From: chosso@travel-net.com (M Chossudovsky)

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
    
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