Serbia’s Grain Trade: Milosevic’s Hidden Cash Crop
Serbia’s Grain Trade: Milosevic’s Hidden Cash Crop
Table of Contents
  1. Executive Summary

Serbia’s Grain Trade: Milosevic’s Hidden Cash Crop

Nearly a year after NATO defeated Serbia in the war over Kosovo, the international community appears uncertain about how to remove Yugoslav President Slobodan Milosevic from power.

Executive Summary

Nearly a year after NATO defeated Serbia in the war over Kosovo, the international community appears uncertain about how to remove Yugoslav President Slobodan Milosevic from power.

With its avowed policy of tough economic sanctions, the indictments by the UN’s International Criminal Tribunal for the former Yugoslavia (ICTY), the accompanying asset freeze placed on all indictees by the Tribunal’s chief prosecutor, and the visa and financial ban lists maintained by the European Union (EU) and United States government, the international community has focused on dismantling the regime’s financial underpinnings. However, the potential effectiveness of this approach has been undermined because thus far, the sanctions have been poorly implemented and enforced, enabling Milosevic and his associates to exploit their economic hold over key Yugoslav resources and industries.

This is especially true of the grain trade.  Export of wheat and maize alone, it is estimated, yields an astonishing 25 per cent of Serbia’s hard currency needs; moreover, grain is bartered for oil and gas from Iraq, Libya, Syria, Russia, and Ukraine, resulting in a total estimated yield from the grain trade of nearly one-third of Serbia's fungible financial base.

Among the companies carrying out this trade are Jugoimport-SDPR and Progres Trade. Jugoimport, Yugoslavia’s defence procurement agency, currently exports grain to Libya, Syria, and, under the UN "oil-for-food program," to Iraq, with which it has a long history of collaboration on weapons technology and development programs, including the development of weapons with nuclear, biological, and chemical (NBC) capabilities. Progres Trade, headed by Serbian Prime Minister Mirko Marjanovic, handles the grain trade with Russia through the Russian firm Gazprom, which is headed by former Russian prime minister and Kosovo peace broker, Viktor Chernomyrdin.

In its second systematic investigation of how Milosevic has successfully managed to sustain himself in power and manipulate the Serbian population,[fn]See ICG Balkans Report No. 82, Trepca: Making Sense of the Labyrinth, 26 November 1999. Hide Footnote  ICG has examined the mechanics of grain from farm gate to foreign market. This paper discusses the regime’s decade-long exploitation of the farmers of Vojvodina, a traditional breadbasket of central Europe; the arrangements with Montenegro and the implications of the current blockade of Serbian foodstuffs on that dissident, democratising Yugoslav republic; and the activities of the international humanitarian assistance programs which, by providing wheat to a wheat-surplus nation, are not only giving Belgrade added capacity to manipulate its vulnerable refugee population, but are assisting the cash-strapped regime in exporting its own strategic reserves in exchange for a critical supply of fuel and foreign exchange.

In recent months the international community has taken a hard look at its use of sanctions[fn]See Appendix II: Current Sanctions Against Serbia.Hide Footnote  against pariah states with a mind toward toughening restrictions on the regimes in question while softening their impact on the respective civilian populations, be they Iraqi, Libyan, or Serbian. In early April the European Union refined and more sharply focused its own sanctions program against the Belgrade regime, in an effort to clarify to the Serbian people that Milosevic, not the population itself, is the intended target of the international community’s punishing strategy, which will remain in place until he is out of power. The inclusion of the Serbian grain trade in this more refined application of sanctions can significantly enhance the program’s effectiveness in constricting the financial resources available to Milosevic. ICG's recommendations are directed at further strengthening this potentially powerful tool.

Washington/Brussels, 5 June 2000

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