Yugoslavia on the brink

Serbian beggar
Serbian beggar (© Dennis Jarvis/Creative Commons)

Yugoslavia used to be one of the richest countries in eastern and central Europe. But by 1994, the country had fallen apart, and in the two remaining republics – Serbia and Montenegro – the average monthly salary had dropped to less than 20 dollars a month. A few years ago, it was 100 times more. Rump Yugoslavia was facing some of the strictest economic sanctions ever imposed, and total economic collapse in Belgrade and the rest of the country just around the corner. Everyone knew it, and everyone knew that the summer was about to make way for one of the worst winters ever.

Original broadcast: August 8, 1994


Sanctions, hyperinflation and other factors are almost ideal situation for dictatorship, where a small group will control everything.

The stark reality of Yugoslavia’s collapse is not yet really apparent here in the main shopping street in Belgrade, the capital of Serbia, in what remains of the Republic of Yugoslavia. Well-dressed men and women wile away the long, hot summer days of the street’s four and five storey buildings. Scantily clad young people enjoy ice creams and soft drinks, and the atmosphere seems pretty laid back. Hard to believe that this is the capital of a country at war with much of the rest of the former Yugoslavia, at war with the rest of the world, at war with itself. That this is a country facing some of the strictest economic sanctions ever imposed. Total economic collapse in Belgrade like the rest of Serbia and Yugoslavia is just around the corner. Everyone knows it. And everyone knows that the summer is about to make way for one of the worst winters ever.

Radio Netherlands, the Dutch international service, presents “Yugoslavia on the brink”. The programme is produced and presented by Eric Beauchemin.

Yugoslavia used to be one of the richest countries in eastern and central Europe. Now, it’s as poor as many countries in Africa. The average monthly salary today is approximately 10 to 20 dollars. A few years ago, it was 100 times more. To find out what the effect of this economic collapse has been on the ordinary citizens of Yugoslavia, I went shopping with Lepa Medjanovic, a single woman who is unemployed. She receives 3.5 dollars a month from the government.

Well the story with the milk is you see there is nothing here because they ran out of the colours to print the carton, and the only milk they have now is the most expensive one, which is this sort of extra vitamanised milk. EB: How much does this cost? It’s 32 million. Half a litre. EB: Which is approximately 50 US cents. Yoghurt is 13,000. EB: So, that’s fairly cheap. Well, 13,000 half a litre. I guess so. I’m not sure. EB: But I get extremely confused here. Everybody gets confused. EB: But do you have to add three zeros to this or not? Because it should be 13 million and in that case it would only be 30 cents. Yeah, that’s what we are talking about. Exactly. EB: A loaf of bread. Well, now it’s five times more expensive than last week. That’s why there was no bread for about four days. Well, here is the price. It’s 10 million. EB: 10 million. 10 million, yeah. EB: So, 20 cents. So 3 eggs, a loaf of bread, a quarter of a litre of milk. So this cost you approximately 600 million? No. 50… EB: 59 million. That’s a little over a dollar then. And how much do you receive a month? Well, I’m unemployed and I receive unemployment, which is 8 marks. EB: Per month. Yeah. EB: You just spent a quarter of your monthly salary. Yeah, on just milk and bread, for breakfast in fact. EB: So how do you live? Well, I live because I have lots of friends in Europe who send me sometimes $50 or 50 marks. So we used to have $200, $300, and we could exchange it and go outside also. So now everybody has already in these two years of war learned to decrease their needs very, very much. EB: You sound extremely disheartened. Is it a disheartening experience to go shopping every day? I’m trying not to be, really. EB: But if you didn’t receive this money from abroad, you wouldn’t have enough to eat. Oh no, I wouldn’t. That’s true. EB: Is that the case for a lot of people? Yeah. Yeah. In fact, sometimes I really don’t know how they survive.

The fact is that most people are not managing. 90% of Yugoslavs today are living under the poverty level. A survey carried out a few weeks ago showed that 37% of people have just enough money to buy bread. 17% can’t even afford that. International relief organisations here are already describing the economic and humanitarian situation as catastrophic, and the harsh Balkan winter has yet to begin.

