The Place Where The Balkans Begin

The mission talked to representatives of the remainder of the federal state and Serbia. Usually, communiqués are issued after negotiations are completed. Since this issue of VREME is going to be printed while negotiations are still under way, we can only remind ourselves of the initial positions of the Yugoslav-Serbian side, and acquaint our readers with an analysis which was presented to the Mission before it headed off for Belgrade.

In short, according to a Federal Government statement, the hosts are hoping the possibility of quicker access to the World Bank credits granted to Yugoslavia before the outbreak of the war, will find its place on the agenda. Above all, talks should focus on the "Kolubara B" steam power-plant loan, and new credit installments for railways and roads. Talks on one or more loans for "extraordinary circumstances" (refugees, medical aid, agriculture) and the continuance of negotiations concerning previously discussed projects (financial restructuring, environment protection, water utilities), have also been announced, but only in cases where there is no dispute between the ex-Yugoslav republics as to the use of these loans.

Although it was announced as the last issue to be discussed, the foreign debt servicing is presently the most important topic. The statement says: "It is expected that one of the topics on the agenda will be the easing of burden of debt repayment, and the consequent outflow of capital."

A Belgrade delegation will appear with similar proposals, more precisely hopes, at the Spring meeting of financial institutions in Washington. This will probably be a trip in vain, for the meeting's scheduled date (April 27 and 28) coincides with the deadline set by the US, EC and CSCE ultimatum to Serbian government. Belgrade will want to increase its quota in the IMF. Serbia is also conscious of the fact that Croatia and Slovenia have submitted applications for membership to international financial institutions, but believes that the Fund is still labeling them as "secessionist countries".

There are certain similarities between this view and the one presented to the World Bank, but only in the fact that analysts of the events in Yugoslavia, after the international recognition of Bosnia-Herzegovina, assess that all creditors will insist on a general "Yugoslav package" as a precondition for a formal debt rescheduling.

It is also estimated that such a package is unfeasible at the moment, due to political reasons, i.e. because Slovenia and Croatia will more readily accept a moratorium than any kind of "Yugoslav" approach. The analysts are not discussing the way in which the creditors will react to such "nationalist" positions, but assess that the Bundesbank, i.e. Germany and Austria, will have the final word, for they have the "economic control" over Slovenia and Croatia. It is interesting that the same foreign powers, which helped in the disintegration of Yugoslavia last year, will probably have to force the ex-Yugoslav republics to cooperate with each other (not only in foreign debt matters).

Therefore, as far as the foreign creditors are concerned, the rescheduling of the Yugoslav debt will not be discussed for the moment. New credits will be particularly out of the question until approval is given by the IMF, which suspended relations with the federal government last February, but is closely coordinating its policy with the World Bank. Some even say that the fact that the last World Bank mission to Belgrade, which avoided meeting Mr. Milosevic, arrived on the anniversary of the rupture in relations was not a pure coincidence. The only thing that has changed since is that debtors from the former Yugoslavia are now closer to a debt servicing moratorium. The NBY (National Bank of Yugoslavia) hard currency reserves fell to the level of two months' imports (the red light goes on when they fall below three months' imports), and that is why the Slovenian demand, made to Paris Club members, to freeze all NBY official reserve accounts in foreign banks, was qualified as unrealistic.

All in all, it is expected that the foreign debt servicing problem will assume critical dimensions before the middle of this year.

Meanwhile, let us take a look at the way in which foreign analysts rank the contribution of each ex-Yugoslav republic to the crisis, which will affect everyone.

In short, Slovenia is behaving the most responsibly by unconditionally accepting its foreign liabilities. It is also agreeing to accept a part of the unallocated federal debt, provided it is allowed to participate in the sharing of the Yugoslav central bank's reserves. The same is said of Serbia, which is willing to accept the largest share of unallocated federal debt (40%), but the pressure that it is exerting on B&H and Macedonia has been noted as well. Namely, the NBY (which foreigners regard as a Serbian central bank) is offering aid to these republics, provided they stay in Yugoslavia. As the latter is out of question, it is assessed that Belgrade will be left with Montenegro as the only, and at the same time economically burdening ally, for the Montenegrin foreign debt is disproportionally large (around 1 billion dollars).

The situation in Croatia, concerning the foreign debt servicing is qualified as disastrous. It is not just a question of repayment capability, but also the fact that Croatia, in contrast to Slovenia, is trying to use the misunderstandings concerning the sharing of the federal debt as an excuse to avoid payment of its undeniable liabilities. By doing this, Croatia is alienating even Germany, which had promised to help its protégé in getting IMF and EC memberships. However, the disillusion with Mr. Tudjman's policy especially increased last month, after a Bundesbank delegation's visit to Zagreb, when Croatian avoidance of any serious economic reform became clear, and when Croatia remained steadfast in its unreasonable position towards the NBY and Serbia where the foreign debt is concerned.

Instead of concluding, it might be useful to remember that even the famous Yugoslav writer (of Croatian origin) Miroslav Krleza used to say that the Balkans begin at the Jankomir bridge, which travelers coming from Slovenia cross to enter Croatia.