This isn’t the funniest joke making the rounds in Belgrade these days, but it is probably the most revealing:
A German businessman and his Japanese and Serbian colleagues are having a drink in a bar. The German says, “You know, we had a war with the U.S. We lost, and afterward they gave us a lot of money. Now we have the biggest economy in Europe.”
The Japanese businessman nodded. “We also fought the Americans, lost . . . and now we have the strongest economy in Asia.
The Serb suddenly went pale. “We had a war with the Americans,” he said. “But we won.”
Having stood up to NATO’s fearsome air campaign for more than eight weeks, the Serbs already are declaring moral victory.
Even as the bombs continue to fall on their country, destroying its economic infrastructure piece by piece, many in Yugoslavia see peace and prosperity just over the horizon.
They dream of a Balkan Marshall Plan that will bring them billions of dollars and rebuild their economy. They see a “normal” Yugoslavia ending its long isolation and once again becoming a part of Europe.
President Clinton first floated the idea of a massive Balkan reconstruction plan last month, and there was more talk of it a few weeks later at the NATO summit in Washington.
Although short on specifics, there is a consensus among the allies that when the bombing stops, there will be a need for economic redevelopment.
There is just one problem: Slobodan Milosevic. As long as the Yugoslav president remains in power, the Clinton administration has made clear that Belgrade will not be allowed to partake of any postwar open-wallet plan.
With the broad outlines of a diplomatic settlement beginning to take shape, it seems all but certain that Milosevic will remain in power. Milosevic’s supporters, as well as what remains of the enfeebled and fragmented opposition, believe the war has actually solidified his grip on power. This is certainly true in the short term. Whether he can sustain his rule is questionable.
Two of the four cornerstones of his regime have been significantly weakened by the war.
The first consists of the army and security police. Both have taken heavy losses in men and materiel.
The second is the economic infrastructure, particularly the large state enterprises–oil refineries, steel mills, chemical plants. Outmoded, inefficient and totally controlled by Milosevic and his men, this is where they got their cash, and now these enterprises are in ruins.
The third cornerstone is Milosevic’s control of the media, television in particular, which serve as Milosevic’s personal propaganda machine. This remains intact despite NATO’s bombardment of state television headquarters in Belgrade and its transmitters around the country.
Finally, there is Milosevic’s uncanny ability to force Washington and the rest of the world to negotiate with him. This, too, remains intact, and the signals coming out of Belgrade are that Milosevic is ready to make a deal.
“Read my lips,” said Nebojse Vujovic, the Foreign Ministry spokesman, when foreign journalists wanted to know why he was no longer adamantly insisting that NATO troops could not be part of
an international peacekeeping force in Kosovo.
The Serbs seem ready to give in on NATO’s demands of a substantial troop withdrawal from Kosovo and a peacekeeping force with a NATO core. The details, say officials, can be worked out at the negotiating table.
What is most important to Milosevic now, according to analysts there, is that he gets a seat at the negotiating table. He wants to be seen as a partner in a deal. He wants respect and legitimacy.
He also wants money.
Vujovic put it bluntly: “We want this region reconstructed, and those responsible for the destruction of our economy to pay the damages.” At this point, the U.S. and its allies are not inclined to pay.
“There won’t be any fresh money if Milosevic stays in power,” said Bratislav Grubacic, editor of an influential Belgrade newsletter. Instead, he predicted, Milosevic will settle for a deal that allows him to stay in power, and Yugoslavia will revert “to some kind of very poor, primitive communist-style society.”
A figure in close contact with the upper echelons of power in Belgrade foresees serious problems for Milosevic if he is unable to come up with loans and credits to rebuild the economy.
“We will have extreme poverty, and I assume there will be disturbances and unrest,” said the man, who spoke on the condition of anonymity. The police and army, he said, “will be coming home from Kosovo defeated and humiliated only to find their refrigerators empty and their children hungry and freezing. Milosevic will no longer be able to count on them.”
