[Nettime-bold] IMF/Yugoslavia (was: Re: <nettime> remember the kosovo war on this list?)

[Alexander Nekvasil <a8504902@unet.univie.ac.at>]

richard barbrook <richard@hrc.wmin.ac.uk> writes:

> I thought that the Left was supposed to support
> national liberation struggles and oppose fascism! If
> the American imperialists choose to aid the oppressed
> against the oppressors, why should we protest?


Here's why, professor Barbrook.  This is an article from
ZNet which sheds light on the economic side of the
breakup of Yugoslavia.  The article is not new, but I
think it fits into two recent threads on nettime, the
one on Yugoslavia and the one on IMF/World Bank; the
fact that these are connected is not as widely known as
it should be, imo.

cheers
AN


-------------------------------------------------------



          DISMANTLING FORMER YUGOSLAVIA,
               RECOLONISING BOSNIA

              by Michel Chossudovsky

          The author is Professor of Economics at the
University of Ottawa. Copyright by Michel Chossudovsky,
Ottawa, 1996. This text can be posted. For publication
in printed form kindly request permission from the
author: E-Mail:chosso@travel-net.com, fax:
1-613-7892050.

     As heavily-armed NATO troops enforce the peace in
Bosnia, the press and politicians alike portray Western
intervention in the former Yugoslavia as a noble, if
agonizingly belated, response to an outbreak of ethnic
massacres and human rights violations. In the wake of
the November 1995 Dayton Peace Accords, the West is
eager to touch up its self-portrait as saviour of the
Southern Slavs and get on with "the work of rebuilding"
the newly sovereign states.

     But following a pattern set since the onslaught of
the civil war, Western public opinion has been
misled. The conventional wisdom, exemplified by the
writings of former US Ambassador to Yugoslavia Robert
Zimmermann, is that the plight of the Balkans is the
outcome of an "aggressive nationalism", the inevitable
result of deep-seated ethnic and religious tensions
rooted in history.1 Likewise, much has been made of the
"Balkans power-play" and the clash of political
personalities: "Tudjman and Milosevic are tearing
Bosnia-Herzegovina to pieces".2

     Drowned in the barrage of images and self-serving
analyses are the economic and social causes of the
conflict.  The deep-seated economic crisis which
preceded the civil war has long been forgotten. The
strategic interests of Germany and the US in laying the
groundwork for the disintegration of Yugoslavia go
unmentioned, as does the role of external creditors and
international financial institutions. In the eyes of the
global media, Western powers bear no responsibility for
the impoverishment and destruction of a nation of 24
million people.  But through their domination of the
global financial system, the Western powers, pursuing
their collective and individual "strategic interests"
helped from the beginning of the 1980s, bring the
Yugoslav economy to its knees, contributing to stirring
simmering ethnic and social conflicts. Now, the efforts
of the international financial community are channelled
towards "helping Yugoslavia's war-ravaged successor
states". Yet while the World's attention is focused on
troop movements and cease fires, creditors and
international financial institutions are busy at work
collecting former Yugoslavia's external debt, while
transforming the Balkans into a safe-haven for free
enterprise.

     Adopted in several stages since the early 1980s,
the reforms imposed by Belgrade's creditors wreaked
economic and political havoc leading to disintegration
of the industrial sector and the piece-meal dismantling
of the Yugoslav Welfare State. Despite Belgrade's
political non-alignment and extensive trading relations
with the US and the European Community, the Reagan
administration had targeted the Yugoslav economy in a
"Secret Sensitive" 1984 National Security Decision
Directive (NSDD 133) entitled "United States Policy
towards Yugoslavia". A censored version of this document
declassified in 1990 largely conformed to a previous
National Security Decision Directive (NSDD 54) on
Eastern Europe issued in 1982. Its objectives included
"expanded efforts to promote a `quiet revolution' to
overthrow Communist governments and parties"... while
reintegrating the countries of Eastern Europe into the
orbit of the World market.3

