The Printing Of Governors

While the public's attention was focused last week on the election of the federal government, or rather, guess work as to whether the Socialist Party of Serbia (SPS) leadership would manage to persuade Governor Vuk Ognjenovic to "voluntarily" step down four and a half years before the end of a mandate given by the federal government, the National Bank of Yugoslavia's (NBJ) monetary authority was extended to the Serbian Republic in Bosnia-Herzegovina and the Republic of Serbian Krajina. It is not known when this union will be made public, but the first reactions were recorded on Tuesday, when in expectance of the Yugoslav dinar, the Deutschemark's black market value in Banja Luka dropped by 50%. Deutschemarks and dollars will continue to be the only real currency in Belgrade, Podgorica, Knin and Pale. That is why it remains to be seen if the Yugoslav dinar's crossing of the Drina and Una rivers will facilitate trade. It also remains to be seen if the NBJ's list of priorities concerning the primary issue policy will be extended. The Croatian dinar was introduced in mid 1992 in those parts of Bosnia-Herzegovina regarded by Franjo Tudjman's government as Croatian. Belgrade's current move is a rare example of lagging behind Zagreb. The essence is the same: both sides are printing money without restrictions, hyperinflation rages and the valueless national currencies are in the shadow of the Deutschemark. Germany is the only one to profit, because it does not need any security for the billions of Deutschemarks in the Balkans.

The reason for offering NBJ Governor Ognjenovic a place in the federal government, must be sought in the extension of the NBJ's monetary authority outside Yugoslavia's borders. How did Ognjenovic manage to fall out with Serbian President Slobodan Milosevic's Socialists in such a short time, that they are making the election of the federal government conditional to the Governor's resignation? After some resistance, Ognjenovic agreed to Serbia's demands that the NBJ increase the primary issue without security. On the other hand, those in the know, say that the Governor's short term refusals to "act under orders," and especially in decreasing demanded sums, should not be underestimated.

It is a well known fact that the Serbian leadership cannot abide criticism, but it seems that the main reason for Milosevic's clash with Ognjenovic must be looked for in a statement made by former President of the Montenegrin Chamber of the Economy, who said that other purpose use of credit granted from the primary issue should be approved by the NBJ Governor, considering that he is well informed as to who was granted credit and under what conditions.

In autumn 1992, Ognjenovic introduced a greater control of the primary issue usage, from the budget to granting credit. The fact that the attempt failed, does not mean that such a Governor can stay on the job, but that the person who has a precise insight into who does the decision-making and how, and who is profiting from the central bank's monetary policy, must be 100% reliable...

The NBJ Governor's mandate lasts five years. He is elected by the federal parliament, at the suggestion of the head of state. Federal President Dobrica Cosic now has another hot potato in his lap: Vuk Ognjenovic's letter, in which the Governor accepts, a priori, any decision the Yugoslav President might make, especially if it is for the good of the alliance between Montenegro and Serbia. In the meantime, statisticians have calculated that average salaries in February stood at 29 DM. This was the average sum earned daily by Yugoslavs three years ago. In the rump Yugoslavia, a month has been cut down to one day. The extension of the NBJ's monetary policy outside Yugoslavia's borders will not prolong the last day.