The Guardian April 7, 1999

The criminal dismemberment of Yugoslavia

Capitalist politicians and the mass media portray NATO's latest attacks 
on Yugoslavia in the same terms used to cloak Western involvement in the 
earlier assaults on Yugoslavia. They claim that it is some kind of noble 
response-of-last-resort to yet another outbreak of ethnic massacres and 
human rights violations. But beneath the stirred up ethnic and religious 
passions lie real economic, social and political causes of the present 

Michel Chossudovsky, Professor of Economics at the University of Ottawa and 
author of The Globalisation of Poverty, wrote in Covert Action 
Quarterly shortly after the Dayton Accords of 1995 that "multi-ethnic, 
socialist Yugoslavia was once a regional industrial power and economic 
success. In the two decades prior to 1980, annual GDP growth averaged 6.1 
percent, medical care was free, the literacy rate was of the order of 91 
percent, and the life expectancy was 72 years."

Yugoslavia, however, figured prominently in US machinations to bring the 
countries of Eastern Europe back into the global capitalist market economy.

Economic pressure

As with other small to medium sized economies, the US, through the 
manipulation of trade, loans and currency speculation, was able to exert 
pressure on the Yugoslav Government to "reform" their economy.

In 1980, Belgrade's "international creditors" (mainly US and European 
banks) forced the Yugoslav Government to impose the customary cuts in 
public spending that are identified as "macroeconomic reform" by capitalist 

In 1982, the Reagan administration issued National Security Decision 
Directive #54 which advocated "expanded efforts" to promote what it called 
a "quiet revolution" against the Communists in Eastern Europe.

In 1984, two years later the US Government specifically targeted the 
Yugoslav economy in a document marked "Secret Sensitive" and not made 
public until 1990, and then only in a heavily censored version.

IMF-induced economic crisis

The International Monetary Fund (IMF) was used throughout the '80s to force 
the curtailing of Yugoslavia's industrial production and the gradual 
dismantling of its social services.

Chossudovsky notes that "debt restructuring agreements increased foreign 
debt, and a mandated currency devaluation also hit hard at Yugoslavs' 
standard of living.

"Industrial production declined to a negative 10 percent growth rate by 
1990  with all its predictable social consequences."

In 1989, in the face of mounting political disruption (it was just before 
the fall of the Berlin Wall), the Yugoslav Government of Ante Markovic was 
forced by US President George Bush to accept yet another "financial aid 

The terms required Yugoslavia to agree to a new devalued currency, another 
wage freeze, sharp cuts in government spending, and the elimination of 
socially-owned, worker-managed companies. Foreign investment had already 
been "liberalised".

In January 1990, the IMF ordered a further wage freeze. "Prices continued 
to rise unabated, and real wages collapsed by 41 percent in the first six 
months of 1990."

But the US plan required that Yugoslavia be broken up ("Balkanised" into 
its component parts). The means for this was the IMF's effective control 
over the country's central bank.

The tight fiscal policy imposed by the IMF further robbed the Yugoslav 
Federal Government of the ability to finance its economic and social 

Federal Government income that should have been allocated to the republics 
to finance their state budgets had to be used instead to service the 
country's Western debt. "The republics", says Chossudovsky, "were largely 
left to their own devices....

"By cutting the financial arteries between Belgrade and the republics, the 
reforms fuelled secessionist tendencies that fed on economic factors as 
well as ethnic divisions and virtually ensured the de facto secession of 
the republics."

"The IMF package unquestionably precipitated the collapse of much of 
Yugoslavia's well-developed heavy industry.... Some 600,000 Yugoslavs had 
already lost their jobs by September 1990, and that was only the 

Yugoslav President Borisav Jovic warned that the reforms were "having a 
markedly unfavourable impact on the overall situation in society....

"The further deepening of the economic crisis and the growth of social 
tensions has had a vital impact on the deterioration of the political-
security situation."

The macro-economic "reforms" imposed by Belgrade's external creditors since 
the late 1980s had been carefully synchronised with NATO's military and 
intelligence operations. Kosovo's fate had already been decided. Through 
the IMF, the entire Yugoslav economy had been pushed into bankruptcy.

Chossudovsky says: "The IMF-induced budgetary crisis created an economic 
fait accompli that paved the way for Croatia's and Slovenia's formal 
secession in June 1991."

Political consequences

In the multi-party elections in 1990, separatist coalitions came to power 
in Croatia, Bosnia and Slovenia. The simultaneous appearance of militias 
loyal to secessionist leaders hastened the descent into dismemberment.

"These militias, with their escalating atrocities, not only split the 
population along ethnic lines, they also fragmented the workers' movement."

