China's play to Milosevic

February 21, 2000|By Laura Rozen

BELGRADE, Yugoslavia -- The growing financial ties between China and Yugoslavia appear to be extending the life of President Slobodan Milosevics regime and undermining Western efforts to limit his access to hard currency.

Last December, $300 million was transferred from bank accounts in China to Serbia, enabling the government in Belgrade to avert a financial crisis. Economists believe the amount should be enough to forestall hyperinflation for six months and allow the government to pay pensions as well as military and police salaries for several months.

Belgrade first described the infusion of funds from China as a gift. Later, it was called a commercial loan. Many observers are skeptical of both explanations.

It could not be a gift because China does not make financial gifts, says leading Belgrade economist Mladen Dinkic. I believe that this is money belonging to Serbias political establishment that was transferred abroad, first to Cyprus, and other countries, then to China, and repatriated in December, he said.

Serbian companies reportedly began moving money from banks in Cyprus and other Western countries to those in Shanghai and Hong Kong in the summer of 1998, anticipating that clashes between the Yugoslav Army and the Kosovo Liberation Army would renew international sanctions.

But its not just money that is moving from China to Belgrade. Every week, it seems, a Yugoslav Airlines jet arrives in Belgrade with a new Chinese delegation. Officials from Beijing are among the few diplomats and statesmen still willing to meet with Milosevic.

Meanwhile, Serbia opened a consulate in Shanghai last year and the Yugoslav minister for cooperation with international financial organizations, Borka Vucic, was recently in Beijing to strengthen Sino-Serbian ties.

During her visit, she presented the head of the Chinese Red Cross a memorial pyramid containing debris from the Chinese embassy in Belgrade, which was bombed by NATO last year.

The pyramid was a symbol of the protest against and defiance of the NATO aggression and a message that there was no forgetting and no forgiving, she told her Chinese hosts.

Indeed, while China and Yugoslavia have long had cordial relations, NATOs bombing of Chinas embassy in Belgrade last May, in which three Chinese nationals were killed and 20 wounded and for which the United States paid China $24 million in compensation, has brought Belgrade and Beijing even closer.

The United States and NATO insist that the bombing was an accident and attributed it to out-of-date CIA maps. But some reports have suggested the embassy was targeted because it was serving as a backup communications center for the Yugoslav Army after NATO had destroyed other command and control points.

The Chinese government has completed its own investigation and remains adamant that the bombing was deliberate.

While the China connection provides Milosevic with access to hard currency, commercial loans and investment and prestige, Serbia affords Beijing an opportunity to invest in European industries at knock-down prices and a base in Europe for trade and intelligence.

In fact, Bratislav Grubacic, editor of the Belgrade independent news agency VIP News, estimates that as much as two-thirds of the money transferred from Beijing to Belgrade in December paid for an interest in a new mobile phone network in Serbia and the Pancevo chemical plant.

Laura Rozen is a regular contributor to the Institute for War & Peace Reporting, a London-based independent media organization.

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