If the rule you followed brought you to this, of what use was the rule?
Anton Chigurh, No Country for Old Men
Perhaps it would not be pointless to consider Ivica Dacic’s opening speech to the Parliament. After all, it contains the principles and objectives of the new government. As far as I could see from the news reports, there was no real analysis neither in the Parliament or by the public, which is probably in line with the prevailing cynicism that nothing said by the people in power should be taken seriously. However, this allows them unlimited liberty, which is not in accordance with the democratic accountability of either the government or the public. Therefore, I will try to reflect on the most important points from this speech.
The historical crisis
At the outset, “recent decades” have been described as a “historic crisis of the Serbian people.” From that undefined number of decades, the most recent one in which “social changes did not produce the expected results” prominently stands out. Criminal privatization and the destruction of the country’s enormous economic potential led to “widespread poverty and the decline of living, economic, cultural and civilizational standards of the Serbian society.” It is important to note here something that is characteristic of the entire text. One might call it confusion that is not completely devoid of being systematic. Because, these political changes were initiated while in the midst of an economic crisis that was a result of not only the criminal privatization, but because of an all encompassing criminalization of the society that led to a complete decline of all standards. But this happened a decade earlier. Still, despite the fact that the last decade of political changes has been really disappointing, any comparison with the criminality that preceded it is intellectually insulting.
From what follows, it becomes even more unclear to which decades Dacic is referring. Dacic says that, as the new prime minister, he does not intend to deal with all these inherited problems and feuds, some of which date back to World War II, but will instead turn to the future. The historical crisis will therefore, despite its duration, be managed through forgetfulness, particularly in regard to the role Ivica Dacic’s own party. Because, if one is to judge the recent decades, particularly those after political changes, and points to the role of politics and political responsibility, it would be expected that at least something would be said about the Socialist Party’s liability over this period. For example, in the last decade of the 20th century, at the time when the crisis was at its peak and the decline at its deepest, this party was in power. Even in the decade following the political changes, the Socialist Party was not a part of the government or did not supported it only during the period from 2001-2003 and from May 2007 to May 2008. In all other years it supported a minority government or was a very influential member of the ruling coalition. The mentioned historical crisis is however focused on the economic downturn, implying that the responsibility for the crisis lies with the Democratic Party and possibly G17 Plus (and the Democratic Party of Serbia?). And then Dacic concludes that we will overcome this historical crisis by forgetting it.
Unfortunately, this is not possible. Because besides inherited responsibilities, including those partisan and personal which one could probably forget (although, again, usually not without consequences in political terms), state obligations and responsibilities cannot be forgotten. On the one hand, he accepts this by saying that agreements made by the previous government will be respected, but on the other he doesn’t seem to completely appreciate them when talking about relationships in the region and particularly the policy towards Kosovo and Bosnia and Herzegovina. These sections of the opening speech are almost entirely devoid of content, although they deal with problems and obligations arising from the period before the “political changes”. In statements before and after the forming of the new government, it is obvious that Nikolic and Dacic view these problems in the same way as they did during the nineteen nineties – that is, as territorial. If for no other reason, it is because of this that the political results from this period should be re-examined, since it was the national-territorial policies that led to the breakup of Yugoslavia as well as Serbia. So we should be clearly asking those who are constantly confusing government with national interests, how can they guarantee that the outcome will not be similar?
Here it makes sense to digress and note the latest statement from Dobrica Cosic, undoubtedly the main ideologue of these policies. From what he says one can conclude that the goals of Serbian politics in the last twenty years were to accept what was offered, or at least what was offered mythically in 1915 by the World War II Allies. That is to say the creation of Serbia in boundaries that were later popularized particularly by the advocates Greater Serbia. This was something, he says, that Serbia obtained in times of war but then lost during peace. Some similar, probably abbreviated version provided the goals of the politics of the nineties. It is especially interesting to note that lessons here are being drawn from a decision rendered in 1915 that politics based on territorial grounds should be rejected, instead of looking at the results of such policies, both in war and peace, during the period of the “historic crisis of the Serbian people.” This would however be useful in order to properly understand government and national interests and their democratic and territorial aspects.
Because, no matter what the opening speech says, if one really wants to consolidate “the only victory of the Serbian people,” as stated by Cosic and reiterated by Dacic through his support for the disintegration of Bosnia and Herzegovina, and if there is a real wish to delineate borders with Albanians, one could open up multiple territorial issues, with the later one involving those related to the present territory of Serbia. Not even to mention the human and other migrations. Therefore, to put it mildly, this part of the opening speech is disappointing, because it certainly doesn’t provide any clarity on the reasons for the “historic crisis of the Serbian people” nor does it offer a political solution to the problem.
Social justice and the labour market
Most of the opening speech focused on the changing economic policies. But there is very little coherence or information about the strategy outline. Therefore, it is important to emphasize that which was missing in this outline of the government’s agenda: there was virtually nothing said about the labour market and employment policies. However, there was a lot in the speech on the topic of social justice, meaning the redistribution from the rich to the poor, highlighting the opposition of the 99 percent of the poor to the one percent of the rich, although this type of inequality is of little importance to Serbia today. But the speech says nothing about what will be done to at least create some kind of equal conditions for obtaining employment. By far the greatest economic and social problem in Serbia is its low employment rate or, in other words, high unemployment and inactivity, meaning that biggest social justice problems are related to the labour market. But this government does not comprehend the problem or give possible solutions.
