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Humanitarian Risk Analysis No. 7: Federal Republic of Yugoslavia

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OCHA Belgrade issues a monthly "Humanitarian Risk Analysis", which provides an overall and impartial evaluation of the impact of the economic crisis, sanctions and the NATO intervention on the vulnerable sectors of the population in the Federal Republic of Yugoslavia (FRY).
1. INTRODUCTION

This issue of the Humanitarian Risk Analysis (HRA) addresses the following subjects:

A review of the trends of the FRY economy over the past decade: This section seeks to provide an overview of the general decline of the FRY economy in the 1990s - the decade marked by conflicts in the region and the country’s increasing international isolation. This is shown in charts that map out the status of various economic indicators, presented parallel to major events in the region.

An examination of the situation of vulnerable groups: The situation of "social cases" - the segments of the FRY populations made vulnerable by a combination of socio-economic factors and who dependent on humanitarian assistance - is becoming an increasing concern for the international humanitarian community. This issue of HRA first looks at one of these vulnerable groups, the urban destitute, by reviewing the typical profiles of those being assisted through soup kitchen programs. It then reviews the vulnerability of children in FRY, in a section contributed by the United Nations Children’s Fund (UNICEF).

Lastly, as part of our ongoing effort to track trends that impact on the most vulnerable, a few macro-economic indicators are once again highlighted, including the updated OCHA shopping basket.

2. OVERVIEW: THE FRY ECONOMY IN THE 1990S

The charts on the next page were prepared in order to provide an overview of the socio-economic situation in FRY during the past years. They are shown together with the major events to indicate their relevance and impact on the socio-economic trends in FRY.

The top chart depicts macro-economic trends that have an impact on the general socio-economic conditions and consequently influence the standard of living of the FRY population, especially those most vulnerable. The economic indicators chosen for this purpose include the GDP, inflation, and the average wage (based on official statistics), as well as the real (i.e., grey market) value of the dinar (against DEM). They are all measured on the basis of an year-to-year change.

The bottom chart seeks to demonstrate the impact which these economic trends have had on the life of the FRY population, by showing changes in some of the relevant indicators that have been examined in the past HRAs. These include the percentage of the FRY population living under the "poverty line" defined as those households with a per capita income insufficient to purchase the optimal food basket, as determined by the Federal Statistics Office (see HRA4); the unemployment rate; and the share of the grey economy in the total economic activities (see HRA6).

In 1993 - the year of hyper-inflation - all indicators were at its extreme. The GDP plummeted by over 30% from the previous year, and the inflation rate in 1993 was 116% higher than that in 1992. It was estimated that 39% of the populations lived under the poverty line - the highest level in the 1990s.

Following the monetary reform in 1994, the GDP, as well as the average wage, began to pick up. This became a steady trend particularly after the lifting of the UN sanctions in 1996 and the Dayton agreement, leading to the stabilization of the inflation and the exchange rate. Consequently, the percentage of the population below the poverty line has been reduced steadily, as well as the size of the grey economy.

However, after the bombing campaign and the introduction of EU/USA sanctions in mid-1999, all the indicators showed a sharp deterioration of the FRY economy. At the end of 1999, the GDP was over 30% lower than the previous year. The top chart also shows an increase in inflation and a drop in the real value of the dinar, resulting in a decrease in the real value of wages. The share of the FRY population below the poverty line, which had been on the steady decrease, sharply increased, back up to the 1995 level. The unemployment rate was significantly higher (from 25% in 1998 to 32% in 1999), and the size of the grey economy has climbed up close to the level in 1993 when hyperinflation forced many to turn to the grey market participation.

3. VULNERABLE GROUPS: URBAN DESTITUTES

Based on the findings of OCHA’s Household Income Survey and other studies, previous HRAs pointed out that some categories of people are particularly vulnerable in the current economic situation. They include disabled or chronically ill persons, the elderly with low pensions, residents of institutions, vulnerable families (such as those headed by a single-parent or with many children), as well as destitute persons with no earning potential, particularly those in the urban areas without rural ties. For these vulnerable groups, it is feared that buffers, which had prevented a critical slide from poverty into dire humanitarian need, may, after ten years of hardship, no longer exist. HRA5 examined the collapse of one such buffer, the state social welfare system, whereas this issue examines another mechanism of social safety net, the soup kitchen program, which targets vulnerable persons in urban areas.

