one does not know the official estimates according to which "grey economy" equals approximately one half of the official gross product of the national economy.

INCREASING PAUPERIZATION: Despite the known and unknown ways of evading legal obligations, the population is rapidly becoming poorer. From the beginning of this decade to the middle of last year, according to the results of a very extensive expert survey, the number of poor people in Serbia, excluding the provinces, raised from a little over 320,000 to nearly two and a half million. One out of four citizens of Serbia was poor a year ago. Since then the standard of living has dropped even further (an average salary late last year was about 180 German Marks and now it is about 120), so when the new survey results come in, they may prove that one out of three citizens is a pauper now.

The latest expansion of poverty, regardless of numbers, is a result of the growth of prices, i.e. the decrease of real income. Inflation is, as always, more efficient than the any of the population's attempts to maintain the standard of living, so this year's competition between the state and its subjects is to the detriment of the latter. The price-controlling policy of the government (actually all three governments) can yield no permanent results so new high inflation is inevitable, Miroljub Labus has told "Nasa Borba". He added that the "political statements" made by some politicians, according to which there is no reason for growth of prices until the end of the year, were "quite senseless." Labus, as well as other economy experts, reiterates that the inflation has been accelerated by the state's enormous budget considering the situation of Yugoslav economy. Right at the beginning of this year, which should officially be the year of stabilization, there was not much for economic subjects to do but get into "grey economy" either by evading taxes or by transmitting them on to their customers through increased prices. At the same time, the Serbian government kept saying that it was working toward stabilization because it was not going into budget deficit, while in fact it was piling up quasi-budget deficits mostly through losses in the public sector. This resulted in a multiple increase of the price of electricity and the introduction of block-tariff in early October. It is interesting to mention the time of the last presidential elections when the (then and now) Serbian president first visited oil drills in Turijapolje where, he said, there would be enough oil to cover all our needs and then visited the Serbian Electric Power Industry where, in front of the cameras of the state-owned TV, he managed to convince his hosts that block-tariff was not necessary and that its introduction should be postponed.

A lot of time has passed since then and the officials of the Serbian Electric Power Industry are afraid that they may fail to fulfill what they had been promising. They had been promising, partly under political pressures from the government, regular supply of electricity better than last year. They counted on the fairly well done repairs, full accumulations, sufficient supplies of coal and a lower consumption. Several cold days in late October denied all of this.

BAD TIMING ERROR: Daily consumption suddenly jumped from about 60 to over 90 million kilowatt-hours. There was a cold wave and people started heating their homes. As the government had determined November 1 as the date when the heating season begins, heating plants had not started working and most people used electricity.

What is going on in the electric power industry? Repairs have not been completed, many plants are not ready. Due to a suddenly increased consumption, they used what was ready. Besides, accumulations are empty. Some 20 million kilowatt-hours are taken out of accumulations every day, although until recently they swore they would maintain accumulations at all costs. The Electric Power Industry has thermo-electric power plants which could cover this level of consumption, but they cannot get them going. Simply there is no mazout. They are in panic, fearing that what happened last year might be repeated. Need we say that the scenario was almost the same last year? While the heating plants were waiting for the prescribed date, accumulations were emptied and were afterwards useless for months. Not until spring rains came were they filled up again and in the meantime, both the consumers and producers of electric power suffered. All this was due to a rigid administrative procedure of determining the beginning of the heating season. People obviously want to warm their homes when it is cold, not when it is prescribed.

BLOCK-TARIFF BLOW: Of all the measures from the government's package, the only one which has been carried out is a drastic increase of the price of electricity. On April 1, the price went up by 20 percent, on May 24 by 10 percent, on July 1 by 15 percent and on September 1 by 25 percent. In the meantime, the block-tariff was introduced which means another 50 percent increase. All of this has had almost no effect. The consumers have not stopped using electricity. Many of them do not have much of a choice and the Electric Power Industry still has money problems. It is not even covering the expenses of simple reproduction and is making losses.

