A Year Gone By, but Still a Pall Remains

The grand hope of the students and miners, farmers and intellectuals who overthrew strongman Slobodan Milosevic was that their populist revolution would mean a new era for this nation.

It would bring a different government, a market economy, a system of laws and a fresh mentality to the Federal Republic of Yugoslavia.

But today, exactly a year after protesters seized parliament, forcing the president to step down, a pall hangs over the country. While people no longer fear new bloodshed or wars, the economy is still on the ropes. Meanwhile, the young people who were the revolution’s lifeblood are on the fence: Should they stay to help rebuild the nation or leave for better lives in the West?

“My best friend is applying to go to the States--he wants a chance to make his own life, to have choices economically and politically,” said Ivan Marojevic, 27, a leader of Otpor (Resistance), the student-led group that emboldened the opposition to Milosevic.

“I was always a skeptic that there would be big changes right away, but the way things turned out is even below my low expectations,” Marojevic said.

Gone are the heady days that followed Milosevic’s ouster. The list of disappointments today is long, according to people from many walks of life.

Although many Yugoslavs’ salaries have doubled, the prices of utilities and essential goods such as cooking oil, sugar and bread have quadrupled, leaving people with as little in their pockets as they had during some of the worst years of the Milosevic regime. Not one major state-owned firm has been privatized, and government employees’ habit of demanding bribes from businesspeople for official permits remains entrenched. The smugglers market is still the place where many Belgraders buy necessities, from toilet paper to shoes.

Promised reforms in the police and military have yet to take place, and the judicial system remains seriously underfunded.

Since the Yugoslav federation fractured in the early 1990s, Yugoslavia has consisted only of its dominant republic, Serbia, and Montenegro, a small, mountainous region on the Adriatic coast. And most worrisome to many people inside and outside the country is the infighting between its two most powerful politicians: Serbia’s pragmatic prime minister, Zoran Djindjic, and the popular but more conservative Vojislav Kostunica, president of Yugoslavia.

“The leaders are spending all their time . . . doing things to spite each other instead of focusing on needed reforms,” said one senior Western diplomat.

“Right now you have a situation where things are in limbo,” the diplomat said.

There has been progress, but so far it has made little difference to working people, according to investment consultants and financial experts. Indeed, numerous changes that have put the country on a sounder economic footing have translated into hardships. Higher prices for essential goods, for instance, are the result of a halt to Milosevic-era subsidies that kept prices artificially low and drained the treasury. But for a janitor or schoolteacher, that just means they’re paying more for a loaf of bread.

Serbian Finance Minister Bozidar Djelic is an energetic Western-trained investment banker who returned to his native country less than two months after Milosevic was forced from office. Until the end of last year, he was a partner at McKinsey & Co., an international consulting firm. He worked on Poland’s post-Communist overhaul with Harvard economist Jeffrey Sachs and later on Russia’s recovery plan.

In the first nine months after his return, Djelic spearheaded a reform of the tax system and the budget, which, under Milosevic, had numerous overlapping accounts and offered no clear picture of where money went. He is now undertaking the personally risky job of cracking down on gambling and the booming cigarette-smuggling trade.

“The track record here is better in the first six to nine months than in other post-Communist countries,” he said.

Yet while World Bank analysts agree with Djelic’s assessment and priorities, they emphasize the many sectors of the economy that still need attention.

“The government has done a very good job in a very short period of time on economic reform. They’ve managed the budget extremely well, and there is a new openness about how money is being spent,” said Elaine Patterson, acting country manager for the international bank’s office in Yugoslavia.

“But they still have very tough reforms to go through, and they need political cohesion to do it.”

World Bank economists applaud a proposed labor law moving through parliament. The measure would make it much easier for businesses to hire and fire people, which, it is hoped, will make investment more attractive.

