Sunday, July 9, 2000

Mladjan Dinkic, Coordinator of Group 17

I would never join the government alone without my colleagues

Mladjan Dinkic

Mladjan Dinkic was born on December 20, 1964 in Belgrade. He graduated and acquired a master degree at the Faculty of Economy in Belgrade. He is assistant to Professor Ljubomir Madzar on the subject of Theory and Planning of since 1994.

Career: The public first heard of him after the first and only bestseller in Serbia in the field of Economy, "The Economy of Destruction", in which Dinkic describes in detail how the Serbian regime robbed the citizens of Serbia. The book was reprinted four times.

He is the co-founder of the expert Group 17, which addressed the public with the Program of Radical Economic Reforms in 1997. Only Ante Markovic and Dragoslav Avramovic matched his high popularity, when economists are in question. He is the Executive Manager of Grou 17 Plus, whose members aside from economists, are experts from various other fields.

Love: Independent media and Dinkic are deeply in love, which can't be said for his relationship with party leaders.

Health: A healthy liberal.

Future prospects: Good, in any case. If he doesn't get stuck in the muck created by Milosevic and Milosevic's greatest opponents, he has a good chance of becoming the leader of some new Serbia. If nothing else, he can always continue his expert career in the West (he has already lectured at prominent universities in America, Italy, Belgium and Germany).

Trivia: He plays guitar in a YU-nostalgia cover band called The Monetary Shock. Other group members are Goran Pitic, manager of the Institute of Economy, Igor Avzner, owner of the Focus Communications marketing agency, Dragisa Lekic, General Manager of the Societe General Yugoslav Bank, Goran Tulic, traumatologist at the Serbian Medical Center and Tibor Tot, black market dealer and part-time percussionist of the musical band The Kuguars.

FS: Group 17 was founded three years ago. What was the motive?

The motive for foundation in 1997 was to conceive a program for radical economic reforms. At the time we believed that the Zajedno coalition would be able to implement the program after taking power in Serbia. However, they fell apart. The program remained and so did G17. We continued to work on further improvements of these solutions. In the meantime we worked for the governments of Montenegro and Republika Srpska. We hope to work for Serbia some day, since most G17 members are from Serbia. Others are from Montenegro, the World Bank, the International Monetary Fund...

FS: But, why you?

Because there was no one else. Back then, the institutes either worked for the authorities or did not have the courage to say that politics were to blame for the obstruction of economical reforms. Conformity on one hand, and fear on the other urged us to organize a group of economists who would have the courage to tell people who things really are, a group that would not stop at criticism, but also suggest what to do in practice in various fields of our economy. That is how it started. After the bombings we decided to widen the organization and bring experts from other fields as well, from Belgrade and all other cities in Serbia. That's how G17 plus came to be.

FS: Are there any plans to register G17 as a political party? Many FreeSerbia visitors ask that question, and many others are afraid this might happen.

G17 will not take part in the following elections as an organization, but this won't stop our members from being candidates in front of the united opposition, especially in local elections. Ten percent of our members are also members of political parties and it is only natural to assume that some of them will be candidates on the joint electoral list of the united opposition. Only the name G17 will not stand by their name in those lists, but the name United Opposition of Serbia, while they will be permitted to use our organization in their election campaigns. However, the organization will not give them official support.

G17 plus will support those candidates who openly pledge changes in the political and economic system and who don't stop at that, but also define what they will do on the first day of their election to Parliament, the first hundred days in Parliament and who present a one-year program of activities.

FS: What are your personal political aspirations?

My personal aspirations are tied to economy, to get a chance to realize some of the reforms essential for our country. Time will show whether it is possible to pull out without politics or not. I would be most pleased if I could come to be in the position of, say, our member Veselin Vukotic, who isn't a member of any political party, but practically controls the reforms in Montenegro. However, his experience shows that for precisely this reason, because he is not linked with politics, the reforms are moving ahead very slowly. Whether it is possible to do this without politics I sincerely do not know, because if I knew that it wasn't, I would probably have been a member of some political party by now.

