ambassador rudolf v. perina - Association for Diplomatic Studies and ...
ambassador rudolf v. perina - Association for Diplomatic Studies and ...
ambassador rudolf v. perina - Association for Diplomatic Studies and ...
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welcoming dinner in a restaurant <strong>and</strong> I couldn’t believe how it was paid <strong>for</strong>. The<br />
economic counselor opened an attaché case that was just filled with stacks of bills, <strong>and</strong> he<br />
paid <strong>for</strong> the dinner with all of these bills. He just put them on the table, <strong>and</strong> we had to<br />
wait about 15 minutes while the waiters counted them. This inflation continued through<br />
my tenure because of the sanctions. Currency was continuously being devalued <strong>and</strong><br />
reprinted in higher <strong>and</strong> higher denominations. The largest single bill that was issued in<br />
my time there was 500 billion dinars, that’s billion <strong>and</strong> not million. I have never yet seen<br />
a single bill of a higher denomination, even from the German inflation after World War I.<br />
When this bill was issued it was worth about $10. Within a week it was worth a dollar<br />
<strong>and</strong> within about 10 days it was worth a nickel. I have a stack of them which I kept as<br />
souvenirs. Basically, Yugoslav money became meaningless. Initially, of course, some<br />
people also profited by paying off debts <strong>and</strong> mortgages in worthless currency. There were<br />
rumors that Milosevic had paid off the mortgage on his personal house <strong>for</strong> a few hundred<br />
dollars.<br />
Q: How did people survive?<br />
PERINA: There was a black market primarily in German marks <strong>and</strong> to some degree in<br />
dollars. Most shop owners wanted to be paid in marks. If a person only had Yugoslav<br />
dinars, it was very difficult. A barter economy developed where people from the<br />
countryside paid with produce <strong>for</strong> manufactured goods <strong>and</strong> so on. There continued to be a<br />
stream of Western currency coming into the country from the many Serb guest workers in<br />
Western Europe, <strong>and</strong> especially Germany, who sent money back to their families. This<br />
basically sustained an entire black economy in hard currency. When I came back to the<br />
Department on consultations a couple of times, I brought back examples of the Serb<br />
currency—the bills denominated in millions <strong>and</strong> billions of dinars. People loved them,<br />
<strong>and</strong> Warren Christopher even passed some around at one of his morning staff meetings,<br />
as evidence of how the sanctions were working. But there was a flip side to the story. The<br />
sanctions destroyed the currency but the economy continued to function in some<br />
remarkable ways. For example, there continued to be a McDonalds’s in Belgrade through<br />
the entire sanction period. It was no longer under franchise <strong>and</strong> had to procure the<br />
ingredients <strong>for</strong> their products locally, but one could not taste a difference from any other<br />
McDonald’s hamburger. If one had hard currency, it was still possible to buy almost<br />
anything, including new Mercedes automobiles smuggled into the country. There were,<br />
of course, many criminal elements who soon figured out how to make such a system<br />
profitable <strong>for</strong> themselves through smuggling <strong>and</strong> similar activity. The sanctions thus<br />
contributed to a real criminalization of the society. Gangsters <strong>and</strong> criminals became<br />
wealthy <strong>and</strong> rose to the top, while average people suffered.<br />
Q: How did the people eat <strong>and</strong> procure basic necessities?<br />
PERINA: I think a lot of people relied on communities, on social contacts, on family.<br />
People in the countryside could raise their own food <strong>and</strong> were relatively self sufficient.<br />
They were less affected by the sanctions. Many city dwellers had come within one or two<br />
generations from villages where they still had relatives who could help them get food.<br />
Others relied on remittances from abroad <strong>for</strong> hard currency. Serbs are also very inventive<br />
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