Sanctions bite in Yugoslavia: Serbs find themselves isolated as the international community runs out of patience and steps up efforts to halt fighting in Bosnia

ANYONE wanting to check the effectiveness of sanctions against the former Yugoslavia can go to the McDonald's in central Belgrade and order a Coca-Cola with their Big Mac. They will find there is no Coke. Supplies of the syrup have dried up. There is apple juice instead, served in red, white and blue waxed-paper cups (those bearing the golden arches ran out weeks ago). And while there is apple juice, there are no apple pies.

With a ban on the transport of goods through Yugoslavia now in effect as part of a tightened land, sea, river and air blockade, the likelihood of Coke or apple pies appearing back at McDonald's any time soon is extremely slim. Everything else on the menu, though, is grown locally, and is available, albeit at higher and higher prices. The cost of burgers and fries, like everything else, changes daily.

'I can only afford to come here once or twice a month,' said Gordana, who is lucky enough to earn a salary at a bank in Deutschmarks, the currency standard of Yugoslavia since sanctions were imposed a year ago to punish the country's political leadership for its role in the war in Bosnia-Herzegovina.

This does not quite fit the picture painted by Milorad Unkovic, the Yugoslav Minister for Foreign Economic Relations, who told journalists yesterday that sanctions amounted to 'genocide against the Serbian and Montenegrin people'. But it is a good example of how part of Yugoslavia's economy has tried to cope with sanctions.

The thin veneer of normality that has blanketed Serbia so convincingly since sanctions were first imposed last year has been largely the result of currency speculation and sanctions-busting, which yesterday's new measures were aimed at stopping. Smuggling has been seen to be as much a patriotic duty for Serbs as a means of survival.

Until yesterday, many shippers had moved goods through Yugoslavia using a false destination and unloaded the merchandise, such as cola syrup, once it reached Belgrade. Now that supplies will become unavailable, or too costly, they will be substituted by locally produced goods wherever possible. Ironically, in the case of McDonald's, inflation has allowed the company to maintain a presence in Yugoslavia. According to economists, as its products have become more expensive, its supplies have lasted longer.

None the less, economists say that sanctions have destroyed huge sections of Yugoslavia's economy and set the country back decades. Petrol costs about pounds 7 a gallon and is scarce. Industrial production is half what it was a year ago. Less than one- third of industry is working at full capacity. Thousands of people have been laid off or sent on enforced holidays.

Inflation is 230 per cent a month. Trade unions have been buying and distributing basic goods, such as sugar, flour and meat to help prevent them from becoming scarce. There have also been reports of a spate of suicides because of economic problems.

Economists say the new regime of sanctions will wreak further havoc, although not immediately. What it will not do, they say, is lead to a quick peace in Bosnia-Herzegovina, as some Western leaders hope. 'Nothing is going to happen in a matter of days or weeks. It will take months before things worsen. Even then, ruling out any major catastrophe or a widening of the war, the economy will stabilise at a lower level,' said Danko Djunic, the director of the independent Institute of Economics.

(Photograph omitted)