Euobserver has an article ("Mass unemployment in the Balkans – a need to act") by Kori Udovicki and Gerald Knaus.
It compares how in former Yugoslavia the textile industry has shrunk while in neighboring Bulgaria it has exploded. The difference: Bulgaria has an - EU supported - industrial policy that promotes this kind of industry by encouraging foreign investment, providing targeted education, etc.. In contrast in former Yugoslavia the anti-communist aversion against any kind of industrial policy still dominates.
Ideology is nice, but it shouldn't cloud common sense. Copying best practices from other countries should be standard routine.
Showing posts with label serbia. Show all posts
Showing posts with label serbia. Show all posts
Tuesday, April 17, 2012
Wednesday, May 25, 2011
Sense and nonsense about reconciliation
Reconciliation is hot. Western NGOs have spent millions in former Yugoslavia to achieve it. Put some people from ethnic groups that used to right each other together in some course or project and you can get a lot of money because it is supposed to contribute to reconciliation. As the reasoning goes: these people didn't talk to each other and now they are talking again; this must the the first step towards reconciliation.
It doesn't work always. Many of those projects in Kosovo found their end in march 2004 when Serbs saw their "project-friends" in the mobs that attacked them. And one has to wonder whether it works better in other situations.
A related concept is that of justice. Many millions have been spent on the ICTY and other courts to condemn the war criminals. But the effect has been limited. On the one hand it is good to see that some consensus arises on the facts and that for example you don't hear anymore that people deny that mass killings happened in Srebrenica. But when you hear the comments from the different parties it looks like the courtroom has become the newest battlefield. Everyone wants crimes by the other side exposed and preferably provided with labels like "genocide". And with good reason: the conflict is going on. Serbia and Croatia are still involved in a genocide case at the ICJ and in Bosnia the statuses of the Republika Srpska and the Croat majority region are ongoing sources of conflict.
South Africa is often seen as an example how to solve conflicts. But the South Africans did it very different compared to former Yugoslavia. First they found a political solution that had wide support on all sides. Many in the West think that only apartheid was abolished but the whites negotiated a deal that gave the country a very capitalistic constitution that protects them from large scale expropriations.
Only when there was a solution in which every part felt safe did the South Africans proceed to the next step: the "truth and reconciliation commission". Because of this timing justice was no longer loaded with political consequences. A second step they made was to pardon most of the crimes. In the heat of a conflict people do things that they normally wouldn't do and this was an implicit recognition of that fact. Also, because the primary aim of the commission was not to get these people convicted there was much more attention to what they thought at that time and how they came to their acts. This is a climate that produces real reconciliation.
In contrast the Western approach to Yugoslavia has been counterproductive. There has been no commitment to solutions that are seen by all sides as fair. On the contrary: a formalistic approach was chosen - encouraged by the Badinter Commission - that gave Yugoslavia's republics independence without negotiations and discarded widely shared concerns amongst certain groups as "nationalistic". And while the West has been very helpful to help those "warlike" people of the Balkans to find reconciliation it has been very unwilling to investigate its own role.
It doesn't work always. Many of those projects in Kosovo found their end in march 2004 when Serbs saw their "project-friends" in the mobs that attacked them. And one has to wonder whether it works better in other situations.
A related concept is that of justice. Many millions have been spent on the ICTY and other courts to condemn the war criminals. But the effect has been limited. On the one hand it is good to see that some consensus arises on the facts and that for example you don't hear anymore that people deny that mass killings happened in Srebrenica. But when you hear the comments from the different parties it looks like the courtroom has become the newest battlefield. Everyone wants crimes by the other side exposed and preferably provided with labels like "genocide". And with good reason: the conflict is going on. Serbia and Croatia are still involved in a genocide case at the ICJ and in Bosnia the statuses of the Republika Srpska and the Croat majority region are ongoing sources of conflict.
South Africa is often seen as an example how to solve conflicts. But the South Africans did it very different compared to former Yugoslavia. First they found a political solution that had wide support on all sides. Many in the West think that only apartheid was abolished but the whites negotiated a deal that gave the country a very capitalistic constitution that protects them from large scale expropriations.
Only when there was a solution in which every part felt safe did the South Africans proceed to the next step: the "truth and reconciliation commission". Because of this timing justice was no longer loaded with political consequences. A second step they made was to pardon most of the crimes. In the heat of a conflict people do things that they normally wouldn't do and this was an implicit recognition of that fact. Also, because the primary aim of the commission was not to get these people convicted there was much more attention to what they thought at that time and how they came to their acts. This is a climate that produces real reconciliation.
