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DISMANTLING FORMER YUGOSLAVIA,
RECOLONISING BOSNIA

As heavily-armed NATO troops enforce the peace in Bosnia, the press andpoliticians alike portray Western intervention in the former Yugoslavia as anoble, if agonizingly belated, response to an outbreak of ethnic massacresand human rights violations. In the wake of the November 1995 Dayton PeaceAccords, the West is eager to touch up its self-portrait as saviour of theSouthern Slavs and get on with "the work of rebuilding" the newly sovereignstates.

But following a pattern set since the onslaught of the civil war, Westernpublic opinion has been misled. The conventional wisdom, exemplified by thewritings of former US Ambassador to Yugoslavia Robert Zimmermann, is thatthe plight of the Balkans is the outcome of an "aggressive nationalism", theinevitable result of deep-seated ethnic and religious tensions rooted inhistory.1 Likewise, much has been made of the "Balkans power-play" and theclash of political personalities: "Tudjman and Milosevic are tearingBosnia-Herzegovina to pieces".2

Drowned in the barrage of images and self-serving analyses are the economicand social causes of the conflict. The deep-seated economic crisis whichpreceded the civil war has long been forgotten. The strategic interests ofGermany and the US in laying the groundwork for the disintegration ofYugoslavia go unmentioned, as does the role of external creditors andinternational financial institutions. In the eyes of the global media,Western powers bear no responsibility for the impoverishment and destructionof a nation of 24 million people.

But through their domination of the global financial system, the Westernpowers, pursuing their collective and individual "strategic interests"helped from the beginning of the 1980s, bring the Yugoslav economy to itsknees, 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'sattention is focused on troop movements and cease fires, creditors andinternational financial institutions are busy at work collecting formerYugoslavia's external debt, while transforming the Balkans into a safe-havenfor free enterprise.

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

Secessionist tendencies feeding on social and ethnic divisions, gainedimpetus precisely during a period of brutal impoverishment of the Yugoslavpopulation. The first phase of macro-economic reform initiated in 1980shortly before the death of Marshall Tito "wreaked economic and politicalhavoc... Slower growth, the accumulation of foreign debt and especially thecost of servicing it as well as devaluation led to a fall in the standard ofliving of the average Yugoslav... The economic crisis threatened politicalstability ... it also threatened to aggravate simmering ethnic tensions".4These reforms accompanied by the signing of debt restructuring agreementswith the official and commercial creditors also served to weaken theinstitutions of the federal State creating political divisions betweenBelgrade and the governments of the Republics and Autonomous Provinces. "ThePrime Minister Milka Planinc, who was supposed to carry out the programme,had to promise the IMF an immediate increase of the discount rates and muchmore for the Reaganomics arsenal of measures..."5

Following the initial phase of macro-economic reform in 1980, industrialgrowth plummeted to 2.8 percent in the 1980-87 period, plunging to zero in1987-88 and to -10.6 percent in 1990.6 The economic reforms reached theirclimax under the pro-US government of Prime Minister Ante Markovic. In theAutumn of 1989 just prior to the collapse of the Berlin Wall, the federalPremier had travelled to Washington to meet President George Bush. A"financial aid package" had been promised in exchange for sweeping economicreforms including a new devalued currency, the freeze of wages, a drasticcurtailment of government expenditure and the abrogation of the sociallyowned enterprises under self-management.7 The "economic therapy" (launchedin January 1990) contributed to crippling the federal State system. Staterevenues which should have gone as transfer payments to the republics andautonomous provinces were instead funnelled towards servicing Belgrade'sdebt with the Paris and London clubs. The republics were largely left totheir own devices thereby exacerbating the process of political fracturing.In one fell swoop, the reformers had engineered the demise of the federalfiscal structure and mortally wounded its federal political institutions.The IMF induced budgetary crisis created an economic "fait accompli" whichin part paved the way for Croatia's and Slovenia's formal secession in June1991.

