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New Sanctions Against Yugoslavia Would
Spell Disaster
‘It's just a game of poker
By Gordana Filopovic
BELGRADE, June 3 (Reuters) -- Threats to reimpose global sanctions on Yugoslavia would spell catastrophe for an exhausted economy, but might fail to damage the government politically, economists said in Belgrade on Monday. After the Dayton accord ended the Bosnian war, the Security Council suspended damaging economic and diplomatic sanctions that effectively isolated the Yugoslav republics of Serbia and Montenegro.
But now the United States has threatened Serbian President Slobodan Milosevic with a renewed trade and oil embargo unless he extradites his onetime protege, Bosnian Serb leader Radovan Karadzic, to the U.N. war crimes tribunal in The Hague. Big powers also demand that the hardline separatist leader give up political power under the Dayton accord signed last November.
U.S. Secretary of State Warren Christopher warned Milosevic of Washington's "growing impatience" at the weekend although he refrained from setting a deadline for Karadzic's arrest. Several independent economists, who asked not to be identified, told Reuterss in Belgrade they believed the United States was bluffing and knew that sanctions could not force Milosevic's obedience.
"It's just a game of poker played by the Americans. If not, it would be a catastrophe," one source said. "The reimposition of sanctions would only mean more pain for ordinary people. At the same time, the ruling Socialists could use it to strengthen their power."
During 3˝ years of sanctions until their partial suspension last year, the government successfully used its control of the media to convince public opinion that the embargo was an unjustified discrimination against Serbs. It would almost certainly drum up a similar nationalist outcry if the measures were renewed, again cutting off vital imports including oil, the economists said.
A so-called outer wall of sanctions, effectively blocking Belgrade's access to the hard currency credits it needs from abroad, has remained in place despite the suspension. In practice, this means that financial assets of former Yugoslavia remain frozen with foreign banks, waiting for a final succession deal among the former Yugoslav republics.
Despite frequent government assurances that it wants to restore ties to the International Monetary Fund, the World Bank and World Trade Organisation little progress has been made. Over the past four years, the country's debt piled up to five or six billion dollars, economists say, adding that Yugoslavia needs debt rescheduling deal with its creditors and a huge inflow of foreign capital. Reimposed sanctions could confront rump Yugoslavia with a worse slump than under the previous embargo, choking off a hesitant revival in legitimate business activity.
Economists said they feared a return to hyperinflation and total economic decay.
Rump Yugoslavia experienced 60 percent daily inflation in 1993. Per capita gross domestic product in a once relatively-prosperous nation slumped to a third of its 1990 level, from about $3,000 to barely $1,000, among the lowest in Europe. According to the Belgrade Economics Institute, the state lost nearly $5 billion during 1991-95 because of the grey economy which flourished under sanctions. Recent estimates said Serbia needed investment of about $1.5 billion a year until the rest of the decade to revive its economy. |
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