Dismantling former Yugoslavia, recolonizing Bosnia
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 Warren 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 (Zimmermann, 1995). 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’ (Vasic et al, 1992).
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’. As the world focuses on troop movements and cease-fires, the international financial institutions are busily collecting former Yugoslavia’s external debt from its remnant states, while transforming the Balkans into a safehaven 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’ (Gervasi, 1992).
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 macroeconomic 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’ (ibid.). 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…’ (Boarov,1992).
Following the initial phase of macro-economic reform in 1980, industrial growth plummeted to 2.8 per cent in the 1980-87 period, plunging to zero in 1987-88 and to -10.6 per cent in 1990 (World Bank, 1991a: 10/14). 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 selfmanagement (Gervasi, 1992). 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 (Gervasi, 1992). 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…’ (Schoenman, 1995).
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 per cent.1 In 1991, GDP declined by a further 15 per cent, industrial output collapsed by 21 per cent (Kiss, 1994). 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)’ (World Bank,1991a). The latter were sociallyowned productive units under selfmanagement 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 (World Bank, 1991a: viii). `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…’ (Schoenman, 1995).
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’.2 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 (World Bank, 1991a: 38). 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 IMFWorld 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 (ibid: 33). 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 with its creditors within the next 15 days with the 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 (ibid: 33).
In 1989, according to official sources, 248 firms were steered into bankruptcy or were liquidated and 89,400 workers had been laid off.3 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.4 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 (World Bank,1991a: 34).
Many socially owned enterprises attempted to avoid bankruptcy through the non payment of wages. Half a million workers representing some 20 per cent 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’ (Boarov, 1992).
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) was confirmed by the 1989-90 bankruptcy figures, and 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 (World Bank,1991a). In other words, these 2,435 firms with a combined workforce 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 per cent of the total (remaining and employed) industrial workforce.5
Supporting broad strategic interests, the austerity measures had laid the basis for `the recolonization’ 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 (Gervasi, 1992: 65). 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 BosniaHerzegovina) 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…’ (Gervasi, 1992: 45). 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’… (Zimmermann, 1995).
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 per cent in four years 1990-93). 6
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’ (Schoenman, 1995).
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 wartorn 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 per cent in 1991 to 19.1 per cent in 1994 (The Banker, 1995: 38).
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, multibillionaire 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… (World Bank, 1995).
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 donorsponsored banking reforms, `it was literally impossible to find a company in the country which would be able to … to cover [its] costs ….7 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 (Macedonian Information and Liaison Service, 1995).
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 fullyfledged 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 negotiations. 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. To make the point crystal clear, the Dayton Accord spell out that `The High Representative is the final authority in theater regarding interpretation of the agreements’ (Dayton Accord, `Agreement on High Representative’, articles I and II).
An international civilian police force is under the custody of an expatriate Commissioner appointed by the United Nations Secretary General Mr. Boutros Boutros Ghali. Irish police official Peter Fitzgerald, with UN policing experience in Namibia, El Salvador, and Cambodia, presides over some 1,700 police from 15 countries. some 1,700 policemen from fifteen countries most of whom have never set foot in the Balkans. The police will be dispatched to Bosnia after a five-day training program 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.
Moreover, 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…’ (IMF, 1995)
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 may 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 noncitizens 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… (Viviano and Howe, 1995). 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 19951 reluctant to divulge their latest exploration reports to the combatant governments while the war continues’. Moreover, there are also `substantial petroleum fields in the Serb-held part of Croatia just across the Sava river from the Tuzla region’ (Viviano and Howe, 1995). 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 BosniaHerzegovina 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.
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 macroeconomic 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. Macroeconomic 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 cent 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 per cent, life expectancy was 72 years (World Bank,1991b). But after a decade of Western economic ministrations and five years of disintegration, war, boycott, and embargo, the economies of the former Yugoslavia are prostrate, their industrial sectors dismantled.
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.
1. See World Bank, 1991a: 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.
2. For further details see World Bank, 1991a: 38. 3. Ibid., 34. Data of the Federal Secretariat for Industry and Energy, Of the total number of firms, 222 went bankrupt and 26 were liquidated.
4. Ibid., 33. These figures include bankruptcy and liquidation.
5. ‘Surplus labour’ in industry had been assessed by the World Bank mission to be of the order of 20 per cent 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.
6. Figure for Macedonia, Enterprise, Banking and Social Safety Net, World Bank Public information Centre, 28 November 1994.
7. Statement of Macedonia’s Deputy Minister of Finance Mr. Hari Kostov, reported in MAK News, April 18, 1995.
Boarov, Dimitrije (1992) ‘A Brief Review of Anti-inflation Programs, the Curse of Dead Programs’, in Vreme New Digest Agency, No.29, 13 April.
Cooper, Scott (1995) `Western Aims in ExYugoslavia Unmasked’ in The Organizer, 24 September.
Gervasi, Sean (1992) `Germany, US and the Yugoslav Crisis’, in Covert Action Quarterly, No.43, Winter.
IMF (1995) `Bosnia and Herzegovina becomes a Member of the IMF’ in Press Release No.97/70, Washington, December 20.
Kiss, Judit (1994) `Debt Management in Eastern Europe’, in Eastern European Economics, May-June: 59. Schoenman, Ralph (1995) `Divide and Rule Schemes in The Balkans’, in The Organiser, 11 September.
Vasic, Milos et al (1992) `War Against Bosnia’, in Vreme News Digest Agency, No.29, 13 April.
Viviano, F., and K. Howe (1995) `Bosnia Leaders Say Nation Sit Atop Oil Fields’ in The San Francisco Chronicle, 28 August.
World Bank (1991a) `Industrial Restructuring Study, Overview’ in Issues and Strategy for Restructuring, Washington DC, June: IO/14.
(1991b) World Development Report, Washington DC.
(1995) Macedonia Financial and Enterprise Sector, Public Information Department.
Zimmermann, Warren (1995) `The Last Ambassador, A Memoir of the Collapse of Yugoslavia’, in Foreign Affairs, Vol.74, No.2.
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