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May 4, 2001
. Vreme News Digest Agency No 489
Economic (non) Equations

Lion Hunt

by Dimitrije Boarov

Still, the strength of a grand gesture in economy musn’t be underestimated, since in this field a single bold move can cause “interference” of a million individual decisions, which again can suddenly bring about an

Seemingly, economy belongs to those fields in which miracles don’t happen. When you start analyzing all past economic miracles, from Roosevalt’s New Deal or the German miracle from the third decade of the last century, up to the Irish economic opening up at the beginning of the 70s – economic literature will convince you that actually there were no miracles. Either the allegedly successful economic moves only coincided with the passing of the climax of the crisis – and was therefore undeservedly hailed as a miracle economic cure  - or the helmsmen of economic policies simply were no longer capable of maintaining the wrong direction, so that the strength of the international economic storm finally and suddenly blew a certain country in the direction of prosperity. Faster than any other, only because up until then it had put up too much resistance against economic logic.

Still, the strength of a grand gesture in economy musn’t be underestimated, since in this field a single bold move can cause “interference” of a million individual decisions, which again can suddenly bring about an unexpectedly good and quick result. However, in order for a grand gesture to acquire an extraordinary, symbolic meaning in economic policies and to set a million small decisions in motion, in its basis it has to be both rational and understandable to any man – since success isn’t fatal and inevitable in economic matters. On the contrary.

For example, at the moment when this text is about to part with its author, a high Serbian delegation which is in Paris, headed by the republic Prime Minister Zoran Djindjic, following meetings with President Chirac and Prime Minister Jospin, already seems to have some very important news in its bag – that it will have France’s support for the final reconstruction of the operational collaboration with the leading international financial institutions (IMF and WB), and, in consequence, it will also have support in negotiations on reprogramming our obligations towards the so-called Paris Club of FRY’s creditor states. However, no matter how enormously important this information is for the Serbian economy, for the average man it cannot have the strength of a “grand gesture” since everyone here knows that that success isn’t in the domain of our decision and our intelligence, but rather a result of a new strategy of the leading powers towards the Balkans and the beginning of Belgrade’s adjustment to the role in that new scenario. However, news that Prime Minister Djindjic, finance minister Djelic and privatization minister Vlahovic have finally agreed that Peugeot will take over Kragujevac’s Zastava and that we will soon be driving “cubs from Sumadija” at favorable, “domestic prices” could have the appearance of a “grand gesture”. True, it isn’t totally realistic to await such news – after an almost decade-long wrangling over the basic concept of the future of the only domestic automobile plant – where one side is in favor of Zastava’s being satisfied with a cooperative role in the framework of this or some other large company (from which it would receive a half-finished automobile in return), while others demand that the domestic auto industry should be preserved in its entirety with the help of capital turnover and the protective brand of old or new foreigners (except that in that case it isn’t clear what that foreign company would get in return for its brand or money, without it being shouldered by the Serbian taxpayers). Exactly due to such circumstances, that it is neither easy nor simple to make a strategic economic decision and take responsibility for it – eventual news about Peugeot in Kragujevac could have the format of a “grand gesture”, regardless of whether it will be evaluated as an extremely farsighted or catastrophically bad one in a few years. It would definitely be good news now, whatever the employees in Kragujevac or the philosophers of the metal industry in Belgrade think of it (who are happy when they notice that a firm uses over ten percent of its technical capacity in this branch today). Not only because behind Peugeot’s wide back other French and international firms would swarm into Serbia, but also because the well-known effect of “table clearing” of the decay of last night’s meager dinner would symbolically signify the beginning of something “new, better and more beautiful”, which we have desperately longed for.

If we don’t get anything for Zastava in Paris, maybe in exchange, we will be offered news, as good and grand, which confirm the sale of Beocin’s cement factory to Lafarge, but that would be like something from Mirko Marjanovic’s repertoire, and therefore couldn’t have the effect of a “new move of the new government”. Anyway, the “grand gesture” doesn’t have to be made in France, but the government of Serbia has to find it somewhere – since popularity cannot be achieved on the ever necessary sorting out of the tax system, for example, nor can the people’s self-confidence be returned by their regular tax payments.

Some “brilliant news” on great economic success would probably be comprehended as the beginning of times in which the headline news which open the famous TV newsreel won’t be the ones from sad Northern Kosovo or from the vicinity of Medvedje and, if you will, not even those from Lovcen – because every citizen of this country has had more than his share of torment over the so-called “state issue”, and I don’t see any particular enthusiasm in Serbia (apart from myself and colleague Cerovic) that after the Montenegrin elections “chances are somewhat better” for a reconstruction of the soured brotherhood and unity of the same religion workers between the Danube and the Adriatic Sea. To put it in a more considerate and intelligent way, I at least feel that “holy national and state issues” are less important than that things start finally looking up for us here in Serbia as well so we can at least start dreaming about a new car, new workshop, new job, new salary. Someone will certainly say that those two things are positively mutually conditioned, but I don’t share that opinion. 

When on the subject of “grand gestures” – there were some even in the economic history of Serbia. Let’s just remember the agreement of the young Principality (which had just gotten its independence) with the General Union in Paris on a loan for the construction of the Belgrade – Vranje railroad line (365 km), which nominally amounted to one hundred million Franks or more than three annual state budgets of the time (just try to find a loan of five billion dollars today!). True, that agreement caused the huge Bontu affair and a number of other complications, but the railroad line was constructed and placed Serbia on its own economic feet, and its contribution to the modernization of economic processes was enormous. However, critics of this move weren’t lacking back then either, and the radical deputy, Reverend Milan Djuric then assessed that due to the construction of the railroad in Serbia “foreign factory owners and all sorts of bums will follow it, and trade will commence with them, and it isn’t our nation’s duty to trade and grow richer, but to avenge Kosovo”!

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