Western plans for returning the Balkans to neo-colonial status were well 

Germany supported Franjo Tudjman's neo-fascist Democratic Union in the 
Croatian elections in May 1990. After Tudjman won, Germany's Foreign 
Minister Hans Dietrich Genscher, pressed him to secede and pressured its 
Western allies to recognise independent Croatia. The former German puppet 
state of WW2 was to return to the German "sphere of influence".

After bloody civil wars financed and armed by the West, Slovenia, Croatia, 
and Bosnia were separated from the rest of Yugoslavia  Serbia (including 
its province Kosovo) and Montenegro.

Western creditors then divided Yugoslavia's foreign debt among the 
successor states, strangling them in separate debt rescheduling and 
structural adjustment agreements.

Croatia and Macedonia accepted the IMF's terms for "aid", agreeing to loan 
packages  to pay off their share of the Yugoslav debt  accompanied by 
privatisation, de-industrialisation and mass impoverishment.

Neo-colonial administration

In Bosnia, a neo-colonial administration answerable to Washington, Bonn, 
and Brussels (EU)  not Sarajevo  was imposed by the Dayton Accords and 
enforced by 70,000 UN "peacekeeping" troops.

Carl Bildt, a former Swedish Prime Minister and European Union 
representative in the Bosnian peace negotiations was appointed High 
Representative to head the new administration.

He was given full executive powers in all civilian matters with the right 
to overrule the governments of both Bosnia and Republika Srpska.

"The High Representative is the final authority in theater regarding 
interpretation of the agreements", say the Accords.

Bildt initially worked for IFOR's (the 70,000-strong international UN force 
enforcing the Dayton Accords  now 32,000 troops under NATO Military High 
Command and the various creditors and donors.

The UN Security Council appointed a "Commissioner", working under the High 
Representative, to run an international civilian police force of some 1,700 
police from 15 countries.

This administration is chiefly concerned that Bosnia pays its arrears to 
the IMF and other international banks, without which the IMF will not lend 
it fresh money.

The arrears are paid with further borrowings. Debt piles up, and little new 
money goes for rebuilding Bosnia's war-torn economy.

Western energy companies like Amoco have been preparing to exploit Bosnia's 
oil and coal resources, which were identified before the hostilities.

The NATO troops in Bosnia, who may be used on the ground against Serbia 
before this article goes to press, have up to now been used to administer 
the partition of Bosnia in accordance with Western economic interests.

The new constitution effectively handed over control of economic policy to 
the IMF and London-based European Bank for Reconstruction and Development 

The IMF was given the power to appoint the first governor of the Bosnian 
Central Bank who, like the High Representative, was not permitted to be a 
citizen of Bosnia and Herzegovina or a neighbouring state.

The Central Bank is severely restricted in its operations for the first six 
years  basically forbidden to exercise controls over currency, the issue 
of money, and other customary practices of a central bank.

The EBRD became head of the Commission on Public Corporations, to supervise 
all public sector corporations, including energy, water, postal services, 
telecommunications, and transportation.

The President of the EBRD appointed the chair of the Commission. The 
Commission was given responsibility for selling off state and socially-
owned assets and procuring long-term investment funds.

"As the West trumpets its support for democracy, actual political power 
rests in the hands of a parallel Bosnian `state' whose executive positions 
are held by non-citizens", said Michel Chossudovsky.

"Western creditors have embedded their interests in a constitution hastily 
written on their behalf. They have done so without a constitutional 
assembly, without consultations with Bosnian citizens' organisations and 
without providing a means of amending this `constitution'.

"Their plans to rebuild Bosnia appear more suited to sating creditors than 
satisfying even the elementary needs of Bosnians." In effect, Yugoslavia 
lost all of its sovereign rights over Bosnia, but Bosnia did not gain its 
independence or sovereignty. Instead the Western powers, in the form of the 
US, the EU, the IMF, the ERBD and NATO, assumed control, acting in the 
interests of US and German financial institutions and corporations.

In the remaining part of Yugoslavia, there was resistance to the IMF/US 
diktat. Yugoslavia quietly and consistently worked to break the US-imposed 
economic blockade and to rebuild trade with a number of countries.

It is very important to the US transnationals' plans that centres of 
economic resistance like Yugoslavia should be crushed, which is one reason 
for the current campaign against "Serbia".


In Kosovo, the IMF's economic "reforms" were conducive to the concurrent 
impoverishment of both the Albanian and Serbian populations, contributing 
to fuelling ethnic tensions.

