The Vienna Institute Monthly Report 2000/2
SUMMARIES

The CIS at the dawn of the century: Hybrid economies benefit from devaluation
The financial crisis that began with the crash of the Russian rouble in August 1998 had severe contagion effects in the rest of the CIS, but they appear to be abating. Most states achieved positive GDP growth in 1999. Political developments in Russia, Ukraine and elsewhere augur well for a new if unspectacular effort at budget-hardening reform, necessary to prevent further marginalization of the region. Caspian oil and gas projects may pick up steam in 2000-01, given the turnaround in energy prices.

Macedonia: Mixed results and prospects
Last year ended better than expected. GDP grew, prices did not. Both came mainly as a consequence of increased spending by non-residents, i.e. refugees and foreigners (both civilian and military). Otherwise, the macroeconomic picture did not improve. Nor can it be expected to improve in the next couple of years because restructuring will be accelerated and therefore the pressure on the budget and on the current account will increase. Political stability will also be tested, though in a much improved international setting. This year Macedonia will start negotiations for a Stability and Association Agreement with the European Union.

Serbia and Montenegro: Diverging or colliding?
The two Yugoslav states are going their separate ways. After the Kosovo crisis, Serbia has chosen autarky, while Montenegro is relying on outside aid. As a consequence, Serbia has relied on inflation, while Montenegro has made the German mark its official currency (parallel with the Yugoslav dinar). The two states can be expected to diverge further in economic and other policies. The predominant expectation is that a decision will have to be taken, sometime this year, whether Serbia and Montenegro will separate or clash. 

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