Economy Will Take Ten Years to Rebuild

By Vesna Peric-Zimonjic, IPS, 21 May 1999

BELGRADE, May 21 (IPS)—If the bombing of Yugoslavia stops now, it would take ten years to take the Serbian economy back to the already difficult situation of March 24, independent economists said here.

With NATO air strikes going on for eight straight weeks now, we will need ten years to go back to the level of March 24, said Mladjan Dinkic, of Group 17, an organisation of independent, market-oriented economists.

Dinkic's analysis coincided with official estimates of the damage caused to the country's manufacturing facilities and infrastructure by the North Atlantic Treaty Organisation (NATO) attacks.

Official and independent economists alike fear that Yugoslavia, a medium-size industrial country, is deliberately being pushed back to become a backward subsistence economy.

In a country crisscrossed by two major and a dozen of smaller rivers, Foreign Ministry statistics list more than 40 road or rail bridges destroyed by missiles, which have blocked traffic in the Danube, a major regional waterway.

The destruction of infrastructure was followed by the systematic devastation of metal-processing, chemical and oil industries.

The disruption of the Danube, a main artery of the European economy, is provoking daily losses of 20 million German marks (10.8 million US dollars) not only in Yugoslavia, but to the entire region, Yugoslav foreign minister Zivadin Jovanovic told journalists earlier this week.

According to official statistics, more than 500,000 workers—with some 1.5 million dependents- were left unemployed since March 24, their workplaces razed to ground.

In a country of ten million, where economic hardships started long before the NATO bombing, the official unemployment rate was 27 percent before the bombing began.

Only 1,9 million people were fully employed by March. Most of the enterprises they worked at are now in ruins, including Zastava, Yugoslavia's only car plant, a home appliances factory and other plants making goods ranging from fertilisers to tobacco and printers.

Until March 24, most of our experts warned that, due to the very bad economic situation in the country, it would take another 15 years for Yugoslavia to reach the economic level of 1989 Mladen Dinkic of G-17 says.

Year 1989 is used by experts as a benchmark, as it preceded the disintegration of the six-member Yugoslav federation and the subsequent wars in Croatia (1991) and Bosnia (1992-95) for which Yugoslavia was subject to United Nations economic sanctions.

UN sanctions were formally lifted in 1995, but the United States kept informal outer wall sanctions, blocking access to preferential trade agreements as well as foreign funding and investment.

Whatever NATO's excuse for air strikes was—Kosovo and the ethnic Albanians—it remains a secret to economic experts why such level of destruction, Dinkic says.

The destruction of factories, bridges and infrastructure did not bring any damage to (Yugoslav president Slobodan) Milosevic. He did not work in those factories nor used the bridges daily. The damage was done only to the people... They will be all in need of humanitarian help if the bombing continues, Dinkic says.

Group 17, known for its sharp criticism of Milosevic's economic policies and reluctance to embrace market reforms, has launched several calls for a halt to the destruction of the Yugoslav economy.

We are drawing the attention of the international community to the fact that the NATO aggression on Yugoslavia represents an act of brutal retaliation against an entire nation and not a punishment of Milosevic's war machinery, the G-17 said in an earlier appeal.

It is an appalling fact that NATO countries, whose main traditions are democracy and civilian institutions, have decided to teach a small European country and send it a political message with bombs and aggression, instead of supporting its economic reforms and democratic developments, it said.

Repeating that the total economic damage caused by NATO air strikes, measured in relation to gross domestic product (GDP), will most likely exceed the damage caused in World War II by Nazi Germany occupation, the G-17 warned that per capita income will fall from 1,650 dollars to under 1.000.

Yugoslavia will not be able to maintain present levels of health, social security and education the economists warned.

Yugoslavia's GDP could fall down by 50 percent, depending on the length of the conflict. It is already clear that without immense foreign assistance we cannot expect any economic recovery, warns economist Srboljub Antic.

Of course, people will turn to agriculture in order not to starve, but that would look more like middle-ages than the end of 20th century he adds.

The reconstruction bill is estimated by Yugoslavia—at present levels of destruction—at some 100 billion dollars, but western officials have already made clear that there will be no aid if Milosevic remains in power.

The war is costing NATO countries some 50 million dollars per day in military expenses only. Some 160 million dollars have so far been pledged for humanitarian aid, but marked exclusively for ethnic Albanian Kosovar refugees.

Milosevic was elected president of Serbia in 1993. His Socialist party narrowly won the general elections in 1997, after which he was appointed president of the Yugoslav federation (Serbia and Montenegro), which is now ruled by a coalition of socialists, neocommunists and nationalists.

The NATO attack has pushed most Serbs to postpone their political grievances. Dissenting voices are considered to be isolated by local independent analysts.

The Serbian government has launched an emergency subsistence plan for 50.000 workers from the nine biggest factories in Serbia that were totally destroyed, offering them jobs in agricultural projects. So far, however, the response is negligible.

The Yugoslav authorities have announced the constitution of mass working brigades to reconstruct the country once the air strikes end.

Tomislav Banovic, head of the pro-government Trade Unions of Serbia recently said that the country's entire work force will have to participate in the effort.

One way or the other, people will survive—they will not be hungry at least Mladjan Dinkic says. But, there will hardly be anything else if NATO air raids continue much longer.