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Serbia: Economic Problems Fuel Support For Opposition

  • Kitty McKinsey



Nis, Yugoslavia; 19 December 1996 (RFE/RL) -- At the age of 47, after 25 years of work, Zoran Trencic finds himself in the humiliating position of having to rely on his 75-year-old mother's pension to support his family of four.

He is officially employed at an electronics factory in the devastated industrial city of Nis, 250 kilometers south of Belgrade, but he hasn't actually worked in three years. Like hundreds of thousands of other Serbian workers, he is on paid leave, receiving the equivalent of $20 cash a month -- a tiny fraction of what official government figures show it takes to support a family of four.

"I feel terrible," says Trencic. "It's humiliating not to be able to take care of my family and having to live off of my mother. We are living at African standards."

His frustrations have driven him into the arms of the Zajedno (Together) opposition, fighting Serbian President Slobodan Milosevic -- and he comes out every day to participate in Zajedno demonstrations.

Since Yugoslavia dissolved in war in 1991, Serbia has staggered from one economic crisis to another. Economic mismanagement by Milosevic's ruling Socialists was compounded by the costs of the war against Croatia and Bosnia-Herzegovina. For more than three years, Milosevic was able to use international sanctions against his country as a scapegoat for economic hardship. These sanctions have been lifted now and, economists say, the full extent of Socialist economic incompetence has been revealed.

Officially, unemployment in Serbia stands at 25 percent. But independent economists put the actual figure at 50 percent. Huge numbers of the country's workers, like Trencic, are paid a pittance to stay at home because their factories are idle and they have little hope of ever regaining well-paying jobs.

Middle class citizens have lost their previously high standard of living, as Gross Domestic Product now stands at only one-fourth the level of 1989, before the country sank into crisis. Avram Radovic, a writer who works at the library in Nis, says his salary now is only one-tenth of what it was 15 years ago.

And those who were already living on the edge have sunk into dire poverty. The Red Cross reckons that nearly one-third of the population lives below the poverty line. Average net wages are only 798 dinars a month (about $160). Prices often run at 10 percent to 20 percent above Western European levels.

At the same time, black marketeers and war profiteers have become fabulously wealthy. All this has added up to widespread public disgust with Milosevic, who for years used the war, sanctions and nationalistic fervor to rally Serbs to his side. The month-long daily Zajedno protests are aimed at restoring results of annulled municipal elections that had been won by the opposition, but much of the anger stems from economic hardships.

Zoran Djindjic, one of the top opposition leaders, said in an interview with RFE/RL that "the main engine for the protests is the wish for economic development and dissatisfaction with the way things are now."

Workers in Nis told RFE/RL that they were no longer afraid to oppose Milosevic. As one worker put it, "Things can't be worse than this."

Aleksandra Posarac, an economist and Serbia's leading expert on poverty, explains public dissatisfaction this way: "People are quite well aware that this regime has not intention of giving up control over economic assets, that they have no political will to reform the economy."

Economic statistics back up what most Serbs feel -- that their economy is on its last leg.

Industrial production has picked up this year but is still only 45 percent of pre-war levels. In some branches of industry, such as the manufacture of machinery, production is only seven or eight percent of 1990 levels.

Prospects for any improvement are grim. Stojan Stamenkovic, an economist with the independent Institute for Economic Studies in Belgrade, says the country needs five percent economic growth each year for more than 20 years just to get back to 1989 levels of relative prosperity. And, he adds, the country has no hope of reaching that growth figure without major foreign investment -- which remains out of the question for now because of western reaction to Milosevic's annulment of the elections.

"It's difficult to give an economic prognosis because nearly everything depends on political considerations," says Stamenkovic.

Hanging like a black cloud over Serbia's economic prospects is the foreign debt, estimated at $9 billion, which has been ignored during the years of war and sanctions.

If Milosevic gives in and accepts opposition victories, rump Yugoslavia (consisting only of Serbia and tiny Montenegro) has a chance of being accepted again into world financial institutions like the International Monetary Fund. But then it would have to start paying off its debt. And as Stamenkovic puts it, "there is not even a theoretical way that we could pay off this debt."

Unless it is restructured over a long period of time, the debt would block economic progress by directing the country's small economic resources toward debt repayment, rather than investment in production. And there's little reason to think Western investors will be attracted to the Serbia's economy for many years, Stamenkovic says, because Milosevic's tendency to interfere in the economy rather than letting market forces work.

What, then, are the prospects for an economic upturn that would allow Serbia's poorest citizens to climb out of poverty in the next few years? Poverty expert and economist Posarac has a short, blunt answer: "None."
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