     Secessionist tendencies feeding on social and
ethnic divisions, gained impetus precisely during a
period of brutal impoverishment of the Yugoslav
population. The first phase of macro-economic reform
initiated in 1980 shortly before the death of Marshall
Tito "wreaked economic and political havoc... Slower
growth, the accumulation of foreign debt and especially
the cost of servicing it as well as devaluation led to a
fall in the standard of living of the average
Yugoslav... The economic crisis threatened political
stability ... it also threatened to aggravate simmering
ethnic tensions".4 These reforms accompanied by the
signing of debt restructuring agreements with the
official and commercial creditors also served to weaken
the institutions of the federal State creating political
divisions between Belgrade and the governments of the
Republics and Autonomous Provinces. "The Prime Minister
Milka Planinc, who was supposed to carry out the
programme, had to promise the IMF an immediate increase
of the discount rates and much more for the Reaganomics
arsenal of measures..."5

     Following the initial phase of macro-economic
reform in 1980, industrial growth plummeted to 2.8
percent in the 1980-87 period, plunging to zero in
1987-88 and to -10.6 percent in 1990.6 The economic
reforms reached their climax under the pro-US government
of Prime Minister Ante Markovic.  In the Autumn of 1989
just prior to the collapse of the Berlin Wall, the
federal Premier had travelled to Washington to meet
President George Bush. A "financial aid package" had
been promised in exchange for sweeping economic reforms
including a new devalued currency, the freeze of wages,
a drastic curtailment of government expenditure and the
abrogation of the socially owned enterprises under
self-management.7 The "economic therapy" (launched in
January 1990) contributed to crippling the federal State
system. State revenues which should have gone as
transfer payments to the republics and autonomous
provinces were instead funnelled towards servicing
Belgrade's debt with the Paris and London clubs. The
republics were largely left to their own devices thereby
exacerbating the process of political fracturing.  In
one fell swoop, the reformers had engineered the demise
of the federal fiscal structure and mortally wounded its
federal political institutions. The IMF induced
budgetary crisis created an economic "fait accompli"
which in part paved the way for Croatia's and Slovenia's
formal secession in June 1991.  The Agreement with the
IMF

     The economic package was launched in January 1990
under an IMF Stand-by Arrangement (SBA) and a World Bank
Structural Adjustment Loan (SAL II). The budget cuts
requiring the redirection of federal revenues towards
debt servicing, were conducive to the suspension of
transfer payments by Belgrade to the governments of the
Republics and Autonomous Provinces thereby fuelling the
process of political balcanisation and secessionism. The
government of Serbia rejected Markovic's austerity
programme outright leading to a walk-out protest of some
650,000 Serbian workers directed against the Federal
government.8 The Trade Union movement was united in this
struggle: "worker resistance crossed ethnic lines, as
Serbs, Croats, Bosnians and Slovenians mobilised (...)
shoulder to shoulder with their fellow workers (...).9

     The 1989 Enterprise Reforms

     The 1989 enterprise reforms adopted under Premier
Ante Markovic played a central role in steering the
industrial sector into bankruptcy. By 1990, the annual
rate of growth of GDP had collapsed to -7.5 percent.10
In 1991, GDP declined by a further 15 percent,
industrial output collapsed by 21 percent.11 The
restructuring programme demanded by Belgrade's creditors
was intended to abrogate the system of socially owned
enterprises. The Enterprise Law of 1989 required
abolishing the "Basic Organizations of Associated Labour
(BAOL)".12 The latter were socially-owned productive
units under self-management with the Workers' Council
constituting the main decision making body. The 1989
Enterprise Law required the transformation of the BOALs
into private capitalist enterprises with the Worker's
Council replaced by a so-called "Social Board" under the
control of the enterprise's owners including its
creditors.13 "The objective was to subject the Yugoslav
economy to massive privatisation and the dismantling of
the public sector. Who was to carry it out? The
Communist Party bureaucracy, most notably its military
and intelligence sector, was canvassed specifically and
offered political and economic backing on the condition
that wholesale scuttling of social protections for
Yugoslavia's workforce was imposed...".14