In contrast the Western approach to Yugoslavia has been counterproductive. There has been no commitment to solutions that are seen by all sides as fair. On the contrary: a formalistic approach was chosen - encouraged by the Badinter Commission - that gave Yugoslavia's republics independence without negotiations and discarded widely shared concerns amongst certain groups as "nationalistic". And while the West has been very helpful to help those "warlike" people of the Balkans to find reconciliation it has been very unwilling to investigate its own role.
Monday, January 12, 2009
Serbian dinar is falling fast
Due to the Ukrainian gas crisis and the ongoing economic crisis the dinar is falling fast - despite the central bank spending $40 mln in one day to support it.
I have already repeated pled for a more sensible currency policy. The dinar is going to fall much more as Serbia's current account, trade and government deficits are simply not sustainable in the present economic climate. The Serbian central bank can react in two ways:
- it can fight the decline because it doesn't like the effect that the Serb companies that have lent in foreign currencies will have to pay back more and may get in financial trouble. This strategy amounts to subsidizing currency speculators. In the end the currency will still end low, but Serbia will be out of money.
- it can also let the fall happen and spend the money that it saves on supporting the companies that get in trouble because of it.
Until now Serbia chooses the first option. Rather foolish in my opinion.
I have already repeated pled for a more sensible currency policy. The dinar is going to fall much more as Serbia's current account, trade and government deficits are simply not sustainable in the present economic climate. The Serbian central bank can react in two ways:
- it can fight the decline because it doesn't like the effect that the Serb companies that have lent in foreign currencies will have to pay back more and may get in financial trouble. This strategy amounts to subsidizing currency speculators. In the end the currency will still end low, but Serbia will be out of money.
- it can also let the fall happen and spend the money that it saves on supporting the companies that get in trouble because of it.
Until now Serbia chooses the first option. Rather foolish in my opinion.
Monday, October 20, 2008
The economic crisis in developing economies
The financial crisis is not restricted to the US and the EU. Developing economies suffer even more as they are often dependent on foreign finance. The NY Times notes that the Ukraine has asked the IMF for 14 billion US$ while Hungary just got 5 billion euro from the European central bank.
The Balkan will not be spared either. Business Week this week published a list of 10 countries in the danger zone. Among them are Serbia and Romania.
Reuters has some economic facts about the Serbian economy. The current account deficit is 18 percent (IMF advice: les than 10%). Foreign investment is artificially keeping the exchange rate high so that there is much more import than export. But of course this is borrowed money that one must be paid back. The Ukraine is already suffering from the hangover of foreign-investment led growth. Serbia may well follow if it doesn't take measures to decrease its trade deficit.
The Balkan will not be spared either. Business Week this week published a list of 10 countries in the danger zone. Among them are Serbia and Romania.
Reuters has some economic facts about the Serbian economy. The current account deficit is 18 percent (IMF advice: les than 10%). Foreign investment is artificially keeping the exchange rate high so that there is much more import than export. But of course this is borrowed money that one must be paid back. The Ukraine is already suffering from the hangover of foreign-investment led growth. Serbia may well follow if it doesn't take measures to decrease its trade deficit.
Wednesday, September 24, 2008
Serbia's economy in trouble
It looks like Serbia's economy is in for some trouble. With imports of 18 bln US$ and exports of only 9 bln it is things look a bit out of balance - even if you take into account that Serbia is fastly developping. Half of the hole is plugged with foreign investment, aid and transfers of emigrant, but the other half is not covered and might on the long term result in the same kind of meltdown that happened in Argentina in 1999.
The IMF has asked Serbia to "adopt a restrictive 2009 budget to prevent the widening of its current account gap". But the cutting the government budget in order to correct the balance of payments is a very indirect method that only the Friedman-style neo-liberals advocate. Unfortunately they still dominate the IMF. They hate every kind of government involvement in the economy. On the other hand they don't care if an economy crashes (like Argentina did in 1999) because it gives them the tools to pressure for more privatisations.
A more sensible approach in such circumstances is lower the exchange rate. Velimir Ilic is advocating this and I think he is totally right to say that Serbia needs a more export driven economic growth model. Unfortunately he packs his ideas in some anti-EU rethorics what may cause some people to overlook them.
The IMF has asked Serbia to "adopt a restrictive 2009 budget to prevent the widening of its current account gap". But the cutting the government budget in order to correct the balance of payments is a very indirect method that only the Friedman-style neo-liberals advocate. Unfortunately they still dominate the IMF. They hate every kind of government involvement in the economy. On the other hand they don't care if an economy crashes (like Argentina did in 1999) because it gives them the tools to pressure for more privatisations.
A more sensible approach in such circumstances is lower the exchange rate. Velimir Ilic is advocating this and I think he is totally right to say that Serbia needs a more export driven economic growth model. Unfortunately he packs his ideas in some anti-EU rethorics what may cause some people to overlook them.
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