Global Policy Forum

By Andrew Borowiec

Debt-ridden and without prospects of foreign aid, Yugoslavia is sinking into a misery that U.N. experts compare to the period following World War II. According to assessments at the United Nations' European headquarters in Geneva, if the situation normalized, Yugoslavia still would need at least 15 years to reach the standard of living that preceded last year's North Atlantic Treaty Organization (NATO) bombing campaign to end the Kosovo crisis. That would have to be accompanied by foreign investment and an average economic growth of 4 percent a year — both elusive prospects.

Meanwhile, Yugoslavia's economy continues to shrink after what U.N. experts describe as "a black year." Figures compiled by the United Nations and by the Vienna-based Institute for International Economic Studies show industrial production down 22.5 percent during the past 12 months. Yugoslav exports have fallen 47 percent, unemployment stands at 32 percent and the average monthly salary is $72. The only tangible foreign currency revenue comes from the sale of wheat and corn estimated at $250 million a year, or 25 percent of the Belgrade government's needs, U.N. officials say.

The bleak statistics come against a background of growing tension over the future of the republic of Montenegro, the unwilling ally of the Belgrade government of Slobodan Milosevic, whose army is the only federal institution remaining there. In March, Montenegrin President Milo Djukanovic accused Mr. Milosevic of planning to use the federal army to topple him. On July 7, in a bold act of defiance, the pro-Western Montenegrin government rejected changes in the Yugoslav constitution that would give Belgrade virtually total control over Montenegro and extend Mr. Milosevic's ability to rule for another eight years.

Although Montenegro stopped short of declaring total independence, an act that effectively would end the remnants of the Yugoslav federation, several Western capitals fear an impending crisis. "No one doubts that Milosevic tries to provoke a crisis with Montenegro," said Anne Gazeau Secret, spokeswoman for the French Foreign Affairs Ministry. "France will continue to support all those who demand democratic changes in Yugoslavia."

In view of the general economic blockade, the Yugoslav government has no hope of securing funds for the country's reconstruction. Although Western experts estimate the damage caused by the NATO bombing at between $30 billion and $50 billion, Belgrade authorities say $100 billion is needed to repair the damaged infrastructure.

In addition to confronting the increasingly strident demands for resettlement by Serb refugees from Kosovo, the government has to face the seemingly insoluble question of unemployment. Only 10 percent of Serbia's population have full-time jobs. According to U.N. estimates, the number of Serbs living under the poverty level has grown from 14 percent to 44 percent during the past 12 months. Yugoslavia owes $1.2 billion to the World Bank and about $8 billion to other international lending institutions.

There are no prospects that Belgrade can pay off the debts in the foreseeable future. According to French diplomatic sources, Mr. Milosevic has succeeded in keeping a lid on the growing resentment of his policies by beefing up the ubiquitous security apparatus. The cost of maintaining the federal army and police force consumes 68 percent of the gross domestic product.