-Caveat Lector-
>From SFGate
>>>This whole thing started with the economic turn-down in the 80ies followed by the
IMF's involvement. Slobo inherited a lot of problems. A<>E<>R <<<
}}>Begin
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West gives Yugoslavia financial boost, but it may not be enough
DUSAN STOJANOVIC, Associated Press Writer
Monday, July 2, 2001
©2001 Associated Press
URL: http://www.sfgate.com/cgi-
bin/article.cgi?f=/news/archive/2001/07/02/financial0724EDT0010.DTL
(07-02) 04:24 PDT BELGRADE, Yugoslavia (AP) --
The $1.28 billion pledged by the United States and other Western donors to reward
Yugoslavia for sending Slobodan Milosevic to the U.N. war crimes tribunal is just a
drop in the ocean for an economy that fell apart under his 13-year rule.
The funds, promised Friday at an aid conference in Brussels, Belgium, will not make
much difference for most Serbs, who are saddled with a $12.2 billion-dollar foreign
debt, 30 percent unemployment and about 80 percent annual inflation. Serbs make up
90 percent of Yugoslavia's population.
"After 10 years of isolation, we are practically bankrupt," Serbian Prime Minister
told the German economic daily, Handelsblatt, in an article published Sunday. "If we
don't show the population soon that things are getting better, the political
situation could become very critical."
A sliver of the money will go toward paying the salaries of teachers, doctors and
other workers who will be laid off in the restructuring of the economy, officials
said.
But most will go toward the debt, and another portion will be spent on repairing the
bridges, roads, factories and other infrastructure destroyed by NATO during its 1999
bombing of Yugoslavia.
The airstrikes -- designed to force Milosevic to halt a crackdown on ethnic
Albanians in the southern Serbian province of Kosovo -- cost Yugoslavia an estimated
$29.4 billion in lost infrastructure, and at least 500,000 lost their jobs, the
government estimates.
Yugoslavia, made up of Serbia and tiny Montenegro, is at near-beggar status, said
Miroljub Labus, the country's deputy prime minister.
"The Germans are paying for our electricity, others are paying for something else,"
he said. "The people here are not aware of that, but unfortunately we are in such a
situation that we cannot finance our basic needs."
But economists estimate that only $800 million or so will actually reach Yugoslavia.
Most of the World Bank's pledge of some $150 million will go toward the debt, as
will $220 million of the $350 million promised by the European Union, said Milica
Uvalic, a deputy minister for foreign economic cooperation.
"The promised money has to come in fast," Uvalic said, suggesting that any delay
could trigger social upheavals and undermine the new reformist government that
unseated Milosevic in October. "I think the Western countries understood this at the
donors' conference."
The United States had threatened to boycott the donors' conference, but promised
$181.6 million in Brussels -- with additional strings attached -- after the surprise
extradition of Milosevic.
"We are making this pledge confident that Yugoslav authorities will continue to
fulfill their international obligations ... including, of course, the transfer to
the tribunal of other tribunal indictees on the territory of Yugoslavia," said State
Department spokesman Philip Reeker.
With a gross domestic product of barely $8 billion -- less than its foreign debt --
Yugoslavia is struggling to finance its debt repayments. The budget gap in 2001 is
expected to be about $300 million.
Although there has been a limited recovery since Milosevic's ouster, much of the
economy is operating at only 50 percent capacity.
The World Bank, which organized the donors' conference together with the European
Union, estimates that Yugoslavia will need $4 billion in foreign financial
assistance over the next four years.
The money pledged for Yugoslavia underlines the strategic importance the country has
for stability in the troubled Balkan region. Last year, the whole of southeastern
Europe, which covers most of the Balkans, attracted only $3.2 billion in foreign
investment.
Yugoslavia needs three more aid conferences in coming years in order to revive its
ruined economy, Uvalic said.
"The country is in a total chaos, there are major, major problems in every aspect of
the organization of the economy," said Rory O'Sullivan, a World Bank official.
©2001 Associated Press
End<{{
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