- Patrick Young
- Serbian bank chief attacks reliance on EU
- www.ft.com
Summary
Serbia’s Central Bank Chief correctly ruminates on EU reliance while observing the need for internal economic reform that often citizens are more comfortable with than the political classes.
Analysis
Given that Serbia has one of the world’s older central banks, it would be wise to take heed of Radovan Jelasic’s deeply considered arguments. In a region where politicans are often seen as somewhat hot-headed, Radovan remains a calming influence on the tiller of Serbian finance – after a series of hectic and often horrific problems in the past decade or two.
Truly Eastern European economies do need to look within to provide a degree of reform to their economies and make them much more functional and lower friction for entrepreneurs and business developers. At the same time, this may be complicated by the fact that much of the western world seems to be lurching back to towards the left. In that respect, the CEE economies simply cannot afford to follow suit.
The political dilemma is that in CEE many of the politicans are precisely that: political. They lack even the most rudimentary understanding of economics and as such are not ideally positioned to create dynamic economies. Moreover the economies themselves need to advance to become deeper and stronger across more sectors. In the past decade property has been centre stage and while this has helped development, the resultant asset boom was not neccessarily conducive to broad economic growth.
The EU may currently be unclear as to its policy on the Balkans and this is truly a tragedy. For the Balkans need to see a stable olive branch from Europe to overcome the resentment that has grown in the likes of Serbia in recent times from what are still regarded by the citizenry as atrocities carried out by NATO in the past decade.
Serbia needs help as do many other nations in CEE and SEE. The fact that the EU has recently seemed keener on political machinations through carving out a (probably untenable) statelet in Kosovo has not helped the east believe that the EU remotely understands its politics, nor that it prioritises economic development.
The banking system is starved of capital in the likes of Serbia and many other CEE nations currently and that is ultimately proving a disaster for the economy. There needs to be a clear method of deploying credit and the banking system needs to be capable of lending for more than just “bricks and mortar.”
In relation to political instability, of course this may be a factor in the Balkans after their recent history in particular. However, the future ought to be bright provided the EU and international bodies can help engage the governments of the Balkans in ways to ensure that their eonomies remain stable. The danger is that if the EU ignores the Balkans then it is simply creating a tinderbox of resentment on its eastern fringes.
Providing the west can continue to engage with the Balkans and indeed the CEE as a whole then the converse is true: some of the greatest global opportunities in the aftermath of this financial crisis will be found in both the CEE and in particular not just the Balkans but indeed Serbia.
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