     Overhauling The Legal Framework

     A number of supporting pieces of legislation were
put in place in a hurry with the assistance of Western
lawyers and consultants. A new Banking Law was enacted
with a view to triggering the liquidation of the
socially owned "Associated Banks". More than half the
country's banks were dismantled, the emphasis was on the
formation of "independent profit oriented
institutions".15 By 1990, the entire "three-tier banking
system" consisting of the National Bank of Yugoslavia,
the national banks of the eight Republics and autonomous
provinces and the commercial banks had been dismantled
under the guidance of the World Bank.16 A World Bank
Financial Sector Adjustment Loan was being negotiated in
1990. It was to be adopted by the Belgrade government in
1991...

     The Bankruptcy Programme

     Industrial enterprises had been carefully
categorised. Under the IMF-World Bank sponsored reforms,
credit to the industrial sector had been frozen with a
view to speeding up the bankruptcy process. So-called
"exit mechanisms" had been established under the
provisions of the 1989 Financial Operations Act.17 The
latter stipulated that if an enterprise were to remain
insolvent for 30 days running, or for 30 days within a
45 day period, it must hold a meeting within the next 15
days with its creditors in view of arriving at a
settlement. This mechanism allowed creditors (including
national and foreign banks) to routinely convert their
loans into a controlling equity in the insolvent
enterprise. Under the Act, the government was not
authorised to intervene. In case a settlement was not
reached, bankruptcy procedures would be initiated in
which case workers would not normally receive severance
payments.18

     In 1989, according to official sources, 248 firms
were steered into bankruptcy or were liquidated and
89,400 workers had been laid off.19 During the first
nine months of 1990 directly following the adoption of
the IMF programme, another 889 enterprises with a
combined work-force of 525,000 workers were subjected to
bankruptcy procedures.20 In other words, in less than
two years "the trigger mechanism" (under the Financial
Operations Act) had led to the lay off of more than
600,000 workers (out of a total industrial workforce of
the order of 2.7 million). The largest concentrations of
bankrupt firms and lay-offs were in Serbia,
Bosnia-Herzegovina, Macedonia and Kosovo.21

     Many socially owned enterprises attempted to avoid
bankruptcy through the non payment of wages. Half a
million workers representing some 20 percent of the
industrial labour force were not paid during the early
months of 1990, in order to meet the demands of
creditors under the "settlement" procedures stipulated
in the Law on Financial Organisations. Real earnings
were in a free fall, social programmes had collapsed,
with the bankruptcies of industrial enterprises,
unemployment had become rampant, creating within the
population an atmosphere of social despair and
hopelessness. "When Mr. Markovic finally started his
"programmed privatisation", the republican oligarchies,
who all had visions of a "national renaissance" of their
own, instead of choosing between a genuine Yugoslav
market and hyperinflation, opted for war which would
disguise the real causes of the economic catastrophe".22

     The January 1990 IMF sponsored package contributed
unequivocally to increasing enterprise losses while
precipitating many of the large electric, petroleum
refinery, machinery, engineering and chemical
enterprises into bankruptcy. Moreover, with the
deregulation of the trade regime in January 1990, a
flood of imported commodities contributed to further
destabilising domestic production. These imports were
financed with borrowed money granted under the IMF
package (ie. the various "quick disbursing loans"
granted by the IMF, the World Bank and bilateral donors
in support of the economic reforms).  While the import
bonanza was fuelling the build-up of Yugoslavia's
external debt, the abrupt hikes in interest rates and
input prices imposed on national enterprises had
expedited the displacement and exclusion of domestic
producers from their own national market.

     "Shedding Surplus Workers"

     The situation prevailing in the months preceding
the Secession of Croatia and Slovenia (June 1991)
(confirmed by the 1989-90 bankruptcy figures) points to
the sheer magnitude and brutality of the process of
industrial dismantling. The figures, however, provide
but a partial picture, depicting the situation at the
outset of the "bankruptcy programme". The latter has
continued unabated throughout the period of the civil
War and its aftermath... Similar industrial
restructuring programmes were imposed by external
creditors on Yugoslavia's successor states.

