Serbia's neighbours count cost of sanctions: East European countries feel economic strain of international blockade

SERBIA'S neighbours are increasingly concerned about the effect on their economies of Western sanctions against Serbia. Hungary, Romania, Bulgaria and the former Yugoslav republic of Macedonia fear that, if the West introduces tighter sanctions next Monday, their stability will come under even greater strain.

'The strict controls on the borders of Serbia's neighbours have put Macedonia in an impossible situation, as if it were the actual target of the sanctions,' said Slobodan Casule, the director of Macedonian radio.

His remarks were echoed by Ivan Budai, Hungary's deputy United Nations representative. He told the UN Security Council last week that sanctions against Serbia and Montenegro, which make up the rump Yugoslavia, had cost Hungary dollars 500m ( pounds 325m). Budapest is also worried that if the anti-Serbian embargo is strengthened the ethnic Hungarian minority in Serbia's Vojvodina province could suffer more discrimination.

The Security Council decreed last weekend that next Monday Serbia and Montenegro should be placed into almost total economic isolation. The only escape for the Serbs will be if they accept the Vance-Owen peace plan for Bosnia and stop fighting.

The measures include a ban on all goods going to and through rump Yugoslavia, except for humanitarian supplies, which must be approved by the Security Council's sanctions committee. Nato will guard a 12-mile exclusion zone barring ships from Yugoslavia's territorial waters. The Danube will be closed to Yugoslav vessels outside her borders.

Sanctions have already hurt Serbia's neighbours by severing traditionally close commercial relations and forcing lay-offs of workers and factory closures. Bulgaria's President, Zhelyu Zhelev, estimated in January that the sanctions had cost his country between dollars 40m and dollars 60m a month. Since war broke out in the former Yugoslavia in June 1991, the neighbours have been forced to use other, more expensive routes for their trade with Western Europe. Bulgarian officials calculate overall losses to their country at more than dollars 1.2bn.

The sanctions were an extra blow for Bulgaria and Romania because in 1990 they had to abide by a UN embargo on Iraq, another important trade partner. Romania estimated last year that the anti-Serbian sanctions had caused losses of dollars 550m from lapsed import and export contracts, services, import taxes and tourism. However, a Foreign Ministry official said that Romania had lost another pounds 2.5bn because of the collapse of 'traditional economic exchanges and technological co-operation' with Yugoslavia.

The embargo had an immediate impact on the Solventul chemical plant in Timisoara, which imported ethylene and propylene from the Serbian town of Pancevo. After the sanctions cut off these supplies, the Romanian factory had to close entire sections and sack workers. The Transport Minister, Traian Basescu, said that, by drastically reducing commercial traffic on the Danube, the sanctions had thrown 10,000 Romanians out of work.

In Macedonia, supplies of energy and raw materials are so low that important factories, such as the Feni ferrous nickel plant and the Ohis chemical firm, are facing closure. The government has accused Greece of compounding the crisis by sealing the southern border in an attempt to force the republic to change its name.

Lord Owen, one of the co-authors of the Bosnia peace plan, arrived in Belgrade to try to persuade Serbia's President Slobodan Milosevic to press Bosnian Serbs to back it, but apparently he made little headway in a day of talks.

The Bosnian Serb leader, Radovan Karadzic, said earlier that he was still unable to accept the peace plan, under which Bosnia would be divided into 10 provinces along ethnic lines.

At the United Nations, Yuli Vorontsov, the Russian ambassador, warned the Security Council against the dangers of taking an unbalanced and politicised approach to the Balkan conflict.

Following an open meeting of the council on the civil war in Bosnia- Herzegovina, Mr Vorontsov told the press that the international community was focusing too much on the Muslim enclave of Srebrenica.

'I'm very much concerned about the fighting between Croats and Muslims. Hundreds of people have been killed already . . . let's try to do something there, but people keep talking about Srebrenica, Srebrenica and Srebrenica . . . as if it is the only topic we have,' the Russian diplomat said.

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