Economic sanctions – social and economic effects

By Johan Galtung

Written 1993 and edited 2006

The following six points are based on observations and dialogues in the conflict area:

[1]  The Security Council has succeeded where the Milosevic regime might have failed: in unifying the population and thereby prolonging the war.  The Democratic Opposition, very much at odds with the regime and especially over issues of violence, shares the basic view of the government: the sanctions are unjust, based on a misreading of the situation (that Belgrade is behind everything Serbs do), possibly against international law (the conflict is more a civil than an inter-state war although there are aspects of both).  Since the sanctions are an important part of everyday life, more important than the war itself in non-war zones, attitudes toward sanctions may overshadow other attitudes, and unify.

[2]  The Security Council and foreign governments are seen as responsible for the economic predicament, not the government.  The idea that the sanctions are due to government policy stretches the causal chain. The immediate cause, the Security Council resolution, will more easily be held responsible.  But the major reason is deeper: a feeling that the aim is to bring down the government which, right or wrong, then becomes “our government”.  The sanctions are seen as illegitimate intervention in internal affairs, going beyond what the government has done: “they are out to get us, not just trying to change some policy.”

[3]  The sanctions confirm rather than counteract Serbian images of the outside world and strengthen their resolve.
The Serbs have a richly developed and well internalized CGT-complex (a sense of being chosen, with glories and trauma).  The sanctions have been nicely integrated into the long litanies about suffering imposed from the outside. But at the same time strength is derived from the Orthodox faith that Justice and Truth will prevail, with Redemption; Orthodoxy being the most optimistic of the three Christianities.  One day the world will understand how unjustly the Serbs have been treated, the sanctions will be lifted, and Serbs will live in their homeland.  The injustice that has fallen on the Serbs is what one can expect from the outside world (except Orthodox countries); but even so injustice will run up against its limits.

In other words, the sanctions are interpreted in a historical and symbolic context; probably incomprehensible to people with economic material cost-benefit analysis driving out any sense of history and symbolism. As such the sanctions reinforce existing perceptions rather than weaken them, thereby strengthening the resolve.  Ideas like “the highest body in the world, the Security Council, has launched sanctions against us; hence we must have done something very wrong, let us mend our ways, improve and the sanctions will be lifted” may be held by people not co-inhabiting the CMT-complex (which should not be confused with superficial terms like “nationalism”).  They are likely to be few, perhaps members of the old cosmopolitan elite, and marginalized by the regime, or self-marginalized.  Consequently, the sanctions become counter-productive exercises in unenlightened political behavior.

[4]  The sanctions are also seen as unjust because they hit the weak and innocent; not the strong, responsible for policies.
Street-life in Belgrade, with shops, restaurants etc. is almost normal.  Most products seem to be available, except gasoline, pharmaceutical products, foreign currency of course, and the travel agencies have little to offer.  Restaurants are crowded, food is as plentiful and good as ever.

General suffering is not visible, the sick and the old victims suffer invisibly in their apartments.  The basic condition for survival under sanction duress is to do everything to keep healthy (good food, exercise) and not depend on medical supplies. The whole situation is very different from the subsistence economy in Norway during the occupation 1940-45.  The national socialists had strong measures against black market and hoarding, and ensured minimum satisfaction of basic needs through rationing and subsidies.  As no such measures are introduced in Serbia, the consequence is a sharpening of inequality.  But this inequality hits the sick and poor in general with retired people as a major category rather than, say, the working classes.  Being agriculturally rich and  self-sufficient, food will be easily available and plentiful forever, or for a very long time.

Conditions of local self-sufficiency should also apply to Montenegro and to the minorities in Kosovo/a, Sandzak and Vojvodina.  The duress would be felt among groups such as the retired, the sick and the old), but they are unable to exercise any strong pressure on the government even if they had been inclined to do so.  More critical for all layers of the population would be heating in the cold season; but smuggling may be the solution.

[5]  Economic defense takes the form of smuggling rather than import-substitution, using mafia rather than entrepreneurs. Economic sanctions, the 20th century homologue of the siege, is a low intensity warfare, killing slowly to the extent supplies for basic needs satisfaction are cut off. There is nothing nonviolent or peaceful about economic sanctions; after all, the goal is that they should “bite”.  Nor is there anything “moral” making people less willing to accept the duress of sanctions than of war.

Being economic aggression the search will be on for adequate and sustainable economic defense, meeting the basic needs of the population, and the basic greed of elites.  This could become politically problematic with long-lasting economic aggression.  Some individuals will solve the problem by escaping with their families.  But the society cannot escape.

