The Yugoslav Crisis:
Reconstruction, Reconciliation and Regional Economic Cooperation and development

By Milan Panic
Former Prime Minister of
The Federal Republic of Yugoslavia
(1992-1993)
and
Chairman & CEO
Of
ICN Pharmaceuticals, Inc.

LaszloTeleki Institute
Budapest, Hungary
May 14. 1999

It may come as something of a surprise, but I have some good news for you. As bad as things look today in the Balkans, there is a future. There is always a future. Will we control it, or will we let the future control us? Will we use our energy and creativity to prepare for a good, hopeful and prosperous future, or will we repeat the mistakes of the past that produced the human tragedy and economic disaster that now engulfs the Balkans?

I have often said that I believe in dreams. Mans must dream of a better future or he simply exists from day to day, never improving his lot, and never providing inspiration for his children and grandchildren. That approach leads to despair, distrust of others, and in many parts of the worlds, including the Balkans, to ethnic conflict. Desperate people are easy prey for unscrupulous, demagogic politicians, who preach hate thy neighbor, rather than love and work together with thy neighbor for you common good.

In two articles in The European in 1993 and 1994, I argued the need for regional economic cooperation in Southeastern Europe to form the basis for lasting peace and stability in the Balkans. The people of the Balkans need a vision of the future that offers them something other than destructive orgies of ethnic nationalism. Endless negotiations under the aegis of the United Nations, the European Community and the G-8, punishing economic sanctions, and now even more punishing bombardment, as well as war crimes trials, have brought peace no closer. Isn’t it time to unveil a carrot, to offer a positive vision of a shared future of economic development and prosperity instead of the hopelessness of endless ethnic conflict and destruction?

I have entitled my remarks today: Reconstruction, Reconciliation and Regional Economic Cooperation and development. I have no quarrel with the Rambouillet Accords, or the May 6 statement of the Group of 8. I welcome the Russian efforts to help convince that Yugoslav regime that it must accept these conditions for the restoration of security in Kosovo for all its citizens. But these conditions only address the physical security of Kosovo, not its economic future, nor the economic future of the neighboring Balkan states. Physical security is the indispensable first half of the loaf, but the equally indispensable second half, which in the long run is the more important half, is economic security. The need for intensive physical security measures recedes when broadly based economic satisfied with their lot in life, and gain faith in the opportunities available to their children and grandchildren.

Since I expressed my views in the two European articles and in several speeches, there has been a beginning toward regional economic cooperation in Southeastern Europe. Three years ago an excellent project called the Southeast European Cooperative Initiative (SECI) was created. The architect and chief proponent was a visionary American statesman named Ambassador Richard Schifter. He created the concept, which is to reduce legal, institutional and bureaucratic barriers to efficient commercial relations among the countries of Southeastern Europe. We met several times and agreed that we had very similar views in what was needed. Schifter convinced the members of the European Community of the merits of his program and the project was adopted as a joint U.S.-EU undertaking with a secretariat provided by the EU Economic Committee in Geneva. Former Austrian Vice-Chancellor Buseck agreed to become the SECI Executive Director. Together with a prominent Greek businessman, Costa Karas, and a prominent Turkish business man, Remi Koc, I was a founding member of the SECI Business Advisory Council in a meeting in Thessaloniki two years ago. SECI has embarked on several specific projects and is moving actively toward its stated objectives of fostering and facilitating regional economic cooperation in Southeastern Europe. SECI is an excellent initiative, but a much greater U.S. and EU commitment for a much more comprehensive program is needed, something similar to the Marshall Plan in scope. And the planning and preparation should begin now.

The European Community and the United States should establish a planning group to elaborate a comprehensive program of economic cooperation and development for Southeastern Europe. I t must embrace the entire region in order to succeed. To alleviated the fears of some, it should be made clear that this is not an effort to recreate the former Yugoslavia, and that no nation will surrender any of its sovereignty. The first order of business should be to re-establish the transportation and communications links that are essential to the entire region and have been disrupted by the wars and sanctions. All barriers to the intra-regional movement of good and services should be moved and various other steps taken to facilitate regional economic development. The experts will know what has to be done and how to do it. The important thing is to offer a vision of hope and future prosperity to the entire region.

