Social Disorders Will Not Halt Reforms

too expensive, while the international monitors are admiring the speed of economic transition. One of the major Belgrade reformist leaders, Bozidar Djelic, is on almost all newspaper covers. ‘I do not bother about popularity, but I would like our people to trust me’, this is how Djelic finishes this interview.

‘VREME’: The Government is facing a series of strikes – disappointed countrymen, taxi drivers, judicial employees, metal workers… How ‘healthy’ is that for the begun reforms?

BOZIDAR DJELIC: That could have been anticipated. It is evident that there is no single social group in our country which can boast with welfare. We should be aware of that. On the one hand, our people consider themselves as citizens of an average-developed European country, which implies good-quality school and health systems, judiciary and culture, plus a salary that enables not only a mere survival, but also going on holidays, buying new household equipment… At the other hand, we do not see, or do not want to reconcile with the fact that the situation we are in is pretty much in a state of decay, that we have lost about 60% of our national income in the period of 10 years – that we are almost totally devastated.

VREME: The Law on Privatisation is about to be officially adopted in the Parliament. The banking system has also been subjected to a general overhaul. It is obvious that those two pillars are vital for the reforms. In which spheres are you expecting new walkouts?

BOZIDAR DJELIC: The resistance mainly comes from three directions – from some spheres where filthy private and economic relations used to enable a quick wealth accumulation. The cleansing of all those sectors, the introduction of legal owners and bosses cannot suit those who are used to illegal money amassing and transfers. That is the first lobby which is strenuously trying to prevent the establishing of order in this country. Others are coming from the middle class administration, where some bad habits and bad ways of communication and business running are commonplace. Of course, it is up to the state apparatus to ensure a normal economic existence to those people, but from now on only those that truly wish to operate the administration of the country can enter that sector.  The third source of resistance is rooted in many firms, but also in some towns which are in a really unfavourable situation.

VREME: You have taken part in the reforms of Central and East European countries. Can you make out some comparisons?

BOZIDAR DJELIC: We are doing very fast – much faster than I could achieve it in Poland in the early nineties. Then, Balcerovic was preparing his package of reforms for nine and a half months. Now, we have made some progress from the moment we entered our offices. Poland needed a year for what we have accomplished in four months.

I do not approve of the criticism towards the tardiness of reforms in Serbia. You can transform the monetary and fiscal sectors, but it is hard to change the mentality of nine thousand employees in the Republic Management of Public Incomes, eight thousand customs officers, 40,000 employees in the central administration, 160,000 employed in the health sector and 130,000 in education. Such things cannot be changed overnight.

The crucial instruction in our reforms is the quantity, quality and speed of the international support.

VREME: What do we offer to the West in return for the help?

BOZIDAR DJELIC: We have two levels of offer – the geopolitical and the economic. The first one is the new democratically stable Serbia as an assurance to the stability and peace in the region. It is evident that whenever Serbia sets off in a wrong direction, the whole Europe suffers consequences. In Western terms, the stable Serbia means less illegal immigration, less narcotic, cigarette and similar traffics, as well as people from illegal businesses.

As far as the economic level is concerned, let us be realistic. We are neither Russia, nor Poland – capable enough to bring about such interest of foreign investors. But, we do have certain other advantages. First of all, currently we are the only country with such a huge program of reforms and offers of privatisation. The West has already gained experience in helping out countries in transition. It is, however, globally worse for us that our opening coincided with the fact that the West is now falling into a recession. It will be more difficult for us to export goods to them, and for them to give us cash. If we are smart enough, we can attract them as a unique region in Europe where the economic growth is so high. Although what I’m telling you right now may seem unreal, I can guarantee that it is achievable, only if we endure the next six to eight months to come.

VREME: Why hasn’t anybody come here yet?

BOZIDAR DJELIC: Well, they are coming. You too are impatient – huge expectations in such a short period. We had a few very important meetings here in Belgrade during the last four months; we had a number of economic delegations; we have travelled to about 60 spots of this globe in order to talk to people from economic and business circles. But, you cannot expect a country that has just come back to a normal position, to become a focus of all world companies.

