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How Milosevic Hangs On

Dana Popovic, a professor of economics at Belgrade University who took part in the demonstrations of the winter of 1996-1997, told me what happened in her class after the new law was enacted. “Some students asked me whether, if they went on strike, I would join them. I said: ‘This would be my fifth protest in seven years and frankly I think it’s a complete waste of time. What’s the point?’ I said if they did strike I would join them, but in the end they agreed with me.” For many of the brightest students, especially those in the technical faculties, the future lies in getting a job abroad; they are simply abandoning forever all hope of change in Serbia.


Of course Serbia will change one day, but commentators in Belgrade compete with one another to describe how difficult it is to predict when this will occur. The political analyst Ognjen Pribicevic said: “I got a scholarship to go to Oxford but after three months I had to come home. It was so boring there! Here it’s really exciting…if you’re a political scientist. It’s like being on board a supertanker out of control. You know it’s got to crash but how or when that will happen nobody knows.”

For the historian Aleksa Djilas the country is like the zeppelins of the 1930s. “If they got a hole in them they did not crash immediately but could float about for a week before they came down. We’ve got several holes now but how long will it take for us to come down….” At this point, just like many others, he finds it hard to be more specific.

It is this uncertainty and exhaustion then that has led many to simply “switch off,” to become part of what used to be called “internal emigration” in Communist countries, even while the houses of Kosovo are being burned near the Albanian border. Kosovo is only a four-hour drive away from Belgrade, but one political scientist told me that for all he cared it could be Burundi.

In fact, many people hardly know what is happening. Most still get their news from state-run Serbian television, which creates a weird fantasy world of its own. The day after the elections defeating Milosevic’s candidates in Montenegro and as the situation in Kosovo became ever more violent, the evening news broadcast did not mention either event during the first twenty minutes. For the news editors, the most important story of the day was the visit to Serbia of executives from a French concrete company.

True, anyone who wants to know what is going on can listen to independent or foreign radio stations or read the independent press. But after ten years of following bad news, and having hopes for improvement raised and disappointed, many would rather have no news at all, especially since they feel impotent to change anything anyway.


Milosevic is often accused of ruining the Yugoslav economy, while profiting politically from it himself. This, it is sometimes said, may ultimately bring him down. The raw facts are hard to obtain since many important details are state secrets. A statement released by antigovernment economists known as the Group of 17 observed that it was easier for them to find out the foreign exchange reserves of Taiwan or Burkina Faso than those of their own country. Statistics released by the state are also regarded as unreliable. Still, some broad conclusions can be drawn.

Yugoslavia’s GDP of roughly $15 billion is believed to be about half what it was in 1989. Some 44 percent of the work force is believed to be unemployed and the country has a $12 billion foreign debt. The “black” economy, which includes a large variety of illegally manufactured and traded goods, is thought to make up as much as one third of GDP. Although the main economic sanctions against Yugoslavia were lifted after the November 1995 Dayton peace accords for Bosnia, the country is still excluded from receiving credits from the IMF and World Bank and so is largely cut off from the world economy.

Such grim information, however, conceals some often misunderstood realities. Many of the people said to be unemployed actually have jobs; and many of the people who have jobs are not quite as badly off as we might think. Under promise of anonymity, a metalworker in the tractor and engine factory in Belgrade’s industrial suburb of Rakovica gave me an account that suggested why workers have been reluctant to join the opposition to Milosevic.

First of all, he said, I had to understand that things were far better now than at the worst times of war and hyperinflation. Before the wars in Bosnia and Croatia he had earned the equivalent of $500 a month. By the end of 1993, with Yugoslavia’s economy suffering from international sanctions and the drain of wartime expenditures, he was down to $4. But now he was back up to $100, even though, compared to a year ago, his salary was eroding again.

