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    Copyright: The following text is for personal information only. Any professional use or publication in written or electronic form is subject to an agreement with AIM, 17 rue Rebeval, F-75019 Paris, France

    WED, 20 DEC 1995 21:51:14 GMT

    Re-establishment of business deals between FR Yugoslavia and Slovenia

    STILL FAR FROM NORMALIZATION

    Recognition of FRY and adoption of regulations on economic cooperation in Ljubljana were received in Belgrade with icy silence and biting retorts.

    AIM Belgrade, December 14, 1995

    "We will quickly re-establish business operation with all former republics of ex-Yugoslavia, only the Slovenes will have to wait for a while", Dusan Vlatkovic, Director General of "Sartrid 1913" Metallurgy Complex in Smederevo, said in his long interview given to state television on December 11. This almost incidental, but insulting, remark of a Serb director who has been renowned all these years as a favourite of Slobodan Milosevic and his Socialist Party of Serbia (ever since the rally of support to the authorities held in Belgrade in March 1992 when he called the Socialists to set off to Terazije drinking-fountain and settle accounts with the students who were demonstrating there against the authorities), practically is the only "official" reaction to the decision of the Government of Slovenia to recognize FRY as a state and to its adoption of a law which permits reestablishment of economic relations between Ljubljana and Belgrade.

    Not even the officials of the Chambers of Commerce of Yugoslavia and Serbia have agreed to give even a courtesy statement about acception of economic cooperation with Slovenia "only on the basis of a large economic interest" as they otherwise informally answer to the question whether they believe in re-establishment of the once well developed economic cooperation. And while complete silence has fallen on Belgrade concerning re-establishment of business operation with Slovenia, an agreement with INA (Oil Industries) from Zagreb on resumed using the Yu pipeline has already been reached. Tudjman's declaration that he accepted continuity of FRY, but demanded his share of inheritance of the SFRY was given favourable publicity in the media, while news about actions of Slovenia to prevent deblocking of foreign currency reserves of the National Bank of Yugoslavia abroad until a definite agreement is reached concerning distribution of joint property were carried by Belgrade press as just another proof of Slovene selfishness.

    Statements of heads of Slovene firms, "Gorenje", "Mura" and others, about their interest to return to the market of FR of Yugoslavia (given to TV Ljubljana) were carried only by independent Nasa Borba in Belgrade and nobody else. Nobody, not even in a sarcastic tone, commented on the fact that Drnovsek's Government decided to recognize FR Yugoslavia exactly 6 years after Serbia had declared economic war against Slovenia, on November 30, 1989, to be exact.

    It would be useful to be reminded at this point that, according to data from 1987 available in Serbia, Serbia realized 3.1 per cent of its social product (goods and services about 650 million-dollar worth) on Slovenian market, while Slovenia realized in Serbia 8.1 per cent of its social product at the time (or about a billion-dollar worth). Six years ago, export to Serbia was on the level of half of the total Slovenia's export to countries outside the SFRY, and the export od Serbia to Slovenia amounted to one third of its export outside former Yugoslavia. These figures, as well as a series of others which could be added to them, cannot be used as a reference point any more, because everything has completely changed. For instance, it is assessed that Slovenia, with five times less inhabitants than the FRY, has twice as large social product, etc.

    Although there are almost 12 million of possible consumers nowadays in the FR of Yugoslavia, they are at the moment the poorest buyers in whole Europe with approximately 700-800 dollars of national income per capita (which means that, theoretically, their purchasing power is lower than in Romania, Bulgaria and other countries from the bottom of the European scale). It is true that these figures may be deceitful just like all the data about FRY, because, according to certain assessments, Serb statistics cannot include as much as 30-40 per cent of the product from the grey zone of the economy. In fact, even in the course of this year, FR Yugoslavia has managed to cover its deficit in foreign balance of payments of 700 million dollars, which leads to the conclusion that the scope of foreign trade exchange is much higher than one would expect based on other indicators (data on the scope of foreign trade are not being published, only the figure of the balance of payments deficit was publshed).

    During the three years of the UN Security Council sanctions imposed on Serbia and Montenegro which were suspended after the Dayton Agreement, from time to time unreliable information leaked about continued business deals between firms in Slovenia and Serbia. A rumour circled Belgrade as a big scandal that the firm "Iskra" from Kranj was still supplying the PTT System of Serbia with spare parts for telephone exchanges. There was also much talk about continued wholesale supply of Serbia with pharmaceutical products from Slovenia (including smuggling by private pharmacists), and supply with spare parts from the Maribor Car Industries (TAM). But, in spring 1992, exchange almost completely died down and the only thing that continued to arrive in FRY for some time were tank cupolas from steel works "Ravne" (with "Iskra"'s electronic equipment).

    The greatest Yugoslav TAM vehicle maintenance service in Novi Sad, in fact, mostly vehicles of the former Yugoslav People's Army (JNA), although immediately after introduction of the "blockade of Slovenia" when the "rally of truth" in Ljubljana was banned in 1989 it changed its name into "Remont i servis" share-holding company, until recently purchased spare parts in Maribor, but its employees nowadays say that the number of vehicles which come for repair has significantly decreased. In the course of six years, practically everybody resorted to other types of trucks and vehicles.

