Serbia Economy Report : A Country torn between China and Europe

The economy of Serbia is a service-based upper-middle-income economy with the tertiary sector accounting for two-thirds of total gross domestic product. Serbia is a country that went through a lot, from the 90s Yugoslav Wars and related diplomatic and economic sanctions to the massive influx of refugees, Serb but not only, pouring in the impoverished country. Serbia faced directly a NATO military aggression with airstrikes in 1999 on its military, but also civilian infrastructures. With the consecutive abduction of its Kosovo and Metochia province, its mines, States assets, while 200,000+ new refugees were pouring into Central Serbia and Vojvodina and 100,000 Serbs remained firmly in the U.N controlled Kosovo. The consequences of this situation and of 18 years of hardcore liberalization of the economy, led under Western patronage against the interests of your daily Serb, and 25 years of ethnic shaming from the western diplomacies and media, are still felt today. But the country is one of the safest in Europe, just behind the Scandinavian countries, Belgrade is one of the safest cities in Europe. Welcome to The Atlantis Report. The Serbs are passionate, life-loving people. They love life and good living… and like rational life-loving people, they don’t like to work as long or as hard as the Germans do, for example. The Serbs went through 500 years of occupation by Ottomans, then soft communism… and they blame that for their current situation. The Germans lost almost all of their young men and had their country completely flattened in 1945, and it took them 20 years to become the top dog of Europe again. Why? Because they prefer to work than not to work. People say the Marshall Plan was the reason, but we forget that the Marshall plan was essentially just loans that allowed the Germans to rebuild factories and roads, etc.… they still had to actually work 8 hours a day or more in silence to crank out those BMW’s. And make sure they did a great job and made a fantastic car! Serbia, on the other hand, has (and always has had) dreadful productivity because of the values of its culture. A bit like the Bulgarians. Or Montenegrins, or Croats (but at least these guys have tourism, which is basically free money and proximity to the very rich West so a bit more trade and influence). Serbia imports more than they export… despite having cheap labor and being right next door to one of the biggest consumer economies in human history (Europe)! Having cheap labor should make them ideal for an export economy with lots of multi-national manufacturing firms setting up there to get cheap labor, but that’s not the case. Serb’s don’t like to work too long, or too hard - so they have a lot of cafe’s (one of the highest number of cafes per capita in Europe) and other services which are dedicated to the art of spending money for leisure, rather than making stuff to sell to others (which is hard and laborious). Think about it - why have so many cafes if the object of the population is to have high output? Sitting around having coffee and talking is not an economically conducive way to spend the finite hours in a day. Working in a factory or office very hard without talking is. When millions of people do this, the ‘economy’ shows its character in higher output and GDP. Economics is not complicated at all when you fully comprehend the basic building blocks, which is what people do every day of their lives. There is also corruption and things like that, but that’s just another side effect of a culture predicated on making easy money, without too much hard work, and without actually delivering something of value to other people. Corruption is just the purest example of the allocation of the velocity of money towards unproductive ends, and societies that have a lot of it indicate the kind of culture you can expect there generally. It’s not the reason for poverty, but just another side effect of the culture that produces poverty generally. So why does Serbia have a bad economy? A lot of reasons, all related to the same cause: the violent dislocation of Yugoslavia at the expense of the Serbs : Two millions of abducted Serbs from Yugoslavia in the 1990s, 300,000 more in 2006 with the NATO propelled separation of Montenegro from Serbia. Years of economic sanctions in the 1990s and the consequences of the Wars on the Serbian society It led more than 500,000 refugees to come to Serbia but also 2.5 more million of Serbs from Serbia on the road of exile from 1991 to today. The “Serbian market shrunk to less than 60% of what it should be. Serbia lost eight years of economic development there, its GDP per capita shrinking by half instead of growing by a third to a half. From 40 billion US Dollars in 1990 to 19 in 1999. Thirty billion US Dollars at least of infrastructure damages.Military bases, but not only; bridges, railways, media-stations, factories, chemical plants, various civilian infrastructures were also destroyed. The country having to indebt itself to repair a part of the damages done by the NATO aggression and its Airstrikes between the 24 March and 10 June 1999. Serbia lost a whole year of GDP in these damages. And lost four additional years of economic development, reaching only in 2003 its 1999 GDP. Environmental damages, sicknesses, and mental pathologies related to the Yugoslav Wars and the bombings of the Serbian cities in the 1990s, which are a burden for the Serbian health-system, the Serbs