The introduction of block-tariff is disputable and there are reasons why it should be abolished. Not only because it has made a confusion and caused revolt of the consumers. The block-tariff is a punishment, its aim was to frighten the consumers and make them use other forms of energy and also to relieve the Electric Power Industry by preventing large-scale damages and a breakdown of the system. Essentially, block-tariff is an old-fashioned method and the countries which once used it, have abandoned it. The government engaged an expert team to prepare a program of rational consumption of electricity and adopted this program. The program proposed introduction of three tariffs, but the government, for reasons unknown, chose the block-tariff which was contrary to the proposed program. Confusion started when consumers were informed about their advance payments calculated on the basis of last year's consumption. Most people complain that they cannot afford to pay that much.

By introducing the block-tariff, the Electric Power Industry has added a new detail to its already bad image. It is a normal thing for a producer in the world to advertise his product, to stimulate consumption and to give discounts or special offers to major consumers. The Serbian Electric Power Industry, however, is punishing its major consumers. Any lawyer could get a case against the introduction of block-tariff if he were interested and brought charges. The catch is in the way electric meters are read. If block-tariff is applied to monthly consumption, then advance payments calculated on the basis of last year's consumption cannot count because one is to pay only for what is consumed. And this is where the entire construction falls - the company does not know, nor will it measure, how much electric power the consumers used in October or any other month to come. Without these figures, they cannot apply the block-tariff. This is the third attempt with block-tariff: the first time, citizens were saved by elections, as has been mentioned, the second time was last year when the decision was made but was not applied, and this year we are yet to see. Our suggestion is to abolish it, if anyone should care to accept a suggestion from a newspaper article.

DANGEROUS BANKS: In normal states, pressured by order and calculations, a citizen would seek help from a business bank, but the banks here are not offering any kind of mutually beneficial protection. They, on the contrary, behave like an extension of the insatiable state. After having discredited the system of current accounts by issuing checks for overdrawn accounts, business banks now seem to be heading toward the other extreme. They are now "stealing" money from current and giro account owners and chronically robbing old foreign currency savings in order to cover the losses sustained during the hyper-inflation. In addition to extremely high commission (1 to 10 percent) for all banking operations - the highest being for the tax on travelling abroad - the most frequent abuses are those which have as an excuse the shortage of cash. Apart from being restricted to drawing only 500 Dinars a day from an account (a restriction which even the National Bank Governor assessed as having no legal grounds), there is a much more difficult problem - how to draw 200 or 300 Dinars from a giro account. Banks admit that the payment "has been recorded" but say there is no cash. They suggest transferring the money to the current account. Commission applies to this operation, too. The interest rate on the positive balance on giro and current accounts is about 15 percent per year. Unlike this, short term loans to citizens, in the form of negative balance on current accounts, has an interest rate of about 20 percent per month, i.e. about 0.6 percent per day. Not only are business banks incapable of offering the impoverished population favorable legal loans for food for winter, timber, household appliances, major repairs or reconstructions, with an interest rate which would by a few percent exceed the downfall of the Dinar, but they are charging the illegal loans at a rate which exceeds the inflation by 50 or more percent. After the disaster with Jezda and Dafina there are not many private banks which would try to specialize for dealing with citizens and there are only individual examples of banks which do not respect state-imposed limits and offer favorable interest rates in order to restore saving which in normal countries represents between 30 and 50 percent of credit potential. Our banks have no money, and any time someone mentions credits for citizens they say the National Bank should take care of them. Perhaps several joint arrangements, such as offering short-term loans only to those who receive their salaries through current accounts, would make an easier life and better banking.