Yugoslavia’s economic decline began in the 1980s after the death of President Josip Tito. According to Serjan Bogaseveljic (sp?) of the Yugoslav Statistical Office, intense political rivalries among the different republics and strong nationalist sentiments fuelled by people such as Slobodan Milosevic, the president of Serbia, disrupted the economy,

The economies were connected very closely in economic sense. So the main partner for the new Yugoslavia, for Serbia and Montenegro, were Croatia and Slovenia, not Russia or Germany. So for us the breakdown of the Yugoslav Federation is the main cause of the troubles.

The war that accompanied the meltdown of the former Yugoslavia only exacerbated the economic woes. Today 70% of Yugoslavia’s budget is earmarked for the military and the war effort in Bosnia and Croatia. The war, says Dr. Jelisa Minic of the Institute of Economic Sciences in Belgrade, has also provided the Yugoslav government with a way to partly make up for the collapse in trade between the various republics.

There is a kind of perverted structural changes that has been going on. For example, our famous factory for car production Zastava, our biggest car producer, has been producing now some equipment for invalids, war invalids.

And many other factories have been converted for the production of ammunition and war material. Nevertheless, over 70% of Yugoslavia’s industry has come to a standstill. But no matter how much damage the war is causing, Dr. Stefan Lilic of the University of Belgrade and a member of the opposition says many people in Yugoslavia have a vested economic interest in seeing the war continue.

If you really wanted to end the war, you could do it right away. But nobody really wants to end it. At the moment or in the last year or so, you have had war going on in Bosnia, and it’s not really clear who wants it or doesn’t want it. It seems as though everybody that’s waging it wants it because once there’s no war, they’re out of power.

Indeed the war and economic collapse have created a class of nouveaux riches in Serbia. 10% of the people have profited enormously from the bloodletting: members of the regime, arms and drugs smugglers, and black market money dealers. They now speed down the virtually empty streets of Belgrade in expensive sports cars and wear the latest fashions. But while these unsavoury characters grow richer, the people and the state have become destitute. And according to Sergan Bogaselvejelic of the Federal Statistical Office, the government has no policy to end the economic decline.

The government is thinking only about their own survival, survival of their own party and things like that. Not about the economy because they don’t have any kind of instrument that would be effective in this situation. The problem is that there are no real sources for budgeting. So what we have is only printing.

The Yugoslav Central Bank has been churning out new bills at a dizzying rate with several printing presses in Serbia working round the clock. The result: inflation of over one billion percent per year. Dr. Minic of the Institute of Economic Sciences again.

One of the reasons of the hyperinflation is printing money in those newly formed entities – let’s call them like that – in Bosnia and Croatia that just print money. This money has no basis. And this money has been exchanged for Yugoslav money at the rate one to one. So it is emission of money in fact done here, covering war expenses in the Serbian entities there.

According to Mirko Gaspari, a member of the Belgrade Circle, a group of intellectuals, the government of President Milosevic has actually enshrined hyperinflation as the key to its economic policy.

Every Friday, we have a new bank note issued. Two weeks ago, it was 100 million dinars. Last Friday it was 500 million dinars. And suddenly on Friday, or even before they say that the bank note is to appear officially on Friday, it’s on the streets already on Thursday in the hands of the street dealers who exchange dinars for hard currency. Now also on Fridays, you have the wages paid out for the workers and you have the old age pensioners getting their pension checks. Now, what happens is the commercial banks are supposed to get the new bank notes, but they don’t get to the commercial banks. They go to the streets. The old age pensioners go to the banks, and the banks just say we don’t have cash. The money is on your account. Don’t worry about it, but we can’t give you the cash. So the pensioners are forced to wait until Monday or Tuesday. And somebody from the Economic Institute in Belgrade has computed a few days ago that our inflation rate at present is 1 percent per hour, that means 24% a day, and if you take 3 or 4 days, that means their pension is worth 50, 60, 70% less on Tuesday than what it was worth on Friday. EB: And even when they go to the bank on Tuesday, they don’t get their full pension. Now, they just get instalments of cash. Not only the pensioners. It’s the same for people who are employed, who get their wages in dinars. It’s the same for them. You have the state robbing its own citizens in an organised way. They print money they give to the dealers on the streets straight away and the dealers try to extract the last foreign currency reserves the population has.

