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Yugoslavia: Serbian Prime Minister Seeks Greater Economic Assistance

Although world attention has shifted in recent months from the Balkans to the war on terrorism, much of Europe's future stability still hinges on what happens in its strife-torn southern flank. Serbian Prime Minister Zoran Djindjic is in Washington this week trying to convince U.S. leaders that now is not the time to forget about the Balkans.

Washington, 6 November 2001 (RFE/RL) -- Serbian Prime Minister Zoran Djindjic -- a driving force behind sending former Yugoslav President Slobodan Milosevic to The Hague -- is warning that timid international financial support for his government is putting the future of the Balkans at risk.

Djindjic is in Washington this week with Serbian Finance Minister Bozidar Djelic to drum up support for their shaky coalition. Djindjic told a forum on Serbia one year after the fall of Milosevic that Belgrade's first democratic government has accomplished a lot after just nine months in office.

In contrast to a decade of war and poverty under Milosevic, Djindjic said yesterday that his government has set in motion vital reforms of Serbia's economy, tax, and legal systems, as well as cracked down on organized crime.

But many of those reforms, such as slashing jobs at inefficient state firms, have been painful to ordinary Serbs. And coupled with sending Milosevic to the International Criminal Tribunal for the former Yugoslavia -- a controversial move that has divided his government -- Djindjic said his cabinet is battling a rising tide of popular and political resistance to reforms that he calls vital to the region's future: "And that [is the] dilemma: To conduct reforms, you take the risk not to be very popular. But to continue the reforms, you need public support."

To maintain critical public support, Djindjic and Djelic said they will urge U.S. officials this week to back Yugoslavia on key financial issues, including support for a 70 percent cut in its debt burden, some $40 million in additional debt relief this year, and a normalization of trade relations that would eventually bring Most Favored Nation trade status to Belgrade.

Yugoslavia, whose other half is tiny Montenegro, has inherited a massive debt -- at $11.4 billion, it's more than 140 percent of gross domestic product (GDP) -- from its previous communist and autocratic governments. Analysts from the International Monetary Fund say such debt is unsustainable.

Corruption is rampant, and Serbia's infrastructure is decayed if not destroyed. Average wages are just $40 a month, and domestic GDP is 60 percent of what it was 10 years ago. There are also close to one million displaced people among a population of 8.5 million.

Finance Minister Djelic said international financial institutions have yet to back Serbia's economic and democratic transition in the way they supported postcommunist Central Europe during the last decade.

He said that while European institutions had recently loaned Belgrade $54 million for its railway and $100 million for its electrical utility, it is just a tiny part of the more than $1 billion annually Serbia needs to complete its transition in the next five years: "It is unacceptable that the World Bank would remain only at $540 million exposure for us for the three-year period to come. As you know, two-thirds of that will need to be repaid because of the arrears. So the exposure of the World Bank to Yugoslavia and Serbia is a paltry $160 million. Is this the level of exposure that is acceptable to the West for us?"

While thanking the West for its support, Djindjic said his government is a bit humiliated that, after taking courageous steps, it is still being kept at arm's length by the world's powers. He dismissed suspicions of graft in his cabinet as unfair and said the world should not forget one thing: "We are [the] first clear pro-Western, democratic government after 600 hundred years."

Djindjic said that for the first time in 200 years, people in the Balkans have started to prize economic progress over nationalism. He said to that end, Serbia and Montenegro would be better off together in a loose confederation that would advance the region's economic integration and interest among foreign investors, as well as prevent further Balkan fragmentation. Montenegro is expected to hold a referendum on independence next spring.

A prosperous, democratic Yugoslavia would help to stabilize the entire Balkans, Djindjic said, adding that the region is still beset by grave problems even if international attention has turned elsewhere since the 11 September terrorist attacks on the U.S. "Now, it is not so bright. We have democratic-reform governments [that] lost the elections in Bulgaria, Romania; Montenegro is divided; Macedonia, after war, not so stable; Bosnia, not so stable; Croatia, not so fast in doing reforms as expected; and the world economy in crisis and worldwide security in crisis."

Djelic said that although U.S. resources are being focused on the antiterrorism fight, the price in stability and security will be too high for Europe and Washington if Belgrade stumbles and falls in its historic bid to achieve a free-market democracy and join the rest of Europe.

As Djelic put it: "It's a question of investment and the counter-factual. What will happen if we fail, if we are gone?"

The Serbian delegation is in Washington until 8 November and is expected to meet with senior White House officials, including President George W. Bush's national security adviser, Condoleezza Rice, as well as members of Congress.