The story of how foreign currency accounts are plundered is a well-known one and the new act which should resolve these problems does not contain many novelties. According to the draft which was submitted to the Yugoslav Parliament some ten days ago, the payment of the six billion US Dollars worth of debt to foreign currency account owners would begin on January 1, 1997. Until then, the banks would have an obligation to offer the foreign currency account owners Dinar equivalent of 50 German Marks every month at the average exchange rate on the day of the payment. Today, this would mean the rate three times lower than the real exchange rate. In the long run, the fact that 17.2 percent of the primary issue has been given to banks to pay back the old foreign currency savings at the official exchange rate of one Dinar for one Mark shows how lucrative a business this may be. There are some complaints in business banks, however, because they are not interested in the debt to foreign currency account owners, as if it were not part of their balance. They maintain that they are wasting the money which they could now be turning and somebody else will resolve their foreign currency disbalances.

It has been calculated that by paying back the debts by these devaluated payments about 300 million Dollars worth of obligations could be bought in the next three years, which, of course, will not reduce the total debt which is being augmented by interests. Later on, between 1997 and 2007, the state and banks would need about 600 million Dollars a year to service the debts to citizens.

The arguments between the state, central bank and business banks on who got the better or the worse part of the "distribution of foreign currency losses" are of no importance for this story and the troubled citizens. What is important for them is the fact that neither this nor any other law initiative means brings them any improvement.

PEASANTS' QUESTION: In Ruma and its vicinity, as well as in some villages around Novi Sad, peasants have not yet been paid for the wheat, nor have all obligations been fulfilled concerning sunflower, sugar, beet and other autumn cultures. The price of 15 Dinars for a cubic meter of maize is so low that village people are already burning the maize to heat their homes because it is far cheaper than coal and timber. As far back as the memory goes, maize reapers used to work for a cubic meter of maize as their daily wage and now they do not want to reap even for three meters. The peasant is a partner who has no one to turn to with his mass goods, so he is easily blackmailed. Taxes need to be paid and they are no longer low.

The Serbian Government's action to reduce meat prices to the last month's level has turned into a crisis of livestock. Many butchers in Novi Sad did not have an ounce of fresh meat to sell last week because peasants refuse to deliver livestock. In return for the "reduction of prices," the government gave special offers only to state-owned farms and producers.

The actual social situation in Serbian villages is unknown, but great discontent and fear from future are apparent.

TROUBLES IN CITIES: The situation in cities is even worse. Nebojsa Covic's Belgrade authorities keep reassuring citizens almost daily that block-tariff will not be introduced for the consumed water, but there are no reactions to mass protests or even protests of individual officials because of the 40 percent raise of communal service prices. The citizens can relax. They will not be paying for water 7-8 Dinars instead of four which they have been paying, so the raise of communal service prices will not affect them much. Before this latest increase of prices, the communal service prices were raised several times this year, which means that a Belgrade citizen whose communal service bill was about 20 Dinars at the beginning of this year will be paying 100 in October. However, one thing is permanent: the cost of the so-called investment maintenance is the highest on the list of all services, although very few people ever get any money from the substantial fund for the repair of their rapidly dilapidating buildings.

Only occasionally someone from the ruling circles utters something about the squeezing of the citizens by a joint action of inflation and other techniques. The Serbian Private Business Minister last spring on two or three occasions said in public that some of the largest companies which are closest to the ruling circles were not paying taxes. Then the Electric Power Industry said that some of the "giants" of the Serbian economy were their major debtors. Governor Avramovic recently said that it was interesting to notice that prices on the green market were not going up while prices of industrial products were.

This is what the subjects of economic and monetary power have been doing this year and who should pay for possible failures. On the other hand, apparent conflicts for monopoly, for another piece of the big budget cake which was taken from the economy and the population in advance, constantly keep arising among the ruling circles. A history expert has said that all of this very much resembles the first days of Nasser's rule in Egypt. The new leader of the country impoverished by the flight of capital strengthened his power by giving his revolutionary followers, unable to pay them, the positions which enabled them to take bribes. Present-day Serbia is not Egypt from half a century ago, of course. This is a lot worse.