Yugoslavia’s hyperinflation has decimated the country’s sizeable middle class. Now 90% of people are poor, earning less than $20 a month. For pensions the economic collapse has been catastrophic, as I heard from an old man in a market in Belgrade.

Stop putting philosophical questions. It’s a matter of philosophy and even science fiction how can I get on with the prices with my small pension. And he said on my question what will he do next month with such an inflation and salaries. He said I don’t know. I hope as they promised – probably the government – that they will increase our pensions, but the inflation is too high so that I clearly doubt that my pension will be enough for some basic things.

Almost all of Yugoslavia’s one million pensioners are now in the same boat, and Nenad Stevanovic, a journalist at the independent weekly Vreme, says that many of them are having to turn to their children for handouts.

I know a lot of young people who now have to help their parents, although their parents are from the middle class, although they have very nice pensions before. But now… My example, I have this in my family. It’s very painful for parents to be faced at the end of their lives with the inability to survive. My father was a meteorologist. He cannot survive. His pension is less than 20 German marks.

That’s less than 15 dollars a month. The Yugoslav economy’s free fall has been speeding up over the past 18 months following the imposition of United Nations economic sanctions. The embargo was designed to end the war in the Balkans and force a change of political leadership in Belgrade. But in fact says Alexandra Posarac, a social policy expert at the Institute of Economic Sciences, the sanctions have had the greatest impact on the most vulnerable.

Victims of sanctions were actually ordinary people: children, old people, because there are no anymore drugs and sanitary material. So if you go to hospital, you have to bring your own medicines. If you don’t have medicine, you will simply die. That happens to children. Operations are stopped in hospitals. Quality of education is becoming lower and lower. And at the same time, you have elite or so-called elite, those who belong to 10% of the population, who are doing extremely well, and they even don’t know that there are sanctions because they are living better than they used to live a year ago. So for them, the situation with sanctions is ideal. They can say: look, you are poor. You are suffering because the world imposed sanctions on you, ordinary people in Yugoslavia. We are not to blame. And believe me: people believe them because they follow television. People don’t even have money to buy newspapers anymore. So their main source of information is primetime news, which is controlled by the government. That primetime news are pure brainwashing. So if you don’t have other sources of information, you believe. And if you talk to ordinary people, they say: look, Europe is to blame, and the United Nations are to blame, and America is to blame, not the authorities. In fact, the authorities are to blame but how are we going to convince them? So imagine yourself in the shoes of ordinary citizens of Yugoslavia. I think that sanctions actually stabilised regime in a way. They give them a perfect excuse for whatever they did or they haven’t done in Yugoslavia. So they really helped them. They are rich. They are powerful. They control television. They control people. So they can do whatever they want.

Many in Belgrade, including the opposition and even international relief workers, agree with that assessment. The UN embargo has provided President Milosevic and his regime with the perfect alibi for his ruinous policies and has helped consolidate his position. The sanctions have had disastrous consequences for the health care system in the country. In fact, relief organisations are not mincing their words. They describe the humanitarian situation as “catastrophic”.  Dr. Hana Vuri (sp?) is the director of the World Health Organisation in Belgrade.

I used to say last spring the health care system is on the verge of collapse. Now I would say it has collapsed. It means that in a country that before the conflict used to have a fairly high-level health care system. You don’t find most of the basic necessities that you need for health care. They lack drugs. They lack X-ray films. X-rays are now limited primarily to fractures. Many hospitals are giving blood without testing it for hepatitis and HIV. Many hospitals request patients who are scheduled for operations to buy on the private market all the drugs and dressings and whatever is needed, and the prices are exorbitant. And you don’t necessarily get everything that is needed. Some elective surgery, transplants – hip, liver, so on – have been completely stopped. The same applies to gall bladder operation and so on.