daily life and productivity. The Loss of the Kosovo mines, which once represented 70% of the Kosovo province GDP, and 5% of the whole Serbia GDP. A few years later, the U.S led diplomacy obtained from Serbia a change of legal structure of these mines, so the Kosovo Albanians and their foreign “investors” could take them legally. The Loss of the Montenegrin coastline in 2006, and hence devastation of the remaining Serbian tourism industry and Belgrade’s capability to operate an independent trade policy through its access to international waters. While Montenegrins still enjoy privileges in Serbia because they are still considered as Serbs. For example, the famous Slobodan Milosevich was himself a Montenegrin Serb from both his parents. Privatization, sometimes for ridiculous prices, of the Serbian public companies (damaged by the war or not) and, by treacherous (or simply Western indoctrinated and weak ) Leaders sponsored by the West. the Washington Consensus was imposed on Serbia, who needed foreign investors anyway to bring fresh cash and hence guarantees so Serbia could borrow on the foreign markets the money needed to rebuild itself… Corruption, lack of rule of Law, criminality, institutionalized racket against workers, policies inherited from the 90s and amplified. Studies are not free for everyone anymore, per example. In addition to the remains of the “socialist Yugoslavia mentality” where debilitated socio-economic, industrial and monetary policies were put in place and crippled Yugoslavia through the excessive importance given to ideology against reality, and to the republics against the Federation. Both components leading to the 90s violent dislocation of Yugoslavia. The economic crisis was a fertile ground for disunion, selfishness, and nationalism. Especially when the related issues have been at the same time thrown under the rug and… enshrined in the 1974 “powder-keg” constitution of Yugoslavia. Today, Serbia’s GDP is 20% below what it was in 1989, and 10% lower if we consider a per-capita PPP GDP. For the sake of clarity, let’s say Serbia’s GDP is 40 billion US dollars today, like in 1990, aka. 6,000 US Dollars per capita. If Kosovo and Metochia, Montenegro, and the Republika Srpska were reunified today, Serbian GDP would amount to approx 50 billion US Dollars. and grow fast to 60 billion due to the recovery and reopening of the mines in Kosovo, then to 80 billion in 2025 and 100 billion in 2030 due to the recovered hopes from the Serbian civil society’s into Serbia’s future and the probable return of a few hundred thousands of Serbs in Serbia. If only the current Serbia was never economically sanctioned nor attacked, and Kosovo not taken away, Serbian GDP would probably revolve today around 100 billion US dollars. with the same emigration and 125 billion US Dollar without. If both previous situations were united into one, Serbian GDP would be today beyond 150 billion US dollars. Today, approximatively 30% behind Croatia per capita (11,500 US dollars. instead of 16,000). And aim to 200 billion US dollars. in 2030 (more than 15,000 US Dollars per capita). The current reality and future perspectives are much less bright. But these fundamentals are based on temporary FDI heavily subsidized by the Serbian State, as well as exceptional resources through the sale of State-Assets. It will be long before we see Serbian business prospers, and the worker wages rise to decent levels; the only way to really judge the real performances of a market-oriented economy as Serbia is more and more today. If Serbia GDP reaches a GDP of 60 billion US dollars. (9,000 per capita, with 400 US dollars. as a minimum monthly wage and 800 as an average one) in 2030, that would already be very good… And yet far to be enough to compete with the life-standards of an average Croat in Croatia or even Romanian in Romania. Serbia is a country with a complicated history. And things are still complicated. Some Serbians want to join the European Union to enjoy all the financial benefits, but the standards to get in are really high, and other Serbians aren’t sure whether they can even meet those standards. In fact, there are so many forces pulling every which way— that even the two-headed eagle on the Serbian flag seems unsure which way to go. And that’s when China showed up with billions of dollars. The Chinese Communist Party has offered to make Serbia the European heart of its massive Belt and Road Initiative, also known as One Belt, One Road. That’s the plan to spread Chinese investment around the world. And this offer has put Serbia at a difficult crossroads. Serbia has officially been a *candidate* for EU membership since 2012. But it is bad the earliest it could get into the EU is 2025— and maybe not at all if it doesn’t shape up. On the other hand, China is battling the European Union using Serbia as the European hub of trade in the Belt and Road Initiative. Xi Jinping said he would make Serbia the European hub of the Belt and Road infrastructure plan. But these Chinese investments could put Serbia into deep debt— what’s called “debt-trap diplomacy.” We’ve seen it before in Sri Lanka, Pakistan, and Djibouti. Chinese loans come in, but the country can’t repay them. China is purposefully plunging recipient countries into debt, then going after what’s in soil, like minerals and rare earth metals. Also, there’s the danger that China’s investment might target critical technologies and strategic industries. 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