There are only two answers when stocks have been exhausted: import-substitution, producing what is needed domestically, behind sealed borders; and illegal import, smuggling. Economic sanctions by definition guarantee high level of protectionism for infant industries, and high level of challenge to real entrepreneurs.  Innovations are needed, unconventional use of resources, etc. Thus, in general one might expect a high development effect from economic sanctions if this road is chosen; a reason why economic sanctions fall more under the Economic than the Security Council.

But Serbia seems to have chosen the other road: smuggling, from all neighboring countries, including Croatia, calculating the risk of losing some percentage when detected. The talents needed are risk-taking, illegality, night work, violence and excellent organization, also transnationally.  In short, mafia talents. In that sense sanctions serve to wean Serbia off any socialist inclination toward self-sufficiency, and launches the country on the normal Eastern European privatization/mafia track. The damage done by bringing the wrong people and the wrong talents into power will be considerable, as elsewhere in Eastern Europe; and the responsibility for this lies with the Serbian government.

Why has the smuggling approach been chosen rather than  import-substitution?  Many answers come up in the dialogues:
– sanctions are seen as entirely unjust, even illegal; hence illegality is a permissible reaction;
– sanctions will probably be short-lasting; hence no structural change is called for and a more self-reliant economic structure may be counter-productive when the sanctions are called off;
– people demand foreign goods, not home-spun local products;
– there is more money, and above all more fast money, to be made through smuggling than through import-substitution;
– the talents called for in smuggling are more similar to the talents promoted through warfare;
– warfare itself provides opportunities, like use of military vehicles, logistics in general, including cooperation with foreign (and UN) military.

And yet, in spite of all such explanatory factors, the F.R.Y leadership seems to be losing an important opportunity in not using the sanctions challenge to generate local supplies for the people, thereby also demonstrating their defiance and readiness to stand up against outside pressure in a more positive way.  Thus, F.R.Y should have had a booming pharmaceutical industry by now.

[6]  The sanctions, diplomatic (bilateral/multilateral), cultural (including sports) and economic, weaken the opposition.  Under normal conditions opposition to the violence of the Serbs (and the Croats, and the Muslims) might make alliances with forces in the outside world to bring about a change.  Thus, they could have given a more truthful image of the whole situation, and received a more truthful image of the outside world than the picture provided by Yugoslav media (where any opposition to standard Western anti-Serbian policy is overplayed, giving rise to unrealistic expectations and policies).  Instead, they are all branded as “Serbs”, applying the collective guilt principle.

But this also applies to the way governmental forces are treated.  Excluding the F.R.Y diplomatically from UN political processes not only reinforces their image of the world but also gives the world less of a handle on the F.R.Y.

Government and opposition are forced to come to terms with each other, having no outsiders to call upon.  As mentioned, many of their perceptions will be shared, meaning that the range of opposition points decreases. Under such conditions the F.R.Y will probably become even more autistic, acting out of its own inner inclinations, and even less attentive to outside reaction.  Their reaction will become even more stereotyped and ritualistic, even less guided by a concern for consequences, and even more guided by sanctions as ritual (according to the Charter) and the idea that “the UN (and the New World Order?) cannot afford to be beaten; a little longer and they will bite”.  If that is the sentiment, and the sanctions strengthen the regime, then they may last for a long time, hardening both sides like a military war, but less decisive.

What would happen if all sanctions were lifted?

The government would not collapse under lack of outside pressure for the reason mentioned: We will prevail.  This would also fit into the general cosmology conceiving of Serbs as living on a highly dramatic time, on kairos rather than, or in addition to, khronos.

However, being admitted again into the international community would probably make them less autistic, more reciprocating.  The former Yugoslavia was a very good member of the international community, playing very constructive roles during the dangerous Cold War; a fact often heard in conversations, adding to the bitterness of injustice.  The Western world then has the difficulty of having to explain why “Communist/Titoist” Yugoslavia was the good one, and the present super-capitalist Yugoslavia, with media and elections more free than one could expect under such adverse circumstances the bad one.

The formula often used is that “the old Communists are still in power, only when they go can there be real change”.  That some or many leaders have survived the change is true, but (1) they were party members and/or bureaucrats/technocrats more than ideological Communists and (2) that type of people would be in power anyhow, and be strengthened by the outside pressure.  To diminish that pressure would not make them give up the search for security for Serbs everywhere – particularly from their perceived arch-enemies in Zagreb, Sarajevo and Pristina, under federal or other formulas, including as refugees on Serbian soil, which should not be confused with efforts to create a Greater Serbian unitary state. That formula fits Croatian and Bosniak politics rather than the Serbs.

In short:  lift the sanctions, or produce a reasonable plan for their gradual elimination in return for reasonable Serbian offers.  The present policy is simply counter-productive.