"The deliberate manipulation of market forces destroyed economic activity 
and people's livelihood creating a situation of social despair ...", says 

The social and economic conditions created the environment for the 
fostering of ethnic tensions, and the West gave a helping hand training and 
financing the ethnically based Kosovo Liberation Army (KLA).

NATO, and the US, British and German Governments in particular, have 
defended their aggressive and illegal bombing of the sovereign territory of 
the Federal Republic of Yugoslavia, on the ground that the Yugoslav 
Government refused to sign an agreement put forward by NATO powers at 
Rambouillet in France.

Yugoslav President Slobodan Milosevic was given the choice: sign as it was 
presented or be bombed.

The US administration and mass media presented the Rambouillet agreement as 
an even handed "peace plan", which no reasonable government could reject.

The outrageous details of the agreement have been carefully buried beneath 
the stories and pictures of suffering women and children.

Rambouillet Agreement  NATO dictatorship

The Rambouillet Agreement basically removes all of Yugoslavia's sovereign 
rights over Kosovo, handing them over to NATO, while pretending to give the 
ethnic Albanians of Kosovo autonomy.

NATO's economic and political agenda bears a remarkable similarity to the 
treatment already forced on Bosnia.

Yugoslav laws would no longer apply in Kosovo.

"Kosovo will have a president, prime minister and government, an assembly, 
its own Supreme Court, constitutional court and other courts and 
prosecutors", says the agreement.

"Kosovo will have the authority to make laws not subject to revision by 
Serbia or the Federal Republic of Yugoslavia, including levying taxes, 
instituting programs of economic, scientific, technological, regional and 
social development, conducting foreign relations within its area of 
responsibility in the same manner as a Republic."

But these laws will be subject to revision by a Civilian Implementation 
Mission (CIM), "appointed by NATO".

This CIM will have overriding powers: "The Chief of the CIM has the 
authority to issue binding directives to the Parties on all important 
matters he sees fit, including appointing and removing officials and 
curtailing institutions."

In the military sphere, Yugoslav army forces will withdraw completely from 
Kosovo, except for a limited border guard force (active only within a 5 
kilometers border zone).

NATO occupation

NATO will be "invited" to deploy a military force (KFOR), which will be 
authorised to use "necessary force to ensure compliance with the accords".

"Three years after the implementation of the Accords, an international 
meeting will be convened to determine a mechanism for a final settlement 
for Kosovo on the basis of the will of the people."

There is no promise of a referendum or independence or say by the people of 
Yugoslavia, but a distinct possibility of annexation by NATO to become part 
of a Greater Albania under NATO domination. NATO has already used the 
refugee influx to move into Albania.

The Yugoslavian delegation at Rambouillet was prepared to give Kosovo 
autonomy, but not to hand it over to NATO occupation.

Western control

Macedonia, Slovenia, Croatia, and Bosnia Herzegovina have already been torn 
away from the Federal Republic of Yugoslavia. The present bombing and 
events that led up to it have the aim of tearing away Kosovo, and may well 
be extended to "restore democracy" to Montenegro.

The bombing of Serbia, the only remaining republic of the Federation, now 
appears to be aimed at infrastructure  much along the lines of the 
attacks on Iraq.

The destruction of Yugoslavia is part of a much larger process to ensure 
Western control of the Balkans and to open the way to penetration further 
eastward of Georgia, Azerbaijan, the Ukraine and even Russia.


Albania has also been subjected to some of the same economic treatment as 
the former republics of Yugoslavia.

"... similar macro-economic reforms under IMF auspices were imposed on 
Albania with devastating economic and social consequences, culminating in 
the West's military intervention in 1997", writes Michel Chossudovsky.

Western-induced neoliberal (economic rationalist) macroeconomic 
restructuring was used to dismember and destroy Yugoslavia. Yet, western 
politicians and the mass media dishonestly present cultural, ethnic, and 
religious divisions as the sole cause of the crisis.

In reality, they are the consequence of a much deeper process of economic 
and political fracturing leading to overall control by the transnational 

At stake in the Balkans are the lives of millions of people.

"In the name of global capital, borders have been redrawn, legal codes 
rewritten, industries destroyed, financial and banking systems dismantled, 
social programs eliminated. No alternative to global capital, be it market 
socialism or `national' capitalism, will be allowed to exist", said Michel 

"But what happened  and is happening  to Yugoslavia should resonate 
beyond the Balkans", says Professor Chossudovsky. "Yugoslavia is a mirror 
for similar economic restructuring programs in not only the developing 
world but also in the US, Canada and Western Europe."

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Alternative sources of information Our press does not tell the truth about the war against Yugoslavia. Call the websites of the people in the front line of the new struggle against war and fascism. (appeal) http://www.serbia-info.yu http://www.yu

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