Many fear a civil war. Montenegro, the tiny republic that is Serbia’s junior partner in Yugoslavia, is in open rebellion against Milosevic’s rule, and its pro-Western leader, Milo Djukanovic, has spoken boldly of the need to replace the regime in Belgrade.
Then again, all of this could bode well for Milosevic. He thrives in times of turmoil and crisis.
No matter who is in charge of postwar Yugoslavia, one man certain to be at the center of things is Bogoljub Karic. An associate described the jovial, 45-year-old tycoon as “the kind of man who will always be best friends with whoever is running the country.”
From humble origins in Kosovo, Karic and his siblings have become the masters of crony capitalism in Yugoslavia. They own the largest private bank in the country, the largest insurance company, a string of television stations, the cell phone network and a host of other businesses.
One indication of the way things really work in Yugoslavia is the fact that Karic and his family earned most of their fortune outside the country, mainly in construction in the former Soviet Union.
In Milosevic’s Yugoslavia, there is not much room for Western-style entrepreneurs like Karic. Instead, the economy is tightly controlled by Milosevic through his political loyalists.
Dragan Tomic, for example, speaker of the federal parliament and a close ally of Milosevic, is the head of Jugopetrol, the state refining conglomerate; Dejan Kovacevic, minister of construction and another Milosevic loyalist, heads the country’s biggest construction company. The list goes on.
After the 1995 Dayton agreement for peace in Bosnia-Herzegovina eased economic sanctions against Serbia, investors came flocking. But they turned around and went home when they discovered that Milosevic and his cronies had no intention of relinquishing their grip on the state economy.
Desperate for foreign capital, Milosevic brought Karic into the government last October as minister in charge of privatizing Yugoslavia’s 75 largest state-run enterprises.
NATO might have simplified Karic’s task by bombing 16 of these enterprises into oblivion.
Despite the devastation, Karic is upbeat about Yugoslavia’s future. “We expect the international community to help us after the war,” he said. “Europe should know that even a rich man cannot live happily in his mansion when he has a very poor neighbor.”
Karic’s vision is of an economy driven by thousands of family enterprises just like his own, all financed by loans from abroad.
“There are thousands of Serb millionaires, but most of them are living outside Serbia. We are talking to them, and most of them say we would be glad to invest in Yugoslavia, but sanctions, war, bombing–obviously people don’t want to invest in places that are not stable,” he said.
Karic’s advice: The politicians on both sides should declare a victory and let the businessmen get on with the task of rebuilding the country.
A far more pessimistic vision of the future in postwar Yugoslavia can be found in Kragujevac, a glum industrial city of 200,000 about 80 miles south of Belgrade.
Kragujevac was Yugoslavia’s “Motor City.” The Zastava complex was the largest car manufacturing facility in the Balkans. At its peak, before the breakup of Yugoslavia in 1991, 38,000 workers were producing about 200,000 cars a year.
On April 9, and again on April 11, NATO bombs and missiles leveled the main plant.
The carcasses of half-built cars dangle from the wrecked assembly line like sides of beef in a giant butcher shop. Nothing of it can be salvaged, according to Dragan Srejovic, a company vice president.
“This city, this entire region was supported by the factory. And in a few seconds, NATO has destroyed not only our present but our future,” he said.
According to Srejovic, nearly 500,000 people in the region were dependent on jobs generated by the Zastava plant.
NATO says the complex was a legitimate military target because it made vehicles for the military, as well as some light weapons. People in Kragujevac dispute that claim.
The bitterness on the streets and in the workers’ bars of Kragujevac is palpable. Everyone blames NATO, but in reality Yugoslavia’s auto industry was ruined long before the bombs hit.
In the mid-1980s, autoworkers at Zastava earned about $650 a month and were, by far, the best-paid industrial workers in Eastern Europe. The breakup of Yugoslavia and economic sanctions doomed the company.
Last year, Zastava produced only 14,000 cars, a poor-quality, decade-old version of the much-ridiculed Yugo. Last month, the few workers who still had jobs–perhaps a few thousand–had seen their pay shrink to about $12 a month.
