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Black Market Becomes Mainstay Of Teetering Serbian Economy

A segment of the business community here in Belgrade has gone underground to try to stay prosperous amid the ravages of war

ECONOMIC upheaval in Serbia, fueled in part by United Nations sanctions, has by necessity encouraged inventions, shortcuts, and adaptations to ease the growing chaos of daily existence.

Patrons of Momcilo Marinkovic's stall in Belgrade's largest open-air market, for example, can change hard currency into hyper-inflated Yugoslav dinars at the stall and then buy what the proprietor boasts are the city's best mushrooms.

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``We are loaded with German [deutsche] marks,'' says the gregarious merchant amid large groups of shoppers who jostle between tables piled with autumn fruits and vegetables.

One of the black-market gypsies who deals cigarettes and haunts Kalenic Market shuffles up. He asks Mr. Marinkovic about the price of the deutsche marks. They confer as several women wait patiently. Their business concluded, the gypsy puts his investment into his pocket and melts into the crowds. Marinkovic returns to his customers.

A metalworker by profession, Marinkovic got into the mushroom trade five years ago.

Marinkovic had the foresight to rent a tunnel that had been used since the beginning of the century for mushroom cultivation. When his competitors' basements became too hot last summer to grow the popular fungi, Marinkovic's business boomed.

``There was no competition this summer,'' he says, weighing out a plastic bag of his produce. ``Mushrooms require controlled, steady temperatures. No one else has a cave.''

With the profits from his very successful mushroom business, Marinkovic expanded into banking. Underground businesses flourish

Marinkovic is among the relative few in Serbia who have managed to hold out against the ravages of the economic crisis and even to prosper, albeit through illegal businesses. This sector of the business community has become the mainstay of what was once the most affluent economy of the communist world.

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In Serbia, fortunes have been made through smuggling, racketeering, and war-profiteering and in the process have created a boom in violent organized crime. But the majority of those involved in the ``gray economy'' are small-timers like Marinkovic.

``The gray economy is an enormous factor,'' says Srdjan Bogosavljavic of the Federal Bureau of Statistics. ``Nobody can really estimate how big it is.''

Mr. Bogosavljavic's candor about the depth of the crisis has earned him the wrath of senior government officials.

``In Serbia, our economy was once comparable with Portugal and Spain,'' he says. ``Now, we are at the level of underdeveloped African countries.''

Most factories are closed or operating at vastly reduced capacities. Hundreds of thousands of people are jobless or on forced leaves, while those still working earn an average monthly salary of $30, compared with about $1,300 two years ago.

Inflation in September was about 2,000 percent.

It is expected to drop by half this month because huge shortages of goods, particularly food, have left most store shelves bare. Ironically, harvests have been bountiful. But factories and farmers refuse to send their wares to stores since the government sets prices that are so low they do not meet production costs. Farmers who enjoyed a bumper wheat crop are feeding the grain to their livestock rather than selling it to the state as required by law. The same is true for dairy products.

Shortages of gasoline, which costs almost $8 a gallon on the black market, also hamper the distribution of supplies and hike up prices.

Long lines of shoppers form early to snap up what little milk, sugar, oil, salt, meat, soap, and other basics are available.

An attempt to ration staple goods failed because the items marked for regulation were not being produced in large enough quantities or were stolen by store employees to be sold at inflated prices.

Similar efforts to contain the chaos have come to naught. On Oct. 1, the government took steps to devalue the dinar.

The six zeros printed on paper bills were eliminated, stemming the confusion that resulted from computers and cash registers unable to process so many zeros. But at the same time basic commodity and utility prices were raised significantly and now some goods are more expensive than in New York. Economic consequences of war

Infrastructure has deteriorated. Public transport is slowly grinding to a halt as a lack of spare parts forces massive service cutbacks. The telephone system, never good during the best of times, is worse than ever. State hospitals are having to turn away patients because of a lack of resources.

Concerns are growing over potential electricity outages this winter. With little heating fuel, the system may become overloaded. The main power plants are French- or Croatian-built and are running out of spare parts.

The crisis continues to fuel a wave of emigration. ``I want to move to Canada,'' says Nesho, a black marketeer who sells smuggled Western and Japanese goods along one of Belgrade's main thoroughfares. ``I want to start a new life. I want to start somewhere where [there] is no war, and there will always be war here.''

Nesho left behind a restaurant and all of his possessions except his car. He drove with his family to Belgrade, where they began a sidewalk business with their modest savings of hard currency. For deutsche marks or American dollars, the family hawks gleaming German-made cooking utensils, digital telephones, powdered milk, and batteries.

Nesho claims that business is good because people still have hard cash reserves ``under their mattresses.''

``Anyone who can afford 350 [deutsche] marks for a pot has money,'' he says. ``The easiest goods to sell are the cheapest and the most expensive. There is no middle ground any longer.''

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