Yugoslavia’s Economy Takes a Direct Hit

It took just a few NATO bombs to destroy Novi Sad’s three bridges over the Danube River, tearing this graceful and industrious city in two.

The gargantuan wreckage in the river symbolizes the only clear achievement of the allied campaign so far: In 41 days, bombs have blown away so much of Yugoslavia’s civilian industrial capacity and public works that economists say the damage will take a decade or more to repair.

While the air attacks have not loosened the Yugoslav military’s grip on Kosovo province or turned the country against President Slobodan Milosevic, they have brought the economy to a near standstill, putting hundreds of thousands of people out of work.

On Sunday night, NATO squeezed the economy harder with its most effective strike against the electric power grid, blacking out most of the country and signaling the likelihood of continued attacks in days to come. Much of Belgrade remained blacked out Monday for a second night.

Yugoslav officials and independent economists estimate that losses have passed the $100-billion mark. Casualties include the country’s two biggest oil refineries; the factories that make its cars, petrochemicals and construction equipment; 23 bridges; 11 rail lines; four civilian airports; and hundreds of acres of forest.

The economy, already reeling from the effects of eight years of international sanctions and decades of mismanagement, is being devastated in less measurable ways as toxic gases and chemicals from bombed factories spew into the air and spill into the Danube.

No matter how the war ends, or how soon, economists say, Yugoslavia will remain an economic invalid for much of the next generation, raising the potential for new political troubles at home and a long-term outflow of migrants.

“As long as the bombs fall, people will stubbornly go on with their lives because we still have enough to eat and are used to a fairly low standard of living,” said Milan Kovacevic, a Western-trained economist in Belgrade.

“But we’re losing so many of the essentials of a modern country--our roads, bridges, communications--and those will take a long time to replace,” he added.

Kovacevic is a founding member of Group 17, an organization of market-minded economists. They calculate that Yugoslavia’s gross domestic product per capita, $3,000 in 1989, had dropped as low as $1,650 in 1997 and is expected to fall below $1,000 this year, even if the war stops today.

The number of unemployed, which stood at 900,000 before the bombing, could rise by an additional 500,000 in a country of 10 million people, he said. An estimated 100,000 people, many of them skilled professionals the country will need for a rebuilding effort, have left Yugoslavia since the bombing started--not counting the forced exodus from Kosovo.

Few places outside Kosovo have been hit as hard as Novi Sad, the country’s second-largest city. It is home to 300,000 people on both banks of the Danube 50 miles northwest of Belgrade.

Warplanes of the North Atlantic Treaty Organization have struck here on 18 days, knocking out the bridges that joined the city center with its southern suburbs and turning its oil refinery into an inferno.

Because water was piped over the bridges to the suburbs, 30,000 people and a hospital for heart patients are without running water. Bombs have also wrecked eight factories here, including ones making pesticides, rubber products, detergents and motorbikes, according to the Vojvodina provincial government--whose own headquarters, the city’s best known landmark, was hit by a missile and abandoned April 19.

“Every day we have less and less of a city,” said Milan Pavkov, 62.

Pavkov was part of a crowd that had been waiting for hours to cross the Danube at the Novi Sad Rowing Club, which has become a wartime ferry terminal in the shadow of Freedom Bridge. The suspension bridge’s long midsection, cracked in two, tilts into the water like a converging pair of impossibly steep ramps.

On the suburban side, Dr. Josip Cikos, who runs the hospital for heart patients, has scrambled to add a maternity ward and other emergency services for those who can no longer get quickly to city hospitals across the Danube.

Like many here, he wonders what Novi Sad’s bridges have to do with NATO war aims in Kosovo, 400 miles to the south. “The army doesn’t use them,” he said. “They were just easy targets.”

NATO says its bombs are intended mainly to “degrade” the Yugoslav army’s ability to repress the ethnic Albanian majority in Kosovo, a province of Yugoslavia’s dominant republic, Serbia.

The bombing has put an end to fuel production. It forced a cut last week in the monthly gasoline ration, instituted when the bombing started March 24, from 10 gallons to about 5 gallons per civilian car.

Some of the biggest factories struck by NATO produced goods for the military as well as the civilian market. Zastava, which made munitions and Yugo cars, is demolished. Its 15,000 employees in Kragujevac are out of work.

So far, the bombing has had little effect on agriculture, and the markets are full of food. But people in cities near bombed chemical factories are starting to worry that much of the produce is contaminated and are buying less.

As the country moved to a war footing last month, officials in Milosevic’s Socialist Party of Serbia called for a radical redistribution of salaries so that the best paid would earn no more than three times the minimum. The idea was rejected in favor of a “solidarity fund” in which each worker will set aside one to six days of pay per month for the war effort.

That debate could foreshadow a struggle between socialists and free-market advocates over the country’s postwar economy.

Milosevic’s government is already making plans to rebuild the country with domestic resources, including volunteer brigades like the ones mobilized after World War II.

Free-market economists argue, however, that the country can never rebuild its sophisticated industries without large-scale investment, and for that Yugoslavia needs a settlement with the West on Kosovo.