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October 14, 1991
. Vreme News Digest Agency No 3
The Threat of an Economic Embargo

Shivering in the Dark

The one who dared to threaten politically the very essence of trade - the economic interests - announced to the world that he only understands the language of total blockade. The fact that the ultimatum of the European Twelve from Utrecht (from October 6) with the threat of economic sanctions was accepted during the given deadline (24 hours) at the session of the incomplete Presidency by no means implies that the Serbian economy is defeated because of the economic blockade. Such a gesture only means that even the most stubborn ones have accepted the fact that the Serbian economy is near collapse and that the rest of Yugoslavia cannot bear an ounce more of economic pressure.

The young British conservative John Major said that the economic history teaches us that the trade sanctions have not significantly affected anyone: he gave the example of South Africa, which, regardless of the economic sanctions, became one of the world's richest countries. He could have cited a whole list of examples. Italy, for instance, after the economic blockade of the League of Nations. After the attack on Ethiopia, it experienced a significant boost in industrial production (Yugoslavia made a big mistake by drastically reducing its exports to this country). The trade blockade against Serbia, however, would for a long time subject the Serbian population to poverty, unacceptable for the civilized world. Apart from this, such an addition to the existing sanctions would, in the preliminary stages, benefit the radical nationalist fractions (that is what happened with the blockade of Slovenia and the "taxing" of Croatia), the trade isolation would only aggravate the war instead of stopping it (according to The Times magazine). The very idea that the oil embargo on eastern Yugoslavia could literally stop the tanks is ludicrous.

Theoretically speaking, despite the significant dependence on energy imports, stopping the war with the use of "energy blockade" would have no effect; it would only exclude the big world trade partners - Yugoslavia with 16 to 17 thousand dollar imports or Serbia with 5 thousand dollar imports. Thus it is correct to assess that the introduction of the limited or total trade blockade of Yugoslavia (meaning Serbia) to stop the civil war would have no real effect. The underlying motive of the ultimatum from Utrecht is, however, different.

It belies the threat of the long standing retaliation of the civilized world to the ones who consider themselves so independent and omnipotent to think that they can defy it.

(Enver Hohxa is the only one who succeeded in doing so, to the horror of the Albanian population.) If then we discard with the two extreme possibilities - concerning the real trade isolation from the outside world or the continuation of the "undeclared" war of Serbia, counting on the "friends throughout the world who could prevent such a blockade" (Slobodan Prohaska, the Vice-President of the Serbian Government) - there still remain horrific economic consequences of the seemingly victorious politics of the Serbian leadership. Let us assume that in the next ten years no sanctions will be introduced concerning trade with Yugoslavia and Serbia and let us try to evaluate only the effects which such a trade will produce with the view of the tarnished reputation due to the civil war.

Concerning the information given by Radovan Kovacevic, the historian from Belgrade (EKONOMSKA POLITIKA from September 2), Yugoslavia has in the last ten years, trading with the European Community, accumulated the trade deficit of 20,3 billion dollars, which is more than 60% of the trade deficit with the OECD countries in the same decade. More than half this deficit concerns the trade with the Federal Republic of Germany and Italy (11,5 billion dollars). If we assume that the Serbian part in this deficit amounts to 7 billion dollars and that the whole deficit, including the Serbian, was covered by such "sensitive" foreign currency inflows as the income from tourism, workers' foreign currency orders, traffic and other services and, above all, reprogrammed credits - it is easely envisaged what such an informal silent isolation of Serbia, which has not been announced yet, could produce. If based on this assumption we estimate that the Serbian trade deficit in the next ten years, because of the Yugoslav split, would have to be at least 10 billion dollars and the Serbian aggressor image amount to only 5 billion dollars of the non-trade foreign currency income. We could conclude even now that "the war damage" of Serbia (within the old borders) is three times greater that the direct and indirect damage, which is in Croatia estimated to be 1.5 billion dollars.

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