3.1 How the Program Works

The soup kitchen program operated by the Yugoslav Red Cross (YRC) , in cooperation with the ICRC and participating societies, provides daily meals to 100,000 persons from the most vulnerable social categories of the FRY population. In September 1999, there were 57 soup kitchens operating in FRY (the regions of Novi Sad, Belgrade, Kragujevac, Kraljevo, Nis, Kosovo, and Crna Gora), preparing and distributing daily hot meals to 54,296 beneficiaries and cold meals to 45,465. According to the ICRC’s report in November 1999, close to 90 public kitchens are operating in Serbia, serving one hot meal a day to 57,186 beneficiaries from about 230 distribution points. About 35 mt of food (12 staple food items - see the table below) are used every day for cooking. In addition, 21,130 beneficiaries are supplied with take-home rations. The number of hot meals and cooking places are still on the increase.

Table 1 - Hot Meals at Soup Kitchen (per month, per beneficiary)

Wheat Flour Oil Beans Rice Pasta Salt Sugar Mixed Spices Cans/Meat Cans/
Fish
Mixed Vegetable Yeast
12 kg 1 lit. 1 lit. 1 kg 1 kg 0.15kg 0.25kg 0.09kg 0.6kg 0.405kg 0.75kg 0.18kg

The eligible beneficiary is registered by the municipality office of the Red Cross on the basis of the recommendation by the municipality Social Welfare Center (see HRA 5, which covered the regulation of the social welfare program and its eligibility criteria) and on the review of the personal applicants by the municipality Red Cross General Secretary. All beneficiaries receive the meal coupon that gives them the right for one meal per day (every day except Sundays) at a designated distribution center, where they have the choice of consuming the hot meal on site or taking it home.

In Belgrade, there were 3,000 users of its soup kitchens until August 1999, according to the Belgrade Red Cross. Starting from September 1999, with donations and support from the ICRC, this program expanded to 11,260 users in Belgrade (9,036 receiving hot meals, and 2,224 receiving lunch packages). The Belgrade Red Cross estimates that a total of 20,000 persons are in need of a soup kitchen meal per day, which indicates that over 8,000 needy persons may be left unassisted. In addition to the 12 food items provided by the ICRC, the City of Belgrade Government donates on a monthly basis meat, fresh vegetables and spices in quantities sufficient to supplement 1,500 meals. The soup kitchen program in Belgrade uses the infrastructure of the city gerontology center and preschool institutions. Their kitchen facilities are used for food preparation, and the distribution is organized through a total of 32 distribution centers, located in the local community premises.

3.2 Case Study: Profiles of Soup Kitchen Users

In order to get a better idea about the actual implementation of the soup kitchen program and assess the state of some of the beneficiaries, OCHA staff visited one of the distribution centers in central Belgrade. Following are findings from the informal, random interviews conducted there by OCHA staff, which provide the quick snapshots of several “typical” soup kitchen users. They provide some useful ideas as to how their buffers from deep poverty have stopped functioning for the urban poor.

Case 1 - Male Pensioner (Age 70): This user lives alone in a 19 sqm flat, with a small electric heater, and is dependent on a very small pension due to the early retirement as a result of heart disease. The soup kitchen meal is the only meal this user has per day, because, after covering the necessary payments (rent, community utilities and electricity bills), he has no money left for food. If electricity shortages occur, he plans to spend day time in the soup kitchen center (gerontology social center) which is equipped with individual central heating on coal.

Case 2 - Single Mother (Age 46): A soup kitchen user for one year, this user has been unemployed since 1992, after 20 years of work as an accountant. Though a social welfare beneficiary, benefits have not been paid out for ten months. She will not be eligible for a pension for another 9 years. She survives by doing odd jobs from time to time to earn cash to meet basic needs and provide for her three children (aged 10, 14, and 16). This family of four lives in a 46 sqm, rent-subsidized apartment. They have no savings and have already sold all valuables to generate extra cash.

Case 3 - Widow (Age 48): A freelance artist, with a problematic 18-year-old son, lives on the 700 dinar monthly pension from her late husband. She lives in a mixed-ownership apartment, which can not be rented or sold to generate extra cash. She has a brother who helps her with some money.

Case 4 - Young couple (in their 30s), with two children (aged 1 and 4): Though the users are employed in state-owned enterprises, the father is on forced leave, while the mother is on maternity leave. Their salaries are in arrears for almost a year. Soup kitchen users for three months, the family is registered with the Red Cross as being eligible for assistance.

Case 5 - Male (Age 45): The user has little education, with no regular income and no property. He survives by doing odd jobs from time to time. Lives alone.

Case 6 - Woman (Aged 70): This trilingual, educated woman of an apparently upper-middle class background is a soup kitchen user for one year. She has never worked and has no pension. She has never been married and has no surviving family members who could help out. Until two years ago, she had managed to cope by renting an extra room in her house in Belgrade. The house by now is completely deteriorated and is un-rentable. It can not be sold, either, as there is an ownership dispute.

