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02-25-2012, 03:02 AM
BELGRADE — Late summer has been numbingly quiet here, but not because international economic sanctions are snuffing out life in the capital of the pariah nation of Yugoslavia. Rather, thousands of city residents have fled to the coast of Greece for their summer holidays.
Those who remain can stay cool in a brand-new, air-conditioned shopping mall with four levels of smart-looking boutiques surrounding a glass atrium.
For entertainment, you can buy pirated copies of any of the latest American box-office hits for $10 at a new video store. Speed and True Lies are especially popular this summer.
To the surprise of Western economists, there are unmistakable signs that the quality of life is improving in the face of international sanctions aimed at pressuring the government to stop supporting the Bosnian Serbs' war effort. All over Belgrade, new stores and cafes have cropped up. Diplomats here were astounded recently when they received invitations in the mail to the grand opening of a new steel plant.
Belgraders talk smugly about how the remaining republics of Yugoslavia - Serbia and Montenegro - have defied the West. In spite of continuing hardships for most residents, the term "economic miracle" is often used to describe how much life has improved here over the last eight months.
As 1994 began, Yugoslavia was on the verge of an economic meltdown. Hyperinflation had raised prices to the ludicrous. A cup of coffee cost five billion dinars, a train ticket more than a trillion. You could see worthless, discarded money blowing on the sidewalks. People waited overnight in the snow in mile-long lines for handouts of bread and potatoes. Pensioners foraged in garbage cans.
Fearing even worse, the administration of Serbian President Slobodan Milosevic introduced a set of anti-inflationary reforms. Drawn up by Dragoslav Avramovic, a 74-year-old former World Bank economist, the plan cut government spending and introduced a new "super dinar," pegged on the German mark.
Today, the Yugoslav currency is relatively stable and has even risen slightly against the U.S. dollar. Despite the continued sanctions, Yugoslavia expects to report a 5 percent increase in gross national product this year - the first since war broke out in 1991.
The average wage, which by last Christmas had been reduced by hyperinflation to about $3 a month, is now back to slightly over $100 - hardly a luxury level, but high enough that people are not going hungry.
"I don't believe in miracles, but I don't know of any other economy that can change overnight like this. How it works, how long it will last, I don't know," said Vlado Jovanovic.
Jovanovic and his wife run the video store, with its bounty of pirated tapes. Like so many of their neighbors, they recently returned from a vacation in Greece. "It is not like we are buying new cars, or a flat, but we are able to live quite normally."
"People were hysterical six months ago. It was a catastrophe. It is much better now, and it is getting better in the future," said Miodrag Lecic, a computer engineer, who sat sipping banana daiquiris with his friends at a chic, halogen-lit cafe in downtown Belgrade.
"We are untouchable. We are very adaptable to any situation, even your sanctions."
The U.N. Security Council declared a trade embargo and other sanctions against Yugoslavia in May 1992 to punish it for its support of Serbian aggression in Bosnia. Secretary of State Warren Christopher said last month that the United States would consider eased sanctions if Milosevic carries through on a promise to cut off the warring Bosnian Serbs.
But many Yugoslavs seem indifferent to the prospect of eased sanctions in the face of a rebounding economy. They say their primary interest would be in having the Belgrade airport reopen for international flights - getting anywhere by airplane now involves taking an eight-hour bus trip to Budapest.
One reason for the apathy about sanctions: Many people make good livings busting them.
There is a brisk business smuggling gasoline into Yugoslavia, where it costs about $8 a gallon, nearly double the going price in neighboring countries.
At the Hungarian border, service stations are crowded with young couples - many with children sleeping in the back seat - who are patiently filling soda bottles with gasoline to sneak past the customs guards.
"All the gasoline powering the traffic jam in front of the embassy right now is bootleg gas," said one Western diplomat with resignation. "These people are very enterprising."
Imports of films and music are also covered by the sanctions, which has led to a booming piracy industry.
The television stations in Belgrade broadcast first-run movies with impunity, sometimes swiped from the satellite feeds of other television stations. Jurassic Park was shown on television last year, around the same time it was opening in movie theaters in the United States. Often, you can see foreign subtitles on the films, underneath the Serbo-Croatian subtitles added by the stations here.
Other newly minted entrepreneurs drive into Romania and Bulgaria and bring back suitcases filled with clothes, cosmetics and household goods to sell at higher prices.
"It is a decent living, if you don't have to pay too much to the border guards to get across," said Dragan Milenkovic, 35, who sells smuggled hair dyes from Romania to supplement his earnings at a government-owned machine factory. "In some ways it will be worse if sanctions are lifted. We won't be able to import things illegally. We'll have to pay taxes."
