Chaos in "Hong Kong"

The National Bank (NB) of the Federal Republic of Yugoslavia (FRY) will have its branches in the Serbian and Montenegrin capitals, while the rest of the territory will be covered by operative units. Such information has appeased some desolate Montenegrin banking experts, but possible surprises might arise from dissent already hinted at coming from Vojvodina. A respectable banker told VREME that "if the joint state makes any sense, then no economist should complain against such an organizational scheme of the National Bank." Actually, it is the only way to put an end to the total chaos which followed the disintegration of the old, and the birth of the new, Yugoslavia, although there are no guarantees that what has been conceived will be really implemented.

Conflicts between the two republics could not pass unnoticed. Moreover, the very possibility of establishing a joint state was several times brought into question under such circumstances. A statement by Mr. Vojin Djukanovic (Montenegrin Minister of Commerce and President of the Montenegrin Chamber of Commerce) sounded shocking at the time. "The acts of the Serbian Government are calling into question the establishment of the new state". He said so at a time when the Serbian government was determining a minimum wage which was unacceptable for Montenegro, thus heavily undermining the mutual trust between the republics. But, after all, similar acts, inappropriate for a sound federal state, continued. The NB's internal organization attracted most attention in banking circles. Rumors have been spread about Belgrade's proposal that Montenegro be deprived of a NB branch, and even that talks between the two government commissions were interrupted because the Montenegrin side had left, and that some kind of agreement was reached only two days later.

Heated arguments took place behind closed doors, while each republic strove to enlarge its hard currency reserves, which is also incompatible to the federal model. Montenegro was filling its reserves by buying DEM at 950 dinars at two spots in Belgrade, while Serbia was offering the meager 860 dinars. Both republics used freshly issued money for that purpose. Montenegro managed to snatch DEM 90 million in the very heart of Belgrade, which gave rise to new misunderstandings after Mr. Jezdimir Vasiljevic (owner of the Jugoskandic company, who made a big business deal with Montenegrin government and hence said that Montenegro will become the FRY's "Hong Kong") and a few other businessmen fled Serbia to the haven of the Montenegrin tax system.

Now the NB should firmly control the monetary aggregates and hold together the country's hard currency reserves, thus putting an end to the chaos which has reigned up to now. If all this was already known and planned, it is unclear why Montenegro strove so hard to buy foreign currency, as opposed to Serbia, which used a significant part of the freshly issued money to appease workers' discontent.

Instead of prosperity in Mr. Vasiljevic's "Hong Kong", the citizens are faced with the chaos caused by the international blockade. Now Mr. Vasiljevic's entire project is brought into question, Montenegrin export combinations are definitely off, while, instead of the announced economic growth, machines are stopping for a simple reason - there are none of the imported components the Montenegrin economy depends on.

It seems that even the optimism fueled by the creation of the new state (along with the pensioners' optimism inflated by a pre-electoral 15,000 dinar holiday bonus) has worn out. Even before all the federal MPs have been elected, Montenegrin shops were wiped clean. The people are waiting in queues for food and gasoline, and trying to make stocks of medicines. The illusions that Montenegro will not be short of food in the union with Serbia have already been dispelled. There is almost no flour at all, and if there is any, the prices are rising, same as oil and sugar prices; not to mention the meat.