Modernizing by Fire

In Belgrade, a furniture company was saved from bankruptcy when fire destroyed its antiquated-- but well insured-- plant. In the town of Pirot, a money-losing rubber factory, also insured, went up in flames. In Bosnia, a meat-packing plant mysteriously burned down.

Throughout Yugoslavia, factories are bursting into flames at a rate described by Zagreb's weekly Vijesnik u Srijedu as "a fire and a half a day." Asked Bel grade radio last week: "Are we going to see our entire industry disappear in billows of smoke?"

By remarkable coincidence, most of the fires break out in establishments that are in deep financial trouble or hopelessly obsolescent. Their managers know that generous fire insurance policies sponsored by the state allow them to modernize their factories as well as rebuild them. "We do not like to make insinuations," said Vijesnik u Srijedu, "but arson pays off handsomely." And the risk is virtually nonexistent. Because state insurance companies rely on harried local police to conduct fire investigations, no company official has yet been found guilty of anything more serious than negligence. The maximum penalty for that is a $16 fine.

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