     The World Bank had estimated that there were still
in September 1990, 2,435 "loss-making" enterprises out
of a remaining total of 7,531.23 In other words, these
2,435 firms with a combined work-force of more than 1,3
million workers had been categorised as "insolvent"
under the provisions of the Financial Operations Act,
requiring the immediate implementation of bankruptcy
procedures. Bearing in mind that 600,000 workers had
already been laid off by bankrupt firms prior to
September 1990, these figures suggest that some 1.9
million workers (out of a total of 2.7 million) had been
classified as "redundant". The "insolvent" firms
concentrated in the Energy, Heavy Industry, Metal
processing, Forestry and Textiles sectors were among the
largest industrial enterprises in the country
representing (in September 1990) 49.7 percent of the
total (remaining and employed) industrial work-force.24

     Political Disintegration

     Supporting broad strategic interests, the austerity
measures had laid the basis for "the recolonisation" of
the Balkans. In the multi-party elections in 1990,
economic policy was at the centre of the political
debate, the separatist coalitions ousted the Communists
in Croatia, Bosnia-Herzegovina and Slovenia.

     Following the decisive victory in Croatia of the
rightist Democratic Union in May 1990 under the
leadership of Franjo Tudjman, the separation of Croatia
received the formal assent of the German Foreign
Minister Mr. Hans Dietrich Genscher who was in almost
daily contact with his Croatian counterpart in Zagreb.25
Germany not only favoured secession, it was also
"forcing the pace of international diplomacy" and
pressuring its Western allies to grant recognition to
Slovenia and Croatia. The borders of Yugoslavia are
reminiscent of World War II when Croatia (including the
territories of Bosnia-Herzegovina) was an Axis satellite
under the fascist Ustasa regime: "German expansion has
been accompanied by a rising tide of nationalism and
xenophobia... Germany has been seeking a free hand among
its allies to pursue economic dominance in the whole of
Mitteleuropa..."26 Washington on the other hand,
favoured "a loose unity while encouraging democratic
development... [the US Secretary of State] Baker told
[Croatia's President] Franjo Tudjman and [Slovenia's
President] Milan Kucan that the United States would not
encourage or support unilateral secession... but if they
had to leave, he urged them to leave by a negotiated
agreement"... 27

     Post-War Reconstruction

     The economic reforms now being imposed on the
"successor states" are a natural extension and
continuation of those previously implemented in federal
Yugoslavia. In the tragic aftermath of a brutal and
destructive War, the prospects for rebuilding the newly
independent republics appear bleak. Despite a virtual
press blackout on the subject, debt rescheduling is an
integral part of the peace process. The former
Yugoslavia has been carved up under the close scrutiny
of its external creditors, its foreign debt has been
carefully divided and allocated to the republics. The
privatisation programmes implemented under the
supervision of the donors, have contributed to a further
stage of economic dislocation and impoverishment of the
population. GDP had declined by as much as 50 percent in
four years (1990-93).28

     Moreover, the leaders of the newly sovereign states
have fully collaborated with the creditors: "All the
current leaders of the former Yugoslav republics were
Communist Party functionaries and each in turn vied to
meet the demands of the World Bank and the International
Monetary Fund, the better to qualify for investment
loans and substantial perks for the leadership... State
industry and machinery were looted by
functionaries. Equipment showed up in "private
companies" run by family members of the nomenklatura".29

     Even as the fighting raged, Croatia, Slovenia and
Macedonia had entered into separate loan negotiations
with the Bretton Woods institutions. In Croatia, the
government of President Franjo Tudjman signed in 1993,
an agreement with the IMF. Massive budget cuts mandated
under the agreement thwarted Croatia's efforts to
mobilize its own productive resources, thus jeopardizing
post-war reconstruction. The cost of rebuilding
Croatia's war-torn economy was estimated at some $23
billion, requiring an influx of fresh foreign loans. In
the absence of "debt forgiveness", Zagreb's debt burden
will be fuelled well into the 21st Century.

