Sanctions fail to sway Serbian town - Heavy shelling by Serbs claims 20 lives and wounds 150 in Bosnia's capital: The people of Sid are much poorer after a year of isolation but, as they tell Marcus Tanner, few of them are ready to give up the fight

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ONE YEAR after the United Nations imposed sanctions on the rump Yugoslavia for its role in the fighting in Bosnia, most Serbs are a lot poorer. But few seem ready to end the country's pariah status by accepting a peace deal in Bosnia which falls short of a Serb victory.

In the town of Sid, near the Croatian border, Nebojsa Krunic, director of the local meat production company, Srem-Sid, claimed production had actually risen since sanctions were introduced.

'We produced 20 per cent more meat this year,' he boasted. Mr Krunic said Srem-Sid would maintain production indefinitely, no matter how long sanctions lasted. 'Even if we have no additives, spices or even cans, we will still be all right. In my business we need only meat and salt.' Asked whether Serbia should ease up on the fighting in Bosnia to get sanctions lifted, Mr Krunic snorted with disgust. 'No way - we will not give up the Bosnian Serbs. In one month I think we will finish off Bosnia completely.'

Srem-Sid is the largest employer in Sid, a town of 12,000. If the firm went under, the town would face disaster. But none of Srem-Sid's 1,200 workers has been laid off, despite the loss of valuable markets in the US and in Hungary, and the confiscation of equipment and outlets in Croatia.

The market is now exclusively domestic. Money was saved by cutting research and salaries. Mr Krunic said his policy was to maintain production and save the workforce.

Most voices in Sid are less optimistic. 'We are now quite literally at the end of the line,' said a worker at the deserted railway station. 'About 180 trains passed every day through Sid to Croatia and the West two years ago,' he said. 'Now we have four local trains a day.'

At the only restaurant, four bored waiters sat smoking in the garden. 'The restaurant is open but there are no guests,' complained Ljubica Mitrovic, a waitress. 'It used to be packed a few years ago but no one has money now. I earn 15 Deutschmarks ( pounds 6) a month and my daughter has epilepsy. I spend everything on drugs for her,' she added. 'I hope foreigners start to understand what they have done to us. The working class is least guilty for all this and yet we suffer the most.'

Medicines in Sid's state-run chemist are free. But these chemists are invariably empty. Ljubica relies on her sister in Germany to send medicines for her daughter. Meanwhile, sanctions have disrupted post between Serbia and Germany, creating another hurdle.

Most people in Sid receive their information from Serbia's state-run television, which says sanctions are the result of an evil conspiracy concocted by Serbia's historic foes, led by the Vatican and Germany. Few connect the rampages by Serb forces across Bosnia and Croatia with their economic plight. In recent elections, moderate opposition parties in Sid lost ground to the ultra-nationalist radical party.

The flat green farmland which surrounds Sid suggests that the Serbian President, Slobodan Milosevic, was correct when he boasted that Serbs would never lack food, whatever measures the international community took. The problem is that skyrocketing inflation has rendered salaries almost worthless, so goods remain unsold. 'I get a pension of 3m dinars a month which is worth only 10 Deutschmarks,' grumbled an old man, sitting outside Sid's baroque church. 'People like me live in fear. You cannot sleep peacefully on that amount of money.'

Agriculture-based firms, such as Srem-Sid, have endured sanctions relatively well. Srem-Plast, which produces chemical products, and Sid's local clothing factory, have sent most of their employees on 'forced holidays' - under which workers stay on the payroll on a minimum wage.

Few Serbian businessmen seem ready to sacrifice their nationalist ideals to restore Serbia's position in the world. Milija Milosavljevic, an office furniture manufacturer, said: 'I am an international businessman, but above all I am a Serb.'

(Photograph omitted)