Croatia and Serbia Mend Economic Fences

Croatia and Serbia, bitter foes during the Balkan wars of the Nineties,

are now aiming exports at each other instead of artillery shells.

Economic ties that worked smoothly in the days of Tito's Yugoslavia are

humming back to life.

Both countries suffered severely from the wartime trade barriers. Now

the obstacles are falling so fast that Nadan Vidosevic, president of the Croatian Chamber of Commerce, was moved to predict, "Don't be

surprised if trade between us reaches one billion US dollars in a few

years." Last year, Yugoslav-Croatian trade amounted to 136 million

dollars.

Vidosevic and his Serbian counterpart, Slobodan Korac, are advocating

establishment of a free trade zone between them and the lifting of visa

requirements that now impede cross-border business contacts.

The improved atmosphere is evident on all sides. There is talk of trade

in cars, shipbuilding, oil and plenty of other fields. Such a revival

would have been unthinkable when Slobodan Milosevic and the late Franjo Tudjman were in power.

Hundreds of Croatian and Yugoslav entrepreneurs recently pledged themselves to aim for the billion-dollar trade level.

Milorad Savicevic, director of the Kragujevac-based car factory Zastava, known for manufacturing the popular Yugo model, told the Zagreb paper Jutarnji list last week that he would write to the Croatian deputy prime minister, Slavko Lukic, proposing that Croatia and Serbia could jointly produce 100,000 cars a year. The Serbian plant currently produces some 10,000 Yugos.

The car has recently gone on sale again in Croatia. Inspecting a model at a Split showroom, a prospective buyer said, "I know it's not such good quality as a Volkswagen, but my salary is lower than a German one. Given that most Croats don't earn very much, this is the right car for our pocket."

The Zagreb factory Koncar, meanwhile, has its eye on resuming the construction, installation and repair of lifts for Belgrade buildings, as it did before the Nineties. During the 10 years of war, lifts in Belgrade were hardly repaired at all.

There is a strong logic behind the trade drive. Croatia's weak economy

finds it difficult to gain outlets to the West. It can best find them

through the connections of former Yugoslavia.

For example, they used to build ships in Croatia using steel sheets produced in the southern Yugoslav republics. When the war closed off those sources of cheap materials, the Croatian shipyards of Split and Rijeka had to import expensive sheet metal from Linz in Austria.

The Croatian oil industry INA has already achieved a turnover of 70

billion dollars in the Yugoslav market. The Jadranski naftovod (Adriatic pipeline) and Jugopetrol (Oil Industry of Serbia) signed a 1.5 million dollar agreement in March for the transport of INA's oil.

In mid-May, the Koprivnica food producer Podravka started exporting to the Yugoslav market, and expects to become a leading player in the field through its subsidiary in Belgrade.

Goods are also arriving in Croatia from Yugoslavia. Apart from Simpo

Furniture from Vranje, and the Yugo cars, the Zastava company in Kragujevac resumed the export of hunting and sports guns to Croatia after a ten-year gap. So far some 400 weapons including hunting rifles, pistols and handguns have been sold. The sales are expected to rise significantly.

Mitros, a meat production company from Sremska Mitrovica in north

Serbia, is packing its products in the wrappings made by the Croatian

company Omis, and intends to enter the Croatian market. The only thing holding them up is the lack of common agreement on

veterinary-hygienic conditions.

Croatian president Stipe Mesic and Serbian prime minister Zoran Djindjic met recently at the European Economic Summit in Salzburg, where Djindjic invited Croatia to take part in the coming privatisation of 7,000 Serbian companies.

But Croatia's foreign minister Tonino Picula said contacts with the

Serbian government were not possible so long as it included Momcilo

Perisic, the general who was sentenced by a Croatian court in absentia to 20 years imprisonment for shelling the city of Zadar.

However, Milosevic's extradition to The Hague improved the atmosphere.

Prospects would brighten further if the "Vukovar troika" - Mile Mrksic, Veselin Sljivancanin and Miroslav Radic - were also surrendered to the tribunal.

Picula and his Yugoslav counterpart Goran Svilanovic met at the end of

May and agreed to tackle outstanding border problems. Picula said both

countries were ready to sign economic cooperation agreements and to

liberalise visa requirements.

Yugoslavia is currently eighth on the list of Croatia's trade partners.

Entrepreneurs in both countries are waiting for politicians to change that position.

Tourism offers a big chance, but Goran Svilanovic said, "That does not depend only on visas or trade but on the views of people on both sides. I think tensions still exist, even though the situation is much better than it used to be. However, it seems that time needs to pass before citizens of Yugoslavia take a big interest in holidays on the Croatian Adriatic."

Tourism depends on cultural cooperation. New possibilities were opened

up by Djordje Balasevic - a famous singer from Vojvodina, well-known for his anti-war views - who held a triumphant concert before some 10,000 people in the Croatian town of Pula.

Another positive sign was the appearance of Yugoslav films at

the recent festival in Pula. In other areas, too, people hope the time

of cultural rapprochement is coming.

Goran Vezic is a journalist of the Split-based independent news agency

Stina.