     In return for foreign loans, the government of
President Franjo Tudjman had agreed to reform measures
conducive to further plant closures and bankruptcies,
driving wages to abysmally low levels. The official
unemployment rate increased from 15.5 percent in 1991 to
19.1 percent in 1994.30

     Zagreb has also instituted a far more stringent
bankruptcy law, together with procedures for "the
dismemberment" of large state-owned public utility
companies. According to its "Letter of Intent" to the
Bretton Woods institutions, the Croatian government had
promised to restructure and fully privatize the banking
sector with the assistance of the European Bank for
Reconstruction and Development (EBRD) and the World
Bank. The latter have also demanded a Croatian capital
market structured to heighten the penetration of Western
institutional investors and brokerage firms.  Under the
agreement signed in 1993 with the IMF, the Zagreb
government was not permitted to mobilise its own
productive resources through fiscal and monetary
policy. The latter were firmly under the control of its
external creditors. The massive budget cuts demanded
under the agreement had forestalled the possibility of
post-war reconstruction. The latter could only be
carried out through the granting of fresh foreign loans,
a process which would fuel Croatia's external debt well
into the 21st Century. The cost of rebuilding Croatia's
war-torn economy was estimated at some 23 billion
dollars...

     Macedonia has also followed a similar economic
path. In December 1993, the Skopje government agreed to
compress real wages and freeze credit in order to obtain
a loan under the IMF's Systemic Transformation Facility
(STF). In an unusual twist, multi-billionaire business
tycoon George Soros participated in the International
Support Group composed of the government of the
Netherlands and the Basel-based Bank of International
Settlements.  The money provided by the Support Group,
however, was not intended for "reconstruction" but
rather to enable Skopje to pay back debt arrears owed
the World Bank...31

     Moreover, in return for debt rescheduling, the
government of Macedonian Prime Minister Branko
Crvenkovski had to agree to the liquidation of remaining
"insolvent" enterprises and the lay off of "redundant"
workers--which included the employees of half the
industrial enterprises in the country. As Deputy Finance
Minister Hari Kostov soberly noted, with interest rates
at astronomical levels because of donor-sponsored
banking reforms, "it was literally impossible to find a
company in the country which would be able to (...) to
cover [its] costs (...).32

     Overall, the IMF economic therapy for Macedonia
constitutes a continuation of the "bankruptcy programme"
launched in 1989 under federal Yugoslavia. The most
profitable assets are now on sale on the year-old
Macedonian stock market, but this auction of socially
owned enterprises has led to industrial collapse and
rampant unemployment.  Yet despite the decimation of the
economy and the disintegration of schools and health
centres under the austerity measures, Finance Minister
Ljube Trpevski proudly informed the press that "the
World Bank and the IMF place Macedonia among the most
successful countries in regard to current transition
reforms".  The head of the IMF mission to Macedonia,
Mr. Paul Thomsen, concurs that "the results of the
stabilization program [under the STF] were impressive"
giving particular credit and appreciation to "the
efficient wages policy" adopted by the Skopje
government.33

     Rebuilding Bosnia and Herzegovina

     With a Bosnian peace settlement apparently holding
under NATO guns, the West has unveiled a
"reconstruction" programme which fully strips
Bosnia-Herzegovina of its economic and political
sovereignty. This programme largely consists in
developing Bosnia-Herzegovina as a divided territory
under NATO military occupation and Western
administration.

     Resting on the November 1995 Dayton accords, the US
and the European Union have installed a full-fledged
colonial administration in Bosnia. At its head is their
appointed High Representative (HR) Mr. Carl Bildt, a
former Swedish Prime Minister and European
Representative in the Bosnian Peace negotatiations. The
HR has full executive powers in all civilian matters,
with the right to overrule the governments of both the
Bosnian Federation and the Bosnian-Serb Republika
Srpska. The HR is to act in close liaison with the IFOR
Military High Command as well with donors agencies.

     An international civilian police force is under the
custody of an expatriate Commissioner appointed by the
United Nations Secretary General Mr. Boutros Boutros
Ghali, some 1,700 policemen from fifteen countries most
of whom have never set foot in the Balkans, were
dispatched to Bosnia after a five days training
programme in Zagreb.

