Bihac is awash with black market riches: A shortage of beer is likely to be only temporary, but long-term reliance on the Croats is a worry for Muslims in one UN 'safe area'

SOLDIERS in Bihac used to joke with outsiders while sucking on bottles of brew that as long as there was Bihacka beer in the town there would always be men willing to lay down their lives in her defence. No one knows this better than Adem Ibrahimpasic, the director of the Bihacka Brewery, who sees it as his patriotic war duty to keep the defenders of Bihac in pivo.

'There are 300,000 people here in Bihac. A lot of poor people, but they don't have anything else to drink except this beer and we will do our best not to stop working for them,' Mr Ibrahimpasic said.

However, the future of the amber nectar so beloved by Croats and Muslims alike is under threat. Last week, the brewery ran out of malt and there is just enough brewing in the vats to last until the end of the month.

Mr Ibrahampasic has no doubts that the problem will soon be resolved. He believes that any day now he will get word that supplies of malt, hops and 3 million bottle caps stored in the brewery's warehouse in the Croatian capital, Zagreb, some 160km away, will be trundling through the front lines for the besieged town and thousands of thirsty customers. 'The summer is our big season,' he said.

Mr Ibrahimpasic knows the secret to Bihac's success lies in its thriving war economy and the excellent black market business connections that the town has with its Serbian enemies.

Of the six towns declared 'safe areas' by the United Nations Security Council, Bihac holds out the greatest chance for success and this is in part due to the economic modus vivendi the town has developed with its attackers. Everything from petrol to sweets pass through the Serbian front lines to Bihac. 'It's very funny, we are making war with them but at the same time there is a great business with them smuggling,' said Hamdia Lipovaca, 17, from a powerful Muslim family in Bihac.

One of the best examples of the bustling underground economy is laid out on the shelves of a boutique owned by Mr Lipovaca's cousin, Hilmija Jasarevic. There in the little store in the cafe district before unbelieving eyes is a cornucopia of luxury goods ranging from jelly babies to exotic spices, shoes to shampoo, teddy bears to bottles of Johnny Walker. 'Nobody has what I have,' boasted Mr Jasarevic with a wide grin -and then a wink when he admitted that most of it came from the black market.

After handing out cans of Montenegrin beer, Mr Jasarevic took out a red pen and drew a map, tracing the route that money and goods follow in Bihac. 'It comes from Croatia and in between south Krajina.' The path cuts through the siege lines held by the Krajina Serbs, past UN protected areas separating Krajina Serbs from Croatian army forces and then on to Zagreb and back again. 'The people who are smuggling are people who have known each other for years,' he said.

The man who makes the whole system work is a Muslim politician with close ties to the Bosnian government in Sarajevo. Relief workers in Bihac refer to Fikrat Abdic, the head of a huge agro-industrial complex based in Bihac, as the eminence grise of the town. Mr Abdic supplies the Bosnian military, and his business operations have the open support of French troops assigned by the UN to protect humanitarian aid efforts in the area. Mr Abdic keeps Bihac in food while continuing his fruit canning business.

But none of this is possible without the Krajina Serbs. Krajina, which wraps around the Bihac pocket, needs all the help it can get. Traditionally a poor rural backwater, the Serb- occupied swathe of Croatia has been turned by conflict into an economic graveyard. The need for building economic bridges and to survive has made the Serbs, Muslims and Croats strange bedfellows. But the Serbs can cut the route whenever it suits them, and especially in the event of a final push to take the town.

The reliance on Zagreb, which is 200km closer to Bihac than is Sarajevo, is a worry for Bihac's Muslims who are fighting for an independent state. Major General Vlado Santic, the head of the Croatian defence forces in Bihac, summed it up: 'It is very easy to threaten and to talk but it is the Croats who are keeping people alive here.'

(Photograph omitted)