West responsible for 'poverty and destruction'

"Western powers helped to bring the Yugoslav economy to its knees, stirring ethnic conflicts"

WHY ARE the United States and its NATO allies so determined to control the Balkans? At first sight it does not seem so clear as in the Gulf, where oil interests are obviously involved. But the US has been intervening in the Balkans for its own economic interests for 20 years, and its role has always been disastrous for ordinary people.

As well as NATO's determination to show its ability to act as a "$400 billion riot squad", there are very direct profit motives for the West linked to debt and control of natural resources. An important article by Michel Chossudovsky, a professor of economics at the University of Ottawa, makes this clear. In Dismantling Former Yugoslavia, Recolonising Bosnia, Chossudovsky demonstrates the West's "responsibility for the impoverishment and destruction of a nation of 24 million people". He says that "Western powers, pursuing their collective and individual 'strategic interests', helped from the beginning of the 1980s to bring the Yugoslav economy to its knees, contributing to stirring simmering ethnic and social conflicts."

Chossudovsky confirms that Yugoslavia's road to hell was paved by Western economic pressure. He says the demands of the International Monetary Fund (IMF) and other bankers "wreaked economic and political havoc leading to disintegration of the industrial sector and the piecemeal dismantling of the Yugoslav welfare state."

During the first phase of "reforms" driven by the bankers in 1980 "the accumulation of foreign debt led to a fall in the standard of living of the average Yugoslav." Industrial growth plummeted to 2.8 percent in the 1980-7 period, plunging to zero in 1987-8 and to minus 10.6 percent in 1990. 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, Markovic travelled to Washington to meet President George Bush. A "financial aid package" was promised in exchange for sweeping economic reforms including a wage freeze, cuts in government expenditure and privatisation.

Money which could have tackled poverty was funnelled towards servicing debt. In 1991 gross domestic product (GDP) declined by a further 15 percent and industrial output collapsed by 21 percent. This is as much as in the US and Germany in the great slump of the 1930s. Chossudovsky says, "The objective was to subject the Yugoslav economy to massive privatisation and the dismantling of the public sector. Half the country's banks were dismantled, the emphasis was on the formation of 'independent profit oriented institutions'."

This was disastrous for workers. In less than two years the International Monetary Fund's programmes led to the layoff of more than 600,000 Yugoslavian workers—out of a total industrial workforce of around 2.7 million. The "bankruptcy programme" continued unabated throughout the period of the civil war and its aftermath. Workers responded to this economic catastrophe with strikes and marches which united people across ethnic lines. But the way was also opened for politicians to whip up scapegoating against other ethnic groups.


THE IMF'S measures laid the basis for the "recolonisation" of the Balkans, says Chossudovsky. Now the economic reforms being imposed on the "successor states" after the collapse of the former Yugoslavia are a continuation of the same policies.

"Debt is an integral part of the peace process," he says. "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)."

Even as the fighting raged, Croatia, Slovenia and Macedonia had entered into separate loan negotiations with the IMF. In return for foreign loans, the Croatian government of President Franjo Tudjman agreed to measures that would mean more plant closures and bankruptcies. Wages fell and unemployment rose. Macedonia followed a similar economic path.

In December 1993 its government agreed to cut real wages and freeze credit in order to obtain an IMF loan. Business tycoon George Soros was brought in to supervise the procedure. The loan was never intended for "reconstruction" but rather to enable Macedonia to pay back debt owed to the World Bank. In return for debt rescheduling, the Macedonian government agreed to the liquidation of remaining "insolvent" enterprises and the layoff of "redundant" workers.

'Colonial regime'

THE WEST also imposed strict controls over the new Bosnia at the end of the war in 1995. Bosnia was stripped of its economic and political sovereignty and put "under NATO military occupation and Western administration. "The US and the European Union installed a fully fledged colonial administration," says Chossudovsky. The first governor of the Central Bank of Bosnia was appointed by the IMF. Chossudovsky concludes, "The future of Bosnia will be decided upon in Washington, Bonn and Brussels rather than in Sarajevo."

Where the powers fight

A GLANCE at a map of the Balkans shows that it is at the centre of trade routes from Europe southwards and eastwards. The discovery of vast oil reserves in the Caspian Sea (200 miles to the east of the Black Sea) has given a new impetus to the scramble to control the Balkans. The oil has to get out from the Caspian. If Western countries are to prevent the only pipeline being controlled by Russia, a new pipeline has to be built. It will either have to be routed through NATO member Turkey, or Bulgaria and then Greece—a stone's throw away from where the bombing is taking place.

In November US energy secretary Bill Richardson said, "The fate of the Caspian region is about America's energy security. It is also about preventing strategic inroads by those who do not share our values. We have made a substantial political investment in the Caspian and it is very important to us that both the pipeline map and the politics come out right."


UP TO 5,000 people marched in London against NATO's bombing last Sunday. Another 300 protested in Glasgow