Professor helps Yugoslavia adjust JHU educator promotes Yugoslavian capitalism.

August 16, 1991|By Ross Hetrick | Ross Hetrick,Evening Sun Staff

Steve Hanke, a professor of applied economics at Johns Hopkins University, is intent on fostering an invasion of Yugoslavia by the "shock troops of capitalism" -- accountants.

Hanke, an internationally recognized expert on the conversion of socialist economies to free markets, is teaming up with a Yugoslavian consulting company and a worldwide accounting firm to help meet the growing need for accountants in Yugoslavia.

"You have to have accountants if you are going to implement a capitalistic system," he said in an interview yesterday. Hanke estimates that the country needs between 5,000 and 6,000 accountants certified in Western methods. He says there are only 27 such people in Yugoslavia at the moment, and he knows them all.

But don't expect jumbo jets filled with accountants to be flying into Yugoslavia any time soon. The emphasis will be on retraining people who were schooled in the accounting methods of the socialist system. Such people, who can be retrained quickly, number between 2,000 and 2,500, Hanke said. The new venture will also draw on recent college graduates.

To provide accounting and business consulting services to Yugoslav businesses, DRT International/Eastern Europe, a worldwide accounting firm, has reached an agreement for a joint venture with the Economics Institute, a private Yugoslavian consulting firm. DRT is known as Deloitte & Touche in the United States. The agreement is to be signed in September.

Hanke, who is an adviser to the president of DRT International/Eastern Europe, is to be one of the directors of the joint venture. He plans to travel to Yugoslavia about once a month and will help develop business strategy and advise the group on the economy of the country.

Other American and European accounting firms will also be vying for the Yugoslav business, but Hanke said the joint venture will "have the strongest presence" in the country.

He has been intimately associated with the country's efforts to convert to capitalism and was a personal adviser to Deputy Prime Minister Zivko Pregl until June 30, when Pregl resigned.

Before his resignation, Pregl had agreed to a plan proposed by Hanke which would have converted national enterprises to private operations, with the new stock funding the country's social security system, which would also become private.

Although the plan is still being debated, it was dealt a setback when Pregl resigned in protest over the actions of the Yugoslav army in the civil war in the country.

In recent months, at least 200 people have died in fighting between Serbs and Croats, the country's two main ethnic groups. On June 25 the republics of Slovenia and Croatia declared their independence.

The bloodshed has severely hurt the economy, according to Danko Djunic, the managing director of the Economics Institute, who was meeting with Hanke yesterday.

It is estimated that the Yugoslav economy has lost $20 billion since the start of the hostilities, Djunic said. Particularly hard hit is the tourist industry, he said.

But Djunic is confident that the move toward capitalism will continue despite the unrest. In fact, he hopes that if more people are motivated by a quest for profits, ethnic differences will be decreased. "The only thing that can cure things in Yugoslavia is business," he said.

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