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Bosnia: Bosnian Economy -- First signs of Recovery

Sarajevo, 17 September 1996 (RFE/RL) -- At a crowded outdoor cafe in the pedestrian zone of downtown Sarajevo, rock music blasts the evening air as well-dressed beautiful young people lounge in wicker armchairs, enjoying the fading days of summer.

Further down the street, a new branch of the upscale French cosmetics firm Yves Rocher is selling raspberry soap, coconut shampoo and a special line of lotions and creams for women over 50. Walk a little further and you'll run into one of Benetton's ubiquitous shops, where even in shattered Sarajevo you can buy this summer's fashions in eye-popping orange and acid green.

On the surface, there are many signs that economic recovery has already begun in Bosnia's war-ravaged capital. But take a closer look: for every glamorous youth sitting in that crowded cafe, there are at least a dozen just walking the streets aimlessly, too poor to afford even one deutschemark (67 U.S. cents) for a cup of espresso.

Mirsada Curcic Selimovic, deputy finance minister of the Muslim-Croat federation that makes up half of Bosnia, sums up the situation this way: "The market is very well supplied and prices are lower than in any other European city, but the purchasing power of the population is very low."

Rade Ovuka, a social worker who counsels Sarajevo residents from ages 5 to 80, puts it even more bluntly: "Poverty is our number one problem."

A year ago, Sarajevo residents were still being massacred by artillery shells and were racing across street intersections to avoid snipers. But at the same time, the entire city was being fed by humanitarian agencies who saw to it that they maintained a nutritious, if unexciting, diet. Poverty was almost universal.

Today the challenge for Sarajevo residents is to make ends meet on their own, because humanitarian contributions have largely dried up as the country shifts to an economy based on private enterprise.

Some experts estimate that only 10 percent of Sarajevo's 370,000 residents are actually earning any income. Kasim Omicevic, governor of the National Bank of Bosnia, puts the figure a bit higher. He reckons that 25 percent of the Sarajevans who held jobs before the war are working now. Among those who are working, he says, the average wage for July, the last month for which figures are available, was 172 Deutschemarks ($115 ). Deutschemarks are the currency of favor in the Muslim-held areas of Bosnia.

But he says the situation is improving: "The standard of living is much better than in comparison with one year and two years ago." And he adds: "We feel progress daily."

A major problem for the government is finding apartments and jobs for the tens of thousands of demobilized soldiers, who, as Omicevic puts it, can no longer live on patriotism and the gratitude of the nation. In fact, veterans of the 43-month Bosnian war, invalids and families of deceased soldiers took to the streets of Sarajevo last month demanding back pay and pensions earned during the conflict.

Another major problem for the Bosnian government is that it does not have full control over its territory -- militarily, politically or for economic and monetary policy-making. The Bosnian Serb half of the country, Republika Srpska, goes its own way with its own Bosnian Serb and Yugoslav dinars. The Croat part of the Muslim-Croat federation continues to act as a separate entity, where Croatian kunas are used as currency. Even in the part of the country the Bosnian government controls, its own dinar is considered a second-rate currency to the preferred German mark.

Omicevic expresses optimism that the country will become truly one economically-integrated state now that countrywide elections have been held. But others see the results of the elections -- with nationalist parties dominating and the vote split strictly along ethnic lines -- as leading to greater division, not the unity foreseen by the Dayton Accords that put an end to the war.

For now, Sarajevo city authorities are concentrating on small investment projects in private enterprise that they believe will provide employment and pay profits quickly. Pizzeria owner Ermina Music is waiting for the day that banks -- with help from abroad -- start offering loans for small businesses to start up and expand. It's her belief that small businesses offer the best hope for economic revival.

For the country as a whole, recovery still depends on massive infusions of foreign investment and aid to rebuild roads, bridges and airports in public works projects that will create huge numbers of jobs. Construction of new apartments to replace those destroyed in the war is also a top priority, as is getting factories running again.

Ordinary people are finding their own ways to cope. Aisa Muzurovic, a 51-year-old seamstress, supplements her husband's pension of 150 Deutschemarks a month with sewing for neighbors that brings in an extra 150 to 200 Deutschemarks a month. With that income, she and her husband are supporting 12 people, including the families of her three grown children who have not yet succeeded in finding jobs.

Omicevic is optimistic that Bosnians can rebuild their shattered country quickly. "Our people are self reliant, they have proven that they can improvise and that they can live on almost nothing. They are tough people and they are going to work hard and very soon they will reach the standard of living they had."