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Date:         Mon, 16 Nov 1992 20:51:51 EST
Reply-To:     George S Kardaras <kardaras@ECN.PURDUE.EDU>
From:         George S Kardaras <kardaras@ECN.PURDUE.EDU>
Comments: To: hellas@brownvm.brown.edu

>From: clarinews@clarinet.com (NATELA SJEKLOCHA)
Subject: Serbian sanctions-busting: from banks to grandmothers
Date: Sun, 15 Nov 92 10:59:39 PST

        BELGRADE, Yugoslavia (UPI) -- The old peasant woman clad in black, a
scarf tied beneath her chin, ambled into the office of the Olympic-Trade
gasoline station and made her pitch.
        ``My son, I have some Greek Shell gasoline to sell at one German mark
a liter,'' she said in her thick countryside accent. ``I have 25,000
liters.''
        The proprietor, Oliver Soldatovic, 38, was not interested.
        ``The old lady was about the 20th person to offer me the same tanker
of gasoline that arrived in Belgrade this morning,'' he said after the
woman departed. ``And every time someone called me, the price went up a
few German pfennings.''
        The woman and Soldatovic play different roles in a massive
underground economy fueled by the U.N. economic sanctions imposed May 30
on Serbia and Montenegro for supporting the war in neighboring Bosnia-
Herzegovina.
        The truncated Yugoslav federation abounds in high-price, blockade-
busting contraband -- none more profitable or politically vital than
gasoline, diesel and other petroleum derivatives that have flooded in
despite oil and trade embargoes included under the sanctions.
        As a result, the sanctions have not accomplished their intended goal:
to force the regime of communist President Slobodan Milosevic of Serbia
to end his backing for a land-grab by Bosnian Serbs.
        The Serbian rebels are fighting to carve territority from the newly
independent Bosnia-Herzegovina for a self-declared state. Serbs are a
minority in the republic, mostly populated by Muslim Slavs and Croats.
        But the U.N. sanctions against Serbia have not forced Milosevic to
agree to compromise in the ongoing internationally brokered search for
peace.
        Instead, import taxes on the embargo-evading flood of fuel has been a
major source of badly needed hard currencies by a regime drained by last
year's Serb-Croat war in Croatia and the conflict in Bosnia-Herzegovina.
        The multi-million-dollar trade has also created a new class of
eriencing the rapid growth of a syndrome of ``the ever-greater
bonding of the state power with the economic underground and mafia.''
        The spread of the underground economy has been accompanied by a
massive surge in violent crime. Belgrade's murder rate has hit an all-
time high of at least two per day as gangsters armed with machine guns,
hand grenades and shoulder-fired rockets vie for control of the
lucrative blackmarket.
        ``The gangsters openly flout the law because they know the state is
either directly enmeshed or too feable to do anything to stop it,'' said
Dobrivoje Radovanovic, director of the Belgrade Institute for Crime
Research.
        Milosevic has seized on the situation in touting a major theme of his
re-election campaign for early polls called for Dec. 20, boasting that
Serbs should not fear oil shortages.
        ``Serbia will neither freeze nor go hungry,'' the Communist strongman
recently proclaimed on state-run television.
        Regime statistics show that traffic volume has increased by 40
percent in Belgrade this month, compared to an almost complete
standstill during September and October.
        In the past two months alone, 14 new private gasoline stations have
opened in Serbia, all of them in facilities leased by the state,
including Soldatovic's Olympic-Trade.
        ``The sanctions do not apply to me,'' he exclaimed. ``It is just a
question of supply and demand.''
        Soldatovic is selling a lot of gasoline, for a weekly profit of
roughly $80,000.
        ``I've never had it better. It's like being in America,'' Soldatovic
trumpeted as he watched cars pulling up to his fuel pumps to be serviced
by attendants wearing new black-and-yellow Shell Oil coveralls and
Reebok high-tops.
        ``Everything is possible. The law counts, but not for everyone in the
same way,'' he said, declining to elaborate.
        Soldatovic and others familiar with the fuel trade say the easiest
way to obtain it is through a sanctions loophole that allows cargoes
bound for other countries to transit Serbia and Montenegro.
        ``Trans-shipments are still legal and it is relatively easy to
falsify documents,'' explained a Western diplomat.
        ``For example: one firm from Greece can pretend it is shipping oil to
Hungary and then just drop it off in Serbia,'' said the diplomat, adding
the Hungarian company would never be informed of the transaction.
        ``I get gas from Greece,'' said Soldatovic. ``I have five or six
people working for me who 'find' supplies. The rest comes from offers
from people like the old lady that just walked out of my office.''
        Serbia's intricate blackmarket petroleum web is closely linked to two
of Belgrade's most prominent private banks, Dafiment Banka and
Jugoskanidic, both of which have opened private gasoline stations and
maintain ties to the regime.
        Their involvement in the gasoline trade is widely regarded by Western
diplomats and economic experts to be the main source of their hard
currency business, which is flourishing despite a provision of a U.N.
sanctions ban on financial transactions with Serbia and a freeze on rump
Yugoslavia's foreign assets.
        Dafiment Banka and Jugoskandic have been virtually giving money away
to citizens through unprecedented high interest rates, directly
contributing to the maintenance of social peace. Their interest rates
exceed 95 percent for the local dinar, while ranging between 10 percent
and 14 percent for hard currency accounts.
        While a handful of people are getting rich, most are suffering as the
republic's economic plunges to unprecedented depths.
        ``It is scandalous,'' said a taxi driver who asked not to be
identified. ``The private banks have virtually sucked up all hard
currency on the market and use it to buy gasoline and other foreign
products.''
        ``Then the banks turn around and give money back to the people in
dinars so they don't starve. The vicious circle continues when they buy
gas at the most expensive rate in the world,'' he complained.
        ``I've been reduced to selling washing-machine detergent to friends
and acquaintances so that I can buy food for my family,'' said Marija
Mrkvic, who works as a secretary in a trade firm for about $90 a month.
        ``Last week, for the first time in my life, I took my daughter's old
clothes to the flea market,'' she said. ``It was humiliating, but what
can I do when my paycheck can hardly cover utilities and daily bread and
milk?''
        One of those profitting from the economic anarchy is ``Wall Street,''
the nickname of one of the countless blackmarket currency dealers who
now line the sidewalks of central Belgrade's busiest streets.
        ``It's true, we make a lot of money in comparison to the average
citizen,'' said Wall Street, who declined to give his real name.
        ``A few weeks ago, the police took 5,000 German marks ($3,500) when
they arrested me,'' he said. ``God knows what happened to the money. It
probably went into their pockets, but I will make up for it.''
        ``It's the price you have to pay when you work for yourself and have
no protection from the ''big guys,`` he added. ''But this is democracy
Serbian style.``
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