But the Government has not created those systematic conditions which facilitate the undertakings of foreign investors?

The Government has prepared the Law on Privatisation after two months, and that is the key law. We have corrected the tax system, and they are the lowest in the region and attractive to foreign investors.

VREME: Where are the laws on the protection of private property, on a free transfer of income abroad…?

BOZIDAR DJELIC: It is ready. Let me show it to you, I have it here with me. Serbia is so behind, there is no dilemma about it. Our laws ought to be competitive and attractive for investment. We even have to give some extra ‘change’ (ha, ha). Let us not slip from our minds that we are starting from the very bottom of the ladder and that we have now been famous for our unattractiveness, corruption, etc.

VREME: What are the broker houses saying?

BOZIDAR DJELIC: Statistically, our situation is frightening. But, they as good businessmen see good dynamics in it, and that’s why broker analysts say that our reform began at full steam, that Serbia is surprising with the swiftness of its reforms, but that we still have a lot of problems that create a high political risk for investors. Big companies will not come here until we sort out the dilemma with Montenegro, for example. The safety of profit is important, but no businessman will ever bring his family here in ‘Colombia in the Balkans’.

VREME: Do you fear that ‘Zastava’ might become the Serbian version of ‘Ursus’, the Polish tractor factory, whose workers have confronted to Balcerovic’s package of reforms?

The story of ‘Ursus’ in Poland only showed whether or not the country was determined to put the reforms into effect. The answer was positive. The Government of Serbia will also respond positively and, if necessary, prove its determination to accomplish the reforms on the example of ‘Zastava’.

VREME: You mentioned that the next six to eight months would be decisive for the destiny of reforms. What is yet to happen in that period?

BOZIDAR DJELIC: We will have a clear concept of what we really intend and what we plan to do by the end of the year. We are planning to pull a considerable foreign capital. Afterwards, in a period of three to five years, the country will have to work on its infrastructure, on its economic image and on getting rid of the international financial support. By the end of this decade, we ought to prove that we are really intending to join the European Union. That is a very ambitious program which has a chance to be successful. There are a few things that have to be done beforehand: the reforms in the sectors of education, health, police and military, the necessity of changing bad habits. That would be a new ambition of all citizens of Serbia.

In the short run, we are facing a task of preserving our macroeconomic stability in the next six months. At the moment, this country is under a successful economic surveillance. There are no more quasi-fiscal deficits, nor are there surprises on the part of the currency. That is the first step, but it is actually a very big one.

VREME: What about the Serbian budget?

BOZIDAR DJELIC: It’s the first time that we can boast with sufficit in the budget, because we have been very conscientious concerning our obligations. I am very proud of one fact – since June 30th, the budget of Serbia will cease to have a loan of from the national Bank of Yugoslavia, although we still have access to those 4 billion dinars approved by the stand by arrangement.

It will not be easy, we are having very hard time, our public finances are still very weak. But, we are not going to submit to the pressure of gross salaries in the public sector. I honestly hope it is clear enough to everybody.

VREME: No more social disturbances?

BOZIDAR DJELIC: No way. However, it does not mean that certain social groups will be subject to the general drop in the standard of living. On the contrary, we are expecting the slow growth of the real standard by the end of the year. The next quarter will be difficult for public finances, but we do have a good chance to get away with the stable Serbia by the end of the year.

There is a real risk that the next autumn be marked by a new social upheaval, but we are ready for that. I believe that there is a strong coherence between DOS (the Democratic Opposition of Serbia) leaders towards realising their reforms.

VREME: Is there a risk of halting the reforms?

BOZIDAR DJELIC: That risk is always present. We have to wait for these six transitional months to pass – until September, October.

VREME: Are there those who will attempt to sabotage something of your general program?

BOZIDAR DJELIC: Absolutely. It is on us whether we will let them do it or not.