    The former "Autokaroserija" in Novi Sad, which depended completely on Slovene suppliers in its production of "buses for Europe" with the annual capacity of 400 vehicles, simply took over the complete project and started producing or purchasing in Serbia parts which used to come from Slovenia. This firm is now producing about a hundred chassis for buses and the entire superstructures, buying only axles and motors in Austria or Germany (or any other country, depending on the buyer's demand). Technical Director of "Neobus", the former "Autokaroserija", Milovan Kurjakov claims that the production is somewhat reduced, but that quality is increased, and that they do not need Slovenes any more, as well as that they will work with them only if they offer them a large profit.

    When speaking of household appliances, but all durable consumer goods too, Italian, Japanese and German firms mostly replaced Slovene suppliers in this segment of Serb market which has quite a high payment purchasing power, while "EI" from Nis and "Sloboda" from Cacak are just barely surviving and expect to recover only after suspension of the sanctions. This was the cause of a major conflict between the Government and the Chamber of Commerce of Serbia on one, and the Governor of the National Bank of Yugoslavia, Dragoslav Avramovic on the other side. Namely, the Governor has initiated a decision of the Federal Yugoslav Government on alleviating customs and non-customs policy in his stabilization "Program II" which he expects will interrupt the accelerating inflation (120 per cent annulaly) and recommend him to the International Monetary Fund for a new arrangement.

    Avramovic's program limits customs duties, in general, to 30 per cent at the most, and it reduces the scope of quota imports from 26 to about 14 per cent of the total imports. Representatives of Serb producers of household appliances and cars, however, think that after the sanctions they should be given some "breathing space" and that it is not good for the state to expose them to world competition immediately. Nevertheless, despite all the mentioned circumstances, there are signs that the reputation of products made by Slovene "Gorenje", as well as their prices which the Yugoslavs observe in Austria and Hungary, have remained on a steady level. Especially in view of the fact that importers from Italy or Germany, for example, charge between 1000 or 1400 German marks for a washing machine. They are doing quite well, because there is a great shortage on the market. Returnees to the Yugoslav market will meet with some hardly explicable phenomena, such as, for instance, the fact that during the sanctions in Yugoslavia, the number of manufacturers of certain goods or middlemen in turnover has increased. For example, manufacturer of furniture from Vranje, "Simpo", has opened a detergent plant, and it has announced that it would start producing pharmaceutical products, too.

    Simply, since at the moment Serbia has a Government of directors who have never actually abandoned their managers' posts, each and every one of them, having the state to support them, has grabbed what he could for his firm. The Vice Prime Minister of Serbia, Dragan Tomic, has provided broadening of the program for his factory "Simpo" in the sphere of chemical industries. Slovene cosmetics, if it tries to return to the Yugoslav market, will meet with about a hundred new rivals. Changes are probably most profound in turnover. "Genex" is not the major firm in foreign trade in Serbia any more, but "Progres" because its Director Mirko Marjanovic is at the same time the Prime Minister of Serbia. "Progres" which used to trade in equipment and metallurgy products is now the major exporter of wheat and food, as well as gas from Russia. Retail trade is privatized in 90 per cent of cases and large trading companies are in a deep crisis (e.g. "Beograd" Department Stores).

    When speaking about the possibility of restoration of imports between Slovenia and Serbia, one cannot disregard that the preliminary talks about such deals have already begun. In the beginning of December, a delegation of "Zastava-Auto" from Ljubljana was seen in Kragujevac, which talked about purchasing of two thousand "Yugo" cars. Miodrag Milicevic, director of "Zastava", share-holding company, hinted at the possibility of establishing a mixed enterprise in Ljubljna. In November, at a celebration of "Jugobanka" in Belgrade, presence of a team of businessmen from "A Banka" from Slovenia was noticed, which had come to make enquiries about possible business deals. Contacts between Serb and Slovene directors have actually never been interrupted and mostly took place in Szeged, the city in Hungary where suppliers of one and the other economy had founded quasi-privately-owned firms.

    Turning towards the East is characteristic for the future foreign trade strategy of the FR of Yugoslavia, at this stage. The first two states with which comprehensive general contracts have been signed were Romania and Bulgaria, and an inter-state agreement with Russia signed while the sanctions still lasted was just activated. The main export trump card of the FR of Yugoslavia, cheap food, is almost entirely monopoly of the state and it is used for exchange with Eastern European countries. All these circumstances, however, do not mean that it will be impossible to earn any money on the market of the FRY "from here to eternity". Despite impressive traces of several-years long demonization of everything that is from Slovenia and that is Slovene, interests and habits have remained which speak in favour of certain goods and services, and the thesis that it is better to buy products of world famous firms than their derivatives from Slovenia, remains to be checked when the race of prices begins.

    Dimitrije Boarov (AIM)