Comment: Serbia's Prophets of Doom

Since the fall of Slobodan Milosevic, business has been bad for the Balkan gloom merchants, that is to say those analysts and journalists who thrive on bad news - and especially if Serbia is the focus of the their attention. However, over the last couple of months, it seems as if there has been new demand for their skills.

Anyone who follows developments in Serbia closely will have noticed that recently there have been a plethora of reports and predictions concerning the prevalence of organised crime, unsolved murders, unemployment, poverty and the continuing lack of proper civilian control of the military and intelligence services.

On top of this there is the ongoing problem of General Mladic, relations with The Hague tribunal - and now the United States is threatening to suspend aid over the issue.

And then, of course, there is the Serb Punch and Judy show - the continuing bitter conflict between Zoran Djindjic, the Serbian premier, and Vojislav Kostunica, the Yugoslav president - the failure of the presidential elections and the impression given that Serbia's politicians are more interested in fighting one another than working for their country.

But is this picture an entirely fair one? Probably many Serbs would argue that it is. After all, a recent Politika poll found that more than half of those asked said that their standard of living was worse or no better than a year ago.

Still, there is another problem, which we must take into consideration. That is that, as the Balkan gloom merchants know all too well, good news is often, well, boring and certainly doesn't make for sexy headlines.

If Yugoslavia and Croatia had traded missiles over Prevlaka - well that would have been a story - but they didn't. They signed an agreement. The fighting in south Serbia two years ago, now that was news - but the fact that Greece is proposing to finance the upgrading of the main highway south of Nis to the Macedonian border, well…big deal.

Two years ago, foreign analysts and consultants galore could be heard chorusing about the need for Serbia and indeed, all of the countries of south-eastern Europe, not only to focus their attention on the European Union but also to start working together on regional integration. And guess what? They are.

But when Yugoslavia signs a free trade agreement with Croatia, part of a widening network of similar such agreements, it is barely reported, because its affect on people's lives is something intangible, and not for today anyway.

In the same way, the fact that the Bulgarian, Macedonian and Yugoslav foreign ministers recently posed for a picture at the place where their three frontiers meet as experts began to physically demarcate the borders is not really news, because it is what they should be doing anyway. And that doesn't affect people's lives - or does it? Of course it does - if it was not for frontiers why did hundreds of thousands die in the former Yugoslavia during the Nineties?

Of course, you could say that today the real issue was the economy…stupid! But ask experts and even they will tell you that the picture is not quite as grim as it is often painted. For example, unemployment in Yugoslavia is often cited as being around 30 per cent. But a new study financed by the World Bank found that the true figure, if one factors in the grey economy, is closer to 15 per cent.

The experience of other countries in transition has been three or four years of decline before an upturn. So far this has not happened in Yugoslavia, although of course the country has been propped up by one billion US dollars of aid a year. Still, according to Rory O'Sullivan, the head of the World Bank mission to Yugoslavia, "compared to Hungary, the Czech Republic and Slovakia what has happened here has been far superior and twice the speed".

Two years ago GDP growth for Yugoslavia was projected at five per cent a year. It is on target, hitting six per cent in 2001 and four per cent last year. Also in 2002, for the first time anyone could remember, the federal government ended with a budget surplus of 100 million dollars and this was thanks to the fact that customs revenues more than doubled from 220 to a whopping 500 million dollars.

And, despite Serbia's crippling political infighting, a lot of economic reform legislation has been passed, and, the new state of Serbia & Montenegro looks as though it will finally be born sometime soon.

So, the gloom merchants were wrong and everything is all right then? Well that, of course, would be too simple. Veteran Balkans analyst Misha Glenny notes for example that, despite its often unreported advances over the last two years, Serbia's political instability now threatens to derail the country's advance towards Europe. "Patience is being lost in Brussels," he said.

According to Glenny, Serbia's politicians - or at least some of the more powerful among them - have not understood just how much damage the conflict between Djindjic and Kostunica is now beginning to have on the country's future. "What EU people were hoping was that by now Serbia would be a serious contender for pre-accession talks," he said.

Instead, Croatia is moving far ahead in this field, which is considered bad for regional equilibrium. Nobody wants Serbia to slip back into the black hole where it languished before the fall of Slobodan Milosevic.

One IWPR source in Brussels echoes Glenny's fears, but notes that he believes that one current fear in Serbia - that the issue of Kosovo's final status needing to be broached sooner rather than later, because otherwise it will stand in the way of the pre-accession talks mentioned by Glenny - is unfounded.

Rory O'Sullivan of the World Bank echoes Glenny. He says that the risk is that Serbia may not be able to reap the benefits of the past two years unless the infighting comes to an end. Reform is one stage of transition but investment, both from abroad and from at home, is the next.

O'Sullivan says that the politicians "need to get their act together" because "otherwise people will switch off and turn away because they are scared of the uncertainty".

Let's hope that this is a message that gets across. Otherwise, the gloom merchants will not only have been proved right, they'll crow, "We told you so."

Tim Judah is the author of The Serbs: History, Myth and the Destruction of Yugoslavia, and Kosovo: War and Revenge.