I'm simply not satisfied with theoretical definitions of what should be done. My ambition is to do something in practice that will have a positive effect. I am primarily concerned with the reconstruction of our industry, monetary reforms, fiscal reforms, all in all, macroeconomic reforms.

Another thing: I would never join the government alone without my colleagues. Even if political parties offered me to be the only one from G17 and the rest of the government was comprised of people from political parties. Without a team behind me with wide authorities, I would never agree to make that move. On the contrary, I wouldn't even want to have the leading role. I'd rather Mr. Labus, President of G17, be the top man.

G17 plus has many more members who are capable of dealing with various fields in economy than any political party. So, if some serious work is to be done, G17 will have to be involved. On the other hand, if someone only wants to create an illusion of some kind of activity, then we are not needed by the sort.

FS: Can you picture yourself as a Prime Minister, Minister of Finance, an advisor?

That is not an important issue. The only thing of importance is that there is a team that will cooperate. One man alone cannot accomplish anything. There are a few other positions that are a challenge, the Central Bank for instance...

FS: Minister for privatization?

No. I wouldn't sail into those waters... Labus and I are macroeconomists and we can work on anything related to reforms of the monetary system, the fiscal system, reconstruction of the nation. But privatization is field for which we have better experts than Labus and I.

FS: Could you suggest a team of economists that could lead the reforms?

We have suggested such a team when we tried to convince the opposition to form a transitive government. Some of the people we named had already participated in reforms in the past, in Poland for example. However, our public has never heard of them. For example, Dusan Vujevic is one of our best economists, and the public has never heard his name.

When they saw a few of those names, some party leaders asked who those people were, why we needed them, etc. This was very disappointing for us. However, the idea of a transitive government collapsed because, even in theory, opposition political parties didn't even want to consider the idea of someone else apart from them in the government, even if it was transitive. So we return to the issue of whether it is at all possible to conduct economic reforms without the involvement of pure politics.

FS: Why don't opposition parties like you very much?

One should distinguish between them. They are not united in their position now. I agree that in the beginning, when we were founded and proposed the idea of a transitive government and organized a meeting with other parties, there was a cannonade of attacks on us - on my colleagues, and myself, but I was the main target. I think the reason is a simple one. A lot of them think in the following manner: "We have fought for ten years and now someone wants to annul our efforts after one year of being active and directly enter the government without shedding a drop of sweat". That is how they see it.

This is, of course, nonsense. Firstly, if their struggle had been efficient I would never have appeared on the scene. I would have remained a teacher and would not have treaded into politics. The people in G17 are essentially not too interested in politics, but they have been forced, indirectly, into politics since they were not able to pursue what they were schooled for in their own field of expertise.

Now, let me continue answering the question. The attacks were forceful, but the attack also stopped once it became clear the G17 and G17 Plus was not only Dinkic. When they saw that Labus, Slobodan Vucetic, Predrag Markovic, Zeljko Obradovic, Bogdan Diklic, Dragoljub Djuricic, Svetlana Velmar-Jankovic, Vida Ognjenovic, Vlada Goati, Ratko Bozovic, and I'll stop here, are also part of G17, it became difficult to launch their attack just on me. On the other hand, our relations with political parties have improved, except with the Serbian Renewal Movement, with whom we don't have any kind of relations, since they have rejected every invitation to discussions we have sent them. The latest example is that they have refused to support our proposal for a donor conference for post-Milosevic Serbia, while 22 other parties did.

We co-operate very well with local authorities, regardless of whether they are form the Democratic Party, Democratic Party of Serbia or the Serbian Renewal Movement. In contrast to our relationship with the SPO (Serbian Renewal Movement) leadership, our relations with SPO mayors in cities other than Belgrade are excellent.

FS: You claimed in October last year that Milosevic blackmails Draskovic. Do you still think so?

Whatever it is about, there is foul play involved. Whether it is blackmail, or threats, or a financial deal is not an important issue. The fact is there is foul play, since to obstruct the opposition means to directly aid Milosevic and the reason for this obstruction is no relevant.