If there is a positive side to the sanctions, economists say, it is that they accelerated the privatization process that Yugoslavia, like other ex- communist countries, was trying to carry out at the time the war started. By some estimates, there are 2,000 private shops operating in Belgrade today, up from fewer than 100 four years ago.
"The sanctions showed people how inefficient and over-employed the state enterprises were. They made the private sector grow much more quickly," said Jurij Bajec, an economist at the Belgrade Economic Institute, which helped
draw up the government's reform package.
Bajec describes the program as a traditional anti-inflationary package, with no particular magic or gimmicks behind it. The key to its effectiveness was in restoring the confidence of the private sector, he adds.
"It was a psychological thing. There were no goods in the stores before
because nobody was prepared to sell anything for worthless money. With this new dinar, goods immediately appeared in the shops. People who had savings at home were willing to spend because they weren't so scared anymore," Bajec explained.
Naysayers are quick to point out the many chinks in the economic miracle. In recent months, the super dinar has lost as much as 20 percent of its value against the German mark in black-market trading. Much of the industrial production relies on outdated technologies. For example, the new steel plant that advertised its grand opening recently is actually recycling scrap metal.
Nobody can figure out how Yugoslavia is managing not to drain its foreign- currency reserves, given that export trade has ground to a halt.
Belgrade is rife with conspiracy theories about the source of the new wealth. One popular theory has it that the Italian Mafia has been encouraged to invest here and launder money. Many people are thoroughly convinced that the United States promised Milosevic a secret infusion of capital in return for his support of the latest peace plan for Bosnia.
To be sure, you don't have to scratch far below the surface to realize that nothing is quite normal here. In the new, air-conditioned City Passage mall downtown, the boutiques have impressive window displays, but hardly any inventory. There is seldom more than one size of any given item.
"What we have here are the things that people bring back from abroad. It is just as if you went on a trip and did some shopping, only you bought more," said Zoran Lazarevic, who operates a children's clothing store at the mall.
Most people who visit the mall come only to window shop, or to escape the heat. Only Belgrade's nouveau riche, the most successful smugglers and money traders, can afford to buy.
"Yes, our economy is much, much better. Maybe even a miracle. If you look at other places that have had sanctions - Cuba, Libya, Iraq - we are living much better than them," Lazarevic continued. "But you have no more middle class. You have only the 5 to 6 percent who got enormously rich in this war and the rest of us who are just surviving."
http://articles.philly.com/1994-09-03/news/25838917_1_yugoslavia-serbia-and-montenegro-sanctions
Those who remain can stay cool in a brand-new, air-conditioned shopping mall with four levels of smart-looking boutiques surrounding a glass atrium.
For entertainment, you can buy pirated copies of any of the latest American box-office hits for $10 at a new video store. Speed and True Lies are especially popular this summer.
To the surprise of Western economists, there are unmistakable signs that the quality of life is improving in the face of international sanctions aimed at pressuring the government to stop supporting the Bosnian Serbs' war effort. All over Belgrade, new stores and cafes have cropped up. Diplomats here were astounded recently when they received invitations in the mail to the grand opening of a new steel plant.
Belgraders talk smugly about how the remaining republics of Yugoslavia - Serbia and Montenegro - have defied the West. In spite of continuing hardships for most residents, the term "economic miracle" is often used to describe how much life has improved here over the last eight months.
As 1994 began, Yugoslavia was on the verge of an economic meltdown. Hyperinflation had raised prices to the ludicrous. A cup of coffee cost five billion dinars, a train ticket more than a trillion. You could see worthless, discarded money blowing on the sidewalks. People waited overnight in the snow in mile-long lines for handouts of bread and potatoes. Pensioners foraged in garbage cans.
Fearing even worse, the administration of Serbian President Slobodan Milosevic introduced a set of anti-inflationary reforms. Drawn up by Dragoslav Avramovic, a 74-year-old former World Bank economist, the plan cut government spending and introduced a new "super dinar," pegged on the German mark.
Today, the Yugoslav currency is relatively stable and has even risen slightly against the U.S. dollar. Despite the continued sanctions, Yugoslavia expects to report a 5 percent increase in gross national product this year - the first since war broke out in 1991.
The average wage, which by last Christmas had been reduced by hyperinflation to about $3 a month, is now back to slightly over $100 - hardly a luxury level, but high enough that people are not going hungry.
"I don't believe in miracles, but I don't know of any other economy that can change overnight like this. How it works, how long it will last, I don't know," said Vlado Jovanovic.
Jovanovic and his wife run the video store, with its bounty of pirated tapes. Like so many of their neighbors, they recently returned from a vacation in Greece. "It is not like we are buying new cars, or a flat, but we are able to live quite normally."