According to Donatella Linari, the director of the Belgrade office of UNICEF, the United Nations Children’s Fund, the situation is even graver for the young.

I think one can simply say that children are dying when they shouldn’t because of how the health system is not able to assist them or cope with the situation. I’ve seen wounded refugee children dying in hospital because the hospital didn’t have the infusions to keep them alive. Baby born with RH blood die because there is no blood component to transfuse them. Children are dying of cancer because there are no cancer drugs, and they could be treated but they can’t. The sanitary situation is very dramatic because hospitals and institutes lack detergents, disinfectants that are normally produced in this country. You can’t buy them. We try to buy them for ourselves, for our programmes, but you can’t. They are not produced anymore. And because of the limitation of heating fuel, you have most hospitals, even in infective centres, wash with cold water. It’s a public health hazard. Ambulance service is reduced by about 60% because of a lack of fuel. I mean, the list could be very long but it basically comes to a point where the health system, despite the expertise of the doctors or the nurses, doesn’t have the means to address the basic needs.

Diseases that are easily treatable such as tuberculosis and scabies are now becoming common, as I saw for myself in a local hospital.

This is a patient who has meningitis and tuberculosis. He didn’t have enough drugs to cure that, and it spread to the brain. I really do believe and I’m sure, positive that we are going to cure him. Instead of six months, it’s going to take at least 12 months.

Mortality rates are already on the increase. Tuberculosis deaths have doubled or even tripled, and even more deaths are being reported in mental hospitals. But it will take some time before there’s an increase in overall mortality figures. Sonia Licht, director of the Helsinki Citizens’ Assembly in Belgrade, who’s also in charge of the Soros Foundation, is scathing in her criticism of the international community’s responsibility for this humanitarian catastrophe.

Although humanitarian aid is exempted, I know our foundation is doing a lot of humanitarian work. You need at least two to three months to receive all the papers from the US Treasury Department and the UN sanctions committee to import medicine, for example. If the same thing will happen during the winter with medicine and food, you can say that there will be a real disaster. The question is: does the world want this kind of disaster? If there will be again thousands and thousands of innocent victims, and there I first of all understand the children because the world was not enough flexible. This is something they will have to take a responsibility for as well. The problem was that from the very beginning, there was a strong division made between victims. So the victims of war that were not of Serbian origin were treated as victims of war, while the victims of war of Serbian origin were forgotten. Many non-governmental organisations now understand that this was wrong. This kind of institutional racism is dangerous as such.

Serbs, bruised and battered by hyperinflation, economic collapse and war might be expected to rise up against their government. But the vast majority of Serbs are uninformed about the political reality in their country. Outside of Belgrade, the only source of information is state television, which pumps out a steady diet of propaganda. Besides, people are now simply trying to keep their heads above water. Alexandra Posarac again.

Shops are empty. You can’t buy even some necessary products. There’s no sugar. There’s no oil. There’s no flour. There are shortages, very serious shortages. People can only satisfy their basic need for food, nothing more. No clothes. Even buying clothes for children is a problem right now. Only one person works in a family. So it’s literally impossible to satisfy any needs. You have to take into account that people in Yugoslavia used to live very well. So households have durables, very modern technology. They have clothes. So what you can see now in the streets, it’s just something which comes from the old times. People in Yugoslavia used to convert dinars into foreign currency. Now they are surviving – everyone is struggling to survive in Yugoslavia – through their savings but those sources have been almost exhausted. The decline in the living standard is definite and very, very serious. It is really catastrophic.

The economic crisis has become so severe that it’s having repercussions on the psychological state of many people, as I heard from Dr. Zoran Korac, a psychologist at the University of Belgrade.

The prevailing atmosphere in the beginning was one of defiance. Serbs are famous for their spite so it was some kind of aggression that went outside. But right now I think that aggression is coming back. People are depressive, and when I say depressive, they’re quite depressive. Occasionally you have outbursts of aggression, and I would say – what we would say in old literature – the leitmotiv of everything they say is that there’s no future and you should run away from this country. More and more people are applying for emigration visas. They are also trying to secure a future for their children abroad. It’s very difficult now to protect yourself because inevitably every conversation that starts about sport or fashion or tourism finishes with: where is our country going? We have inflation. This is not a country, people say. This is a concentration camp. So I would say the general definition of this society right now is that this is a society without any future.