The initiative must come from outside the region or it will not happen. The countries within the region must be told clearly and unequivocally that if they choose not to participate they will forfeit any right to economic assistance. Europe and the United States must be firm in dealing with the nationalistic passions within the region. What is needed is a shared vision of collective economic security and well being. We should provide leadership, guidance and support for those who are prepared to share this vision and are willing to work together for its realization.

The ticket for admission to a Marshall Plan-type program must be full implementation of a serious privatization program. Without a significant flow of private investment funds into the region, the plan will not succeed. In the post-communist era foreign investors are no longer interested in joint ventures with government enterprises. In addition, government enterprises can be used to finance corrupt dictatorial power, which is the case in Serbia. Also the rule of law with a truly independent judiciary system must be established in countries wishing to participate in the program. Each participant must create an atmosphere and business climate that attracts foreign investment. There must be political, social, financial and legal stability. Foreign investors must be comfortable in the knowledge that their money and the money of their stockholders are not being put at risk in an unstable and arbitrary business environment.

There is no perfect privatization program. But the programs in Poland, Hungary and the Czech Republic have worked reasonably well. They have brought in substantial foreign investment that has resulted in modernization of technologies, efficiency of management, and increases in productivity.

Until now I have concentrated on economic themes. Now let me say something about reconciliation of the Serbian nation with the other nations of the Balkans. Let us be honest and frank. This is not a problem of the Serbian people, but a problem of the Serbian regime and its policies. The Serbian people have legitimate interests arising from the break up of Yugoslavia that might have received international support if they had been pursued in non-violent ways by the Serbian regime. However, in defeat after defeat, the regime of Slobodan Milosevic has sacrificed the interests of the Serbian nation in order to assure his continued hold on political power. The final and most punishing defeat is now in progress. It is inconceivable that when this defeat is complete the regime that provoked it and brought so much destruction down upon the Serbian nation can continue to govern Serbia after the war. Serbia is at the crossroads. It can follow the Milosevic regime backward down the dead-end path of international isolation and poverty, or it can close ranks behind the democratic leadership offered by the Alliance for Change and go proudly forward on the road to Europe, as Montenegro under the wise leadership of President Djukanovic is doing.

If Serbia chooses the road to Europe, I am certain it will be welcomed as a full partner with its neighbors in a European program of reconstruction and economic development for Southeastern Europe. But Serbia’s journey on the road to Europe must be gin with full and final rejection of the dictatorial and destructive rule of the Milosevic regime and a rapid transition to democracy via free and fair elections, with international assistance and monitoring by the Organization for Security and Cooperation in Europe.

It must also be recognized that there cannot be true democracy in Yugoslavia unless the rights of minorities are fully respected, in law and in practice. Even with the secession of large area of pre-1999 Yugoslavia, the Federal Republic of Yugoslavia remains a multi-ethnic and a multi-cultural state.

The Yugoslav crisis started by way of an onslaught on multi-cultural coexistence. Ethnicity became the stepping stone of politicians. Massive human rights violations were committed in the name of one ethnic group against the other. Ferocious attacks were also mounted against the rights of individuals and groups to be different from the majority, to have different churches, to use different alphabets, to speak different languages, to use different names for the same city, and to foster cultural identities. This yielded the most questionable vision of “ethnic boundaries”, “ethnic states” and “ethnically pure societies”; and these dubious goals have been gaining ground, and getting even some resigned international recognition. This is completely alien to me. My experience is completely different. I know that people are different, they belong to different religions, speak different languages, but I never understood how this could translate into different political programs, even less can I understand how this could lead to war.

