Serbia on its Road Towards Europe

THE PRICE OF NATIONALISM

By Vladimir Gligorov

When Serbia decided to arrest Ratko Mladic, Croatia finalized negotiations with EU expecting to become its full-fledged member in 2013. Unlike the two, Slovenia's pace towards European integrations had been the same as that of other Middle European, post-socialist countries. So, how much did ex-Yugoslav countries paid for their nationalisms? Now, after 20 years of ex-Yugoslavia's disintegration and 20 years after Slovenia, unlike the others, began pursuing a strategy for integration, the comparison between Slovenia and other ex-Yugoslav states may give us an approximate price of nationalism. Here I will skip the things that are obvious: the cost of institutional underdevelopment and even higher cost of human lives and the well-being lost. The former can only be measured by the distance from EU, whereas the latter is measured in the ICTY. But let's take a look at the economic price.

I will take three indicators - gross domestic product /GDP/ per capita, employment and exports - and compare their development in the past twenty years. I will take Slovenia's development as a model and then compare it with developments of ex-Yugoslav countries in the era of nationalisms. This will indirectly answer two questions: was ex-Yugoslavia's institutional frame better than those nationalistic and should one or should one not strive after integration into EU?

Slovenia is a good model for comparison for two reasons. Firstly, though having opted for secession it has simultaneously opted for EU integration; it could be said, therefore, that it has not pursued a nationalistic strategy for development, at least not the one characteristic of other countries emerging from ex-Yugoslavia. Further, its gradual transition makes it possible to assess the inherited, Yugoslav institutions: a simulation of development of other ex-Yugoslav states under the assumption that they had adopted Slovenia's model of transition regardless of Yugoslavia's disintegration would not be quite senseless therefore.

Let's start from Slovenia's economic growth. In spite of negative effects of the global financial crisis, Slovenia's GDP in 2010 was 57.2 percent higher than in 1990. Poland and Slovakia registered higher GDPs than Slovenia, but Slovenia - if one ignores the effects of the crisis - practically shares the first place with Poland. One should take into account here that Slovenia used to be by far more developed /measured by GDP/ than other comparable countries in transition: hence, less developed countries should be expected to make faster economic growths. And this makes Slovenia's success especially interesting, the more so since it indirectly assesses the inherited economic institutions Slovenia decided to change gradually. Measured in today's Euros, Slovenia's GDP in 2010 was some 17,400 and in 1990 about 11,000.

What about other countries emerging from ex-Yugoslavia? Croatia's GDP exceeds the one in 1990 by 11 percent, while Macedonia's by 15 percent. The rest are still far from the level of development they had in 1990. For instance, Serbia's GDP in 2010 was 4,000 Euros, whereas about 5,500 in 1990 (measured in today's Euros). Croatia's GDP in 2010 was more than 10,000 Euros, whereas 7,000 in 1990s. Before ex-Yugoslavia's disintegration, Bosnia-Herzegovina's and Macedonia's GDPs amounted to one-third of Slovenia's, meaning some 3,700 Euros (about 3,300 in 2010 and with far smaller population in Bosnia-Herzegovina). In 1990 Montenegro's GDP was 3,400 Euros and grew to 4,700 in 2010.

Another way to estimate the cost of the past 20 nationalistic years is to assume individual countries' GDPs had they maintained their attitudes towards Slovenia. This assumption makes sense since these attitudes have not basically changed throughout the era of the socialist Yugoslavia. Hence, it is to be expected that these attitudes would have not changed after its dissolution had these individual states followed Slovenia's strategy for development, implying slightly changed trade barriers. In such case today's Serbia's GDP would have been about 8,500 Euros, Croatia's about 11,000 Euros, Montenegro's some 6,400, while Macedonia's and Bosnia-Herzegovina's almost 5,800. As presented above, all these countries now have lower GDPs than they would have had they followed Slovenia's model. In this context, Croatia fared better than the rest, while Serbia worst of all. The price of Serbia's nationalism is extremely high - for its today's GDP amounts just to some 70 percent of the one in 1990 and is by 50 percent lower than the one it would have had it followed the model of Slovenia's economic growth.

True, Slovenia's growth rate in the past twenty years is not exactly impressive as the average real GDP growth rate has been some 2.3 percent. Croatia's and Macedonia's GDPs have registered by far smaller growth rates and in the rest of ex-Yugoslav republics these rates were negative in the last 20 years. Besides, one should be rather cautious when referring to GDP: for, in some countries such as Montenegro and Croatia it grew faster than real GDP growth rate due to raised prices and real exchange rates. How sustainable that might be, that's another story.

