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  •   Decades, Billions Needed to Restore Yugoslavia

    Jacques Chirac,  Lionel Jospin, Hubert Vedrine
    French President Jacques Chirac (C), flanked by Prime Minister Lionel Jospin (L) and Foreign Affairs Minister Hubert Vedrine, answers questions during a press conference in Cologne after the EU summit ended Friday. (Reuters)
    By Daniel Williams
    Washington Post Foreign Service
    Saturday, June 5, 1999; Page A1

    BELGRADE, June 4—As Serbia absorbed the possibilities of peace today, Mihailo Arsenijevic was picking up the pieces of his life. Workers in blue overalls carefully piled old red roof tiles atop one another and scraped brittle mortar off bricks, as they salvaged what remained of Arsenijevic's little house after it was badly damaged by a NATO bomb.

    This particular scene of dogged reconstruction took place in a modest Belgrade neighborhood. But similar pictures of agonized rebuilding are visible across the city, and indeed the country.

    After 2 1/2 months of war, Yugoslavia is a shattered nation. It is isolated internationally and divided internally. Its president has been indicted for war crimes. Much of its army is in tatters, and hundreds of its factories, buildings, bridges, houses, roads and railway lines are in ruins.

    Flanked on its northern and eastern borders by fellow former communist countries such as Hungary, Romania and Bulgaria that today have dreams of becoming a part of Europe's economic integration, Yugoslavia is heading in the opposite direction.

    Before the war began, but after 7 1/2 years of international economic sanctions, the G-17 economic research organization here estimated that it would take 29 years for Yugoslavia to reach the level of economic prosperity it had in 1989. Today, the think tank says, it will take 45 years -- without a significant infusion of international aid.

    The price tag for repairing the country after more than 10 weeks of NATO's bombardment is estimated to be anywhere between $50 billion and $150 billion.

    Leaders of West European countries, who will likely end up paying most of the bill for rebuilding Yugoslavia, say that Serbia, its dominant republic, will get no reconstruction aid unless President Slobodan Milosevic steps down or is ousted. Humanitarian aid has not been ruled out. Kosovo, Serbia's southern province that has been at the center of the conflict, and Montenegro, Serbia's West-leaning sister republic, are eligible for assistance.

    Yugoslavia has been laboring under the burden of sanctions most of this decade, and it is far from certain that even the combined pressure of sanctions and massive war damage will lead to political change. Potentially, Serbs stand to suffer the effects of the disastrous conflict long after the establishment of peace.

    Arsenijevic, for one, faces disillusionment. "We registered our damage claim with the government," he said. "They told us that we will be paid when NATO pays."

    And if the money doesn't come because of politics?

    "Well, my children need a place to live," he said.

    The Serbian landscape presents a vivid picture of the country's bleak future. Broken bridges in Novi Sad. The charred oil refinery, fertilizer plant and petrochemical complex in Pancevo. The smashed machinery factory in Kraljevo. The ruined auto plant in Kragujevac. The burned out and crushed office and government buildings in Belgrade. The capital's toppled main television antennas on Mount Avala, once celebrated on postcards. (New postcards show before-and-after scenes, noting that "the hill of Avala is hardly recognizable without the silhouette that we were used to.")

    The main north-south highway is ruptured by downed overpasses. Broken trestles interrupt railroad lines. Fuel depots are blasted, electrical transformers damaged, central urban heating plants destroyed, water facilities out of commission.

    According to NATO's estimates, 57 percent of the country's petroleum reserves have been damaged or destroyed.

    NATO mishaps -- the airstrikes' "collateral damage," words which Serbians spit out with venom -- took a toll on at least two hospitals, not to mention houses in Belgrade, Surdulica, Nis, Cacak and other towns. The Serbs claim 1,500 civilians were killed during NATO bomb and missile attacks.

    Then there is the military damage: air fields, barracks, army factories, the Defense Ministry in Belgrade. NATO estimates that 100 aircraft, 314 artillery pieces and 203 tanks were damaged or destroyed, along with 14 military command posts. Some 5,000 Serbian troops were killed and 10,000 wounded, according to NATO estimates.

    Serbs already are preparing for hard times. Sales of generators and small coal-burning stoves have skyrocketed in recent weeks in anticipation of a winter that is months away. Tens of thousands of urban Serbs have settled in the homes of country cousins, where fresh food is readily available and heat can be supplied by fireplaces.

    "For us, winter is the problem," said Djordje Nicovic, a banker. "I expect a migration out of the cities if things don't improve."

    With the end of bombing, enough repairs to the electrical system probably would be made to restore a steady supply of power. Crews have been able to install bypasses and fix generating stations with remarkable speed following NATO attacks.

    Physical damage is not the only fallout from the war. An already depressed economy plunged further. Some economists expect this year's gross national product to decline by 30 percent. Consumer spending ran at about $5 a day before the conflict and fell to $2 a day during it. Many workers have been drawing salaries from inefficient, underachieving state factories. It is not clear that the government has enough money to pay them and rebuild, too.

    Serbia has stayed afloat for years -- and now will depend even more -- on cash remittances from Serbian workers abroad. Before the war, the country ran a trade deficit of about $1 billion annually, according to official figures. But in reality, remittances covered that deficit.

    Serbian business people remain confident in their ability to make do. Even before the war, they were operating in an uncertain world. Under sanctions, Serbian merchants had to make complex arrangements to pay for imports and circumvent foreign prohibitions on dealings with Serbia. They also had to deal with corrupt tax inspectors and customs officials.

    The car repair shop owner, who allowed himself to be identified only by the initial G., said that if Serbia gets any help from the outside, the economy could recover quickly. "We know how to suffer, we know how to survive," he said. "Lots of things could rebound in six months."

    Sanctions have been an education in making-do, he said. His shop depends on imports for parts, so he works with a network of smugglers in Macedonia and Hungary to overcome trade restrictions. Serbia's banking system provides no credit for small businessmen, so he must work in cash, sometimes using couriers to complete transactions. "You can imagine how things could go if times were normal," he said. "But we'll have to wait."

    The country also needs internal reforms, he said. He complained about the difficulties even of getting an extra phone line, of the endless inspections by voracious tax inspectors, of the bottomless requirements for permits. "You can only work through connections. We all work like that," he said.

    "It will not be enough just to fix the physical damages. We need a legal system, we need stability, we need normality."

    A change of government wouldn't hurt, he added. "I'm a businessman. Am I going to go out in the street and try to change things on my own? It could mean 15 years in jail. Maybe, if there is someone to lead, but on my own, I just want to take care of my business, make some money, go home and spend it on my family."

    © Copyright 1999 The Washington Post Company

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