The Fast, Short Life Of A Serb Gangster -- `There Is No Mercy On That Asphalt Anymore'

BELGRADE, Yugoslavia - Aleksander "Knele" Knezevic drove a red Porsche, wore Air Jordans and carried two pistols. He lived his last month in the fanciest hotel in Serbia.

A parade of young women delivered themselves to Knezevic's room at the Belgrade Hyatt. For he was a nice-looking, well-groomed gangster, just 21 years old, tall, with rippling muscles and lots of money.

After he was found dead in his hotel room late last month with two bullets in his head, three in his chest and $3,200 worth of German marks in his pants, his associates organized a funeral befitting a national hero.

Insisting that Belgrade grieve, they ordered nightclubs not to play music on the Friday night after the killing. Restaurants that had paid protection money to Knezevic's gang placed hundreds of mourning notices in the local papers. More than 20 women also bought memorial ads, each proclaiming that she was Knele's one true love.

"You were the samurai of the hot asphalt of Belgrade," said a gangster friend in a eulogy at the crowded funeral. "There is no mercy on that asphalt anymore."

ORGANIZED CRIME RISES AS INCOMES FALL

Knezevic's death illustrates more than the quality of mercy in Belgrade, seat of a regime whose support for ethnic war has made it an international outcast. His fast life and flashy send-off point to the phenomenal rise of gangsterism in Serbia - and the precipitous fall of almost everything else.

As inflation gallops along at 3 percent a day, as monthly incomes skid beneath monthly grocery bills, as the president of Yugoslavia complains that people in what is left of his country "are killed as easily as in the movies," large parts of the country's economy are passing into the hands of men with guns.

The imposition of U.N. economic sanctions, intended to punish Yugoslavia for armed aggression in Bosnia, appear to be speeding the growth of a gangster-controlled black market.

"The so-called Colombian syndrome is developing. There is a merging of top political leadership with different forms of the underworld and mafia," said Dejan Popovic, a professor at Belgrade University law school.

Popovic, a prominent tax specialist, sees a pattern in what he calls "very strange developments" in Serbia's banking system, in government-approved smuggling to get around U.N. sanctions and in the refusal of police to arrest known gangsters.

"If you put it together, there is a mosaic which shows that the underworld has become more and more important in the operation of our economy," Popovic said.

Knezevic was widely believed to have been running an extortion racket in central Belgrade. He also was suspected of having been involved in several killings.

Knezevic, however, was never arrested. Belgrade newspapers have reported that Serbian police even sent a helicopter to rescue him after a shootout last summer in Montenegro, Yugoslavia's other remaining republic.

No arrests have been made in the Knezevic killing. Police decline comment on the case.

In the Belgrade underworld, there is a broad and growing array of well-connected gangsters who might have been irritated by an ambitious young hood like Knezevic. Probably the best armed and most dangerous figures in the Belgrade underworld are those who have become leaders in the ethnic fighting last year in Croatia and this year in Bosnia-Herzegovina.

HAS GOVERNMENT ARMED GANGSTERS?

Western diplomats say many well-known mobsters have been armed, financed and dispatched to the war zones by the Serbian government of President Slobodan Milosevic.

"The biggest heroes of the war so far are criminals. I would say that there are about 3,000 Belgrade criminals in Bosnia at the front," said Vanja Bulic, who writes about organized crime for the magazine Duga.

"Criminals can be very useful to the regime. They are brave, imaginative and loyal to the people they work for," said Bulic, adding that their usefulness goes far beyond waging war. "The black market is the main way of preserving the social peace in Belgrade. So the state is looking to work with it."

The most famous of these workers is Zeljko "Arkan" Raznjatovic, a longtime Belgrade gangster whom the U.S. State Department has singled out as a suspect for future U.N. war-crime investigations.

Arkan's black-hooded gang of fighters, known as the Tigers, has been photographed killing Muslims in Bosnian towns and kicking their bodies. He and his men played a leading role last year in the assault on and destruction of the Croatian city of Vukovar.

Besides leading his Tigers, who remain immune from the Serbian police, Arkan has a number of businesses.

He runs the Delija Detective Agency, which reportedly offers protection services to Belgrade casinos. He operates several service stations that sell smuggled gasoline. And early this month he opened a bank in a fashionable Belgrade shopping center.

Another prominent paramilitary leader who has gone from rebel fighter to Serbian national hero to Belgrade businessmen is "Capt. Dragan," a half-Serb mercenary with Australian citizenship. He was in charge of training Serb rebels inside Croatia last year.

Dragan, who does not disclose his real name, is now a co-owner of Elita Agency, a real-estate firm that advertises on Belgrade television, offering quick cash to homeowners.

KEEPING CRIME IN THE FAMILY

Knezevic was the son of a well-known Belgrade gangster.

But Dusan Knezevic, now retired, was a mobster of a much less well-armed era.

According to several Belgrade residents who grew up around the central train station where the senior Knezevic practiced his trade, extortion was then a harsh but simple business.

Dusan Knezevic sold bricks to people who walked by him on the street. If a passerby could not be bullied into buying a brick, residents say, Knezevic would hit him with it.

Since war broke out last year in Croatia, the weaponry available to Belgrade gangsters has become considerably more potent.

There have been at least six major gangland firefights in Belgrade this year. The most recent involved rocket-propelled grenades.

Yugoslav President Dobrica Cosic called on Serbian police last month to disband all paramilitary and organized-crime groups.

His demand was criticized by members of the federal parliament loyal to Milosevic. They said Cosic, a novelist, should concentrate on matters he understands, such as writing. No arrests have been reported.