The Agreement with the IMF

The economic package was launched in January 1990 under an IMF Stand-byArrangement (SBA) and a World Bank Structural Adjustment Loan (SAL II). Thebudget cuts requiring the redirection of federal revenues towards debtservicing, were conducive to the suspension of transfer payments by Belgradeto the governments of the Republics and Autonomous Provinces therebyfuelling the process of political balcanisation and secessionism. Thegovernment of Serbia rejected Markovic's austerity programme outrightleading to a walk-out protest of some 650,000 Serbian workers directedagainst the Federal government.8 The Trade Union movement was united in thisstruggle: "worker resistance crossed ethnic lines, as Serbs, Croats,Bosnians and Slovenians mobilised (...) shoulder to shoulder with theirfellow workers (...).9

The 1989 Enterprise Reforms

The 1989 enterprise reforms adopted under Premier Ante Markovic played acentral role in steering the industrial sector into bankruptcy. By 1990, theannual rate of growth of GDP had collapsed to -7.5 percent.10 In 1991, GDPdeclined by a further 15 percent, industrial output collapsed by 21percent.11 The restructuring programme demanded by Belgrade's creditors wasintended to abrogate the system of socially owned enterprises. TheEnterprise Law of 1989 required abolishing the "Basic Organizations ofAssociated Labour (BAOL)".12 The latter were socially-owned productive unitsunder self-management with the Workers' Council constituting the maindecision making body. The 1989 Enterprise Law required the transformation ofthe BOALs into private capitalist enterprises with the Worker's Councilreplaced by a so-called "Social Board" under the control of the enterprise'sowners including its creditors.13 "The objective was to subject theYugoslav economy to massive privatisation and the dismantling of the publicsector. Who was to carry it out? The Communist Party bureaucracy, mostnotably its military and intelligence sector, was canvassed specificallyand offered political and economic backing on the condition that wholesalescuttling 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 hurrywith the assistance of Western lawyers and consultants. A new Banking Lawwas enacted with a view to triggering the liquidation of the socially owned"Associated Banks". More than half the country's banks were dismantled, theemphasis was on the formation of "independent profit orientedinstitutions".15 By 1990, the entire "three-tier banking system" consistingof the National Bank of Yugoslavia, the national banks of the eightRepublics and autonomous provinces and the commercial banks had beendismantled under the guidance of the World Bank.16 A World Bank FinancialSector Adjustment Loan was being negotiated in 1990. It was to be adopted bythe Belgrade government in 1991...

The Bankruptcy Programme

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

In 1989, according to official sources, 248 firms were steered intobankruptcy or were liquidated and 89,400 workers had been laid off.19 Duringthe first nine months of 1990 directly following the adoption of the IMFprogramme, another 889 enterprises with a combined work-force of 525,000workers were subjected to bankruptcy procedures.20 In other words, in lessthan 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 totalindustrial workforce of the order of 2.7 million). The largestconcentrations of bankrupt firms and lay-offs were in Serbia,Bosnia-Herzegovina, Macedonia and Kosovo.21

Many socially owned enterprises attempted to avoid bankruptcy through thenon payment of wages. Half a million workers representing some 20 percent ofthe industrial labour force were not paid during the early months of 1990,in order to meet the demands of creditors under the "settlement" proceduresstipulated in the Law on Financial Organisations. Real earnings were in afree fall, social programmes had collapsed, with the bankruptcies ofindustrial enterprises, unemployment had become rampant, creating within thepopulation an atmosphere of social despair and hopelessness. "When Mr.Markovic finally started his "programmed privatisation", the republicanoligarchies, 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 economiccatastrophe".22

The January 1990 IMF sponsored package contributed unequivocally toincreasing enterprise losses while precipitating many of the large electric,petroleum refinery, machinery, engineering and chemical enterprises intobankruptcy. Moreover, with the deregulation of the trade regime in January1990, a flood of imported commodities contributed to further destabilisingdomestic production. These imports were financed with borrowed money grantedunder the IMF package (ie. the various "quick disbursing loans" granted bythe IMF, the World Bank and bilateral donors in support of the economicreforms). While the import bonanza was fuelling the build-up of Yugoslavia'sexternal debt, the abrupt hikes in interest rates and input prices imposedon national enterprises had expedited the displacement and exclusion ofdomestic producers from their own national market.