     While the West has underscored its support to
democracy, the Parliamentary Assembly set up under the
"Constitution" finalised under the Dayton Accords,
largely acts as a "rubber stamp". Behind the democratic
facade, actual political power rests in the hands of a
"parallel government" headed by the High Representative
and staffed by expatriate advisors.

     Moroever, the Constitution agreed in Dayton hands
over the reins of economic policy to the Bretton Woods
institutions and the London based European Bank for
Reconstruction and Development (EBRD). Article VII
stipulates that the first Governor of the Central Bank
of Bosnia and Herzegovina is to be appointed by the IMF
and "shall not be a citizen of Bosnia and Herzegovina or
a neighbouring State..."

     Just as the Governor of the Central Bank is an IMF
appointee, the Central Bank will not be allowed under
the Constitution to function as a Central Bank: "For the
first six years (...) it many not extend credit by
creating money, operating in this respect as a currency
board" (Article VII). Neither will the new "sovereign"
successor State be allowed to have its own currency
(issuing paper money only when there is full foreign
exchange backing), nor permitted to mobilise its
internal resources. As in the other successor republics,
its ability to self-finance its reconstruction (without
massively increasing its external debt) is blunted from
the outset...

     The tasks of managing the Bosnian economy have been
carefully divided among donor agencies: while the
Central Bank is under IMF custody, the European Bank for
Reconstruction and Development (EBRD) heads the
Commission on Public Corporations which supervises
operations of all public sector enterprises including
energy, water, postal services, roads, railways,
etc. The President of the EBRD appoints the Chairman of
the Commission which also oversees public sector
restructuring, meaning primarily the sell-off of State
and socially owned assets and the procurement of long
term investment funds.

     One cannot sidestep a fundamental question: is the
Bosnian Constitution formally agreed between heads of
State at Dayton really a constitution? A sombre and
dangerous precedent has been set in the history of
international relations: Western creditors have embedded
their interests in a Constitution hastily written on
their behalf, executive positions within the Bosnian
State system are to be held by non-citizens who are
appointees of Western financial institutions. No
constitutional assembly, no consultations with citizens'
organisations in Bosnia and Herzegovina, no
"constitutional amendments"...

     The Bosnian government estimates that
reconstruction costs will reach $47 billion. Western
donors have pledged $3 billion in reconstruction loans,
yet only a meagre $518 million dollars were granted in
December 1995, part of which is tagged (under the terms
of the Dayton Peace Accords) to finance some of the
local civilian costs of the Implementation Force's
(IFOR) military deployment as well as repay debt arrears
with international creditors.

     In a familiar twist, "fresh loans" have been
devised to pay back "old debt". The Central Bank of the
Netherlands has generously provided "bridge financing"
of 37 million dollars.  The money, however, is earmarked
to allow Bosnia to pay back its arrears with the IMF, a
condition without which the IMF will not lend it fresh
money...35 But it is a cruel and absurd paradox: the
sought after loan from the IMF's newly created
"Emergency Window" for so-called "post-conflict
countries" will not be used for post-war
reconstruction. Instead it will to be applied to
reimburse the Central Bank of the Netherlands which had
coughed up the money to settle IMF arrears in the first
place... While debt is building up, no new financial
resources are flowing into Bosnia to rebuild its
war-torn economy...

     Multinationals have an Eye on Bosnia's Oil Fields

     Western governments and corporations show greater
interest in gaining access to potential strategic
natural resources than committing resources for
rebuilding Bosnia.  Documents in the hands of Croatia
and the Bosnian Serbs indicate that coal and oil
deposits have been identified on the eastern slope of
the Dinarides Thrust, a region retaken from rebel
Bosnian Krajina Serbs by the Croatian army in the final
offensives before the Dayton Peace accords. Bosnian
officials report that Chicago-based Amoco was among
several foreign firms that subsequently initiated
exploratory surveys in Bosnia. The West is anxious to
develop these regions: "The World Bank --and the
multinationals that conducted operations-- are [August
1995] reluctant to divulge their latest exploration
reports to the combatant governments while the war
continues"...36 Moreover, there are also "substantial
petroleum fields in the Serb-held part of Croatia just
across the Sava river from the Tuzla region".37 The
latter under the Dayton Agreement, is part of the US
Military Division with headquarters in Tuzla.

