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Thursday, 12 October, 2000, 13:41 GMT 14:41 UK
Yugoslav sanctions: What's at stake?

After the initial euphoria, attention is turning to the future
By South-east Europe analyst Gabriel Partos

The EU and US decision to lift the oil embargo and ban on commercial flights - already suspended in March - still leaves Serbia the target of a number of sanctions.

Broadly speaking, there are two types of sanctions against Serbia - some are universal, imposed by the United Nations, while others were introduced by the European Union.

However, the impact of EU sanctions was increased by the fact that they were also observed by the United States, almost all non-EU countries in Europe, and by other parts of the former Western alliance, including Japan.

On the other hand, they were ignored by Russia, China and a number of developing countries.

With a few exceptions the sanctions have been targeted at Serbia so as not to damage its partner republic, Montenegro, which has had a pro-Western government for three years.

While the EU and US have now decided to remove some sanctions, the so called "outer wall" of sanctions remain. That outer wall involves World Bank and IMF loans and financial guarantees, without which foreign investment will be difficult to attract.

  • EU/US sanctions

    Oil embargo: Lifted

    The EU's oil embargo, introduced during Nato's conflict with Serbia in 1999, was never particularly effective because Russia, China, Iraq and Libya were not bound by it.

    Ironically, even the EU violated its own ban by supplying heating oil to opposition-controlled Serbian towns under a scheme called "fuel for democracy".

    However, the embargo did make petrol prices more expensive because of the cost of smuggling. Prices are now expected to drop by half to the prevailing regional level of around DM1 per litre.

    Ban on flights: Removed

    This move is a cosmetic measure since the ban on flights to and from Serbia was already suspended in February for six-monthly renewable periods.

    Its impact, while in place, was mostly of nuisance value to the thousands of Serbs working or living abroad and their relatives at home who wanted to visit them.

    But the suspension of the ban helped earn the Milosevic regime valuable income from landing fees and other expenses charged to foreign airlines and passengers.

    Freeze on Yugoslav and Serbian assets abroad: Decision deferred

    Originally introduced in 1998 when it applied to state institutions only, it was extended a year later to include any individuals and companies that were associated with the Milosevic regime.

    The freeze on assets is believed to have been circumvented in various ways - particularly through the use of proxy accounts.

    It will take several weeks before a way is found for unfreezing some of the assets while keeping the freeze in place for bank account holders linked to the Milosevic circle.

    Ban on investment and credit: Decision apparently deferred

    Dating back to 1998, this ban has helped to starve the Serbian economy of much-needed foreign capital.

    The ban will continue to be applied to a list of companies on a black list because of their association with the Milosevic establishment.

    Visa ban: Remains

    Introduced in 1999, this measure has barred 800 officials connected with the Milosevic regime from visiting Western countries and carrying on business there in person.

  • International sanctions

    Arms embargo: Remains

    The UN responded to Belgrade's escalation of the conflict in Kosovo in March 1998 by imposing an arms embargo on Yugoslavia.

    There have been no moves yet to remove the arms embargo, which may have to wait until some progress is made towards reaching a settlement over Kosovo.

    Suspension from international organisations: Remains

    This diplomatic ostracism predates the Kosovo conflict. The former Yugoslavia was suspended from the UN General Assembly and the Organisation for Security and Co-operation in Europe (OSCE) in 1992, partly because of Serbia's involvement in the war in Bosnia-Hercegovina.

    Because of continuing dispute over the succession to the former Yugoslavia of six republics - which Belgrade has until now claimed for itself - it is not clear whether Yugoslavia would now have to reapply for full membership of the UN.

    Barred from access to international funds: Remains

    Under the so-called "outer wall of sanctions", which remained in place after the 1995 Dayton peace treaty on Bosnia, Yugoslavia has remained excluded from the UN's financial institutions, World Bank and the International Monetary Fund.

    This measure has been strongly advocated by the US, which has insisted on Belgrade reaching an acceptable deal over Kosovo and on the extradition of suspected war criminals to The Hague Tribunal.

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    06 Oct 00 | Business
    The cost of rebuilding Yugoslavia
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