What the metalworker described is typical, I found, of many of Serbia’s major state-owned industries. Of his company’s work force of three thousand, he said, only one third are working. One third are on “sick leave” and one third on “paid leave.” These two thousand only get two thirds of their salaries but prefer it that way because they are all involved in petty commerce of one sort of another; many tend vegetable gardens and sell part of their produce. Of those who are actually working, virtually everyone has a second job without which they could not survive. Of course, the metalworker observed, the company directors and managers are doing well. When they have not actually set up their own private firms to supply their state-owned company with parts, their friends have done so in return for paying them fat commissions. The directors live in company apartments and are driven around in company cars.

The tractors that the company actually manages to produce are bought by the state to barter, for example, for oil from China. But even if it has more orders, the company cannot expand to meet them because the state takes so long to pay; the company is therefore always short of cash and cannot expand production. The banking system has long since ceased to function as a normal part of financial life; credits are extremely difficult to obtain unless company officials have inside political influence and are willing to pay for it.

According to the metalworker, “No one admits to supporting Milosevic nowadays but since people vote for him someone does.” It should be clear that Serbia’s economy cannot go on forever in its present state. However, as the worker pointed out, real economic reform, when it comes, would mean that most workers who are now being paid for doing nothing would then lose their “jobs,” or rather their meager pay. Since unemployment benefits are very low, the devil you know is clearly better than the devil who would fire you.

A central fact of the economic system is that the directors of some of Yugoslavia’s biggest state companies, whether they are in pharmaceuticals, oil, or furniture, are also government ministers. According to Aleksandra Posarac, an economist and vice-president of the small Civic Alliance opposition party, this gives them “access to information, which is the most valuable thing. It helps you safeguard your exclusive monopolistic position because you can kill off any competition and you have access to credits and subsidies and hard currency at the official rate, which is extremely valuable when it diverges from the black market rate.”

The government officials who are also in charge of state businesses have the cushiest positions in Yugoslavia. They and their friends enrich themselves while they can; much of the money that should be credited to the state is believed to be hidden in a network of foreign accounts, most probably disguised as the assets of private businesses or phony companies. And anyone who tries to buck this corrupt system is bound to be in deep trouble. Everyone involved has a secret police “dossier” that can be used against them.

Mira Markovic, Milosevic’s wife, has a small party of her own called the Yugoslav United Left. It is always known by its initials, JUL. Far from being left-wing, it is in fact a businessmen’s party. When two of its senior members recently quarreled with her they suddenly found themselves in court charged with corruption. JUL has no appreciable support in the country. Nevertheless many of the businessmen in it have important posts in the government and the party is a member of the coalition that includes Mrs. Markovic’s husband’s party, the SPS and Seselj’s Radicals. No one doubts that, whatever else it is, JUL is also a useful arrangement for siphoning off public money.

How long can corruption on such a scale continue? I went to the village of Cortanovci, which lies on the banks of the Danube, north of Belgrade. It is in Vojvodina, Serbia’s northern province, the country’s main source of grain, where one sees broad fields of wheat and corn. But all is not well here either. Yields, say the peasants, will be down a quarter from last year because they cannot afford as much fertilizer as they need. According to one farmer, this is because “some bastard in the government or his friends have a monopoly on the import of phosphates that our companies need to make fertilizer.” Because of this the price of fertilizer is too high.

In this region, as in others, anger is translating itself into something worse than support for Milosevic—support for Vojislav Seselj. These people have no interest in dying in order to recapture the “Greater Serbia” advocated by Seselj’s Radical Party. They just want “those bastards” to stop “ripping us off.” In the village cafés some people are taking home illustrated brochures handed out by Seselj’s party praising his first five hundred days as mayor of Zemun, a suburb of Belgrade.

If anyone could reveal how Milosevic deals with the economy, it would be his longstanding financial confidant, Borka Vucic, and she of course would not talk. During the war, according to many reports, Mrs. Vucic organized in Cyprus a network of firms and bank accounts that were set up to evade UN sanctions. Payments to and from foreign countries moved secretly in and out of the loosely controlled island. Mrs. Vucic is clearly a formidable woman. Now in her mid-seventies, she fought as a Partisan during the Second World War. She is said to be ruthless, devoted to her work and to Milosevic.