FS: It has become very popular lately to criticize disunity in the opposition. On the other hand, why do we have G17, the expert team headed by Dragoslav Avramovic, then the Scientific Association of Yugoslav Economists (NDEJ), the Yugoslav Economists' Alliance? They all have a critical attitude towards the economic policy, some of them towards the regime as well. Why don't you try to do something together?

Well, firstly, NDEJ is a completely different story. They are people who organize a meeting, superficially criticize the authorities and then go home and go about their regular business. So, they don't have any concrete suggestions.... They have no desire to involve themselves in the process of political changes. This does mean they lack knowledge in their own fields of expertise. But this type of organization is simply not operational.

On the other hand, as far as Dragoslav Avramovic's expert team is concerned, we have contacts with only one person from this team. Mr Avramovic has been absent from the country for the last six months, so we are physically prevented from meeting with him. However, our doors stay open for co-operation, although we haven't seen one document published by this team. We cannot co-operate on global issues. There has to be some kind of proposal that will initiate discussions. Since I've heard that they will make some kind of proposal, we shall be able to meet and discuss it. It's not a matter of opposing concepts, so I have nothing against our co-operation. However, I think that we have vacated an empty space in this field, since there is not one organization whose activities are even remotely close to what we are doing. Therefore, I don't think we have duplicated someone's field of activity.

FS: Why did Professor Bojan Dinitrijevic, Vice President of Belgrade City Hall and Finance Secretary, if not leave G17, then considerably reduce activities in the organization?

No, no... He isn't even a member of G17. He was in 1997, when we founded the organization. Later he entered Belgrade City Hall and, after we became a legally registered organization and determined the membership, we came to an agreement to leave him out. So, this was an agreement, not... Neither did he simply leave, nor was he thrown out. Why the agreement because doing what he does for the City authorities, he did not have time to do what we are doing.

FS: And Professor Jovan Rankovic?

Same thing. We simply came to an agreement that he was not going to be a member once we registered the organization. So, these are all. Actually we did have one case in which a member left us. Two, as a matter of fact. This was the case of Danica Popovic and Stojan Babic. Danica Popovic left because she did not agree with extent of our political involvement. So, she just did not like it here. Stojan Babic left for a more personal reason.

FS: One year after the bombing ended, Group 17 published a survey dealing with national restoration. How much of the restoration process has been completed?

Our survey has revealed that 5% of the total direct damage inflicted by NATO bombing has been mended. The direct damages totaled 3.8 billion dollars not including Kosovo, while 191 million dollars have been invested into restoration, which gives us the figure of 5%. At this rate, we will need 19 more years to repair damages caused by the bombings. We think this is much to slow, but we do support the restoration itself. It is better to do something than nothing. But the whole thing could progress much faster. However, it cannot move faster based on the regime's policy of utilizing only our own resources. There are insufficient resources to support this policy and this is the essential problem. We have the knowledge and construction skills, but without money it cannot move ahead as fast as we would like it to.

For example, the greatest progress was made in the electric industry, since we have received a formally still secret credit from China for restoration in this domain. We don't know under which stipulations has the credit been validated. Around 40 million dollars have been invested into restoration of the electric industry, meaning that 15.5% of the damages have been repaired.

The bridges are, on the other hand, most heavily exploited by the media, while, at the same time only 10% of the damage has been repaired, or 35 bridges, which, again, is not a small number. However, repairs on the largest bridges that require the highest investments have not even started. Instead, temporary solutions were applied. For example the bridge across the Danube is a segmental bridge and its steel components have been a state reserve for 20 years stored at the Industry of Machinery in Nis. They just erected new piers and laid down the steel structure over them. Maintenance expenses will cost the transport industry more dearly as time passes on. Furthermore, the military collapsible bridge over the Danube crossing to Novi Sad is also a temporary solution that will cost local authorities more in maintenance than it did to build the bridge.

