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Yugoslavia Struggles to Regain Financial Solvency
Dispute looms over $2 billion in cash and
By Johnathan Thatcher
"I can't see how the talks can be anything more than exploratory," one European bank analyst said.
The talks, from Wednesday, are the second between the two sides to sort out the around $2 billion Belgrade owes from its share of the debts left by former Yugoslavia before its bloody collapse.
The picture is confused by lawsuits, real and threatened, over debt deals with other former Yugoslav countries and the so-called outer ring of sanctions against Belgrade over the Bosnian war. Most important, say analysts, is sharing out the assets left over from the days before the country broke apart. One estimated the amount of gold and cash to be about $2 billion, of which close to 40 percent would go to Belgrade under a 1988 international agreement.
"That would be about $750 million which they can use to rebuild reserves and the economy," a Yugoslav expert at one European bank said. "It would be foolish to expect them to strike a deal on the debt if there is no agreement on the assets," he added.
Most of the former Yugoslav republics are meeting later this in the Slovenian capital of Ljubljana to discuss Bank for International Settltment (BIS) proposals to share out a large chunk of the assets. That still leaves the question of dividing up less liquid assets from former Yugoslav embassies around the world to the army.
One of the bankers on the negotiating committee was reasonably optimistic about the negotiations. "Last time we had talks, they said there were no preconditions, which was positive," the banker said, but added it was not what approach Belgrade would take this week. A key issue will be the lawsuit which Belgrade has slapped on a deal its creditors have made with Slovenia and threatened against another one with Croatia. Both agreements exclude any Serbian creditors who are thought to have been active buyers of former Yugoslav debt on the secondary market.
The secondary market price of the debt has more than doubled this year to about 70 percent of face value. Analysts see the lawsuits as motivated by Belgrade's need for some sort of leverage with its creditors and the other republics over the sharing out of assets.
One said the talks would certainly drag on beyond the September elections in Bosnia and that it would be difficult to reach an accord while sanctions remains against Belgrade, which prevented membership, for example, of the international financial institutions.
If the question of frozen Yugoslav assets and Belgrade's ostracision from debt accords with other republics can be sorted out then a deal could be reached, Jerome Booth, ANZ Grindlays head of emerging markets research, said. "There is a window of opportunity here but it could disappear rather quickly," he added. |
LONDON, July 23 (Reuters) - Yugoslavia meets its foreign creditors this week in London to try to settle old debts and lure back desparately needed new money, but the legacy of the Bosnian war means a deal is far from close, analysts said on Tuesday.
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