The state owes its citizensOld missing househokld foreign exchange deposits -
FRI, 28 JAN 2000
Banja Luka, January 18, 2000 - When someone is in debt "up to his neck" it is usually said that he owes to both the God and the people. Using the picturesqueness of the popular language, the same could be said of the Republic of Srpska. It refers to the people it owes money as the "old foreign exchange depositors". There are about 550 thousand of them and they are certainly the most numerous group of people sharing the same interest in this entity. It is possible even offhandedly to conclude that practically each family in RS has at least one family member whose smaller or larger valuable foreign currency savings have remained "blocked" in banks, i.e. that over half of the electorate of the Republic of Srpska belongs to the group of "old foreign currency depositors".
Because of these figures, the fact that the Party of Old Foreign Currency Depositors remained rather insignificant political organisation which did not manage to win a single mandate at any elections, calls for a serious sociological an politicological analysis.
Even more picturesque are data on the "quantity" of foreign currency which RS, as a guarantor, owes to its citizens on account of missing household foreign exchange deposits. Namely, the debt to foreign currency depositors is larger than the total external debt of the Republic of Srpska. While its owes DEM 1.480 billion to foreign creditors, the total amount it owes to foreign exchange depositors is as much as DEM 1.6 billion. Although claims of the majority of these 500 thousand foreign exchange depositors amount to only several hundreds or thousands German marks, there is also a number of large claimants among them.
The RS record in missing household foreign currency deposits is held by a citizen of Doboj whom the bank, i.e. the state - the Republic of Srpska - owes no less than three million German marks, plus interest. The "richest" old depositor in Banja Luka has left DEM 700 thousand to the bank. Also, the greatest capital in old foreign exchange deposits in concentrated in the largest town of the Republic of Srpska: in Banja Luka alone there are 154,600 such depositors to whom the state altogether owes DEM 706 million.
Who are actually "old depositors"? Although when speaking about people first thing that comes to mind at the mention of the term "old" is, naturally, a group of elderly people who, sitting in the park and keeping an eye on their grandchildren, are waiting for the postman to bring them their pensions. But, when it relates to depositors, then age has nothing to do with it. These are inhabitants of former Yugoslavia who, irrespective of sex, race and nationality, having confidence in institutions have, before the war, naively entrusted their money to banks and, when things got too close for comfort, did not manage to withdraw their deposits on time.
It so happened that the Republic of Srpska adopted a law prohibiting business banks from paying missing household savings, including both capital and interest, to their depositors who made their deposits before April 6, 1992.
Apart from this Law, the constitutionality and fairness of which are dubious, the RS Government recently, or more precisely, late last year, made one more "ingenious" move by adopting another legal act relating to missing foreign exchange savings. Namely, when the robbed foreign currency depositors finally came up with the idea to demand the return of their money in court, a large number of valid court rulings was passed whereby the Republic of Srpska was ordered to repay from the budget at least some money it owed its citizens as guarantor of their savings. The RS Government reacted by a "conclusion" on the suspension of these rulings. Such flagrant example of disrespect and disregard of one's own courts is probably without precedent in the history of democratic political systems.
Commenting this decision of the Government, in the adoption of which he had personally taken part, in his interview to the Banja Luka paper "Nezavisne novine" (Independent Paper), Novak Kondic, the RS Finance Minister, explained what had actually happened. Namely, as it had no other choice, the Government requested of the Public Attorney's Office to protect the interests of the Republic of Srpska. Although the mentioned ruling concerned the payment of only interest on foreign exchange savings deposited long ago, the Minister explained that the execution of the mentioned court rulings could have seriously threatened the RS budget and, consequently, the functioning of the entity's public institutions and authorities. In simple terms, even partial payment of interest on "old foreign exchange deposits", not to mention the payment of capital, would have caused the financial collapse of the Republic of Srpska.
Minister Kondic should be trusted on this in view of the fact that RS owes DEM 1.6 billion to its foreign exchange depositors and that the projected annual budget of the Serbian entity, increased by 11 percent from international sources, amounts to mere DEM 621 million. Also, there is no doubt that he is telling the truth when he claims that the International Monetary Fund reacted to Government's attempt to repay at least depositors with deposits up to DEM 100, by "recommending" the postponement of the resolution of the problem of the missng foreign exchange savings for some future, more stable and affluent times. Naturally, MMF does not care for the "old depositors" and their measly DEM 100 one bit and, consequently, does not want to risk for the budget of the Republic of Srpska to fall on the "frail" shoulders of international creditors because of such a "trifle".
As things stand now with the economic and financial power of the Republic of Srpska and its enterprise sector, depositors stand no chance of collecting even interest on their captured foreign exchange. And it is quite likely that that will not happen in near future, although when asked by a journalist whether "old foreign exchange depositors" will ever get interest on their savings, Minister Kondic responded in no uncertain terms: "Sure they will". But when, how and where from, the Minister did not know.
The only chance foreign exchange depositors have of laying their hands on at least a part of their riches, both in RS and the B&H Federation, is privatisation. Privatisation of small state enterprises in RS, those worth up to DEM 300 thousand, which were sold directly at public auctions, are the only "market" in the Republic of Srpska at which the "currency" called "missing foreign exchange saving coupons" is valid. Most of nine state enterprises sold until today to private owners in RS, were paid with precisely these coupons.
The Law prescribes that with their "captured" foreign exchange, "old depositors" can also buy "large" strategic enterprises, i.e. that part which will not be included in the "popular" division of vouchers, but will be put up for sale. Naturally, only if these people, who already had their share of dire experience with state banks, care at all for yet another "futile" investment and gambling with the state. It is most probable that the only thing "old depositors" will be seriously interested in will be the buy up of state-owned flats. But, it should be borne in mind that the majority of "old depositors", at least those who left large sums of capital in the banks, are actually guest workers abroad, people from villages who mostly do not have tenant's rights to state-owned flats.
It is interesting that in the mentioned interview, Minister Kondic had a slip of the tongue. He said that it became common practice for "old depositors" to claim their rights, i.e. money, in court! All the credit for this large-scale act of civil imprudence goes to the Association of Foreign Exchange Depositors of the Republic of Srpska and its Secretary, attorney-at-law, Dragutin Djuric.
Although this Association, located in Banja Luka, has only some 500 members, which means that not even every thousandth "old depositor" has joined it, in contrast to the already mentioned party with the same name, it proved to be a determined fighter for the rights of injured foreign exchange saving account owners. The Association has initiated a procedure with the Constitutional Court of the Republic of Srpska for the determination of constitutionality of the mentioned Law whereby business banks were prohibited to pay missing foreign exchange savings to their depositors. The Association has also demanded of the Organisation for Human Rights, which incidentally has the right to authorise and revoke laws, the revoking of all legal acts which, one way or the other, prevent citizens from getting their money back.
Through their Association, owners of missing foreign exchange accounts have announced their intention to press charges against the Republic of Srpska, as a collective guarantor, before the competent international court.
With a view to finally getting their money back, apart from these legal instruments, the Association of Foreign Exchange Depositors also announced a possibility of resorting to various forms of "civil disobedience": from peaceful protests to boycotting of the forthcoming elections.
Taking into account the number of inhabitants, this intention of boycotting the elections could become a rather serious threat, naturally if missing foreign exchange depositors agree and get organised. But, in all appearance, they are not yet up to that task. Not even those 500 depositors, gathered in the Association, could agree about this. And if those 500 could not reach an agreement, how can then half a million of them be expected to agree on anything?