As for the residential buildings, the restoration program covered less apartments than in two residential blocks in Belgrade. Around 840 apartments have been built. Furthermore, construction was not performed properly, because of cheap materials that were used and political pressure to finish the works before schedule. They even worked on the apartments during winter and now, naturally, walls have started to crack and the tenants have to spend more of their own money to repair the damage. One should also mention that 10 years ago, 50-60 thousand apartments were built every year. Today, a project of 10,000 new apartments is promoted as a grand restoration plan. The number of apartments is six times less than ten years ago, but people who have forgotten how well this industry functioned back then have the impression that this is a remarkable figure.

We also find it unacceptable when someone calls some ancient bridges a grand victory of labor at their opening ceremony. They want it impress and seduce the people, but in Europe this kind of practice was abandoned at the beginning of the 20th century. I think we should be impressed by something such as new telecommunication system or something in the field of the Internet or biotechnology. The bridge story certainly cannot impress someone living at the beginning of the 21st century.

FS: Where do the financial resources for the reconstruction come from?

Salaries and pensions mostly finance the reconstruction. Solidarity wages were introduced in April last year and they have added up to 134 million German marks, which is a third of the assets spent on the reconstruction. A second source is the inflation tax. About six billion dinars have been emitted by the Yugoslav National Bank, mostly without backing. This has realistically decreased salaries by 34 percent in the past year. De facto, money was taken from pensions and salaries and the reconstruction was financed. And the third source is the Chinese credit, i.e. credits from friendly nations. The exact sum of this credit is not known, but is certain that we will not be able to pay it back in money, a very little in goods. The question arises of how we will return these debts. We will probably offer ownership of our companies to the Chinese and others who have helped.

FS: Which companies would that be?

The Chinese have mostly helped us rebuild the electrical power system. That could be one, even though it is not very attractive, since the electricity price is currently depressed and low. It could be telecommunications. There is still 51% of Telekom, and some concessions for mobile phones could also be given. Therefore, these are certain areas that the Chinese could get ownership or resell later when the market is more favorable.

FS: Montenegro and Vojvodina have decreased industrial production in the first four months, unlike central Serbia. Why is this happening?

First, the decrease in Vojvodina is mostly due to the destruction of the refineries in Novi Sad and Pancevo, so there is no production at all, or it is very weak, so the statistical rate of decline is relatively significant. On the other side Serbia has an increase of only 4 percent in the first four months compared to the same period last year, or 11 percent compared to the entire last year. Essentially this is a ridiculously small rate, compared with 1989, since with this increase the production in the first four months is 74 percent lower than in 1989. This means that there is an increase because of the low statistical base. We have been on the bottom of the abyss which we fell into from 1991 to 1993. With the current rate of increase we will need another 40 years to return to where we were ten years ago.

FS: The increase of retail prices, living expenses and production costs in Montenegro are much higher than in Serbia. According to the G17 bulletin, inflation in Montenegro is 3 to 4 times greater than in Serbia. What are the reasons for that?

There are two reasons. The first one is that the price statistics in Serbia falsely decrease the prices. The second is that Serbia has blocked Montenegro, and Montenegro is forced to rely on foreign good instead of Serbia, where prices are controlled and low. The price of these goods is realistic, and that has created higher prices in Montenegro.

FS: Is there an estimate of the embargo costs against Montenegro?

I do not have the exact figures, but in any case Serbia's loss is greater than Montenegro's, because in the meantime Montenegro has received aid from the international community, which is considerable, which nobody is compensating the losses of Serbian companies.

FS: There are five exchange rates used in our economy: the black market, the doctored, the stimulation rate for exporters, the rate for the old foreign currency savings and the official rate. Please correct me if I am wrong. What are the motives for such policies of the exchange rates and what are the consequences?

Our foreign currency policies are such a laugh, there is no such thing in the world. This thing with the stimulation rate is the stupidest thing I've ever seen - it is simply official devaluation. The rate has been moved from 6 to 20 dinars for the German mark, but it has not been admitted, only called stimulation rate. Again the devaluation is not complete, but partial. It is valid for some things, and not for others. It is similar to what is happening in the health care system - so now when you are charged a certain service, you must sign that you are willing to pay a higher price than regulated, because you have been admitted early. Even though it makes no sense - you were not admitted early, but a form has been found.

