The National Bank General Staff

The Serbian Government is getting nervous: the unpopular laws on economic blockade survival do not ring true anymore. They either have to be abandoned or enforced. The dilemma is not an easy one. If they are abandoned, the government will have to acknowledge defeat before the world; if they are enforced, it will lose the elections. The promised ease in neutralizing the sanctions has vanished in the petrol queues, the cooking gas queues, the milk queues...

The republican government has thus decided to attack the federal government according to the scenario which dates back to Prime Minister Ante Markovic's time. There are a number of strategic differences, since this one is still a "friendly government". A compromise was offered following a frontal attack. The deal is for the federal government to continue implementing the unpopular laws, while the republican government controls the money flow in the National Bank of Yugoslavia.

The logic behind this proposal is as follows. The economic blockade is being tightened, so there is no point in taking pains to negotiate financial support for a stabilization program with the International Monetary Fund. This, at the same time, relieves the regime of having to worry about free trade, privatization and market prices. Trade is already under state control, it is now necessary to exercise similar control over the mint. That is why the regime proposed setting up crisis headquarters in which the republican government would play the main role, and the headquarters of all headquarters would be located where money is printed. The last link in abolishing the market would be forming a general staff in the National Bank of Yugoslavia.

The crisis headquarters in the National Bank of Yugoslavia would be formed in the higher interest of "surviving" the blockade. It would print fresh money to be able to approve credits. Both selective loans for (future) exports and agriculture, and credits to firms to give them working capital would be granted. This, together with expanding the control over prices and reducing and further leveling wages, would be sufficient for life in complete isolation. Perhaps a little money would be required for investment in the infrastructure and for maintaining production of sorts, but this can all be fixed on condition that the financial general staff operates as planned.

The Serbian government claims (as always before) that it has a good program, only somebody else is preventing its implementation. Is this really so? There is no point in discussing the existence of an international conspiracy. What is worth analyzing are two key errors in the "survival program".

The first is the erroneous assessment that the world is a frivolous partner and that it will lift the blockade after three months. During that time, most of the domestic firms would manage to keep their heads above water, because they are well stocked in raws and intermediates. The country will emerge from the crisis with a slight drop in production, but otherwise not greatly damaged. The second mistake concerns the level of wages. Wages are low and cannot sustain life in normal conditions, but the social economy is unable to earn even that much money. This is the crushing truth which cannot be declared openly because the Serbian government swears to the efficiency of state and socially-owned companies.

It is now necessary to continue controlling wages, pensions and other social appropriations. This would result in the funds' value dropping to below the mark of three months ago. This is never a popular measure, and it could have far-reaching consequences during the election campaign.

However, this is not the only problem. Even such low wages and pensions cannot be paid with money that has been earned in real terms. What we have here is Swedish socialism at Albanian level. According to expert assessments, public spending accounts for around 60 percent of the gross social product. The Swedish economy might be able to bear such a high amount for public expenditure, but our national income level definitely cannot. That is why it is necessary to keep the mint working to cover public expenditure.

The Serbian Ministry of Finance is carefully hiding information pertaining to the deficit in public spending. This Ministry, and the National Bank of Serbia, are also hiding information on the extent of the unauthorized issue of bank notes in June. In order to stop such behavior, the draft Law on the National Bank of Yugoslavia proposes turning the republican national banks into the branches of the united National Bank of Yugoslavia. Faced with this danger, the Serbian government has made a decisive move, and is demanding a joint general staff in the National Bank of Yugoslavia.

And that is how we arrive at the general staff for money. It all began by disbursing unsecured pensions. It continued with the transformation of socially-owned firms into state and public companies. After that, the large socially-owned "loss-makers" were being injected with money that does not exist anywhere in the world. The country then, by chance as it were, became involved in a war in which it was never involved, and the federation's army budget was kept full with fresh money. The war led to the international community's sanctions which were supposed to last only three months. And so, the wages and prices were put on ice, and all trade placed under state control. Next in line is the general staff for money that is to pay workers who are not working. This, in turn, is to be followed by coupons for bread and milk.

The misuse of money must be punished. A novelty in the republican government's latest initiative is that the money will be used to construct motorways and finance public works. The preceding government was into fast railways, this one is into motorways, to be paid with fresh money, naturally. An interesting novelty, one must say. The old idea of an investment cycle is being warmed up for the cold winter under the economic blockade.

Of course, these are all just excuses and a lot of rubbish. Money is needed only for the next two to three months, until the elections pass. The promises that nobody will be fired, that everybody will get their wages and pensions, that firms will be granted working capital, are clearly being made to counter-attack the fears that are accumulating in the population - the fear of unemployment, the fear of wage cuts, the fear of delayed pensions. These promises of security already won one election. The formula is being repeated. The only obstacle in this could be the National Bank of Yugoslavia which, according to the Constitution and the draft Law, is an independent monetary authority. In order to foil this too, a general staff for money simply must be formed. Thus, the "good" program would receive the "healthy" money.