Serbia's Self-imposed Sanctions

When Valjevo businessman Mihailo Todorovic dispatched a lorry earlier this month filled with frozen pastry to a trusted customer in Macedonia, he thought he was doing his bit to help the Serbian economy back on its feet. Instead, when police arrived at his door, he learned that he was breaking the law.

In a move to squeeze its unruly neighbouring republic, Serbia has banned food exports to Montenegro, as well as Macedonia and Repbulika Srpska. As a result, goods in transit are being returned to their manufacturer.

The new policy, stemming from a February 2 order by the Ministry of Agriculture, has reminded local observers of Serbia's trade war with Slovenia a decade ago. Belgrade used a trade embargo to exert pressure on Ljubljana, but only ended up driving Yugoslavia's wealthiest republic out of the federation.

Many analysts are predicting that the current strategy will prove equally counter-productive.

Mladjan Dinkic, member of the G17 group of independent economists, estimates that the export ban will cost the Serbian economy about $40 million a month and says that the decision "tops the madness and economic ignorance of the decision makers."

Todorovic's company is only one of many hit by the export ban, leaving Serbia's borders clogged with lorries full of goods which can no longer be sold abroad.

The Belgrade company Univerzal, for example, had sent 600 tonnes of corn to Macedonia. But the delivery has been stopped at the Tabanovci crossing point and the delay is costing the exporter 120,000 dinars ($2,250) a day.

Despite last year's war, Serbia has been able to produce more than enough food to feed its own population and thus has a surplus which could be exported. Apart from Macedonia, Republika Srpska and Montenegro, however, the country has minimal access to other markets.

The aim of the ban appears to be to try undermine the anti-Belgrade government of Montenegrin President Milo Djukanovic by forcing Montenegro to buy more expensive food products on the international market. Republika Srpska and Macedonia are included in the ban, lest Serbian food exports are simply rerouted through them to the Yugoslav federation's smaller partner.

Yet instead of unrest in Montenegro, the moves have actually stirred opposition in Serbia.

Serbia's largest meat-processing companies, Neoplanta from Novi Sad and Karneks from Vrbas, have both publicly expressed their hostility to the export ban which is costing them dearly. Last year, despite the war, Karnex earned $1 million from the export of liver pate to Macedonia alone.

The Yugoslav Chamber of Commerce asked the Serbian government to remove all barriers which prevent the export of goods to foreign markets. The chamber's foreign trade committee president, Vasilije Ilic, complained that "businessmen suffer great losses because of the ban, but are unable to change anything."

Criticism of the export ban has also come from Vojislav Simanovic, a leading official in the Yugoslav United Left (JUL), the political party of Mirjana Markovic, Slobodon Milosevic's wife. In his capacity as director of Serbia's largest food-processing conglomerate, PKB, he has pleaded with the Serbian government to be left to pursue commercial interests without political interference.

In response, the Serbian government has allocated $10 million to cover the losses of manufacturers which have been obliged to stop trading with Montenegro.

The issue of exports and imports should, most observers believe, be the jurisdiction of the Yugoslav federal government, which includes Montenegrin representatives, and not that of Serbia. Moreover, the ban on food exports to Macedonia breaks the terms of a free-trade agreement between rump Yugoslavia and Macedonia which outlawed unilateral trade bans.

Last year Yugoslavia was Macedonia's second-largest trading partner behind Germany, with some $350 million worth of goods exchanged between the two. Although shipments of goods from Macedonia to Yugoslavia, intended for Montenegro, have been held up for weeks, Serbian envoys assured their Macedonian counterparts in trade talks in Skopje at the beginning of March that no ban was in place and that misunderstandings would be cleared up.

Montenegrin newspapers have published a copy of the February 2 export ban order signed by Agriculture Minister Jovan Babovic who described the document as a forgery.

As a minor figure in the Serbian government, Babovic is probably not the driving force behind the ban. But he could serve as a scapegoat if the policy proves counter-productive.

Meanwhile, the trade war between Belgrade and Podgorica continues to escalate as Montenegrin lorries filled with goods for Serbia are being turned back at the border. Even a lorry containing medicines in short supply in Serbia was ordered back to Podgorica.

The Yugoslav Army has also begun to block Montenegrin exports to third countries.

At the border crossing of Bozaj at the Montenegrin-Albanian border, troops recently turned back a lorry from Bijelo Polje filled with paper destined for Albania. A soldier told the driver he needed permission from the Yugoslav Army's Podgorica Corps to export to Albania.

Milenko Vasovic is a regular IWPR contributor from Belgrade.