4. VULNERABLE GROUPS: CHILDREN IN THE FRY (This section has been prepared by UNICEF as a contribution to the HRA. More detailed information on this subject can be obtained from UNICEF Belgrade.)

A serious economic and social crisis in the Federal Republic of Yugoslavia in the past decade has adversely affected virtually all child rights. The process of transition, an outbreak of conflict in Kosovo, the NATO military intervention, poverty and dramatic deterioration of social services have had serious impact on family functioning, decreasing the level of parental and societal protection of children from external factors which negatively affect their welfare and impede their development.

Almost a quarter of the Yugoslav children take care of themselves and stay alone at home while parents are at work. As many as one fifth of mothers let their children do a paid job. Estimates indicate that more than 30,000 children are abused and neglected, and that there are about 10,000 street and exploited children under 18. The overall quality of childcare services, which should have supported over one million poor and vulnerable children, continue to decline.

4.1 Vulnerability of Children in FRY: Major Factors

Deepening Poverty and Deteriorating Family Support:

  • Delayed payments of social benefits further contributed to a rapid impoverishment of many families, especially those with children. Children of impoverished households are sometimes engaged in peddling and manual labor.
  • Unemployment, insecurity and emotional crisis have weakened the parental role, rendering parents unable to afford for their children the usual protection from external factors that might adversely affect their development. Reports of domestic violence are increasing. As a result of disintegrating norms and values, aggressiveness and anti-social behavior among adolescents have increased.

Disruption of Social Services and Educational System
  • The under-funded and crumbling social services network that should provide welfare and protection for children, is unable to cope with the increased caseload, caused by the trauma in the recent past and the stress related to poverty and inadequate living conditions.
  • The inability of the educational system to provide good quality education is caused by chronic economic and social crisis which elevated in the past years and reached its peak at the time of the Kosovo crisis and the NATO intervention. This caused an abrupt termination of the school year three months ahead of its regular end.
  • There is also a lack of educational facilities, resulting in overcrowding of classrooms in some schools. During the NATO intervention and the floods in July 1999, four schools were totally destroyed, and 242 primary school buildings were damaged in varying degrees. By the beginning of the school year in September, only 40 schools had been repaired, funded by UNICEF. Furthermore, many school premises in Serbia are still being used to accommodate IDPs from Kosovo and old caseload refugees.
  • The shortage of school equipment and furniture has become even more serious. About 30,000 primary school children displaced from Kosovo are enrolled in schools in Serbia concentrated mostly in several places in central and southern Serbia, making additional burden on those schools.

5. MONTHLY ECONOMIC TRENDS

Inflation (Official): According to official statistics, retail prices in November 1999 increased by only 2.5%. This low official rate for inflation was the result of strict price controls which the Serbian Government had imposed on a majority of industrial products, both food and non-food, in order to prevent a sharp deterioration of the standard of living. This measure has managed to prevent hyperinflation thus far. However, it is feared that on the long run this may lead to further recessionary tendencies, as well as additional shortages of goods in state shops and increased grey economic activity.

While the above figure covers both Serbia and Montenegro, it should be noted that the difference between the two republics is becoming increasingly significant after the Government of Montenegro introduced a dual currency system (Dinars and DEM) and free pricing (except basic items from the state reserve). Food items needed to be imported from neighboring countries due to the Serbian ban on food exports to Montenegro. As a result, the Montenegrin statistics for November showed a 25% increase in retail prices, while in Serbia the figure was merely 1.3%.

Inflation (Real): The reliability of the official inflation figure - held artificially low by the above-mentioned measures - is strongly contested by independent economists. As a tool for calculating the inflation rate more accurately, experts take the DEM/Dinar exchange rate as the most reliable reflection of the actual inflation. Calculated on that basis, the November inflation was 11% (1DEM=15 Dinars in October 1999, as opposed to 1DEM=17 Dinars in November). The overall inflation rate for 1999 was 135% (in January 1 DEM=8.5DEM, in December 1 DEM=20 Dinars).

Salary: In November 1999, the average salary in FRY was 1,654 Dinars (83 DEM/43 USD). There is also a significant difference between the two republics. In Serbia the average salary was 1,580 Dinars (79 DEM/41USD) - a decrease in value in real terms. In Montenegro, on the contrary, the average salary in November was 2,615 Dinars (130 DEM/68 USD), which almost kept pace with increases in retail prices and the real exchange rate.

Pensions: The average pensions in the two republics reflect an equally significant difference. The latest pension paid out in Montenegro had an average value of 2,348 Dinars (117 DEM/62USD), compared to 1,332 Dinars (66 DEM/ 35 USD) in Serbia.

UN Office for the Coordination of Humanitarian Affairs
To learn more about OCHA's activities, please visit https://www.unocha.org/.