"People were hysterical six months ago. It was a catastrophe. It is much better now, and it is getting better in the future," said Miodrag Lecic, a computer engineer, who sat sipping banana daiquiris with his friends at a chic, halogen-lit cafe in downtown Belgrade.
"We are untouchable. We are very adaptable to any situation, even your sanctions."
The U.N. Security Council declared a trade embargo and other sanctions against Yugoslavia in May 1992 to punish it for its support of Serbian aggression in Bosnia. Secretary of State Warren Christopher said last month that the United States would consider eased sanctions if Milosevic carries through on a promise to cut off the warring Bosnian Serbs.
But many Yugoslavs seem indifferent to the prospect of eased sanctions in the face of a rebounding economy. They say their primary interest would be in having the Belgrade airport reopen for international flights - getting anywhere by airplane now involves taking an eight-hour bus trip to Budapest.
One reason for the apathy about sanctions: Many people make good livings busting them.
There is a brisk business smuggling gasoline into Yugoslavia, where it costs about $8 a gallon, nearly double the going price in neighboring countries.
At the Hungarian border, service stations are crowded with young couples - many with children sleeping in the back seat - who are patiently filling soda bottles with gasoline to sneak past the customs guards.
"All the gasoline powering the traffic jam in front of the embassy right now is bootleg gas," said one Western diplomat with resignation. "These people are very enterprising."
Imports of films and music are also covered by the sanctions, which has led to a booming piracy industry.
The television stations in Belgrade broadcast first-run movies with impunity, sometimes swiped from the satellite feeds of other television stations. Jurassic Park was shown on television last year, around the same time it was opening in movie theaters in the United States. Often, you can see foreign subtitles on the films, underneath the Serbo-Croatian subtitles added by the stations here.
Other newly minted entrepreneurs drive into Romania and Bulgaria and bring back suitcases filled with clothes, cosmetics and household goods to sell at higher prices.
"It is a decent living, if you don't have to pay too much to the border guards to get across," said Dragan Milenkovic, 35, who sells smuggled hair dyes from Romania to supplement his earnings at a government-owned machine factory. "In some ways it will be worse if sanctions are lifted. We won't be able to import things illegally. We'll have to pay taxes."
If there is a positive side to the sanctions, economists say, it is that they accelerated the privatization process that Yugoslavia, like other ex- communist countries, was trying to carry out at the time the war started. By some estimates, there are 2,000 private shops operating in Belgrade today, up from fewer than 100 four years ago.
"The sanctions showed people how inefficient and over-employed the state enterprises were. They made the private sector grow much more quickly," said Jurij Bajec, an economist at the Belgrade Economic Institute, which helped
draw up the government's reform package.
Bajec describes the program as a traditional anti-inflationary package, with no particular magic or gimmicks behind it. The key to its effectiveness was in restoring the confidence of the private sector, he adds.
"It was a psychological thing. There were no goods in the stores before
because nobody was prepared to sell anything for worthless money. With this new dinar, goods immediately appeared in the shops. People who had savings at home were willing to spend because they weren't so scared anymore," Bajec explained.
Naysayers are quick to point out the many chinks in the economic miracle. In recent months, the super dinar has lost as much as 20 percent of its value against the German mark in black-market trading. Much of the industrial production relies on outdated technologies. For example, the new steel plant that advertised its grand opening recently is actually recycling scrap metal.
Nobody can figure out how Yugoslavia is managing not to drain its foreign- currency reserves, given that export trade has ground to a halt.
Belgrade is rife with conspiracy theories about the source of the new wealth. One popular theory has it that the Italian Mafia has been encouraged to invest here and launder money. Many people are thoroughly convinced that the United States promised Milosevic a secret infusion of capital in return for his support of the latest peace plan for Bosnia.
To be sure, you don't have to scratch far below the surface to realize that nothing is quite normal here. In the new, air-conditioned City Passage mall downtown, the boutiques have impressive window displays, but hardly any inventory. There is seldom more than one size of any given item.
"What we have here are the things that people bring back from abroad. It is just as if you went on a trip and did some shopping, only you bought more," said Zoran Lazarevic, who operates a children's clothing store at the mall.
Most people who visit the mall come only to window shop, or to escape the heat. Only Belgrade's nouveau riche, the most successful smugglers and money traders, can afford to buy.
"Yes, our economy is much, much better. Maybe even a miracle. If you look at other places that have had sanctions - Cuba, Libya, Iraq - we are living much better than them," Lazarevic continued. "But you have no more middle class. You have only the 5 to 6 percent who got enormously rich in this war and the rest of us who are just surviving."
http://articles.philly.com/1994-09-03/news/25838917_1_yugoslavia-serbia-and-montenegro-sanctions