When ‘Cash- Strapped’ Takes on New Meaning…

When you think ‘siege’ you think of the Middle Ages and months of castles surrounded and stalemated armies. Sieges don’t happen in the modern era. Well a siege actually did happen in Sarajevo (Bosnia) between 1992 and 1995. The Serbs completely surrounded the city and pounded Sarajevo daily with bombs and sniper fire from the high ground they controlled. The Bosnians’ only link to the outside world was a 750 yard tunnel dug beneath the United Nations controlled airport. Without this lifeline who knows how the population would have gotten even the barest necessities.

I am not here to debate how or why the world allowed a siege of a major city to go on for 1,400 days. This is for the history books. The Balkan question is very complicated. What interested me when I visited Sarajevo recently was how did the small stuff get done, how did transactions get made and what was the currency that had any value? The answer is that the most valuable currencies inside the siege area were cigarettes and Deutschmarks. The Euro had not yet been introduced and the Deutschmark was the strongest currency in Europe. It had value. As did cigarettes. The Bosnians are inveterate smokers, and a cigarette was real currency. 

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The Sarajevo question, that is what acts as an effective currency and store of value in time of trouble, is playing out in other places today. Venezuela, Turkey and Iran come to mind. In Iran a traditional store value of gold, has become an important currency of choice. Demand for gold bars and coins has tripled year over year. Gold bugs everywhere are cheering arguing that this is proof positive the yellow metal is the go to asset when economies implode. It’s interesting to note however that the global price of gold has done nothing for some time and in fact is actually down year-to-date. The world is not really beating a path to gold even if the Iranians are.

Venezuela, another country with a collapsing economy and currency, is seeing a strong demand for “things.” Property and cars and foodstuffs have become stores of value as the local currency implodes (see picture). This is what happened in Weimar Germany after World War I when hyperinflation destroyed the Deutschmark. The winners were industrialists who owned physical assets and farmers who had food to sell or barter. Of course, a major hedge for a collapsing currency is the currency of a stronger country. This might be the Euro or the Japanese Yen, but right now the currency of choice is still the U.S. Dollar. The U.S. has its problems today, but as they say in the land of the blind - the one-eyed man is king. For now, we are still that one-eyed man. 

“Once A Year Go Somewhere You Have Never Been Before” - The Dalai Lama

I am the kind of person who needs to go to a place and see it, then I can better understand the history and current events. In the recent past I have been to Iran, the five ‘Stans, the South Caucasus and this summer, the Balkans. All of them are now a little more understandable.

The Balkans are the former states of Yugoslavia - Slovenia, Croatia, Serbia, Bosnia and Herzegovina, Montenegro, and most recently, Kosovo. The region is terribly diverse geographically, encompassing high mountains, great river resources, and the drop dead scenery of the Adriatic coast. It is historically an area of persistent conflict dating back centuries, pitting Catholics against Orthodox Christians against Muslims. Although virtually everyone in the region speaks the same language, albeit with different accents, it has been very difficult to unify the various parts. 

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Here are some thoughts on my trip; some serious and some just back of the envelope observations.

1. If you are interested in politics and history, the place to go is Bosnia and Herzegovina (BiH). Stability in the Balkans seems to rest on how homogenous a country’s people are. For instance, Slovenia and Croatia are primarily Catholic and their people are similar ethnically – Croatia has mostly Croatians and Slovenia, mostly Slovenians. The same generally goes for Serbia which is mostly Serbian and mostly Orthodox Christian. The odd man out is Bosnia and Herzegovina (BiH) which is 50% Muslim and the balance Croatian Catholics and Serbian Orthodox. Things are stable today but, to my mind, not settled longer term. BiH for instance has four presidents, three of which (Muslim, Catholic and Orthodox) rotate every eight months. The leaders could not decide on a national flag so the EU gave them one. This is not a recipe for stability.

The two cities you should definitely visit are Sarajevo and Mostar. Sarajevo weathered a three year siege by the Serbians between 1992 and 1995 and Mostar, historically a peaceful city of Muslims (Bosniaks) and Serbians/Croatians separated by a historic stone bridge (see picture), erupted in ethnic violence in 1995. The city is peaceful now but scratch the surface and you feel the tension.