However, the private banking system is virtually nonexistent, and there is no commercial credit and no stock market. That means the “gray” economy continues to boom, and diminishing it will not happen overnight. The state pension system, the Yugoslav equivalent of Social Security, is unsustainable and will have to be revamped. The government is considering such controversial moves as raising the retirement age from 60 to 65 for men and from 55 to 60 for women and reducing benefits.

Furthermore, said Djelic, “corruption is a big problem for us. We need a state ruled by law.”

For prospective investors, the lack of a financial framework is a particular obstacle, said Milan Kovacevic, a consultant working closely with foreign businesses that are considering putting money here.

“They should allow capital markets to operate,” said Kovacevic. “They should allow the selling of domestic bonds and stocks, and they should allow bonds to be issued in foreign currency. At the moment, the regulations require bonds to be issued in dinars, the Yugoslav currency.”

Dinars are worthless outside Yugoslavia.

Continued economic improvement will also require sustained hard work on the part of the political leadership. It is the next tranche of reforms that is at risk if the president and the Serbian prime minister continue spending their political capital on a struggle for power.

Over the last four months, Kostunica has lobbed charges of corruption at Djindjic, who has responded by raising questions about the competence of Kostunica’s political team. The corruption charges have not been proved, but the rumors have lingered.

The politicians’ effort to move ahead on reforms has also been seriously undermined by the need to cope with a turbulent domestic situation, including the effort by Montenegro to break away from Yugoslavia, insurgency by armed ethnic Albanians in southern Serbia and serious tensions between Serbs and ethnic Albanians in Kosovo, a United Nations-administered province of Serbia.

At the same time, many reform efforts have languished in parliament, and the West is becoming nervous. The reforms are needed soon because before the end of the year, a team of economic ministers is hoping to persuade foreign governments and commercial lenders to forgive about $12 billion in debt. They are also looking for a big injection of U.S. aid to help ease the burden of financial reforms on the poorest citizens.

“I’m afraid that if [the leaders’ disputes] don’t stop, the willingness to give aid will dry up. And without it, they are down the tubes,” said another senior Western diplomat.

Still, most Yugoslavs do not perceive a significant political problem apart from their difficulties feeding and clothing their families. Though Kostunica’s popularity has fallen, it stands at 67%, compared with Djindjic’s 17%, according to Srdjan Bogosavljevic, who runs the respected polling firm Strategic Marketing & Media Research.

The broad tolerance for political troubles attests to the country’s almost passive political climate since the upheaval that surrounded Milosevic’s final days. Rather than working to create a functioning democracy themselves, people expect their leaders to do everything for them.

“American democracy, the American economy, was not made in one year, and Serbs still don’t understand that,” said Bratislav Grubacic, a political analyst. “They think their leaders will give them democracy. They don’t understand that they have to fight for democracy, that it is a process.”

At the Kolubara coal mines in the center of Serbia, where the lignite coal that heats the country comes from, the workers see nothing but hard times ahead. But they say they will be patient.

To a certain degree, they seem merely realistic about how far the country has to go, yet they also evince an underlying depression, a deep wound from the Milosevic era. Most of them earn salaries of about $200 a month and would never think of going out for a meal, even to one of the cheap roadside grills that are part of the local landscape.

“Money isn’t the essence of everything,” said Dusan Rankovic, a 57-year-old miner who participated in the protests last year in Belgrade, the capital. “I’m not living in fear anymore that my home will be surrounded by police and my sons will be sent to the front lines.”

Zikica Djordjevic, 40, said he too will be patient.

“We had a totally perverted system--the people are deadened here because the previous regime destroyed everything,” he said. “Now the problems are unemployment, a low salary, a lot of refugees. And it will take time to change.”

The key question is how much time. If young people such as the Otpor leaders emigrate, there will be little idealism and energy left. And if further reforms are not enacted soon, they will become increasingly difficult as people’s willingness to sacrifice runs out.

“We got rid of Milosevic relatively easily,” said Miroslav Prokopijevic, an economist and scholar at the Center for European Studies, a Belgrade think tank. “It’s much more difficult to get rid of communism.”