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. Last Updated: 07/27/2016

Economists Urge West Not to Shut Out Serbia

BELGRADE, Yugoslavia -- Independent economists painted a grim picture of Yugoslavia's postwar economy Wednesday and urged Western countries not to isolate Belgrade from a Balkan reconstruction program if they wanted stability in the region.

"The strategic international interest must be to definitely stabilize this shaky region which has sustained various blows and to enable its efficient, permanent and sustainable economic growth," the Group 17 of independent economists said in a paper, "The Final Account."

Western countries, led by the United States and Britain, have insisted that no reconstruction aid would reach Serbia with Yugoslav President Slobodan Milosevic in power.

"Unless all of Yugoslavia is included, the program of economic reconstruction and revitalization of southeastern Europe will not accomplish some of its fundamental requirements," the economists added.

Group 17 comprises professional economists, some of whom work with the World Bank and the International Monetary Fund. It has been urging sweeping economic and political reforms for Serbia and its sister republic in Yugoslavia, Montenegro, for more than two years.

The latest study had input from various experts to produce a reliable estimate of total economic damage caused by 11 weeks of NATO bombing and a forecast of the country's future needs.

"The West must offer Serbs carrots instead of ultimatums. It's time they realized that. The Europeans are much more inclined to accept such an approach, but the United States has a totally wrong policy," Mladjan Dinkic, chief coordinator for Group 17, told a news conference.

The economists said Yugoslavia badly needs help.

With its infrastructure and industry demolished, and per-capita income falling 40.7 percent in 1999 to $975, Yugoslavia cannot maintain even its present low level of health, social security and education, the group said.

Group 17 projected Yugoslavia's gross domestic product would fall 40.7 percent in 1999, and industry output would drop 44.4 percent. Exports and imports were also seen plunging.

The bombing forced some 250,000 people out of work and domestic economic mismanagement would render another 500,000 jobless. Unemployment was seen hitting 33 percent this year compared with 25 percent in 1998.

After the NATO bombing, Yugoslavia's industry stood at barely 20 percent of its 1989 level. Total damage suffered from airstrikes was estimated at $29.6 billion, on top of $29 billion needed for development over the next five years.

In addition, its external debt bill has hit $13 billion, sending the foreign debt-to-GDP ratio to 126 percent.

Dinkic said the West had at least three reasons not to keep Serbia isolated anymore - uncontrolled inflow of economic immigrants from Serbia, damage generated from its idle infrastructure and the loss of an export market in the region.

Yugoslavia needs to seriously reform its economy and institutions, including the legal system and public finances, liberalize foreign trade and privatize its companies.

And it has to strive to join the European Union by 2010, Dinkic said.