When the war ended in 1995 Mrs. Vucic returned from Cyprus to Belgrade to become the director of Beogradska Banka, the holding company which owns Milosevic’s former stronghold, Beobanka, from which she continues to provide him with financial help of every sort. Nothing can be proven, but it is widely believed that, owing to Western European pressure, the state and private funds controlled by Milosevic that used to be hidden in Cyprus were shifted to China and Russia.3 And since Serbia is currently defaulting on its debts for gas and oil to both of these countries, the money may be on the move again.

Many Yugoslavs speculate that the amounts in what they call “our accounts abroad” have risen to fabulous proportions. Milosevic or more likely his close allies may well have private fortunes salted away. But there is considerable evidence that the sources of money they are relying on to keep the national economy going may be all but exhausted. Last year Milosevic sold off a 49-percent stake in Serbia’s telephone system to Greek and Italian interests. They paid a bargain price of $1.05 billion in cash, which was used to pay pensions and overdue salaries just before last November’s elections.

For months there has been speculation about what state assets Milosevic would sell off next to foreign investors in order to get him through this year. On June 8 such plans were stymied. The European Union, followed by the United States, imposed a ban on foreign investments in response to Milosevic’s actions in Kosovo. Curiously, Mrs. Vucic slipped out of the country just before the ban. Just where she was going no one would say.

The Russians have not joined the investment ban, but a cash-strapped Serbian government cannot be expected to obtain much financial help from its Slav “brothers,” as the Russians are often called. Russia’s giant gas firm Gazprom would like to buy into Serbia’s strategic, valuable, and expanding gas pipeline network, but since the Serbian government owes Gazprom and other Russian creditors as much as $700 million, it would still be in debt to the Russians even if it sold off the pipelines.


Milosevic can be seen almost every evening on television welcoming some visitor or other for a chat, but, apart from that, he never speaks to his people anymore. Some believe that this withdrawal was originally a tactic to give him a mystique of remoteness. Now they believe he is losing touch with reality.

Because Milosevic so rarely speaks it is noticeable that those who are supposed to speak in his name also do so less and less. During the war, government and party officials made energetic efforts to get their propaganda messages across, especially to foreigners; they said that the Serbian case was being misrepresented. Now almost all of them have clammed up. I suspect that this is because, in the absence of guidance from above, they do not know what to say. There is of course another reason for their taciturn behavior. If “the end” comes they will need to be able to jump ship to save themselves, and so the less said the better about their support for Milosevic now.

During this summer Zoran Djindjic will try to set up a new opposition coalition based on his own Democratic Party, whose program calls for a more democratic Serbia. When Djukanovic won the recent elections in Montenegro, Djindjic hoped he would have Djukanovic’s support; but so far Djukanovic has refused to join with him. Other small political groups are also talking about setting up a new organization that would serve as an “umbrella” for the entire opposition. Whatever happens in Kosovo, they are calculating that beginning in autumn there may be social unrest if the government fails to find cash to pay wages and pensions.

Pensioners make up one third of Serbia’s electorate, and because so many people retire early, 44 percent of them are younger than fifty-five. The Serbian government recently announced that their pension was to be cut by 20 percent; because of inflation that will mean a cut, in real terms, of 40 percent. Since pensioners have been one of the main groups supporting Milosevic, a failure to scrape together some cash from somewhere could badly weaken Milosevic’s Socialist Party of Serbia.

No elections will take place this year. Unless Djukanovic and Milosevic can strike a deal, which they might do, the newly elected Montenegrins will soon be in a position to block legislation in the upper house of the Yugoslav parliament. If they were willing to continue doing this until next spring and if, as a result, a new budget cannot be passed, then new elections would have to be called. If strong opposition emerges in Serbia—a big “if”—a newly elected Yugoslav parliament with enough deputies ready to vote against Milosevic could depose him.

