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Monday, August 23, 1999 Published at 12:45 GMT 13:45 UK

Business: The Economy

Kosovo cost cripples Yugoslavia

Damage to Serbia's infrastructure will take years to repair

Yugoslavia will become the poorest country in Europe as it struggles with the cost of the Kosovo conflict, a reports says.

Kosovo: Special Report
The Economist Intelligence Unit (EIU) report into the cost to Yugoslavia of the 11-week bombing campaign says the country will see its economy shrink dramatically in the coming years.

It puts the cost of the damage at around $60bn (£37bn).

As well as strategic bridges, tunnels and roads, the Nato forces also targetted power stations, oil refineries and factories.

[ image: Commercial buildings, like this Novi Sad oil refinery, were among Nato's targets]
Commercial buildings, like this Novi Sad oil refinery, were among Nato's targets
The bombing came on top of the expensive campaign Belgrade had been waging against the ethnic-Albanian guerrillas of the Kosovo Liberation Army.

The Serbian leadership had spent vast sums financing wars in Croatia and Bosnia which led to the imposition of United Nations sanctions on Yugoslavia in the first half of the 1990s.

As a result of all this, the EIU estimates that Yugoslavia's gross domestic product (GDP) will contract by 40% this year and continue to stay well below levels of 10 years ago.

In the list of poor European nations, that will put it below even Albania, with a per capita GDP of just $830 (£515).

Foreign aid unlikely

A spokesman for the EIU said: "The estimate of the economic cost of the war to Yugoslavia is based on a a comparison of GDP flows over time between those that would have occurred in the absence of war and those that are now likely to be achieved during the period of recovery."

The estimate of future growth is based on the experience of other war-affected countries and other countries in the region.

And there is little prospect of any foreign assistance while the current Yugoslav President, Slobodan Milosevic, and other leaders indicted for war crimes, remain in office.

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