BELGRADE (29 page)

When Tito died in 1980 and his funeral cortège made its solemn way down Knez Miloš Street, Yugoslavia appeared to be the most successful state in Eastern Europe. The country had defied Stalin in 1948, forged good relations with the West, patched up its differences with the Soviet Union and established itself as one of the leading countries in the Non-aligned Movement—an international grouping committed neither to the Warsaw Pact nor NATO. Yugoslav passports were welcomed in more countries than most others without the need for visas. Large numbers of tourists sunned themselves on the coast, arriving by car from Germany and Austria or by cheap charter flights from Britain. Yugoslavia was held in high esteem for its liberal domestic policies by western governments and by dissidents in Eastern Europe. It offered a third way, not based on the market demands of capitalism nor run according to a centrally planned state system. Neither in the West nor the East, it had an identity of its own. Its citizens had enough disposable income to take holidays or go shopping abroad, while the old quarrels between the different nationalities were forgotten by a generation of younger people. Yet a decade later the country was in a state of civil war, and Belgrade was ostracized by its former friends.

There was real fear in international circles that Yugoslavia might become a trouble spot after Tito’s death if the Soviet Union tried to assert its influence in the region. This, in fact, did not happen. Rather, the country became embroiled in its own problems of an economic and political nature. The Yugoslav economy began to falter in the early 1980s, with some everyday items in short supply and restrictions on energy consumption. Inflation and unemployment both began to rise, while those entering the job market after 1980 found a dormant economy with few new opportunities. At the same time, foreign banks and governments began to call in the debts that Yugoslavia under Tito had borrowed. The republics began to pull in different directions, each trying to maximize its share of reduced resources. This situation was not unexpected as each unit had its own strengths and weaknesses, the federation having been held together in a spirit of compromise and by a willingness to negotiate between the more and less advanced regions. Tito was effective in bringing the country together by a combination of charisma, personal prestige and the power he represented at the federal level in the government, the League of Communists and the armed forces. After his death no single person held all the important positions he had enjoyed. Instead, the federal system operated according to the principle of consensus and all parties had to agree before policies could be enacted.

Knez Miloš’s
Konak

The republics increasingly asserted their independence from the central organs, however. Competition in the deepening economic crisis became worse, and the republics’ leaders blamed their neighbours for lack of progress. So began a cycle of recriminations, which eventually turned into more overt nationalist rhetoric, causing further anger and frustration in each constituent part of the country. Communities looked inward to themselves for salvation and anyone who was different became a potential enemy.

The federal institutions, the symbols of a united Yugoslavia, were disintegrating by the end of the decade. The League of Communists met in January 1990 to try to resolve some of the issues but broke up without agreement when the Slovene delegation walked out of the meeting. The federal government was powerless to prevent the referenda held in Slovenia, Croatia, Bosnia and Macedonia to secede from Yugoslavia. This move frightened national minorities in those areas, influenced by the recent waves of negative nationalist rhetoric. This fear was particularly evident among the Serbian communities in Croatia and Bosnia, which led to the beginning of conflicts in the former in 1991, and the latter in 1992. The Yugoslav army no longer existed, and the civil wars that broke out were unmistakable evidence that Tito’s Yugoslavia had come to an end.

The Serbian government was dominated by the Socialist Party—in fact the renamed League of Communists of Serbia—led by Slobodan Milošević. He and his policies were by no means universally popular at home, and especially not in Belgrade. A huge opposition rally of some 40,000 demonstrators met on Republic Square on 9 March 1991. Milošević sent in riot police with tear gas and water cannon, then called on the military for support. The army entered the centre of Belgrade during the night, with tanks gouging deep holes in the asphalt between Slavija Square and Terazije. They departed the following day, but not before a bond of trust between the city and the institution entrusted with its defence was broken.

Milošević gave in to some demands, enough to defuse the situation, but he also bussed in his own supporters from the provinces to provide a counter-demonstration. With the secession of the other republics, the remaining government deputies in Belgrade declared the formation of a new country, the Federal Republic of Yugoslavia, made up of the republics of Serbia and Montenegro, on 27 April 1992. The city was the capital of a country with a new name for the seventh time in the twentieth century; but with a clearly uneasy relationship between the citizens and the state government.

The Serbian communities in Croatia and Bosnia called on support from Milošević, which he supplied but then withdrew to leave paramilitary organizations in Serbia to continue the fight over the borders. The United Nations expected greater efforts from the Serbian president to control these forces and to exert his influence to stop the fighting in former Yugoslavia. Consequently, the UN Security Council voted for Resolution 757 on 30 May 1992 to impose sanctions against Serbia and Montenegro. The measures included a very strict ban on all trade, financial, sporting, cultural and educational links and prohibited air and sea traffic. The country was cut off from the rest of the world and the Milošević regime left to rule behind its hermetically sealed borders with no interference from outside.

This situation sparked a series of events in the country over the coming years which for all those who lived through or witnessed what was to come brought some of the most bizarre experiences possible. Some people amassed huge personal fortunes but most suffered the opposite effect: poverty, unemployment and the disappearance of normal life.

The monthly inflation rate for retail prices in June 1992 exceeded 100 per cent and the German deutschmark became the unofficial currency in a city that no longer trusted the domestic dinar. By September almost half of factories were closed and thousands of workers were put on what was known as “forced holiday”. Salaries, for those who still received them, were not enough to cover basic costs of living and it was necessary to do something to find extra cash. The routine and discipline of regular work disappeared and many took to the streets in a chaotic and disorganized way, either selling goods or changing currency. Some of these activities were supported by organized syndicates breaking sanctions by importing cigarettes, clothes, petrol or virtually anything since nothing was being produced in Serbia itself. The need to survive was slowly pulling a majority of the population into nebulous criminal or semi-criminal forms of activity.