There are other possibilities though. Ever since Vojislav Seselj became deputy prime minister he has toned down his rhetoric and appears, at least, to have moderated his views. To the average Serb he no longer looks like a madman. In last year’s elections for the president of Serbia, Seselj originally beat Milosevic’s candidate. However, claiming that not enough people had voted, the poll was run again and a new candidate was found. This lackluster character, Milan Milutinovic, is now president of Serbia, in name only, of course.

It is clear that Milosevic thinks it is safer to have Seselj on the “inside” rather than sniping from outside. However what is also clear is that, from this position, Seselj is building his own powerful network of supporters within Serbian and Yugoslav institutions. Unlike the remnants of the old opposition parties, he is making definite plans for running the country in the post-Milosevic era. The other party leaders are just talking about making plans.

As the situation in Kosovo and in the rest of the country becomes more and more critical, it is also clear that there is more and more disquiet at the top. Perhaps Milosevic is already feeling that he is under threat. On June 10 a meeting of the some two-hundred-strong “managing board” of the SPS was called to discuss the situation in Kosovo. One insider told me that Milosevic looked “tired” and “frightened” and only managed to mumble some platitudes about the province. To the outrage of the delegates, Milosevic then had the board agree to shift all real decision-making power to an inner core of some fifteen loyalists. The leadership of the army is also angry. It does not want to get dragged into full-scale combat in Kosovo, and Milosevic has been relying on thousands of his police to carry much of the burden of the war. However, many senior policemen are already angry that they have been ordered to fight a guerrilla force without the full support of the army. Despite the fighting many also believe that Milosevic is actually preparing to abandon Kosovo just as he abandoned the Krajina, the would-be Serb state in Croatia. He cannot simply sign it away—that would arouse fierce opposition from Serbian nationalists. It may turn out that he needs a war—and even a NATO occupation—to get rid of the place.

I asked one SPS official, who would only speak anonymously, if he thought Milosevic could survive the loss of Kosovo. He said he thought he could, “because everyone would understand that it was not his fault, that it was the fault of Clinton, Albright, and Blair.” That, at least, is what state television would tell them to think.

Milosevic is quite capable of sacrificing Kosovo. He has shown himself to be a brilliant political opportunist, interested in nothing but his own power even though the physical extent of that power has constantly been shrinking. I asked a very well connected former Milosevic loyalist and top SPS official how he thought the political career of his old boss would end. “Either like Gorbachev or the Ceausåüescus,” he replied. “I think it is more likely that he will end like the former but the latter is possible too.”

As it happens, I lived in Romania for a year just after the 1989 Christmas revolution in which Nicolae and Elena Ceausåüescu were executed, shot down like dogs. Slowly the story came out of how they were overthrown. For a year or two, disgruntled army, party, and securitate officials had been talking among themselves about what they might do “just in case.” Their chance came when thousands of hungry, cold, and angry people finally took to the streets of Timisoara. I asked the man whether such discreet discussions were taking place in Belgrade. “Yes,” he said. And, I asked, if there was social unrest in Serbia, and NATO was poised to invade Kosovo, and the Montenegrins were seriously threatening to secede, could there really be a coup? “Yes, that is realistic,” he replied.

This could be the fantasy of an embittered former loyalist. As Milosevic’s country continues to crumble around him, he might carry on ruling in splendid isolation as Serbia continues to drift, as war engulfs the south, as foreign troops threaten to occupy a part of the country. What is certain though is that, in the words of Sonja Biserko, the brave woman who runs Serbia’s Helsinki Committee for Human Rights, sooner or later this country must face “its historical debacle.”

June 18, 1998

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    As a candidate for membership of the European Union Cyprus now needs to clean up its act.

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