The Federal Government Vs. The Governor

The talks with the International Monetary Fund (IMF) ended in failure in Paris. National Bank Governor Avramovic wanted to preserve the stability of the dinar and secure loans for the recovery of the Yugoslav economy but the authorities weren't ready to put the foreign debt in order. They thought that issue was sacred to all patriots and that everyone would back off from it. The problem appeared the moment it turned out that Avramovic loves his country more than all ex officio patriots. Moreover he did us a bigger favor than he intended to although even the intention of keeping the currency healthy and enable the economy to recover is a big thing.

The establishment of relations with the IMF starts the procedure to settle the foreign debt which the authorities don't want to do yet. They want to postpone that issue even at the expense of keeping the country in isolation and out of the international financial market. So they're pressuring the national bank for loans as if it had the capital to finance the economy. The country's existing foreign currency reserves stand at 300 million dollars, Avramovic said and added that they're dropping at the rate of a million a day.

In that situation, the governor wanted to preserve the dinar and get foreign loans but the condition was membership in the IMF. That didn't happen after the first round of talks in Paris. After a big clash within the FRY delegation the problem went public. The federal government didn't like that and I'm not sure the IMF was pleased. But, things just can't move forward in any other way here.

Something useful did happen. In this country the national bank was never an independent body. How long it will remain independent is uncertain but for one week at least we witnessed a rare occurrence. The dinar-DEM ratio improved and got close to the official exchange rate because everyone understood Avramovic. He decided to preserve the value of the national currency and not fall to political pressure. This is proof of the saying that the health of the national currency depends on trust in the governor. That psychological turning point is important even if it only lasts a week. I like to see the governor put his foot down and reject a dozen ministers and a couple of prime ministers. I'm beginning to feel like I'm in Europe.

No one asked the people if they want continuity with the former Yugoslavia. Perhaps the people want another state that would be called Serbia and Montenegro and which would not continue the tragic misconceptions of the previous state? The people should also be told why the Paris talks ended over continuity while it was abandoned in the agreement with Macedonia. Recognition for the fact that Macedonia brought its state into the former Yugoslavia and left with it makes any future demand for continuity meaningless. Do the people who sign international treaties know the meaning of the words they signed?

I want to point out the fact that the FRY accepted point 3 of the IMF executive board decision of December 14, 1992 on the percentages in dividing rights and obligations in the IMF. That act had far reaching legal consequences. Accepting a percentage is not just a sign of political will (as we thought) but it is also listed as a condition to start the procedure for each republic to inherit the former Yugoslavia's IMF membership.

From a legal point of view we can always renounce our inherited IMF membership but we can't ask the IMF to change its decisions and a hold on the advantages of a shortened membership procedure and get 36.52% of the former Yugoslavia's property and obligations in the IMF. Counter to the governor's wishes, the FRY asked for both in Paris. Some delegation members were even proud of themselves for that.

We shouldn't wait for the IMF to respond because their answer will be negative in terms of continuity. The IMF is a strictly legalist body and if it made a concession and recognized our succession it would have to change its decisions on all the other former Yugoslav republics. Since they have been paying their dues since 1993 that would create untold chaos. So the probability of a positive response is minimal. To turn things in our favor we need to make a compromise proposal before the IMF speaks up.

The formula for the compromise could be: separating the continuity issue, as a question of statehood, from the problem of inheriting membership in financial organizations as a property issue; settle the continuity issue with the UN Security Council and the issue of membership in financial organizations with the IMF; leave open the legal issue of state continuity and accept IMF membership; clearly state that membership in financial institutions does not prejudice solutions in terms of state continuity or the division of the rest of the property and obligations of the former Yugoslavia.

Every compromise, including this one, is not ideal. I would prefer a clean solution but I know the state of the economy and how much time it will take for this solution. Since we don't have that much time the governor should be given the authority to find a compromise and successfully end the talks with the IMF.

Latest reports said the National Bank council lent its support to the governor. Now it's the turn of the federal government.