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 The factory was wrecked, and barely a house in the town around it
was left untouched by the worst floods to hit the Balkans in living
memory.
Maglaj was a picture of destruction, and of the economic toll on a
region woefully unfit to foot the bill.
"We all live off this factory, and the sooner production resumes,
the sooner the town will return to life," said mill worker Mirza
Mahic, shovel in hand.
Two decades after the wars that tore apart Yugoslavia and put much
of the region on Western financial life support, Serbia and Bosnia
must again look to Europe for the money to recover from days of
devastating floods.
In Bosnia alone, forecasts of the damage top 1 billion euros ($1.37
billion). Given the destruction inflicted on agricultural land and
the energy network, imports are set to rise, impacting economic
growth and inflation. Food prices could soar.
Estimating the damage in Bosnia at 1.3 billion euros, or roughly 10
percent of national output, Raiffeisen Bank said on Tuesday its
forecast of 1.5 percent economic growth this year was under
pressure.
Already struggling with very high unemployment, lower growth will
only make it harder for the countries' populations to find regular
work. Bosnia's jobless rate is running at around 40 percent and
Serbia's at 25 percent, according to official estimates, with many
workers scratching out a basic living in the grey economy.
Bosnia's presidency has asked the central government to request
reprogramming of the country's international loans and for
commercial banks to adjust loan repayments for Bosnians hit by the
flooding. The government says they number in the hundreds of
thousands, and that more than 100,000 buildings are unusable.
In Serbia, sandbag barriers largely kept the waters from the
country's biggest power plant, Nikola Tesla, but the largest coal
mine that supplies it was turned into a lake 60 meters deep in some
parts. Prime Minister Aleksandar Vucic says the clean-up at the
complex will cost more than 100 million euros.
Energy production, already down 40 percent, could be limited for
months. "It will take us a year to recover production here and take
the water out," Kolubara mine general manager Milenko Grgic told
state television.
Envoys from the European Union and the European Bank for
Reconstruction and Development (EBRD) visit the region this week to
see the damage first-hand.
As a candidate for EU membership, Serbia qualifies for the bloc's
Solidarity Fund, providing the damage amounts to at least 0.64
percent of gross domestic product (GDP), or around $240 million.
Serbia plans a donor conference on Thursday.
"LOST EVERYTHING"
Bosnia, however, is yet to qualify for candidacy due to years of
foot-dragging by a political elite still split along ethnic lines. A
spokesman for the EU's mission in Bosnia said the bloc's executive
arm, the Commission, was urgently looking at how to pull together a
support package for the country.
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"The flooding destroyed not only the houses and businesses but also
the infrastructure, inflicting huge damage to roads, bridges,
railway tracks and waterworks, which will need major investment,"
said Aleksa Milojevic, director of the Economic Institute in the
flood-hit town of Bijeljina in eastern Bosnia.
Milojevic said the agriculture and cattle stock in Bosnia's northern
Semberija region, the country's granary, was completely destroyed
because of the failure of authorities to react quickly to warnings
of the impending floods.
Bosnia's central government will discuss the impact with the
International Monetary Fund, which begins a 10-day review of a
standby loan deal on Wednesday. The deal is already frozen over the
failure of governments in the country's two autonomous republics to
agree on economic policies.
"The floods will have significant implications for the budgets, both
on spending and revenue sides," the Fund's envoy to Bosnia, Ruben
Atoyan, told Reuters.
Serbia, too, is due to begin talks soon on a new precautionary loan
deal with the IMF. The Washington-based lender is looking for deep
spending cuts but the floods may have ruined the best-laid plans of
Finance Minister Lazar Krstic.
In Serbia, agriculture accounts for roughly 12 percent of GDP and is
valued at $5 billion. The sector accounts for 25 percent of total
exports. Fortunately, Serbia's breadbasket, the northern Vojvodina
region, was spared the worst of the flooding. But the sector did not
escape completely.
"If 10 percent of agricultural production was affected it means that
the damage could amount to $500 million," said Milan Prostran,
former head of the agriculture department at Serbia's Chamber of
Commerce.
Small farmers in both countries were hit hardest.
"We all lived off raspberries, and now it's all gone," said Elvir
Cizmic from the Zeljezno Polje region in central Bosnia, where
landslides left over 5,000 people homeless and destroyed raspberry
fields.
"We had an annual output of 3 million markmarka ($2.1 million) from
raspberries," Cizmic said. "I can't believe that in one hour I lost
everything I had worked for my whole life."
(Additional reporting by Zoran Radosavljevic in Zagreb and Gordana
Katana in Banja Luka; Writing by Daria Sito-Sucic; Editing by Matt
Robinson and Toby Chopra)
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