That this assessment is not too harsh can be seen from statements made about the demographic trends and the need for the state to take measures against the population decline. As in all other cases, subsidies of one kind or another are seen as a means of solving problems ranging from increasing birth rates and agricultural production to encouraging investments and increase exports. In addition, the state will invest in infrastructure as well as support entrepreneurs, both domestic and foreign. If one excluded subsidies, other economic policy measures are practically nonexistent. And how subsidies will increase the birth rate in a country where opportunities for young people to find work are minimal remains completely unclear.
In the part relating to banks and the Central Bank there are a lot of inconsistencies. It is noted that banks have about 25 percent of bad debt in the corporate sector, but banks are told to continue investing in this sector since otherwise there will be no profit for either. But if the banks and the corporate sector are in such a poor condition, wouldn’t it be best if they went through the process of financial consolidation, including program consolidation in the corporate sector – however, on this topic, Dacic remains silent. Because even if banks had the money, although he says that in fact they do not, it would not be favourable for them, as well as the society in general, to invest in companies that are unable to repay their debt. Because this will at a certain point in time, in Serbia probably right about this time, lead to the socialization of losses. After all, this is partly the reason for the rapidly-growing public debt.
The Central Bank is blamed for allowing the exchange rate devaluation, although it has no obligation to defend a fixed or any other kind of predetermined exchange rate level. And it would not be able to do this even if it was given this task. In some countries a fixed exchange rate has proved to be a viable solution, but Serbia is not an example of this. If someone really wanted a stable exchange rate, then they would ensure that the Central Bank stays true to its mandate – to ensure price stability. This is however not mentioned. In the opening speech it is suggested that we should strive for a stable exchange rate and a decrease of foreign exchange reserves. This is a contradiction. Fixed or stable exchange rates require an even higher level of foreign exchange reserves than those which are currently held by the Central Bank. So if one wants to “defend the national currency,” the foreign exchange reserves must be increased or at least they should not be allowed to decrease.
There is not much mention about the consolidation of public finances except that the government will save money so that citizens do not need to. This is of course impossible. It is possible that some people save more than others, namely that some receive lower wages or lose their jobs or pay higher taxes, while others do not. But a country can’t embark on saving money that doesn’t include private savings. The opening speech mentions the differences between those who create new capital, a small number that works in real production, and those that redistribute income, engage in commerce and finance, or work on enhancing public or private good – education, public administration (the list ends with etc., but health should have probably been added here as well) – and the implication is that the latter live at the expense of the former. It is not certain what exactly is the meant with this rhetoric.
According to the opening speech, Serbia has a comparative advantage in energy production, agriculture and food industry (infrastructure is also mentioned, although it really does not belong there), so investing in these areas begins a new investment cycle. Practically this is being repeated by everyone, although it is not clear how these estimates were made or how the profitability of these investments was calculated. Serbia will, in addition, be a society based on knowledge, not ignorance. However, there is no mention about where this knowledge could be applied. We have a very rich experience with exporting qualified, as well as unskilled workers, so it would be good if there was a goal of employing this knowledge within Serbian borders. That means the industry and services. Dacic tells us nothing in that regard.
What has been achieved in the nineties and later consolidated in the period “after the political changes,” is the fundamental de-industrialization of the country and the immeasurable loss to the quality of human capital, i.e. knowledge. Adding to that the destruction of institutions and the revitalization of crime by reference to nationalism and patriotism completes the picture of the “falling civilization standard.” Little will be achieved if society and politics are not based on this knowledge.
Separation of Powers
The opening speech ends with a statement of the proposed composition and distribution of government portfolios. It makes sense to point out here at least four things and draw a conclusion.
First, it is unusual for the Prime Minister to also be the Minister of Internal Affairs. Perhaps there are examples, but they are not easy to recall, at least not when it comes to democratic countries. In the not-so-frequent cases where the prime minister also heads another department, usually foreign affairs, it is usually a temporary solution. In the case of Dacic this is permanent. There is no explanation why.
Secondly, it is not customary that the first Deputy Prime Minister is also at the helm of the defense ministry and responsible for overseeing all security services. As in the previous case, the reason that all these functions are separated is so to ensure proper balance between political and administrative functions. This merging leads to the politicization of the function, in particular that relating to the intelligence agencies, which can’t possibly be a good thing.
Thirdly, it is unusual for the Minister of Foreign Affairs not to be a prominent political figure. A diplomat in that position just means that the foreign policy will be developed elsewhere. This will cause problems both to the Minister and the Government, as well as those who will be developing the foreign policy. In coalition governments, one of the leaders, usually the second largest party takes over the department of foreign affairs. This is not a diplomatic position; it is very political, because the Minister of Foreign Affairs takes responsibility on behalf of the state. This cannot be done by someone who was in no way elected by the voters.
Fourth, it is unusual that the Department of Finance is given to a leader of very small party in the coalition. As is the responsibility for foreign and domestic trade is given to a leader of a party which probably wouldn’t have received enough votes to enter the Parliament and was previously in coalition with a party that lost the elections.
There’s more, but the point is this: in order to have a stable government it is necessary that the division of government responsibilities reflects the support obtained during the election. This is not the case with this government. Given the problems facing the country and therefore the government, this is quite risky. If the government is unstable, which it is by its composition and the division of responsibilities, is not unlikely that this will significantly cost both the country and businesses regardless of which coalition partners and members of government do better and which worse?