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.

For publication in printed form kindly request permission from the author:
E-Mail: <[log in to unmask]>
Fax: 1-613-789-2050.


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...[34] 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"...[35] Moreover, there are
also "substantial petroleum fields in the Serb-held part of Croatia just
across the Sava river from the Tuzla region".[36] 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: 1-613-789-2050

E-Mail: [log in to unmask]

Alternative fax: 1-613-562-5999

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