Struggling Serbian city awaits end of sanctions

Pancevo: Its industrial muscle has been stripped bare

By Steve Nettleton, CNN.com correspondent in Yugoslavia

PANCEVO, Yugoslavia (CNN) -- In an outdoor market crowded with more sellers than shoppers, a retired riverboat captain waits for customers behind piles of blue jeans and jackets.

Toma, who wouldn't give his last name, used to pilot ships loaded with exports up and down the Danube.

Today, with trade stifled by international sanctions and the Danube blocked by the ruins of bridges wrecked during NATO's bombing campaign last year, Toma is forced to hawk imitation Levis at the market to make ends meet.

IN-DEPTH Yugoslavia in Transition   • Balkan hotspots   • War crimes defendants   • Milosevic profile   • Kostunica profile   • Ambition and wealth   • Timeline 1945-2000   • Shrinking of Yugoslavia   • Message board   • Sanctions highlights   • Sick society   • Aftermath of an uprising   • Serbia: A day of change   • Protest in pictures    VIDEO CNN's Nic Robertson says the visit by Hubert Vedrin shows Yugoslavia's improving international relations Play video (QuickTime or Windows Media) CNN's Patricia Kelly explains what the lifted sanctions may mean for Yugoslavia. Play video (QuickTime or Windows Media) CNN's Alessio Vinci explains what must be done before Milosevic is truly out of power Play video (QuickTime or Windows Media) CNN.com Political Editor Robin Oakley analyzes the lifting of sanctions (October 9) Play video (QuickTime or Windows Media) CNN's Jim Clancy examines possibilities for the future of Kosovo now that Milosevic is gone (October 9) Play video (QuickTime or Windows Media)     TRANSCRIPT James Rubin on Yugoslavia

He greets news that the European Union will lift its economic sanctions in the wake of the election of Yugoslav President Vojislav Kostunica with little enthusiasm.

"All we've heard in the last few days are just promises," he said. "We are waiting for real effects."

Across the aisle, a man selling plasticware is even less optimistic.

"If they just send us more money, the mafia will get it," said the salesman, a former worker at an airplane manufacturing plant who has not received a salary in five years.

"Nothing will change."

The market has become a bastion of Pancevo's unemployed, where victims of Yugoslavia's devastated economy -- everyone from factory workers to scientists -- have resorted to selling whatever merchandise they can find.

At the dawn of the 1990s, Pancevo, an industrial suburb of Belgrade, produced more than the entire output of Montenegro, Serbia's junior republic in the Yugoslav federation, according to local union leaders.

By the end of the decade, all of its major plants were out of commission or operating at only a fraction of their capacity.

Sanctions banning oil exports to Serbia left Pancevo's oil refinery starved for its primary raw material, while sanctions on trade severed commercial deals between the city's plastics factory and light bulb production plant and their European business partners.

Between March and June 1999, Pancevo's plants were struck repeatedly by NATO missiles.

Barred from importing the necessary spare parts to repair their damaged U.S.- and German-built machinery, the factories were unable to return to full production.

The troubles in Pancevo have an impact far beyond the city limits, said Slobodan Krasulja, a manager from HIP Azotara, Yugoslavia's only manufacturer of ammonium and urea, which currently produces less than half what it did a few years ago.

"Not only do our 1,800 workers and their families depend on our production, but so do other plants elsewhere in Yugoslavia," Krasulja said.

"We provide the raw materials for plants that produce fertilizer. Without our products, they can't make their products."

The sanctions are not the only cause of HIP Azotara's problems, he said.

He accused the government of mismanaging the allocation of natural gas -- the main resource used to produce ammonium -- often leaving the plant short of its needs.

The sanctions -- and the bombing -- didn't help, he said.

Starved of oil: Pancevo's refinery

"We need a complete lifting of sanctions so we can buy spare parts on the open market," Krasulja said.

"We need more investment. We would like to find a European partner to go into business with in the fertilizer market. Lifting the sanctions opens the door to all of this."

A worker from the neighbouring Petrohemija plastics plant, who asked not to be identified, believes his hometown's survival depends on the opening of economic markets.

He said an ecologist recently told him the closure of Pancevo's heavy industry would be good for the city, making it a cleaner and healthier place to live.

"I told him it was industry that gave the city life. It was industry that gave the city money to build its roads and schools," he said. "With the lifting of sanctions, this city will live again."

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ABC of Pancevo

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