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2. If you are interested in a ‘Holiday’, the Adriatic coast is your choice. From Split to Dubrovnik, you have crystal clear water and beautiful weather. The trick however is avoiding the modern day Roman Army – the cruise ships. Dubrovnik often receives four cruise liners a day in the summer, disgorging thousands of passengers who clog the narrow streets of the beautiful walled city. Instead of spears and shields they carry selfie sticks and sunscreen. If you don’t like crowds, avoid July and August.

3. Phillip Morris needs to move its world headquarters. I have been to smoking countries (Japan and China for instance) but they don’t hold a ‘Bic lighter’ to the Balkans. I would venture to say that 90% of men, women and children smoke. Non-smoking sections are more a suggestion than a rule.

Caveats aside, I rate the Balkans five-stars. You should go. As someone once said, “don’t tell me how educated you are, tell me how much you have traveled”.

The Travel Bug Bites...

Wealth and travel go hand in hand. The British started taking the Grand Tour of Europe in the 18th century. America first got its travel bug in the 19th century and things really took off after World War II. Travel opens your eyes to new places, new people and new customs. Most of all, travel forces an understanding that the world is complicated, even more complicated than you imagined. Once you travel, there are no thirty-second sound bite answers to global problems. Everything gets more nuanced and actually because of this, the world gets even more interesting.

Today’s new travelers are coming from the Emerging world. The Pew Research Center recently reported that the global ‘middle class’, those who earn between $10 and $100 a day, totals 1.7 billion people. This is down from previous estimates but still is a big number. China alone has 235 million people who earn more than $50 a day. These people can travel, and many do.

Over 100 million Chinese traveled abroad last year. This is expected to grow to 200 million by 2020. By way of comparison about 60 to 70 million Americans traveled abroad in 2014.

Where do the Chinese go? In the early days it was to Hong Kong and then later to Singapore, Malaysia and Thailand. The first tourists all traveled in groups. Today this is changing. More and more Chinese tourists are traveling on their own.

The number one destination is Europe which to the Chinese means “culture.” Other popular destinations might surprise you. Japan, which China has had a difficult relationship with is a favorite today. The Chinese like the orderliness and cleanliness of Japan, the cheap prices (import duties in China are as high as 40%) and the quality of goods. One of the most popular items from Japan this past New Year’s holiday was sophisticated, mechanized toilets. Go figure. Good toilets trump politics and history I guess.

The U.S. is coming up quickly in the Chinese travel ranks. New York is the #1 U.S. destination. It doesn’t hurt that the Chinese buy more things when they travel than visitors from any other country. One of the biggest impediments to Chinese tourism however is the visa hassle. The recent China-US agreement allowing for ten-year tourist visas is a big step forward.

Travel is as much about the clash of cultures as anything else. Evan Osnos of the New Yorker accompanied a Chinese tour group to Europe in 2011. His observations were interesting, and often hilarious. Guides instructed participants not to converse with locals. You were just asking for trouble. And all meals were at Chinese restaurants. The guide cautioned, “if you eat Western food too fast, you will get an upset stomach.”

The tour itinerary was offbeat, at least to Western eyes. Trier, Germany was a stop - to see the birthplace of Karl Marx. Another must see was a stand of willow trees at Cambridge University which were referred to lovingly in a famous 20th century Chinese poem.

The Chinese have also taken up cruising today. Ship operators have had to adopt “Chinese characteristics” to their boats. Esoteric movies are out and self-help educational seminars are in for the ever ambitious Chinese. The moneyed masses also want more ‘class distinctions’ with higher paying guests receiving extra perks. Sounds odd coming from ‘socialist’ travelers but capitalism reigns in the Middle Kingdom today and those who have it want it recognized.

The upside to Chinese tourism is money is flowing freely. The International New York Times recently reported that a Chinese company, the Tiens Group, took its entire workforce, 6,000 employees, on a one week vacation to France and Monaco. They booked 84 airplanes, 140 hotels and scores of trains.

The downside to Chinese tourism is that the ‘nouveau’ travelers can still cause a cultural stir. The Chinese are often loud, and sometimes coarse. The Chinese government recently put out a no-fly list of rowdy passengers. Southeast Asian officials have sometimes been outraged at the cultural insensitivities of Chinese tourists (see picture). Other tourists have been caught carving initials into thousand year old statues.

But pretty soon Chinese and other emerging market tourists will be seen as permanent fixtures on the travel scene. They will get assimilated and we will get used to the Mandarin next to the English on signs.