The man who, carrying a Kalashnikov, liberated the National Bank of Serbia (NBS) on October 5th 2000 in the name of the new, unquestionably democratic government, forced an entry into the same bank on August 2nd 2012, carrying a wooden stake, to stab its independence and occupy it in the name of the new government, one whose democratic potential is rather questionable.
Thus, in only 12 years, the circle closes – after revolution, comes restoration, and the key monetary institution of Serbia will once again become the government’s servant. The manner in which our ruling coalition, marching through the institutions of the system, has forced an entry into the National Bank, has no democratic legitimacy, seriously jeopardizes the painstakingly achieved level of the rule of law, and is not in accordance with European standards, which the SNS-SPS-URS coalition has been promising us so sweetly.
The blatant triumphalism and petty political arrogance are immune to any kind of well-intentioned advice – that forming a parliamentary majority does not imply the permission to behave “like a bull in a china shop” and crash all democratic institutions the previous government has managed to establish. And the independence of NBS, conquered and adopted in the parliament only two years ago, was a great democratic feat and an unquestionably European value. It is thus the more scarier that the new parliamentary majority, with its mouths full of Europe, began the mandate by placing NBS under party control, gaining at the very beginning of its rule the reputation of a government which violates those same European values.
The current governor Dejan Soskic serves only as a cover, put to the fore so that the government could hide its main intention – to revoke the independence of one of the key institutions of the fourth branch of power (independent regulatory and control bodies), which, in EU member states, represents the most important and efficient control over executive power (government) in the name of the society. The current debate on the achievements and effects of governor Soskic’s work is false and dishonest. The new government is looking only at his flaws and oversights, with the intention of vilifying him and then easily deposing him, while the good moves he has made, the moves which have helped preserve a stable banking system (when banking systems around the world and Europe were falling apart) along with measures securing macroeconomic stability in the moments when the executive power acted irresponsibly, endangering the exchange rate of dinar and forcing the market, are being ignored.
For example, one of the objections to his work – that “he turned a blind eye” to the dealings in Agrobanka and contributed to its demise, is hypocritical, to say the least. Even the birds in the trees know that the case of Agrobanka has been dragging along since 2005-2006, which means that the current minister of economy and finance (in particular), as well as the incumbent Prime Minister, knew about it, and were in some way involved in it.
Objections to the work of the governor are many. An ordinary citizen, for example, does not understand how it is possible that a country can have a stable banking system and a failed economy (at the same time). And who is more responsible for the current economic situation in Serbia – the government and the parliament or the National Bank? The debate on this issue – the responsibility of the governor and the possibility of deposing him, could have been and can be carried out in accordance with established democratic procedures, respecting the independence of the National Bank of Serbia. But the new government does not care about procedures or debate. Although it is trying to convince us of its meekness, the new government is savagely attacking the already conquered European values in Serbia, with blatant disregard for the warnings issued by the World Bank, IMF and the European Commission.
Whoever might have been in Soskic’s places right now, would have lost his or her head. The “target” is not personalized, it does not have a name; this is not an issue of a capable-inept governor.
The target is systematic and strategic – it is necessary to place the central monetary authority under party control.
Why is this important?
For two reasons.
The first is to put a paw on the foreign currency reserves – 7.2 billion EUR of foreign currency savings are part of these reserves.
The second is for the government to take over the most important lever of the National Bank – control over commercial banks.
By placing foreign currency reserves under its control, the government does not have to undertake difficult and painful reforms in order to receive (let’s say) two billion euros from IMF and the World Bank, in order to fulfill some of the electoral promises. One of these promises, for example, is injecting two billion euros into the economy, in order to revive production. That is, giving this money away to selected entrepreneurs and businessmen. A governor faithful to the government (whoever he or she will be), is a safe guarantee that the money will be obtained, and spent without control, without the implementation of necessary reforms, by simply taking it out of the NBS treasury. After all, Jane Armitage (WB) and Bogdan Lisovolik (IMF) already spoke for their respective institutions – Serbia will not receive any financial aid if it does not continue implementing economic reforms.
And what happens if the government gets the taste for spending more than the two billion euros of foreign currency reserves (foreign currency savings)? Who will stop them from putting this bad idea into action? And what will happen in the end, when the government wastes all the money, and citizens (God forbid) are left without their savings?
This implies a very dangerous scenario. But an even more dangerous move is taking control over NBS functions. This means that any day now, our executive power (government) will have direct control over every commercial bank in Serbia. In that way, “the enemies of the people” will be placed under direct control of Prime Minister Ivica Dacic. Each NBS controller, at the behest of the government, will have the opportunity to go out of his or her way to look for flaws in the business records of every commercial bank. And then these flaws will be used to blackmail banks. For example, to force them to lower interest rates on loans issued to state-owned companies, or to postpone or write off debts of “certain” companies, or to purchase state securities for non-market (high) prices, or to ban them from taking profits outside the country, or to force them to participate in the financing of state infrastructural projects…
In all reality, by revoking the independence of NBS, the government will take over the system of control over commercial banks, and use blackmail to force them to finance the electoral promises of the ruling coalition. Those that refuse to do the government’s bidding will have all of its dirty laundry aired in front of the public’s eyes (proven experts in the government already exist for this task), followed by public lynching (authorized spin doctors ready for this job are present as well). Such a bank will then be prohibited from operating, shut down and banished from Serbia. As it should be with the enemies of the people.
This is why it’s good that the National Bank stays outside of the reach of politics.
Translated by Bojana Obradovic