Blood and soil

Blood and soil

Mikhail Katkov

More than twenty years ago, NATO bombings virtually destroyed the economy of Yugoslavia. The operation lasted 78 days and claimed thousands of lives. Today, Serbia is called the “Balkan dragon” – because of the pace of development. Having stabilized the dinar, the authorities have focused on investment as the basis for growth. Due to what this country has become the fastest growing economy in Europe – understood RIA Novosti.
Blood and soil
The heyday of Yugoslavia fell on the years of the reign of Josip Broz Tito. There, as in the USSR, they built socialism in a single country, however, adhering to their own principles of development. Tito died in 1980, and sectarian and ethnic conflicts broke out in the next decade. The subjects of the federation demanded economic independence, and then political slogans followed suit. Since the end of 1990, Slovenia, Maced-onia, Bosnia and Herzeg-ovina, and Croatia have de-clared independence. The population there is mixed, and inter-ethnic clashes escalated into civil wars.
By 1998, 100,000 people had died in Croatia, Bosnia and Herzegovina, and hundreds of thousands more had become refugees. And then the Albanian Kosovo Liberation Army declared war on the Serbs and those Albanians who defended them. The militants blocked Serbian villages, blocked roads, took people hostage. The army of Yugoslavia (then only Serbia and Montenegro remained in the federation) responded harshly, and by autumn the number of victims among civilians in Kosovo and Metohija exceeded one thousand.
Negotiations in France in February 1999 were unsuccessful, but the Yugoslav army drove the Albanian fighters into the forests and mountains. Then the NATO countries put forward an ultimatum to Belgrade: either the alliance will send troops to Kosovo, or start bombing. And so they did – in 78 days, from 25 to 79 thousand tons of explosives were dropped on Yugosl-avia. Used cluster bombs, unenriched uranium.
Two thousand civilians were killed, about seven thousand more were injured, every third victim is a child. The material damage from the bombings was estimated at about $30 billion. Explosions destr-oyed or damaged 89 factories and plants, 120 energy facilities, 14 airfields, 48 hospitals and hospitals, 82 bridges, 70 schools, 18 kindergartens, nine university buildings, 35 churches and 29 monasteries.
The peacekeeping contingent of the UN and NATO failed to stop the et-hnic cleansing in the region – the Serbs were almost completely expelled from Kosovo.
Yugoslavia, transformed into the Union of Serbia and Montenegro, lasted until 2006 and broke up following a referendum into two new countries. And Kosovo has never received full recognition as a sovereign state by the international community.
Opened doors to foreigners
However, the severe crisis helped to make a powerful leap forward. In 2021, the country’s economy outpaced the whole of Europe in terms of growth – GDP increased by 7.5%. The republic also updated the historical record for gold reserves – 37.3 tons.
But Serbia has come a long and extremely difficult path. If in 1990 the GDP was at the level of the Czech Republic (about 40 billion dollars), then in 2000 the country slid to the indicators of Cameroon (ten billion). True, it still turned out to be richer than its neighbors – Macedonia (GDP – $ 3.8 billion), Bosnia and Herzegovina (5.6 billion). But Bulgaria, Croatia, Romania and Hungary left the Serbs far behind.
Over the next twenty years, the market value of goods and services in Serbia increased by 5.4 times – up to 53.3 billion dollars: the republic reached the level of Croatia. In Macedonia in 2020, the figure was about 12.3 billion dollars, in Bosnia and Herzegovina – 19.8. It was not possible to catch up with Romania and Hungary: their GDP in 2020 is 248.7 and 155.8 billion dollars, respectively.
Today in Serbia, about half of the working population is employed in the service sector. Another 20 percent is in agriculture. One in five is involved in industry and the mining industry. However, the enterprises inherited from Yugoslavia are long outdated. To solve the problem, Belgrade launched a massive privatization program and began to attract investment from all over the world.
The first stage was launched back in 1990 in order to “return to the people what the socialist rulers had taken from them.” However, the full process of privatization did not begin until ten years later. By 2002, about 40% of the Serbian economy was in private hands, by 2006 – 67%. In 2014, it seemed to the authorities that the sale of property was going too slowly, so they modernized the legislation, and now the state’s share in the Serbian economy is only 20%.
It is easy for foreigners to do business in Serbia. Firstly, people here are educated, and salaries are low – an average of 400 euros. (The standard of living is still fairly average. Serbs spend a third of their income on food, about 14% on utilities, according to official figures.) Secondly, the republic has cooperation agreements with 54 countries of Europe and the world to avoid double taxation. Thirdly, Belgrade has agreed on duty-free trade with the European Union, the United States, Russia and other countries.
Most often, investors invest in industry – the production of textiles, cars and electrical appliances. In 2021, Serbia ranked sixth among European countries and fifteenth in the world in terms of the number of jobs created thanks to foreign direct investment. To conduct business, it is enough for a foreigner to establish a branch of his company in the country. The entire process of registration takes no more than two weeks.
Serbian jerk
Privatization in Serbia has nothing to do with what happened in Russia in the nineties. “It was carried out without loans-for-shares auctions and vouchers. The process was based on the traditionally developed small and medium-sized businesses in the country. Moreover, private ownership of the means of production was not abolished even during the period of building socialism. Therefore, the Serbs avoided the problems that Russia faced,” says the founder of the project Balkanist.ru Oleg Bondarenko.
The investment attractiveness of the republic can be explained by the fact that its economic growth began relatively late. “By the beginning of the 2010s, the authorities stabilized the political and economic situation. Gazprom bought the oil industry, becoming a kind of pioneer. The Serbian national air carrier AirSerbia acquired EtihadAirways from the UAE for a billion dollars. The Chinese got two metallurgical plants Zelezara Smederevo and RTB Bor,” lists Bondarenko.
Separately, he notes agricultural products: “For example, their dairy products are simply of excellent quality, in Danon stores they cannot compete with local goods.”
Serbian economist Dušan Prorokovic, looking back at the late 1990s and early 2000s, says his country faced an incredible array of challenges, from NATO bombings to curbing economic relations with Europe. “The situation partly returned to normal by 2006-2007, but we still have not coped with the consequences of the crisis, although we are moving towards it. The republic opened its economy to the world and carried out privatization. As a result, businessmen from Russia, China, and Europe came.”
Serbia’s progress is perceived as an economic miracle in many respects because neighboring countries either do not make any efforts to get out of the crisis, or are not active enough. Against this background, the effect of privatization and attraction of foreign capital seems incredible. “China provided us with a gap,” says Prorokovich. “I bought two factories, but I was in no hurry to enter other Balkan states.”
At the same time, the West does not benefit from the transformation of Serbia into a “first world” country – they want to leave the republic on the periphery. One of the reasons, the economist considers the need of Europeans for cheap labor.
“Western countries do not supply us with modern technologies with which we can produce competitive products. They impose expensive infrastructure projects on us so that Serbia builds up public debt. As a result, the Serbs sell their vegetables and fruits, and then buy expensive phones, computers and TVs abro-ad,” Prorokovich explains.
MP from the ruling Serbian Progressive Party Milos Banjour also notes that over the past 20 years the socio-economic situation in the country has changed a lot: “At the beginning of the 2000s, only bandits could afford to buy an apartment, but now this is no longer a problem. thanks to the help of children, now the elderly have enough payments.
However, Banjour draws attention: the neighbors do not like the pace of development of the republic. Croatia, Bosnia and Herzegovina are worried that Serbia is getting richer, which means that its potential in the field of protecting the population is growing. As for the EU leaders, they see the Serbs as potential traitors and agents of Russia.

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