Serbian war profiteers avoid the pinch: Marcus Tanner, in Belgrade, finds trade sanctions starting to hurt the majority while a few make fortunes

THE KIOSKS have no cigarettes and the state-owned chemists are out of drugs. In hospitals, patients supply their own linen, paper towels, and even medicines and food. The queues for petrol stretch half a mile. That is life in Serbia four months after a world economic blockade was declared.

In Belgrade's fancy Knez Mihajlov Street, appearances can deceive. Fashionably dressed couples promenade, crowd the private cafes and boutiques, and snap up cases of French Bordeaux wine and boxes of Swiss chocolates from the local stores. There seems to be no shortage of delicacies or of people willing to buy them. The lavish window displays of Japanese televisions and cameras bear witness.

But this is the ghetto of the idle rich, their ranks swollen by war profiteers, who have made a fortune bringing in foreign cigarettes and selling petrol coupons. Most people are unconnected with these secret channels leading from Romania, Hungary and Macedonia. They are feeling the pinch as factories close and workers are sent on leave with half or no pay. Those hardest hit include some of Serbia's most prosperous companies. Kluz clothes factory formerly supplied firms in Germany and the prestigious Italian chain, Armani. Their Belgrade factory now stands idle. All 6,000 Kluz workers were recently sent on paid leave for one month. But with no chance of resuming production in sight, there is little hope of the workers earning a regular salary after this month.

Red Flag, an industrial giant, that manufactures cars and weapons, is not much better off. The production of weapons, not surprisingly, is going strong. But the car production lines have halted and the supply of parts, many of which came from war-torn Bosnia, has dried up.

As the number of Serbian workers on low pay soars, the nation's purchasing power tumbles. This is why shops selling luxury goods are still full. Petrol, priced at one German mark (37p) per litre, is beyond the pay packets of most workers, who earn an average DM80 ( pounds 30) a month. So are the queues: three hours if you sit through the night, twice that if you wait by day.

In its eagerness to divert attention from its own record, the Serbian government is blaming Western sanctions for all their economic woes. They hide the fact that most shortages pre-dated the international embargo.

Serbian hospitals are in a disastrous mess. Basic drugs, anaesthetics and fluids for cleaning wounds are practically unavailable. At Belgrade's Lazar Lazarevic Psychiatric Hospital, the lack of tranquillisers led the director to complain that patients were ransacking the buildings, smashing the windows, attacking the staff and each other.

Branko Radovic, the Health Minister, protests piously: 'I hope that the world realises what kind of a situation they have brought us to, and what difficulties we face in securing the health of our citizens.'

What he forgot is that medicines were expressly excluded from the world embargo against Serbia. Eighty per cent of the medicines needed, according to Belgrade's University Clinical Centre, are produced locally; only 20 per cent are imports.

The reason why Serbian hospitals have no rubber gloves or anaesthetics is because the Serbian Government chose to spend its money last year fighting a war of territorial expansion in Croatia, instead of paying the money it allocated to its own Ministry of Health.

As the economy crumples, sparking fears of winter-time riots by impoverished workers, the Serbian government is falling back on the old-style Communist idea of running a command economy. State firms and private companies are being sent detailed questionnaires, ordering them to declare their resources in terms of materials, financial reserves and the number of employees.

But so far, the only result is hoarding by the peasants and an explosion in the black market. While the cigarette kiosks and the state chemists are empty, both Marlboro cigarettes and a range of medicines are in plentiful supply at any of Belgrade's thriving black markets. Among the goods on sale, some angry shoppers recently spotted the contents of Red Cross parcels allocated to refugees from Bosnia. Clearly, someone is making a fortune.

(Photograph omitted)