Uncertain Outcome

The United Colours of Benetton are back in Belgrade. The owner of the world famous enterprize, Luciano Benetton, made u number of appearances in one day only, accompanied by a large number of reporters and TV crews.

Provocative advertisements which forced Benetton to go to courts in Italy and elsewhere will not get him into any trouble with either the Serbian Orthodox church or other institutions, but it just as unlikely that he will be able to do business in a manner he is used to when in Italy and other economically sound countries.

Meanwhile, a delegation of British economists arrived in Belgrade too. There was nothing pompous about it, although its composition suggests serious projects are in store. It is worth recalling that the Yugoslav-British association had initiated a successful convention on possibilities of future cooperation just before the UN-imposed sanctions began to bite.

The delegation consists of individuals representing 15 prominent British firms dealing in various industries. Among them is Everheads, the most successful British lawyers' firm last year. It is also ranked second in Europe and fifth in the world. Apart from its reputaion, the firm's presence in Yugoslavia is significant also because - as well-informed sources put it - lawyers most definitely have a sharp instinct for doing business under favourable conditions. The delegation is to visit Montenegro to assess the conditions for the construction of a waterline to run through the Montenegrin coast, and invest in Montenegrin tourism. Underway are negotiations with the Serbian power industry on reconstructing and modernizing the existing plants and building new ones.

Naturally, it is still too early to expect immediate deals. That was confirmed by the British embassy in Belgrade, which released a statement to the effect that the main object of the visit was to identify the possibilities for trade and British investments in Yugoslavia once the sanctions are suspended. In other words, foreign representatives believe that the sanctions will be completely lifted by the end of this year at the latest, so new deals will depend exclusively on common interest among would-be foreign partners.

In any case, foreign investments have not flooded into Yugoslavia in spite of frantic efforts by the regime to convince the population that foreign markets could hardly wait for the return of Yugoslav companies. The regime seemed to be getting noisier whenever it realized more had to be done to please foreign partners. The real contents of deals on economic cooperation with former Soviet republics are still quite mysterious, but it is more than likely that Yugoslav firms will face fierce competition from the most developed countries even in those parts.

Quite simply, neither will foreign partners invest in Yugoslavia if that is not in their interest nor will Yugoslav producers be able to market exports less competitive than those of other firms. A businessman recently told the weekly Vreme: "High duties, taxes and other unfavourable circumstances are often part of the deal, but how can you do business in a state which changes regulations on a daily basis and adopts retroactive obligations. How do you invest in a country where the republican government nullifies decisions made by the federal authorities. Why invest legally gained capital in illegal conditions"?

No wonder foreign investors are very pragmatic while making deals with Yugoslav partners, avoiding long-term commitments. Stable and long-term relations require a number of changes in the present conditions. That is why imports have prevailed over all shapes of permanent partnership, especially investments in Yugoslav enterprises. On the other side, foreign companies are looking for ways to reduce local taxes and other duties so that stage three - the influx of foreign capital through buying enterprises and other forms of permanent cooperation - could get started under more favourable conditions.

Most of the deals are planned for a period ranging from three to five years, provided that economic and legislative instabilities present in these parts are eliminated. Powerful world enterprises will not tolerate local tricks such as dual prices, one of the remnants of anti-market economy. Although the Yugoslav market is one of the more developed in the former socialist bloc, meaning it is closer to the western consumers, foreign investments will be a dead letter if people here continue to think that the time is right to make piles of money on foreign companies.

A large number of television stations is a favourable circumstance, bearing in mind that a media-plan can be made in no time in countries like Bulgaria, which still boast of two state television channels. However, problems are inevitable in this domain too because the Serbian state television, used to getting away with monopolistic behaviour at home, expects the foreigners to toss money whenever they are asked to. The worst aspect is the fact that state-owned media, guided by one of the most deplorable communist manners, openly charge foreigners double the amount local firms have to pay for advertisements. As a result, the foreign partner halves his adds, the imported product is marketed half as successfully, and the foreigner eventually looks for e new market. Time will tell how long Yugoslavia will have to wait to step out of the isolation actually imposed by the Serbian authorities. Reintegration with the world Serbia was never really a part of requires a price still to be determined.