A Second-Hand Life

When exactly a year ago (May 31st 1992) the UN Security Council adopted a package of sanctions against Serbia and Montenegro, and economically excluded them from the industrial civilization, a thesis was launched in official Belgrade that they would last three months at the most. Today, there are already those who say that the blockade will last "from now to eternity". True, the blockade did not blow away the top leadership from the political scene or stop the war, but it can be proved that, in the strategic sense, it has disabled Yugoslavia from restoring a normal pace of development until the end of the 20th century. Because, everything that can be measured in the economy - has literally been halved (this kind of collapse in such a short time wasn't even experienced by the Roman or Chinese empires, even when they were definitely on the decline). When one compares this year and last April, salaries have dropped in real terms by 56.7 percent, retail trade has been reduced by 57.2 percent, exports are lower by 69 percent (incredibly enough, imports have gone up by 8.1 percent), industrial production has been cut down by 43.5 percent, the number of employees, who really work, has dropped by 30 percent etc. Since wholesale prices have increased by exactly 178 140.7 percent since last April, it is very difficult to estimate the proportions of the economy's losses presented in accounting books which are the result of "deteriorated conditions for doing business" due to sanctions. When one takes a look at infrastructural economic systems that have somehow continued to function, it can be seen that, last year alone, they suffered losses of around 700 million dollars (railways lost 45 billion dinars, the Serbian oil industry 160 billion, and the electric power industry 188 billion dinars). The commentator of "Ekonomska Politika" sets out these figures and makes the assessment that the losses are even five times larger.

Over the past year, money has simply been destroyed. Only a year ago, a DM could be bought on the black market for 50 dinars, while today it costs at least 400,000 dinars. If you borrow a million dinars on the money market today, in a year's time you will have to give back 180 billion dinars - if things don't get worse. Since inflation has reached the rate of around 10 percent per day, economic history says that we can expect 100 percent a day in the fall. However, in the meantime, all talk about money will become pointless. The authorities and experts have been trying, over the past year, to find an economic policy that would suit an isolated economy. Prior to the elections, Serbian President Slobodan Milosevic came up with an unusual notion about sanctions as a "chance for accelerated development", which even his PR men couldn't understand. Over the past months, Federal Prime Minister Radoje Kontic kept talking about a survival program. Lately economists have been mentioning a policy of public works etc. All previous anti-inflationary programs (the one supported by Oskar Kovac when he was vice-premier in Milan Panic's government, or this latest one supported by Nebojsa Savic) clash with the interests of the main "consumers" in the Yugoslav crisis - the army, war profiteers and the upper stratum of the political bureaucracy. The Yugoslav public has constantly been speculating about when it would be faced with a total economic collapse due to the blockade. No one has noticed that, given the economic picture in May, a collapse has already taken place. It is enough to notice that the value of the DM has increased by over 800 percent in only a month's time. Even worse than this is, that no one from the establishment is trying any more to answer the question - what next?

While deposits in private banks made it clear that the population's hard currency reserves were underestimated, there was some point to discussions on whether a radical privatization could be the "electric shock" which would shake up the dying economy. Now, when the last two billion dollars have been lost, the entire economy looks like a worthless second-hand car. That is why the year-long blockade will leave consequences whose proportions can still not be foreseen.