"Shedding Surplus Workers"

The situation prevailing in the months preceding the Secession of Croatiaand Slovenia (June 1991) (confirmed by the 1989-90 bankruptcy figures)points to the sheer magnitude and brutality of the process of industrialdismantling. The figures, however, provide but a partial picture, depictingthe situation at the outset of the "bankruptcy programme". The latter hascontinued 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 otherwords, these 2,435 firms with a combined work-force of more than 1,3 millionworkers had been categorised as "insolvent" under the provisions of theFinancial Operations Act, requiring the immediate implementation ofbankruptcy procedures. Bearing in mind that 600,000 workers had already beenlaid off by bankrupt firms prior to September 1990, these figures suggestthat some 1.9 million workers (out of a total of 2.7 million) had beenclassified as "redundant". The "insolvent" firms concentrated in the Energy,Heavy Industry, Metal processing, Forestry and Textiles sectors were amongthe largest industrial enterprises in the country representing (in September1990) 49.7 percent of the total (remaining and employed) industrialwork-force.24

Political Disintegration

Supporting broad strategic interests, the austerity measures had laid thebasis for "the recolonisation" of the Balkans. In the multi-party electionsin 1990, economic policy was at the centre of the political debate, theseparatist coalitions ousted the Communists in Croatia, Bosnia-Herzegovinaand Slovenia.

Following the decisive victory in Croatia of the rightist Democratic Unionin May 1990 under the leadership of Franjo Tudjman, the separation ofCroatia received the formal assent of the German Foreign Minister Mr. HansDietrich Genscher who was in almost daily contact with his Croatiancounterpart in Zagreb.25 Germany not only favoured secession, it was also"forcing the pace of international diplomacy" and pressuring its Westernallies to grant recognition to Slovenia and Croatia. The borders ofYugoslavia are reminiscent of World War II when Croatia (including theterritories of Bosnia-Herzegovina) was an Axis satellite under the fascistUstasa regime: "German expansion has been accompanied by a rising tide ofnationalism and xenophobia... Germany has been seeking a free hand among itsallies to pursue economic dominance in the whole of Mitteleuropa..."26Washington on the other hand, favoured "a loose unity while encouragingdemocratic development... [the US Secretary of State] Baker told [Croatia'sPresident] Franjo Tudjman and [Slovenia's President] Milan Kucan that theUnited States would not encourage or support unilateral secession... but ifthey 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 anatural extension and continuation of those previously implemented infederal 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 anintegral part of the peace process. The former Yugoslavia has been carved upunder the close scrutiny of its external creditors, its foreign debt hasbeen carefully divided and allocated to the republics. The privatisationprogrammes implemented under the supervision of the donors, have contributedto a further stage of economic dislocation and impoverishment of thepopulation. 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 collaboratedwith the creditors: "All the current leaders of the former Yugoslavrepublics were Communist Party functionaries and each in turn vied to meetthe demands of the World Bank and the International Monetary Fund, thebetter to qualify for investment loans and substantial perks for theleadership... State industry and machinery were looted by functionaries.Equipment showed up in "private companies" run by family members of thenomenklatura".29

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

In return for foreign loans, the government of President Franjo Tudjman hadagreed to reform measures conducive to further plant closures andbankruptcies, driving wages to abysmally low levels. The officialunemployment rate increased from 15.5 percent in 1991 to 19.1 percent in1994.30

Zagreb has also instituted a far more stringent bankruptcy law, togetherwith procedures for "the dismemberment" of large state-owned public utilitycompanies. According to its "Letter of Intent" to the Bretton Woodsinstitutions, the Croatian government had promised to restructure and fullyprivatize the banking sector with the assistance of the European Bank forReconstruction and Development (EBRD) and the World Bank. The latter havealso demanded a Croatian capital market structured to heighten thepenetration of Western institutional investors and brokerage firms.

Under the agreement signed in 1993 with the IMF, the Zagreb government wasnot permitted to mobilise its own productive resources through fiscal andmonetary policy. The latter were firmly under the control of its externalcreditors. The massive budget cuts demanded under the agreement hadforestalled the possibility of post-war reconstruction. The latter couldonly be carried out through the granting of fresh foreign loans, a processwhich would fuel Croatia's external debt well into the 21st Century. Thecost of rebuilding Croatia's war-torn economy was estimated at some 23billion dollars...