But people, particularly intellectuals, are well aware that the economic and political situation could deteriorate even further. Alexandra Posarac and Dr. Jelisa Minic of the Institute of Economic Studies both point to the disintegration of the Weimar Republic which ultimately gave rise to Hitler’s Nazi Germany.

What is happening in Yugoslavia right now is almost as if you are reading a textbook in economics, the history of the Weimar Republic. I am afraid that actually sanctions, hyperinflation and other factors, determinants of the economic situation are almost ideal situation for this regime because this regime has been heading towards dictatorship or autocratic society, where a small group of population will control everything in the country. Very often, we think that we touched the bottom. But it’s not true because there is no bottom. You can be more and more poor with less and less freedom.

There is even the more radical option than the one existing now in that sense of stronger dictatorship, further impoverishing, further destruction of economy and further conflicts in the region. We could get even worse leadership than this pseudo-socialist led by Milosevic. So it’s further radicalisation and maybe more consequent model of fascism than the one existing now although it can’t be such a perfect type of fascism as it was in Germany or even Italy. It could be something like Latin American dictatorships.

Pedrag Simic of the Institute for International Politics in Belgrade agrees and warns of the long-term consequences that this had in Argentina, for instance.

Before Juan Perón, Argentina was one of the 10 most developed states in the world. After Perón, for 30 years, Argentina was underdeveloped state because it had a reverse process. I think that this is exactly what we are now going through. We are going back. So I think we are going to become some kind of underdeveloped society with very strong inclination towards dictatorial, populist, puchist regime, and I think this is the problem for the rest of Europe.

But for now, people are more concerned about how they are going to survive the coming winter. Everyone, says Nenad Stefanovic, is taking precautions.

Every family is scared about next winter, not only about heating. I think we will also have problems with food, although our authorities try to convince people that we will have enough food for next winter because we are an agricultural country and we had enough food in previous times. But I think this terrible inflation will make, will create a situation in which probably we will have enough food but we will not have money to buy it. That’s the reason why a lot of families at this moment are spending all their money buying food and making some kind of famine reserves. Personally, I have done it: at least 100 kilograms of flour, 50 kilograms of sugar, cooking oil, some elementary food because they are scared that next winter they will not be able to buy that.

Opposition movements like the Civil Alliance, says Dr. Stefan Lilic, are also trying to prepare and inform people about what they might need to do to make it through the winter.

The Civil Alliance has just issued a sort of a pamphlet saying what to do in the forthcoming winter. We even said start renewing your old friendships with people you have in the countryside. People you haven’t seen for years or people you didn’t want to accept their children when they came over, now start going back because you might need it. Medical supplies. How to have alcohol. If you don’t have alcohol, you can use slibovic not only for drinking, but you can use slibovic for disinfection and things like that.

For the 90% of Yugoslavs who today live under the poverty level, the outlook is grim. President Milosevic’s control over the country remains solid. The opposition is hopelessly divided. The economy is continuing to spin out of control, and everyone fears that it will only get much worse. Donatella Linari of UNICEF.

Schools were closed last year for a few months. Winter holidays were extended quite long. I just don’t know whether the schools will be able to operate this year. Of course, it’s a problem for the houses, for everybody, but when it comes to schools, hospitals, institutes, children’s institutes, it can have tragic consequences, sure. And again it will be the most vulnerable that will suffer most: the old people living alone. The children will already not be fed properly because no one now can afford meat or milk. It’s just too expensive. No one can afford it. So people will already be on a kind of survival kind of existence, and if the temperature drops below – and here, it can get very cold – I’m sure there will be many deaths because of this. It’s a very tragic situation of which I don’t think we are grasping yet the full extent. And I’m afraid that in winter we will.

“Yugoslavia on the Brink” was produced and presented by Eric Beauchemin. Technical production: Bob van Beeten. This has been a Radio Netherlands’ presentation.