As Prime Minister of Yugoslavia in 1992, I established the first Ministry of Human Rights the world had ever known. As Minister I appointed Professor Gruback of Novi Sad, a man highly respected both by Serbians and Hungarians. I appointed three under Secretaries: a Hungarian, and Albanian and a Moslem from Sandjak. When I caught a senior police official engaging in ethnic cleansing in Vojvodina, I fried him publicly during the August 1992 London Conference. That person, Mr. Kertesz, was then and remains today a close ally and supporter of Milosevic. With regard to Kosovo, I met several times with Mr. Rugova and his advisors. I tried to address the grievances of the Albanians and to work for harmonious relations between Albanians and Serbs, but I was blocked at every turn by Milosevic’s militant nationalists.

Let me tell you in very simple terms what is my approach to ethnic differences in Yugoslavia. First of all, these differences should stay. Yugoslavia has to remain a multi-ethnic country. Minorities – whoever they are – have to be integrated, rather than cleansed. When I say, “integrated”, I do not mean assimilated. I certainly do not want all Albanians to becomes Serbs; I do not want all Hungarians to becomes Serbs; and I do not want all Serbs to become Albanians or Croats. I want all to be equal Yugoslav citizens while maintaining their ethnic, cultural and linguistic identity. Democracy cannot be built on distinctions between right and wrong churches, or right and wrong alphabets.

Let me also say that the problem of the Hungarian minority should be easy to solve if we approach it in a modern European way. I know Mr. Kasa (Kasza) the leader of Hungarians in Vojvodina. I know he is a Hungarian. I know he is ready to fight hard for the rights of his fellow Hungarians, but I also know that he accepts Serbian and Yugoslavia as the frame-work for solutions. As a matter of fact, when I was running against Milosevic for the position of president of Serbia in 1992, I visited many Serbian cities. Hundreds of thousands of people came with hope for a change, but only one mayor had the courage to greet me and endorse me publicly against Milosevic. This mayor was Mr. Kasa.

I would build a multicultural Serbia and a multicultural Yugoslavia on two basic principles: decentralization, and the right of minorities to decide themselves in matters pertaining to their own identity.

If jury members of local courts, local school-masters, heads of local police stations are all appointed by Belgrade, minorities ( and not only minorities) are divorced from their own community institutions and community life. Allocation of more competencies to the local and regional level throughout Serbia ( and within Vojvodina and Kosovo in particular) would alleviate these problems. It does not make sense for Belgrade to appoint every judge and every school-master. Decisions have to be made at a close range to those who are concerned. Most matters concerning Nis have to be decided in Nis, and most matters concerning Pristina have to be decided in Pristina. Furthermore, minorities should be allowed to organize and govern their own schools, media, and cultural institutions.

In Conclusion let me emphasize that we must find ways to help Serbs emerge from the wilderness into which the Milosevic regime has led them. It is in Europe’s interest to do so because without political stability in Serbia there will be no stability I the Balkans.

The Rambouillet Accords provide for free and fair democratic elections in Kosovo, but not in Serbia. Meanwhile, in this decade the Milosevic regime has stolen a series of elections that otherwise would have produced legitimate, democratically elected governments, which would have worked with the European Community to protect the legitimate interests of the Serbian nation within the framework of peaceful regional solutions. True democracy in Serbia would have prevented the series of Balkan conflicts that have caused so much death and destruction.

I am sure that my concept of regional economic cooperation in Southeastern Europe will be considered unrealistic by countless skeptics and detractors. The will maintain that the wounds and scars of brutal warfare are too deep. Ethnic hatreds too inflamed. To that my response is: who would have believed in 1945 that the French , the English, the Germans and other Europeans who had been locked in history’s most brutal and destructive war for almost six years would within a few years after the war beforging cooperative economic, political, and even military ties. The secret is mutual self-interest. With the proper assistance and incentives, Southeastern Europeans can be convinced of and start working toward their mutual self-interest. As for achieving truly democratic free and fair elections in Serbia, the requirements for participation in the Marshall Plan for Southeastern Europe would force this issue, and produce such elections, unless the Milosevic regime should decide to accept political and economic isolation and forego any assistance with reconstruction, let alone economic development.

Thank you for permitting me to express my views to you on the most serious challenge to European peace in over fifty years. We must, and we can, prepare for a better and peaceful future as we enter the next millennium.

Milan Panic
Prime Minster
The Federal Republic of Yugoslavia 1992-1993