The Cynicism of Mr. Bozovic

The recent economic history of Serbia has recorded PMs who ranted and roared against inflation, while fueling it behind the scenes. But there was none who claimed that inflation was beyond his capabilities, that he would be doing nothing against it and that he should not be blamed for the fact that prices have already reached astronomic heights. And they will rise even more after the said Mr. Bozovic's statement.

It would be to cynical to say that after Mr. Bozovic's statement the slogan that the main reason for creating Yugoslavia out of Serbia and Montenegro lies primarily in the sphere of economics, finally becomes clear - i.e. to have someone else to blame for the absence of a renaissance, and to blame the federal government for doing nothing against the high cost of living that burdens the unfortunate Serbian people. For it would be rather amusing if, following Mr. Bozovic's logic, both republican PMs started to criticize the federal government after a while, for things going so badly, and they (alas!) are unable to do anything, because "it is the role of the federal government and parliament to adopt laws and measures, and this can by no means be an issue left to partial resolving in the republics".

However, a somewhat different explanation could be defended with plenty of arguments. For example, that Mr. Bozovic made the above statement because the business sector reacts to all his statements by raising prices, transferring assets abroad or dividing assets among the employees. Following this line of thought, it could be that the Serbian PM realized that he better announce he would be doing nothing so that this inflation would slow down. Because business can only expect some kind of freezing, restrictions, bans or decrees from him. Like the one made public in the middle of the last week under the name of "The Decree on Obligatory Market Availability of Certain Foods". By issuing this Decree, the government has taken over the only phase in the agricultural economic cycle that was not controlled before. Now it issues the money necessary for planting, determines the prices and the stocks, directs the distribution (domestic and foreign trade), regulates the input costs, and finally brings everything to the market. In this way agriculture demonstrates Mr. Bozovic's idea of a market economy. No specific economic policy is necessary here, so it can be left to some federal government to cope with in peace.

If we carefully analyze the timing of Mr. Bozovic's statement to the Tanjug news agency last weekend, we will see that it was made a day before the Statistics Bureau published that (in Serbia, Macedonia and Montenegro) the April consumer price level is 72.2% higher than it was in February, and that it has risen by 376.8% (the cost of living increased by 394.5%) since the beginning of the year.

So probably, while reading the "bitter" statistics, a Solomonic idea crossed Mr. Bozovic's mind, and this was to leave the anti-inflation policy, i.e. the whole economic policy, to the future federal prime minister. If we are grasping the whole thing correctly, the future federal prime minister will not be Mr. Bozovic, since the conflict with the people, army, civil servants etc. is being left to him so elegantly.

The first voice against Mr. Bozovic's further delaying of what cannot be delayed anymore came from his colleague (by trade and by party), the professor of economics, Oskar Kovac. He, truly, does not doubt that the new federal government is the one which should be pursuing the anti-inflation policy, but deems that even this crippled government (left over from Mr. Markovic) should be given a program to implement. By stressing that there is no reason to wait for the election of new federal institutions and that the old federal government could launch an anti-inflation program as of tomorrow, Mr. Kovac spells out the conditions that should be met before such an undertaking is initiated. And a closer look at these conditions reveals that Mr. Bozovic would have to make arrangements and negotiate far and wide, in order to obtain foreign and domestic support. Having in mind the PM's already noticed "elasticity", it might be better to leave the anti-inflation policy to another federal premier.

Bozovic's giving up of the idea of an anti-inflation policy can also be interpreted by the fact that the Serbian leadership is unable to project the further financing of the war in Bosnia-Herzegovina and to finance the Serbian Krajinas in Croatia. After panicky statements that Serbia will control the troop movements into Bosnia on the river Drina, and that it will pull out all its citizens wearing uniforms from B&H, it is not quite appropriate to announce the future model of paying Serbian militias in B&H and Croatia. This particular "anti-inflationary problem" probably will not be resolved either within the next two months or another 200 months. Bozovic is holding off the solution until the federal and local elections have passed.

Without any intention of claiming that a model of economic survival in Yugoslavia's disintegration has been found elsewhere in the ex-Yugoslav territories, we must look at the fact that inflation has not completely broken loose in Ljubljana, Zagreb and Skopje. In Slovenia and Croatia, the monthly inflation rate is below 10%, while the Macedonian government has, for the time being, frozen wages and prices. Why is the Governor of the Yugoslav National Bank saying that the currency will be changed "when it is assessed that the time is right"? If he is waiting for Mr. Bozovic's assessment, he might end up waiting forever.

The hyper-inflation clearly demonstrates that Serbia's war goals exceed its economic powers, and that the "all Serbs in one state" project cannot be financed by Serbs from Serbia. This is probably why Serbia has announced that it will not be pursuing an economic policy. To avoid a possible failure.