     The territorial partition of Bosnia between the
Federation of Bosnia-Herzegovina and the Bosnian-Serb
Republika Srpska under the Dayton Accords thus takes on
strategic importance, the 60,000 NATO troops on hand to
"enforce the peace" will administer the territorial
partition of Bosnia-Herzegovina in accordance with
Western economic interests.

     National sovereignty is derogated, the future of
Bosnia will be decided upon in Washington, Bonn and
Brussels rather than in Sarajevo... The process of
"reconstruction" based on debt rescheduling is more
likely to plunge Bosnia-Herzegovina (as well as the
other remnant republics of former Yugoslavia) into the
status of a Third World country.

     While local leaders and Western interests share the
spoils of the former Yugoslav economy, the fragmentation
of the national territory and the entrenching of
socio-ethnic divisions in the structure of partition
serve as a bulwark blocking a united resistance of
Yugoslavs of all ethnic origins against the
recolonization of their homeland.

     Concluding Remarks

     Macro-economic restructuring applied in Yugoslavia
under the neoliberal policy agenda has unequivocally
contributed to the destruction of an entire country. Yet
since the onset of war in 1991, the central role of
macro-economic reform has been carefully overlooked and
denied by the global media. The "free market" has been
presented as the solution, the basis for rebuilding a
war-shattered economy. A detailed diary of the war and
of the "peace-making" process has been presented by the
mainstream press. The social and political impact of
economic restructuring in Yugoslavia has been carefully
erased from our social consciousness and collective
understanding of "what actually happened". Cultural,
ethnic and religious divisions are highlighted,
presented dogmatically as the sole cause of the crisis
when in reality they are the consequence of a much
deeper process of economic and political fracturing.

     This "false consciousness" has invaded all spheres
of critical debate and discussion. It not only masks the
truth, it also prevents us from acknowledging precise
historical occurrences.  Ultimately it distorts the true
sources of social conflict. The unity, solidarity and
identity of the Southern Slavs have their foundation in
history, yet this identity has been thwarted,
manipulated and destroyed.

     The ruin of an economic system, including the
take-over of productive assets, the extension of markets
and "the scramble for territory" in the Balkans
constitute the real cause of conflict. What is at stake
in Yugoslavia are the lives of millions of
people. Macro-economic reform destroys their livelihood,
derogates their right to work, their food and shelter,
their culture and national identity... Borders are
redefined, the entire legal system is overhauled, the
socially owned enterprises are steered into bankruptcy,
the financial and banking system is dismantled, social
programmes and institutions are torn down... In
retrospect, it is worth recalling Yugoslavia's economic
and social achievements in the post-war period (prior to
1980): the growth of GDP was on average 6.1 per annum
over a twenty year period (1960-1980), there was free
medical care with one doctor per 550 population, the
literacy rate was of the order of 91 percent, life
expectancy was 72 years...37

     Yugoslavia is a "mirror" of similar economic
restructuring programmes applied not only in the
developing World but also in recent years in the US,
Canada and Western Europe...  "Strong economic medicine"
is the answer, throughout the World, people are led to
believe that there is no other solution: enterprises
must be closed down, workers must be laid off and social
programmes must be slashed...  It is in the foregoing
context that the economic crisis in Yugoslavia should be
understood. Pushed to the extreme, the reforms in
Yugoslavia are the cruel reflection of a destructive
"economic model" imposed under the neoliberal agenda on
national societies throughout the World...

                   ENDNOTES

      

     1. See the account of Warren Zimmermann (former US
Ambassador to Yugoslavia), "The Last Ambassador, A
Memoir of the Collapse of Yugoslavia", Foreign Affairs,
Vol 74, Number 2, 1995.