The Milošević government ended up forming an alliance with those groups who could break the sanctions regime and prosper in an atmosphere of corruption and intimidation. These were essentially criminal gangs, formerly part of an underground mafia, now pushed to the surface and cruising the streets openly, flaunting their new respectability and their celebrity status. They were rich and successful, while everyone else could only stand by and watch their rise to a position of power.

One way offered to ordinary people to make ends meet was via the huge interest rates for deposits in private banks. One of these was run by Dafina Milanović, a larger-than-life character who would appear in public adorned in furs and jewellery when not overseeing the money mounting up in her vaults. By December 1992 she was offering an interest rate of 15 to 17 per cent per month on deutschmark savings. In other words, an investment of 500 deutschmarks would provide a monthly income of about 75 marks—not a huge amount but enough to provide a welcome addition to a family budget. Investors would pick up their monthly payout, and immediately take it onto the streets to convert into dinars on the black market. Dinar banknotes were going straight from the state mint onto the streets through the connivance of the government operating hand-in-glove with crime bosses. The system was perfect. Citizens put their money into a bank run with the approval of the government and then gave their deutschmarks earned in interest to the dealers on the street. Meanwhile, corrupt politicians received payback from both the bank and the dealers. The momentum of this scheme could only be kept up for as long as new money was being deposited to finance the monthly interest, and it eventually collapsed—with investors losing all the savings they had committed.

The figures for inflation in this period provide some barely believable statistics. At the end of September 1993 one deutschmark was being traded for 1,000,000,000 dinars. In October the government resorted to removing six noughts from the currency, making the value of one mark 1,000 dinars. Yet the daily rate of inflation was such that by the middle of November the deutschmark was again worth 1,000,000 dinars and the average monthly salary dropped to about ten marks (approximately five euros). By the end of the year the deutschmark reached a value of 1,000,000,000,000 dinars (really 10,000,000,000,000,000,000 if compared with its value earlier in the year before the noughts were removed). The price of a loaf of bread had risen from 12,500 dinars on 2 November 1993 to 4,000,000,000 dinars on 22 December. The retail price index recorded a monthly inflation rate of 313,563,558 per cent, or a daily inflation rate of 62 per cent and an hourly rate of almost 3 per cent. Goods no longer had price tickets in shops as values changed so much during the course of one day. Cash registers could no longer be used to add prices together because of an excess of noughts. Sales staff sometimes quoted prices according to the pictures on the banknotes, so that an item might cost “two sunflowers and a little boy”. Stores were largely empty of goods and a supermarket might display widely spaced boxes of cornflakes or chocolate but little else. The streets were eerily empty of traffic in the summer of 1993 since petrol was expensive and only available on the black market from gangs who smuggled it illegally. Of course, the new elite making money from this chaos was subject to no restrictions.

These figures only tell a small part of everyday life in Belgrade. Daily existence was dependent on maximizing all available resources. Those who could left the country. Community services collapsed and society fragmented under the strain. Streams of desperate refugees arrived from across the borders. People were living a doubly isolated life: first, behind the wall of sanctions separating them from the world at large; second, behind a psychological barrier that prevented integration into the abnormal world which was now the norm at home. The history of the collapse of social and economic order in Belgrade during the period of sanctions is also the story of the simultaneous collapse of moral authority, value systems and all the small decencies that are the hallmark of civilized society.

By the end of 1993 the dinar was no longer used as currency and there was little profit left to be made from manipulating the black market, so the period of hyperinflation had outlived its usefulness. The government appointed a new governor to the National Bank of Yugoslavia, Dragoslav Avramović, and on 24 January 1994 hyperinflation came to an end. A new dinar was introduced and exchanged for the old one at a rate of 12,000,000:1, with no more wild and indiscriminate printing of money. The solution could have come much sooner.

A gangland culture emerged and took over the city during the 1990s. Tim Judeh, a journalist who lived in Belgrade from 1991 to 1995, describes the beginning of this process in his book
The Serbs
:

The end of Yugoslavia turned Serbia and the Serb-held lands in Croatia and Bosnia into a patchwork of mafia fiefs. The unprecedented breakdown of law and order and the fantastic business opportunities provided by sanctions-busting meant that many Yugoslav gangsters who had hitherto operated in the richer pastures of Germany and Switzerland returned to reap the profits of war. Some became involved with Serbian paramilitaries, which under the cover of patriotism became rapacious looting machines. After they had stolen all the cars and other goods from the frontline towns, they turned their attention to the home front.

Two such patriots were Branislav “Beli” Matić and Đorđe “Giška” Božović who helped establish the Serbian Guard, a paramilitary formation under the auspices of the Serbian Renewal Movement and its leader Vuk Drašković. When Drašković’s political career began in earnest he distanced himself from the Serbian Guard. The lives of criminals were short; Matić was shot outside his home in August 1991, Božović a month later in one of the Serbian enclaves in Croatia. It was rumoured that he was shot in the back by his own side. In October 1992 another gangster, Aleksandar “Knele” Knežević, described by Judeh as “the icon of a younger generation of the Belgrade underworld”, was killed in a room in the exclusive Hyatt Hotel. He was just twenty-one years old.