Macedonia has also followed a similar economic path. In December 1993, theSkopje government agreed to compress real wages and freeze credit in orderto obtain a loan under the IMF's Systemic Transformation Facility (STF). Inan unusual twist, multi-billionaire business tycoon George Sorosparticipated in the International Support Group composed of the governmentof 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 owedthe World Bank...31

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

Overall, the IMF economic therapy for Macedonia constitutes a continuationof the "bankruptcy programme" launched in 1989 under federal Yugoslavia. Themost profitable assets are now on sale on the year-old Macedonian stockmarket, but this auction of socially owned enterprises has led to industrialcollapse and rampant unemployment.

Yet despite the decimation of the economy and the disintegration of schoolsand health centres under the austerity measures, Finance Minister LjubeTrpevski proudly informed the press that "the World Bank and the IMF placeMacedonia among the most successful countries in regard to currenttransition reforms". The head of the IMF mission to Macedonia, Mr. PaulThomsen, concurs that "the results of the stabilization program [under theSTF] were impressive" giving particular credit and appreciation to "theefficient wages policy" adopted by the Skopje government.33

Rebuilding Bosnia and Herzegovina

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

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

An international civilian police force is under the custody of an expatriateCommissioner appointed by the United Nations Secretary General Mr. BoutrosBoutros Ghali, some 1,700 policemen from fifteen countries most of whom havenever set foot in the Balkans, were dispatched to Bosnia after a five daystraining programme in Zagreb.

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

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

Just as the Governor of the Central Bank is an IMF appointee, the CentralBank will not be allowed under the Constitution to function as a CentralBank: "For the first six years (...) it many not extend credit by creatingmoney, operating in this respect as a currency board" (Article VII).Neither will the new "sovereign" successor State be allowed to have its owncurrency (issuing paper money only when there is full foreign exchangebacking), nor permitted to mobilise its internal resources. As in the othersuccessor republics, its ability to self-finance its reconstruction (withoutmassively increasing its external debt) is blunted from the outset...

The tasks of managing the Bosnian economy have been carefully divided amongdonor agencies: while the Central Bank is under IMF custody, the EuropeanBank for Reconstruction and Development (EBRD) heads the Commission onPublic Corporations which supervises operations of all public sectorenterprises including energy, water, postal services, roads, railways, etc.The President of the EBRD appoints the Chairman of the Commission which alsooversees public sector restructuring, meaning primarily the sell-off ofState and socially owned assets and the procurement of long term investmentfunds.

One cannot sidestep a fundamental question: is the Bosnian Constitutionformally agreed between heads of State at Dayton really a constitution? Asombre and dangerous precedent has been set in the history of internationalrelations: Western creditors have embedded their interests in a Constitutionhastily written on their behalf, executive positions within the BosnianState system are to be held by non-citizens who are appointees of Westernfinancial institutions. No constitutional assembly, no consultations withcitizens' organisations in Bosnia and Herzegovina, no "constitutionalamendments"...

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

In a familiar twist, "fresh loans" have been devised to pay back "old debt".The Central Bank of the Netherlands has generously provided "bridgefinancing" of 37 million dollars. The money, however, is earmarked to allowBosnia to pay back its arrears with the IMF, a condition without which theIMF 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" forso-called "post-conflict countries" will not be used for post-warreconstruction. Instead it will to be applied to reimburse the Central Bankof the Netherlands which had coughed up the money to settle IMF arrears inthe first place... While debt is building up, no new financial resources areflowing 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 accessto potential strategic natural resources than committing resources forrebuilding Bosnia. Documents in the hands of Croatia and the Bosnian Serbsindicate that coal and oil deposits have been identified on the easternslope of the Dinarides Thrust, a region retaken from rebel Bosnian KrajinaSerbs by the Croatian army in the final offensives before the Dayton Peaceaccords. Bosnian officials report that Chicago-based Amoco was among severalforeign firms that subsequently initiated exploratory surveys in Bosnia. TheWest is anxious to develop these regions: "The World Bank --and themultinationals that conducted operations-- are [August 1995] reluctant todivulge their latest exploration reports to the combatant governments whilethe war continues"...36 Moreover, there are also "substantial petroleumfields in the Serb-held part of Croatia just across the Sava river from theTuzla region".37 The latter under the Dayton Agreement, is part of the USMilitary Division with headquarters in Tuzla.