     2. Milos Vasic et al, "War Against Bosnia", Vreme
News Digest Agency, No. 29, 13 April 1992.

     3. Sean Gervasi, "Germany, US and the Yugoslav
Crisis", Covert Action Quarterly, No. 43, Winter
1992-93.

     4. Ibid

     5. Dimitrije Boarov, "A Brief Review of
Anti-inflation Programs, the Curse of Dead Programs",
Vreme New Digest Agency, No. 29, 13 April 1992.

     6. World Bank, Industrial Restructuring Study,
Overview, Issues and Strategy for Restructuring",
Washington DC, June 1991, p. 10 and 14.

     7. Sean Gervasi, op cit.,

     8. Ibid.

     9. Ralph Schoenman, "Divide and Rule Schemes in The
Balkans", The Organiser, 11 September 1995.

     10. World Bank, op cit., p. 10. The term GDP is
used for simplicity, yet the concept used in Yugoslavia
and Eastern Europe to measure national product is not
equivalent to the GDP concept under the (Western) system
of national accounts.

     11. See Judit Kiss, Debt Management in Eastern
Europe, Eastern European Economics, May-June 1994,
p. 59.

     12. World Bank, op cit

     13. Ibid, p. viii.

     14. Ralph Schoenman, "Divide and Rule Schemes in
The Balkans", The Organiser, 11 September 1995.

     15. For further details see World Bank, Yugoslavia,
Industrial Restructuring, p. 38.

     16. Ibid., p. 38.

     17. Ibid., p. 33.

     18. Ibid., p. 33

     19. Ibid, p. 34. Data of the Federal Secretariat
for Industry and Energy, Of the total number of firms,
222 went bankrupt and 26 were liquidated.

     20. Ibid., p. 33. These figures include bankruptcy
         and liquidation.

     21. Ibid, p. 34.

     22. Dimitrije Boarov, op. cit.

     23 World Bank, Industrial Restructuring
     p. 13. Annex 1, p. 1.

     24. "Surplus labour" in industry had been assessed
by the World Bank mission to be of the order of 20
percent of the total labour force of 8.9 million,
--ie. approximately 1.8 million. This figure seems,
however, to grossly underestimate the actual number of
redundant workers based on the categorisation of
"insolvent" enterprises.  Solely in the industrial
sector, there were 1.9 million workers (September 1990)
out of 2.7 million employed in enterprises classified as
insolvent. See World Bank, Yugoslavia, Industrial
Restructuring, Annex 1.

     25. Sean Gervasi, op. cit., p. 65

     26. Ibid., p. 45

     27. Zimmermann, op. cit.

     28. Figure for Macedonia, Enterprise, Banking and
Social Safety Net, World Bank Public information Center,
28 November 1994.

     29. Ralph Schoenman, "Divide and Rule Schemes in
The Balkans", The Organiser, 11 September 1995.

     30 "Zagreb's About Turn", The Banker, January 1995,
     p. 38.

     31 See World Bank, Macedonia Financial and
enterprise Sector, Public Information Department,
November 28, 1995.

     32 Statement of Macedonia's Deputy Minister of
Finance Mr. Hari Kostov, reported in MAK News, April 18,
1995.

     33 Macedonian Information and Liaison Service, MILS
News, 11 April 1995.

     34 See International Monetary fund, Bosnia and
Herzegovina becomes a Member of the IMF, Press Release
No.  97/70, Washington, December 20, 1995.

     35 Frank Viviano and Kenneth Howe, Bosnia Leaders
Say Nation Sit Atop Oil Fields, The San Francisco
Chronicle, 28 August 1995. See also Scott Cooper,
"Western Aims in Ex-Yugoslavia Unmasked", The Organizer,
24 September 1995.

     36 Viviano and Howe, op cit.,

     37 World Bank, World Development Report 1991,
Statistical Annex, tables 1 and 2, Washington DC, 1991.

      

      Michel Chossudovsky Department of Economics,
University of Ottawa, Ottawa, K1N6N5

      Fax: 1-613-7892050 E-Mail: chosso@travel-net.com

      Alternative fax: 1-613-5625999



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