SANCTIONS AGAINST FORMER YUGOSLAVIA SQUEEZE ROMANIA'S DANUBE LINK

SANCTIONS AGAINST FORMER YUGOSLAVIA SQUEEZE ROMANIA'S DANUBE LINK

The Danube-Black Sea canal bustled with business from dawn to dusk two years ago. Now only a few ships pass by in the afternoon - a vivid reminder of how the waterway has suffered from sanctions against its neighbor, the former Yugoslavia.

Canal officials estimate that in 1992 alone, the first year of the embargo against the warring nations of the area, sanctions cost the passageway $2.5 million in canceled contracts and lost transit fees. That year was intended to be a pivotal one for the canal, as administrators geared up for a move that should have brought windfall business: the opening of its sister waterway, the Rhine-Main-Danube Canal.The 42.2 mile Danube-Black Sea Canal shortens the route of Europe-bound cargo from the Far East by 2,500 miles, and with the Rhine-Main-Danube Canal linking it ultimately to the North Sea, the maritime community of the Port of Constantza saw unlimited possibilities.

What it got was an unexpected blow. War among the states of Bosnia, Serbia and Croatia has dashed business.

As sanction procedures become smoother and Romania's domestic market recovers, cargo volumes are slowly rising at the canal and the adjoining Constantza port, but business is still way off its peak and potential.

Although traffic through the Port of Constantza was up 9.6 percent last year, to 30.4 million tons total, Vasile Pistolea, port administration general manager, said he believes it could be much more.

"Traffic in both directions has been affected by the Serbian fees and U.N. permits," said Mr. Pistolea, who estimates that those factors have cost the port at least 25 percent of its traffic. A Serb tax of $1.83 a deadweight ton on passing vessels makes the route impossibly expensive for all but the most necessary shipments.

"The customers are trying to find other, cheaper routes, but for some exceptional cases they use this," he said. "It's (also) a question of stability. The system doesn't offer customers a regular route."

Aided by the Danube-Black Sea Canal, the Constantza port had planned to move away from its main role as a domestic port for Romania - whose collapsed economy offered few prospects - and into the international arena to become a gateway between Europe and the Far East. The embargo, which essentially closes off the Danube, has restricted that chance, and also cost the port its most important international client: Yugoslavia.

"Constantza was their port," said Violeta Limona, an associate in the port's marketing and strategy department. "They used it a lot for oil and

bulk material."

In 1990, Yugoslavia took 296,000 tons of goods shipped via the port through the canal. By 1994, that number had fallen to 40,000 tons, less than one- fifth.

Romtrans, one of Romania's largest forwarders, reported a complete change in the nature of its business. Before the embargo, transshipment comprised nearly 75 percent of its activity. Now it accounts for about 10 percent. Radu Dinu Irimia, Romtrans-Constantza director, estimated that the total volume of traffic handled by his company has slipped 25 percent, and he said Romtrans has had to branch out into other areas to compensate.

Romtrans has begun exporting the Romanian automobile Dacia to South America, South Africa and China, and next year will begin importing Daewoo autos from South Korea. Romtrans is pursuing a contract to deliver oil drilling equipment to a platform in the Black Sea for two international companies, an activity outside its usual scope.

"We've been obliged to do this," said Mr. Irimia. "The embargo is a real problem. All the others can be solved."