Who Benefits From Sanctions?

In the middle of last week, Belgrade resembled its pre-war self, at least in part. A number of meetings of experts were held in two days. They discussed anti-inflationary and stabilization projects, composed "letters of intention" to the International Monetary Fund and assessed what and how real are the chances of attaining a stable and prosperous national economy as speedily as possible. Two programs are in question here: the Panic government is behind one and the Democratic Party promoted the other last Wednesday.

The pre-war image disappears for a moment with warnings by the authors of both projects that their application is possible only in a time of the living, that is after the sanctions against the Federal Republic of Yugoslavia are lifted. Reality came bounding back, on Wednesday, with the unequivocal demand of the Bozovic government to the National Bank of Yugoslavia to change its policy in the last quarter of this year and to, in fact, print more money. The printing of money "as the need arises" is not a novelty in the world of "socialist economies". Perhaps the Serbian prime minister should receive a plus for supplementing the system by demanding additional money for products which can be sold on the domestic market, and not for those who are not working or whose products and services are of no use to anybody!

There is no mystery in the Serbian government's demand: it is simply much more comfortable to ask for unsecured funds for those who produce and sell, and for the increasing population which has been reduced to privation by that same regime, and for all the other beneficiaries of the state strongbox (the regime in Serbia today reallocates almost two thirds of the social product). A debate on the standard of this latter group would undoubtedly set off an avalanche of questions on the reasons why overall and personal living standards have toppled.

In other words, only a miracle could hold the Serbian regime's claims that the international sanctions are to blame for the catastrophe of the Serbian economy and the population. The "Program for Stabilizing the Economy and Economic Prosperity" by the Economic Council of the Democratic Party has a chapter on the present situation, from which one unequivocally derives that Serbian economy was on a sharp decline even at the beginning of the year. Unemployment topped 30 percent, the average wage dropped to around one hundred German marks, the regime reallocated the social product more and more using the crudest methods, and nationalization has become a general trend and characteristic in many branches - from individual segments in economic life to ownership. Nothing good could have come from this even if the war had not spread to Bosnia-Herzegovina and the international sanctions not imposed. In short, there is no doubt that the Serbian economy cannot survive the blockade (according to many estimates not even by the middle of next year), but its life would not have been much longer with the internal blockade which the political and economic leaders in Serbia have and still are imposing before and during the sanctions. The conclusion drawn is that the burden and damages suffered during the blockade would have been much lesser with some other helmsmen.

With regard to the current situation in Serbia, one is not surprised when Prof. Ljubomir Madzar of the Belgrade Faculty of Economic Sciences stresses that one of the main virtues of the Democratic Party's economic program is that it is based on liberalism at its best, or in other words that it transposes the concept of human rights into business conditions for every individual economic subject.

Mr. Miroljub Labus, one of the program's authors, confirms such an assessment by describing the program with the slogan "return future to Serbia", and bases this return on an economically free and legally safe citizen. In this system, the state cannot own people and property, rather it can only organize and safeguard the rules of conduct. Serbia is a public company today, says Mr. Labus, and the consequences of such general nationalization can be seen in the inflation rate which, if nothing changes, will reach the figure of 37,700 percent in one year.

There is no dispute over what should be changed to avoid a total disaster: If the authors of both programs are working for the post-sanctions period, then eliminating the reasons for imposing the sanctions is, without doubt, the first and main precondition. This is the key point of the separation, or conflict, between the Serbian regime on the one side and the federal government and, on this occasion, the Democratic Party on the other: The Serbian regime is searching for ways to survive the sanctions because it is not ready to fulfill all the demands set out by the international community. To the extent that politics, or quasi-politics, has never tutored the economy more than now.

Since the preconditions for stabilization have yet to be ensured, there is no justification in wasting time on describing the contents of the two programs in detail. In any event, the programs are almost identical, and their presentation now is most important, all the more so because it confirms that, in the economic field, not everybody in Serbia has lost his bearings, even that a large part of the scientific and economic public is on the side of those demanding a change of regime.

Both programs say all this both directly and indirectly. To illustrate this, if the economists in the Democratic Party and experts close to it rank highest political preconditions for economic stabilization (general political stability, educated and honest government, lifting the sanctions, abolishing war-time economy, opening up to the world) then it is clear even to those who are not quite abreast with the current situation that Milosevic's resignation is the common denominator of all these preconditions. Or, when economists engaged by the federal government write that the main causes for the galloping inflation are excessive public expenditure, scare financing of that expenditure, filling the budget by printing fresh money and lack of financial discipline - then this indirectly corresponds to what the authors of the Democratic Party's economic program advocate.

There is time for more detailed expert discussions unfortunately, but there will never be a program which would be supported by all. The decision on choice, and therefore public responsibility, always falls of the country's state and economic authorities.

The warning regarding reality, which was the Serbian government's main objection, is difficult to understand and accept other than as an invitation to show unconditional respect for the Milosevic-Bozovic duo and explanations given by experts loyal to them.

The question is still the same: Is Milosevic's power an unchangeable reality? Or: Is it easier, and therefore less important, to change reality by decreasing the annual income of the Serbian citizen from 2,500 to 500 American dollars than to remove the clique which brought all this upon the population?