Hello Poverty

The later the Serbian policy-makers leave the scene, the longer the citizens of Montenegro and Serbia will be deprived of basic economic dignity. Let us just remember how 100,000 Albanians from the most independent and proudest "eagle nation" crawled at Mr. Baker`s feet, after decades of hunger.

Despite the trade embargo, the story about mass hunger in Yugoslavia can only begin when an energy collapse occurs. If EKONOMSKA POLITIKA`s information is correct, the summary balance of food stocks in Serbia and Montenegro (last year's figures) showed significant surpluses. There are, however, some indications that the stocks were poorly managed over the past few months, and this year's produce will also have to provide food for some 3 million Serbian souls outside the Federal Republic of Yugoslavia (FRY) which should to be fed, almost for free. All of this calls for caution and questions the estimate that hunger could be avoided if measures of food rationing and compulsory sales of produce are adopted, no matter how long the trade embargo lasts.

The supply of energy is not only a precondition for maintenance of self-sufficiency in food, but also for the simple functioning of the economy. Even the European Commission's study on possible effects of economic sanctions is disclosing plenty of data concerning Serbia's sensitivity to a possible oil embargo. Some of these data demand further clarification, and some do not even show the full scope of the situation. For example, can one seriously consider the cited Serbo-Russian US$3.5 billion worth (in 1992) agreement on trading oil and gas for agricultural raw materials, consumer goods and construction material? First of all, the fact that Serbian exports to USSR amounted to US$ 822.9 million while imports from the said country totaled US$ 675.7 million (in 1991), puts into question the magnitude of the agreement.

Another problem is that not a single barrel of oil has arrived in Yugoslavia, either last year, or even this year, thanks to the said arrangement. This does not necessarily mean that the Commission's paper is citing completely untrue figures that Serbia imported US$ 44,305,000 during the first quarter of 1992. The confusion arises from the fact that the oil was purchased on the spot market from a Russian firm. For that money, Serbia could have bought oil from American dealers. The fact that Serbia's principal oil supplier is a Chinese firm, does not mean that trade between the two countries is flourishing, but rather that this particular firm was one of the rare companies in the world prepared to open short-term credit, with foreign guarantees, of course. When money stops flowing from Serbia, and foreign guarantees disappear, the Serbo-Chinese love could abruptly grow cold. Last year, Serbia's exports to China reached the mark of US$ 9.4 million, while imports from China were worth US$ 139.7 million. Anyone familiar with the fundamentals of economics must be aware that a miraculous and prompt emergence of large barter arrangements between countries separated by a distance of 10,000 km is simply impossible.

There is also a theory according to which Serbia (Yugoslavia) has moved significant hard currency sums to a "safe place". If we start with official data that the FRY's total hard currency reserves amount to some US$ 2.3 billion, and then subtract the FRY's US$ 750 million trade deficit (in the first four months of 1992), we can see that the reserves in the beginning of May were at the mark of US$ 1.5 billion (on the hypothesis that invisible earnings and expenditures are balanced). If we suppose that legal and illegal funds deposited with private foreign banks come to the same level, it's still nothing compared to total liabilities amounting to US$ 12.8 billion. And when an economic embargo is imposed against someone, the creditors will rush to save their receivables - without a formal financial blockade. We needn`t even mention that "safe places" are expensive. Of course, a "government in exile" would have at its disposal enough funds to cover hotel expenses, just for starters.

There are many ways to prove that the trade embargo is bringing on an economic catastrophe to FRY citizens. A glance at the list of Serbia's top foreign trade partners would suffice. Germany, Italy, Soviet Union, USA, Austria, France, Hungary, Great Britain, Greece and Iran occupied the first ten places (in that exact order) last year. The outcome of the boycott should be easy to foresee from that list.