Kasagic Fired

Rajko Kasagic is no longer prime minister of the Bosnian Serb Republic (RS). He was ousted on May 15 by Radovan Karadzic. The reason listed in a statement was "protection of constitutional order and implementation of agreed policies" and removing the blockade of the authorities. Karadzic said Kasagic failed to adapt to the situation and that could bring unforeseeable consequences to the state and people. The government will be headed by one of the deputy premiers. There are three of them: Miroslav Vjestica (economic affairs), Milomir Dragic and Velibor Ostojic (social activities and seen as a potential front-runner for the premiership).

NATO Secretary General Javier Solana and alliance forces commander in Bosnia General George Joulvan said they would visit Banja Luka on May 16. The schedule for the visit passed out to reporters by IFOR said they plan to meet Kasagic. At the moment this issue is going to press we don't know whether the meeting will happen.

Karadzic's decision was not surprising. First he accused "some Serb politicians" of pushing the Serbs into a common state with the Moslems and Croats through their irresponsible statements. Then he went a step further and said he would run in the coming elections in Bosnia. He added that "the international community is wasting its time looking for Serbs with moderate stands".

Both those statements referred to Kasagic. He's the man who said the peace process will speed up once Bosnian Serb representatives join the newly-established bodies of the Bosnian union. Also, the international community is counting on Kasagic as a moderate to bypass Pale and Karadzic. Confirmation of that lies in the fact that more diplomats and international community representatives came to see Kasagic in the last month than came to Pale over the past few years.

But, Kasagic responded to Karadzic. At a meeting with 33 Bosnian Krajina MPs he said "it's shameful for any nation to harbor war criminals" and indicated he would cooperate with the Hague tribunal. He added that he would reconstruct his government and dismiss ministers "who oppose the peace process". Well informed sources believe that was aimed at hard liners in Pale - Foreign Minister Aleksa Buha, Defence Minister Zivomir Ninkovic and others.

Kasagic intended to raise the government reconstruction issue at a May 15 cabinet meeting in Pale. That meeting never took place and he was ousted.

Sources close to the EU feel that the Bosnian Serbs lost their only acceptable negotiator when Kasagic was ousted.

The RS parliament is due to meet soon in Banja Luka. Informed sources there said Kasagic could refuse to leave if he gets support from Belgrade. The precedent for that was set when Karadzic tried and failed to oust army commander General Ratko Mladic. One of the ways out is seen in the form of a government of experts who would run the RS to the elections.

Federal Government's Negotiators

The Forging of Scrap Iron

by Dimitrije Boarov

Dr. Oskar Kovac will have a hard time convincing foreign partners that the chief transition deals in our economy were carried out a long time ago and that the ownership issue is of no importance for the transition

The Federal Government on 11 May appointed the "heads of expert teams for the preparation of platforms, stands and participation in the talks" with foreign financiers. Professor Dr. Oskar Kovac is to be in charge of the talks with IMF and the World Bank; Minister Vuk Ognjanovic is to be in charge of the distribution of debts to commercial banks in the London club; and Dragutin Vucinic is to take care of possible re-programming of debts to the Paris club (of creditor states). The coordinator of all these affairs is Jovan Zebic, the vice-president of the Federal Government and finance minister.

When National Bank Governor Dragoslav Avramovic was told that only President Milosevic was authorized to conduct negotiations with the world (which was allegedly said by Federal Prime Minister Radoje Kontic) and when he was to be replaced by a team made obviously to the taste of the self-authorized negotiator, few people noticed that Kosta Mihailovic was eventually left out of this team. And this is big news. It points to the conclusion that Milosevic realized that he must not go on with Avramovic if he was to maintain his system and that he could not go on with Mihailovic. Because of this, he decided to try with Kovac who so well combines social ownership and the English language.

During the congress of the Socialist Party of Serbia, one could guess that Dr. Kovac was preparing to become the key person for the "economy after sanctions". This became quite clear after 22 March when he presented his "Bases and Framework for the Stabilizing and Developmental Policy of the Federal Republic of Yugoslavia," the subtitle of which is "F.R.Y.'s Return to International Economic Relations." This is an ambitious document containing five sections which the Federal Government allegedly adjusted with the governments of Serbia and Montenegro.

Dr. Kovac said this document, which is to ensure rapid development, did not contain all the elements of a "letter of intentions" for the IMF because the aims of the economic policy and "nominal anchors" which were to ensure a stable convertible local currency were yet to be quantified.

If Milosevic has decided to let Oskar Kovac develop his economic ideas and plans in the forthcoming period, we ought to review the biography of this economist of high reputation (nearly 300 papers and 14 books published) and long political career.

Oskar Kovac was born in Zrenjanin, on 28 December 1937. He graduated from the Belgrade Economic Faculty in 1960 and got his Master's Degree in 1967, having spent a year at the London School of Economic and Political Studies (OECD scholarship). He got his Doctorate Degree after a specialization course at the Massachusetts Institute of Technology in 1971, where he stayed at the expense of the American Council of Scientific Societies. He worked at Serbia's Institute for Planning (1965), the Institute of Economic Studies (1965-1972) and taught at the Economic Faculty in Belgrade from 1983 to 1985.

In the early 1980's Kovac took part in important political affairs, as member of Krajger's committee for the long-term economic stabilization program. He became the federal minister for the first time in 1986, in Branko Mikulic's government. He greatly contributed to the well-known Bases of Economic Reform made under Mikulic's leadership, which ideologically went so far as to call the social ownership social capital (which has the price and rejects profit). He played an important role in the creation of the so-called May stabilization program in 1988, when prices, interest rates and foreign trade were liberalized while the "nominal anchors" - public consumption, monetary mass and salaries were limited. When the program failed in late 1988, because no other anchor but the salaries had reached a solid bottom, a few weeks before Prime Minister Mikulic's resignation, Kovac left the sinking ship and resigned for the first time from ministerial office.

Kovac skipped Ante Markovic's government, complaining several times that Markovic's success was based on his de-regulation program and his legal and current models of foreign economic policies and increase of foreign currency reserves and opening of the economy to the European and world courses. He said that the major shortcoming of Markovic's anti-inflation program was that it was wrong from the beginning to the end. By saying this, Kovac qualified for Milosevic's economic reform team. Later, when the leader changed his image from the man of change to the warrant of socialist continuity, Kovac somehow managed by spreading out the story about the equality of all forms of ownership, i.e. by maintaining in his scientific and political stands the continuity of socialist ownership.

As a man absolutely faithful to SPS leadership and an expert on world economy, Kovac was then appointed deputy prime minister in Milan Panic's government, the government which was expected to urgently help at lifting the international sanctions. Since Panic only wanted and could remove these sanctions by removing Milosevic, Kovac once again hurried to leave the sinking ship and again resigned. One of the last moves he made with Panic was his consent that the IMF should distribute the old founders' quota at the turn of 1992 and 1993 to "five successors" (F.R.Y. got 36.52 percent of the active and passive) and by doing so he indirectly accepted IMF's stand that the Socialist Federal Republic of Yugoslavia no longer existed. However, since this decision was fiercely criticized by Kosta Mihailovic, one of the ideologists of "Yugoslavia's continuity," Kovac had to go into the political shadows.

Should Avramovic really be removed, Dr. Oskar Kovac will have a hard time convincing foreign partners that the chief transition deals in our economy were carried out a long time ago and that the ownership issue is of no importance for the transition. He says that the social ownership is ownership when the ruling principle is that of "tough budget limitation." He only does not say why the tough budget limitation has not been "introduced" here in over a century? Is there a monopoly of the government which restrained itself?