What is the Purpose of Economic Policy?

Only after Milosevic's interview for The Washington Post, in which the same old phrase that "there is no price for Kosovo", was repeated, it became clearer why the governments and parliaments of SRJ and Serbia rushed this year to adopt the next year's state budget. Those principal documents of economic policy, this time adopted much earlier than usual (December 3rd and 7th), yet at the last moment, i.e. in the middle of the unexpected turning point of both Yugoslav and American "Kosovo politics" in relation to the direction, which was expected after the Milosevic-Holbrooke agreement.

The supposition that the Kosovo affair will finally move from a standstill and that that process will be followed by reduction of the isolation of SRJ and Serbia, enabled the representatives of economic policy to be carried on the wings of imagination, and to set the state and public consumption within the ideal proportions of the planned increase in social products next year of 7%, the increase in production of 8%, export above 20%, import of 12%, etc.

THE 'INCAUTIOUS' ZEBIC: The fact that the information about the importance of the 'foreign wall' of sanctions towards Serbia and its extension for another six months, which the American President submitted to the US Congress, reached a small number of the uncontrolled local editorial offices (only) on December 6th, did not, of course, make either the Serbian Prime Minister, Mirko Marjanovic, change the report on aims of economic policy, or even the Republican Minister of Finance, Borislav Milacic, change the state budget for 1999. Only the 'incautious' Zebic, exactly on the day of the almost unanimous 'operation' of the budget and the policy of development in the Serbian Parliament, disclosed to the public that all these optimistically planned rates of growth for next year actually relied on the assumption of re-integration of SRJ with the world finances and the trade association, along with the rehabilitation of salary circulation with the world and the annulment of this year's ban on investment into Serbia.

Why did Milosevic, at the time of the latest tactical 'crucial point for Kosovo', find it necessary, long before the legal deadlines, to 'perform' the adoption of the state budget for 1999 in the Parliaments of SRJ and Serbia? It is a question which is worthy of formulating several hypothetical answers. According to the first hypothesis, it could be supposed that those who created the economic documents for 1999 were informed on time to prepare the papers for Serbia's more favorable times, which Holbrooke promised to Milosevic as an exchange for Kosovo's autonomy. However, the Serbian leader estimated that he had gone too far, or at least, further than he had to - therefore, he changed the political plan, whereas the economic plan, unimportant as usual, remained the same as it was ordered. According to that hypothesis, a funny discrepancy between the year in which, as according to the Serbian Prime Minister, Marjanovic, a stability of prices and currency was reached (an increase in prices of about 50% and an official devaluation of 83%), and the next year in which, again, a policy of "consolidating the increase in production and standard" will be carried out - is merely a result of the unhappy dispersion of political and economic planners.

UNTIED HANDS: With the support of certain arguments, a second hypothesis could be constructed too, according to which, Milosevic hurried to push the federal and republican budgets through "the institutions of the system", in order to have his hands untied and prepared for the 'reconstruction' of both governments, and together with the more acceptable ministry personnel, to begin the realization of the agreement with Holbrooke and to prepare the allegedly inevitable special elections for next year.
In fact, if we stick to the old parliament theory, the only job of each government is to push the state budget through the parliament - everything else can be performed without the government and the parliament, i.e. without the majority in the parliament. Even tomorrow, without proclaiming a state of emergency, Milosevic could dismiss both Seselj, as a coalition partner of Serbia, and Bulatovic, as a quasi-coalition partner of SRJ - without even counting the votes, neither in the Serbian nor in the Federal Parliament. Because the budgets are adopted. And above all, the infamous Law on the Rights and Obligations of selected individuals has also been adopted, i.e. "The Law on Official Privileges", so nobody needs to be worried about the outcome of special elections.

The shortcomings of this second hypothesis are numerous, but it is enough to ask a question: why would Milosevic change the current government personnel when there is no sign of their unreadiness to follow him in any political direction for which he shows some understanding?

BIG GAP: Hypothesis number three seems to be the most convincing one, because it is the simplest. The budgets are already adopted because the state apparatus finally realized that the economic policy in this country is separated from reality to the extent that a painful 'fitting' of the desirable growth rates into the empirical base from last year, is no longer necessary. Numbers are not useful anymore. For example, what can be concluded from the fact that in the end of 1994, the state budget planned for 1995 was about 2 billion US dollars (according to the then commercial rate), and now it is planned for about 1,8 billion US dollars (according to the unstable current rate).

Or, what does it mean that the Serbian budget planned for next year is 34% bigger (in dinars) than that planned for this year - before the real current devaluation of the national currency of about 100%. And, should the buying power of the planned Serbian budget, be judged according to the rate of 1 DM as being 8,6 dinars, or 7,4 dinars, the two (so far) extreme rates in the first week after the adoption of the state budget. Those who draw a conclusion that the budget consumption in Serbia is going down, while the social product continuously rises (as the participation of the federal budget rises in the interest of the republican budget), would be only partly right, or would be only partly wrong - all the same. The essential point is that the 'crushed' economy like ours, lacking in development, could not, neither before nor tomorrow, endure such consumption (nor even the lower), without some foreign financial support. And that support is, with this policy and official personnel - more than difficult to secure, even if we sell not only Kosovo, but everything we have.