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

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

While local leaders and Western interests share the spoils of the formerYugoslav economy, the fragmentation of the national territory and theentrenching of socio-ethnic divisions in the structure of partition serve asa bulwark blocking a united resistance of Yugoslavs of all ethnic originsagainst the recolonization of their homeland.

Concluding Remarks

Macro-economic restructuring applied in Yugoslavia under the neoliberalpolicy agenda has unequivocally contributed to the destruction of an entirecountry. Yet since the onset of war in 1991, the central role ofmacro-economic reform has been carefully overlooked and denied by the globalmedia. The "free market" has been presented as the solution, the basis forrebuilding a war-shattered economy. A detailed diary of the war and of the"peace-making" process has been presented by the mainstream press. Thesocial and political impact of economic restructuring in Yugoslavia has beencarefully erased from our social consciousness and collective understandingof "what actually happened". Cultural, ethnic and religious divisions arehighlighted, presented dogmatically as the sole cause of the crisis when inreality they are the consequence of a much deeper process of economic andpolitical fracturing.

This "false consciousness" has invaded all spheres of critical debate anddiscussion. It not only masks the truth, it also prevents us fromacknowledging precise historical occurrences. Ultimately it distorts thetrue sources of social conflict. The unity, solidarity and identity of theSouthern Slavs have their foundation in history, yet this identity has beenthwarted, manipulated and destroyed.

The ruin of an economic system, including the take-over of productiveassets, the extension of markets and "the scramble for territory" in theBalkans 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 towork, their food and shelter, their culture and national identity... Bordersare redefined, the entire legal system is overhauled, the socially ownedenterprises are steered into bankruptcy, the financial and banking system isdismantled, social programmes and institutions are torn down... Inretrospect, it is worth recalling Yugoslavia's economic and socialachievements in the post-war period (prior to 1980): the growth of GDP wason average 6.1 per annum over a twenty year period (1960-1980), there wasfree medical care with one doctor per 550 population, the literacy rate wasof the order of 91 percent, life expectancy was 72 years...37

Yugoslavia is a "mirror" of similar economic restructuring programmesapplied 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 othersolution: enterprises must be closed down, workers must be laid off andsocial programmes must be slashed... It is in the foregoing context that theeconomic 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 societiesthroughout the World...

ENDNOTES
1. See the account of Warren Zimmermann (former US Ambassador toYugoslavia), "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 ActionQuarterly, No. 43, Winter 1992-93.
4. Ibid
5. Dimitrije Boarov, "A Brief Review of Anti-inflation Programs, the Curseof Dead Programs", Vreme New Digest Agency, No. 29, 13 April 1992.
6. World Bank, Industrial Restructuring Study, Overview, Issues and Strategyfor 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 theconcept used in Yugoslavia and Eastern Europe to measure national product isnot equivalent to the GDP concept under the (Western) system of nationalaccounts.
11. See Judit Kiss, Debt Management in Eastern Europe, Eastern EuropeanEconomics, May-June 1994, p. 59.
12. World Bank, op cit
13. Ibid, p. viii.
14. Ralph Schoenman, "Divide and Rule Schemes in The Balkans", TheOrganiser, 11 September 1995.
15. For further details see World Bank, Yugoslavia, IndustrialRestructuring, 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, Ofthe 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 missionto 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 grosslyunderestimate the actual number of redundant workers based on thecategorisation of "insolvent" enterprises. Solely in the industrial sector,there were 1.9 million workers (September 1990) out of 2.7 million employedin 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, WorldBank Public information Center, 28 November 1994.
29. Ralph Schoenman, "Divide and Rule Schemes in The Balkans", TheOrganiser, 11 September 1995.
30 "Zagreb's About Turn", The Banker, January 1995, p. 38.
31 See World Bank, Macedonia Financial and enterprise Sector, PublicInformation 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 Memberof the IMF, Press Release No. 97/70, Washington, December 20, 1995.
35 Frank Viviano and Kenneth Howe, Bosnia Leaders Say Nation Sit Atop OilFields, 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 1and 2, Washington DC, 1991.
The author is Professor of Economics at the University of Ottawa.(Department of Economics, University of Ottawa, Ottawa, K1N6N5)Copyright by Michel Chossudovsky, Ottawa, 1996. This text can be posted. Forpublication in printed form kindly request permission from the author:Michel Chossudovsky fax: 1-613-7892050. (or 1-613-5625999)

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