The Economics of Fire and Water

If the Radicals and the Socialists struggle as coalition partners in the new Serbian government, it will be about economic policy.  That is to say, even Radical leader Dr. Vojislav Seselj is a reformist in regard to Slobodan Milosevic where an economic program is in question.  At least it looks that way on paper.

Shocks from this "merger" are expected by Mr. Mladan Dinkic, coordinator of Group 17, who at last week's press conference commented that the Serbian Radical Party's insistence upon their own economic agenda might represent a blow from the inside to the Socialist Party of Serbia (SPS)--in general a "shock to the system."
Clearly, a conflict between SPS and SRS is visible in the foundation of an economic system that both parties plead for.  While last year the Serbian radicals explicitly, strongly, and most consistently interceded liberal capitalism, the Socialists intend to lead a "step in the new century" with a "mixed economy" as a "synthesis of the liberal and socialistic model."  (Whatever that means.)

Concerning the diametrical economic policies propagated by the SPS and the SRS, perhaps it is better to say something about the support enjoyed by the Radicals' economic plan among economists.  "The Radicals have an incomparably better economic program than SPS," considers Dr. Ljubomir Madzar, professor at the Economic Faculty.  Dr. Bosko Mijatovic of the Economic Institute states that liberal capitalism as intended by SRS is, "that which we need." It is worth mentioning that approximately one year ago at the economic roundtable organized by Belgrade television, Dr. Vojislav Seselj and Aleksandra Posarac, member of the Civic Alliance of Serbia and prominent expert at the Institute of Economic Studies, represented the same position.

Acceptance of the Radicals' ideas indirectly proves true the hesitations of economic experts in the government and around it: at the news that the new government would be a coalition between SPS and SRS, a lot of them were at first prepared to interrupt further collaboration.  To a certain extent, tension fell after they debated declarations of SRS members on economic themes and for the most part found them acceptable.

Although there are differences in economic policy between SRS and SPS that stretch all the way to the dinar's exchange rate (SPS supports the status quo whereas SRS insists on a "climbing" rate), possible skirmishes are most realistically expected in the domain of privatization. Not simply because both parties view their obligations and aims differently, but because it (economic policy) is under the authority of the Government of the Republic of Serbia whose minister for privatization became Jorgovanka Tabakovic.  Tabakovic is, besides Seselj, the only coherent voice in SRS on economic themes.

While in their program, SRS states it's privatization aim at "defining ownership rights and the introduction of a market system based upon competition," the Socialists state in their program that, "the meaning of transformation isn't changing ownership rather it is safeguarding fresh capital through so-called foreign investment." The Radicals, however, rightly view this as a way to hinder, "varying modifications of social capital." Moreover, since SRS members entered the government, they announced that they would demand changes of laws concerning privatization and the introduction of obligation.  Socialists will zealously oppose any opportunities to make new laws.

But all these differences still signify nothing.  At least not until one sees how the Radicals are prepared to move from rhetoric to action.  It is worth being cautions and suspicious because, as Professor Madzar says, "the road from platform to action is long, and a platform alone does not guarantee that it will be carried out in the same spirit."
Firstly, what can be brought into question is the sincerity of the Radicals in pleading for a liberal, capitalistic economy.  In an interview for Vreme, Enrico Colombato, director of the International Center for Economic Research at the University of Turin, cautions that, "Nationalistic ideology cannot be compatible with a free market economy.  Don't believe it.  Look at history--nationalistic ideas have never been for a free market."  Therefore, we will quickly see whether Dr. Seselj is a false nationalist or a false capitalist.  Or will he, with regard to the "French example", become a little less nationalistic and a little less capitalistic?

In every case, both Professor Madzar and Dr. Mijatovic consider that a  shift toward economic reform is possible if the Radicals are "hard and skilled enough to impose their own ideas" and if they "exert constant pressure on their partners in the government."  Dr. Madzar, however, gives the advantage to the Socialists, " Socialists are great masters of the political game, and it wouldn't surprise me if they deceive the Radicals."  Nor does Mrs. Posarac believe there will be a shift based on plain facts that state that the SPS's current economic policy is, "an easier way and the path of least resistance.  It's politically worthwhile and more comfortable than what the risks reform would bring." Mr. Dinkic anticipates that it will quickly come to mutual accusations between Radicals and Socialists because of "an unavoidably large tax grip and proportionally slow economic growth."  Dr. Miodrag Zec, in a statement for Beta news agency, doubts that the Radicals will succeed in obtaining even changes in (privatization) laws, let alone anything more.

It is, however, improbable that the Radicals' eventual economic reforms could somehow change the view of Serbia that is preeminent in the world.  The harm that generates from SRS's world view is already bigger than the  possibility to receive and to use  narrow economic policy, considers Professor Madzar.  That is clearly stated by one foreign journalist writing from Belgrade, "The international community doesn't care if Serbia has a market economy.  They are only interested in what happens in Bosnia and Kosovo."