Therefore, there is no doubt that the price economic growth paid because of nationalism was rather high everywhere, but in Serbia it was - catastrophic.

And then what about employment and unemployment? Comparisons and simulations are not that easy in this domain: the information about employment and unemployment in ex-Yugoslavia was based on statistical data, and now on labor force surveys, which underestimates the former. Differences in employment and unemployment rates in ex-Yugoslavia were huge and changes were hard to follow due to considerable migration both within the country and to other states and regions. In this context, let's again take a look at Slovenia. Its employment rate remained rather high (some 70 percent of work-capable population) but the unemployment rate is much higher than the one characteristic of Slovenia's economy in ex-Yugoslavia (3.2 percent in 1989 vs. 7.5 percent in 2010). The situation of other ex-Yugoslav countries when it comes to employment rate is much worse (mostly about or under 50 percent) and, with the exception of Croatia, when it comes to unemployment rate (8 percent in 1989 vs. 12 percent in 2010). What about Serbia today? Its employment rate is just about 50 percent of work-capable population, whereas the unemployment rate 20 percent, by far higher than it was in Serbia and Vojvodina before ex-Yugoslavia's disintegration (less than 15 percent in 1989). The situation of other countries is somewhat better by one criterion but worse by another: for instance, employment rates in Bosnia-Herzegovina and Macedonia are now about 30 percent (vs. some 20 percent in 1989). In Montenegro, the situation is about the same as it used to be: the unemployment rate amounts to 20 percent in both periods (here the above-mentioned difference in data compilation must be taken into account). The same could be said about Kosovo, though the data are pretty unreliable in the case of Kosovo. The structure of the employed and the unemployed shows that young people, women, persons from ethnic minorities and, in particular, those who turned jobless fared worse.

In brief, nationalistic policies considerably impaired the situation of labor market, notably when it came to the young, women and persons who became jobless.

This is particularly significant since nationalism is usually represented as the ideology and policy of solidarity, notably with persons with same collective identity, and of patriotism - in other words, the policy of caring for members of one's own nation and state. The bleak data about the labor market clearly indicates that nothing is true. Nationalism just plays into the hands of certain categories of people and households, mostly those higher on social ladder and holding power. Categories of persons with less social influence fare by far worse - which is evidenced by their unemployment rates. Besides, patriotism usually implies unequally distributed contributions to general well-being. Domestic production and all kinds of benefits granted to it are usually to the detriment of the employment rate and earnings of those whose situation would be much better in an open market and motivational social environment. Patriotism tends to counterbalance social pressure - and this negatively affects the strata benefiting from social organization.

So, nationalism is above all the policy of redistribution of everything of value (income, property, power, prospects, etc.) - taken from less socially influential people are allocated to privileged groups.

In this context, comparing openness of certain ex-Yugoslav markets with those of newly emerged states provides interesting findings. In ex-Yugoslavia Slovenia's exports (to other republics and abroad) amounted to some 45 percent of GDP, while 50 percent in 2010; Croatia's used to be 33 percent and is 20 percent nowadays; Serbia's amounted to some 40 percent vs. the present 25 percent; Macedonia's exports were 40 percent vs. the present 35; Montenegro's used to be more than 30 percent and just a bit above 10 percent nowadays; and figures for Bosnia-Herzegovina are almost 45 percent vs. less than 30 percent. This clearly indicates that these economies are closer today, at least when it comes to exports. Slovenia is another story - because its development strategy rather relied on exports.

Interestingly, only Slovenia and Macedonia managed to redirect their exports to foreign markets (non-Yugoslav markets), while other countries have been exporting less to foreign countries than at the time of ex-Yugoslavia. In this sense, independence was not an act of foreign trade liberalization, especially liberalization of exports. On the contrary, production of tradable goods, industrial products in the first place, has been considerably downsized while no major progress is in sight.

In brief, nationalism has considerably impaired export potentials of all countries. Above all, it has resulted in major deindustrialization.

These are all economic consequences of nationalistic policies. Of course, the price of Euro-skepticism and patriotic glorification of war criminals is much higher. Industry of graves has replaced automobile industry. This article illustrates economic price only because glorification of destroyed economy and unemployment is not that easy as glorification of heroism in the mass production of graves. But the former is the cost of the latter.