I don't understand Milosevic at all. He has a very strange form of legalism that he is trying to achieve, even though this legalism is an illusion. He wants us to have an apparently legal foreign currency policy, apparently legal health care prices, just like he has an apparently legal parliament, and apparently legal elections. I can't understand that. It only creates confusion in the economy, instability and increased expenses. This is another catastrophic ignorance of those leading economic politics. Nothing significant would have happened if they had declared an official devaluation. The probably wanted to introduce it gradually, fearing that the devaluation would create a avalanche. That is why they made up the official and stimulation rate, while the black market and doctored rate are simply the product of the market. The doctored rate is significantly greater than the black market rate, because the state has decreased the amount of cash and increased the amount of bonds, in order to control the black market rate. That increased the doctored rate.

The economy cannot function normally under such conditions. All we have currently is an economy capable of creating 80-90 German mark salaries, maybe a hundred. That is all. If somebody says that we have stability, and production increase - yes, but at the 90 DEM level. I have nothing against those who say that - if that is enough for the 21st century, and compared to 750 DEM in 1990.

FS: Assuming that the situation becomes normal, is there a possibility for us to catch up to the East European countries that have surpassed us? Which countries could be reach and in how much time?

We can hardly catch Slovenia. Slovenia will soon reach Greece. We cannot follow Poland, the Czech Republic and Hungary. What is left? There's Croatia and Slovakia. Romania and Bulgaria we can reach. We are not that bad, because of our reserves from the past. Therefore there is a small number of countries that we can contest.

FS: The International Crises Group has recently published a report, according to which the main source of Serbian foreign currency is wheat. How accurate is this calculation?

This is a completely incorrect calculation. Laymen did this obviously, since they said that wheat and corn cover 25% of all the countries foreign currency needs. If the entire crops were sold this would not add up to that much. It is a completely incorrect calculation. A maximum of 5% percent of the foreign currency needs can be gained, and that is if the entire surplus is sold. Therefore, without creating reserves, without sowing seeds, etc. That is overdone. Somebody wrote that with political motives. For what reasons, I do not know, but it is completely incorrect.

FS: So where is Milosevic's regime financed from?

Weapons are our main product, not wheat. Second, size of the gray economy is huge and it is difficult to distinguish which product is most important there. It is certain that a huge profit is made in cigarette retailing. We estimate that a billion German marks is going out of the state chest. There are parallel budgets.

Milosevic's regime is financed in two ways. First, the people's needs are much lower, since the standard is down, so less money is needed. On the other side, through the gray and black economy through money which is previously transferred to foreign accounts. Those are the forms of the regime financing.

FS: When look at all this: the decay of the economy, the increased repression in the past months, do you think that the regime will enter an open dictatorship or will Milosevic try to make himself legitimate to a certain extent through some for of elections?

It is my personal opinion that the regime will go for the elections, not dictatorship - for now. However, it will use all possible means of making the elections as dirty as possible. This new law on terrorism is primarily directed towards intimidating people, and only them perhaps towards a broader implementation. I think it is the regime's intention to make the forces of the democratic opposition fall into defeatism, as one party - the SPO already has, and say "Nothing is possible in this country. There is nothing we can to. We give up." That is practically defeatism. In that case the regime would win the elections very easily. Milosevic has partially managed to draw the people into apathy, through the destruction of the opposition unity, in some way. Especially after the easy takeover of Studio B. I think that this will be the basic strategy. I think that he is going for the local and federal elections, counting that the opposition will not be united, that the people are apathetic, and that he will steal the elections.

FS: How will the opposition respond to this strategy of Milosevic's?

By ignoring his threats, solidarity if the part of the treats start being executed, and an action of increasing citizens' moral and giving a precise vision of what it would do if it achieved power. I claim that whoever participates in the elections calling themselves opposition, united, with a single program and vision of what will be done after the elections has a chance of winning the elections. Regardless of the name of the party that is part of what is called the opposition. The only problem is if the SPO decides to participate alone in the elections under the current law on local elections. Then it would only draw votes. This is what the opposition should be doing. I know what we will be doing - I don't know what the opposition will do.

