THE weapons industry in the new Yugoslavia (Serbia and Montenegro) is accelerating production despite sanctions imposed by the United Nations, according to diplomatic and Yugoslav sources.
As Yugoslavs continue to support Serbs fighting in Croatia and Bosnia, efforts are being made to upgrade military hardware and manufacture an attack jet and a weapons carrier.
"By keeping weapons production going and even trying to expand it, [Yugoslav officials] probably see it as a way to support the war effort, provide jobs, and probably to try and earn money," a Western diplomat says. "This used to be a very lucrative business for them."
Before the collapse of the Yugoslav federation in 1991, weapons sales accounted for the major part of foreign income, earning $2.5 billion annually from sales mainly to Iraq, Libya, and Burma. There is a ready market for smuggled arms, particularly in countries under UN arms embargoes such as Iraq and Somalia.
In late February, for example, the United States identified a Greek ship carrying what it believed was a shipment of Serbian arms to Somalia - though this was denied by Belgrade.
Since the federation's collapse, the shrunken Yugoslav Army has suffered a major setback. About 60 percent of its weapons factories were in Bosnia, Croatia, Slovenia, and Macedonia - all of which have seceded. Most armored trucks and electronics were manufactured in Slovenia: Croatia made tanks and warships.
Bosnian Serbs, who have gained control of two-thirds of Bosnia-Herzegovina during 10 months of fighting, have managed to capture most military factories in the former Yugoslav republic. Most of those facilities are still working and are linked with the Yugoslav Army, sources in Belgrade say. Every week, for example, missiles and other equipment are shipped from Serbia for repair in a factory in Banja Luka, a Serb-held town in Bosnia. Plants the Serbs missed
The Bosnian Serbs have failed, however, to capture a major aircraft plant under Croat control in Mostar, Bosnia. They also do not control missile and artillery factories in Travnik and munitions plants in Konjic, which have fallen into Muslim hands.
The Army, however, stripped the Mostar plant before it withdrew from Bosnia-Herzegovina last year and transported the machinery and tools to a factory in Pancevo, just outside Belgrade. It also blew up a super-modern military airport complex in Bihac, Bosnia-Herzegovina, before the Muslims captured it.
Jovo Opsenica, director of the Pancevo plant, says it is now in shape to "produce a completely new series of combat planes." He is counting on the government to provide $5 million to build a new runway for the planes.
The Army has been focusing so far on making up for the loss of the Slovene and Croat plants, Yugoslav officials say. A factory that once made construction equipment in central Serbia has been redesigned to produce modern M-84 tanks, similar to the Soviet T-72. Another factory which built Mercedes-Benz trucks and buses is now producing Army trucks and weapons transporters.
The question is how much money the government can and will provide. Serbia is in dire economic shape under UN sanctions. But if smuggled arms could bring in foreign currency, it may be willing to make the investment.
"I think we are going to see trials of this over the coming weeks," says another Western diplomat. "If smuggling is successful, [Belgrade officials] may take a full-scale plunge into production. I can't see what else they may have that is saleable." He adds that scarce raw materials and gasoline reserves would have to be channeled into the military.
A technical expert involved in advanced technology in military and civilian industries says his work has shrunk to virtually nothing but the military sector: "Only military factories are working - the others have shut down because of the sanctions."
An indication of the military's hopes came from armed forces chief-of-staff Zivota Panic, who recently said "the country's defense must be based on a strong and dynamic arms industry." Impact of sanctions
Even if the weapons industry is jump-started, however, many question how much impact that could have on the economies in Serbia and Montenegro. The sanctions are taking their toll. Inflation runs at almost 25,000 percent and the average salary is less than $100 per month. People can afford to buy little more than bread and milk.
"Weapons is perhaps all they can do, scraping together their resources. They made weapons well, they were competitive," says a Western diplomat. "But the whole country is collapsing economically. I don't think it can do what they would like it to do."
Meanwhile, as the US airdrop proceeded March 2, heavy fighting continued in eastern Bosnia. Thousands were reported dead or wounded in a Serb siege on the Cerska region.