FS: Is the story "it is only important to bring Milosevic down, and then we will se what should be done" correct?

I think that it is. At the moment it is most important to replace the authoritarian regime with a democratic one, regardless of who will be the representatives of the new regime. This makes our previous talk of the minister positions unimportant for the beginning. It is important that we prevent a new Milosevic from replacing Milosevic. Therefore, as I have said - the replacement of the authoritarian system with a democratic one. This is only possible through referendum. I completely agree with those who support this opinion. Most of the citizens are against Milosevic. However, the polls say that they are not for any particular party, which would enable it to win. This means that if a majority is against, a form of political engagement should be created which would enable victory, and that is a referendum and support of one unified opposition list.

There are many undecided voters. I think that G17 plus and Otpor could substantially aid in the motivation of the undecided, first to participate in the elections and then to vote for those who will pledge system changes.

FS: What should be concretely promised to the citizens in the first period after achieving government?

First, they must be promised that which every government that calls itself democratic should do. That is taking the power away from the president, giving the Parliament the crucial role, passing key laws - e.g. the Law on the Courts, on University, on Media, on Police, and key reform economic laws. Then, a projection of the first year of the new government and the obligation of one cooperation with the international community - and that is the return to international financial institutions. The rest depends on what kind of diplomacy we will have. Is we have a good diplomacy and are successful in securing certain financial means, which is what we are struggling for, then that government would have realistic chances of remaining in the saddle for a long time. When I say a long time that is not longer than a year.

FS: Could the struggle of the Montenegrin and Serbian leadership bring us into new war conflicts?

I think that primarily a Montenegrin-Montenegrin war is possible [in Montenegro]. A clash is always possible wherever Milosevic meddles, but will it happen - I think not this time, for two reasons. First, NATO is too close to Belgrade for Milosevic to tease it, and secondly as time passes the citizens of Montenegro are becoming more aware that an internal clash would not help them. I don't believe [in a clash], even though nothing is excluded.

FS: One of our visitors asked whom you would count on in the Yugoslav Army in the event of a internal clash?

I would count on everyone, except the first few on the top. It is plebiscite, I think. Only those at the top who parade on television, and there's only a few of them - you can finger-count them. The majority is against Milosevic - that is my opinion, but the situation is similar like in the society. The majority is against Milosevic, but that does not mean that they are fore somebody.

FS: How do you explain Mr. Djukanovic's apology to the Croatian people?

Wily Brant did the same thing in Germany and I think that it is the only way to establish normal relations with your neighbors. Sooner or later, our new president will have to do something similar, and other presidents should apologize to us. The mutual acknowledgement of mistakes, the senselessness of casualties and violence - these are things that await the presidents in the Balkan region. Sooner or later I expect a new summit, when peoples for democracy elect such presidents. Because of intensive cooperation in the region, they will have to admit the truth about what happened in war, what the public knows little about, and ask apology from the casualties from the other side. But I expect this will take place.

FS: What are your forecasts for the next few months?

I think that the next few months will be dead months, because of the season. We now had the [European] soccer championship, great heat, holidays. The regime is starting a campaign of rebuilding bridges that has not changed for the past year. Now they have also started enlisting new members. They are promising them university enrollment, almost without entrance exams. They are promising through personal contacts that they will pass university without work, etc. A parasitic generation is being formed, degenerated, accustomed to privileges, which is a catastrophe. This has a political effect, because the new voters, because the voters the opposition in counting on 100%, are not opposition voters at all. The youngest voters have pensioner-like characteristics, in light of their political opinion, and the opposition is fooling itself if they think that this generation will vote for them. The opposition must work with them. The regime has understood and started this amoral means of propaganda.

On the other side, I expect bigger political excitement starting in September, when the elections could be called.

FS: How will G17 plus contribute to the excitement?

We will start a campaign supporting the political parties that have promised to work in the direction of changing the political system. On the other side, we will ask them to do that, regardless of whether they have promised or not. We will start the campaign when we feel that the time is right. The campaign will be much stronger than is expected.

Boris Milicevic

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