The IMF contribution to the collapse of Yugoslavia by Michel Chossudovsky
In a recent study of the gradual fragmentation of the Yugoslav federation in the course of the 1980s, Sean Gervasi argues that separatist aspirations in Slovenia and Croatia gained impetus as a result of the collapse in the standard of living and the weakening of the federal system under the structural adjustment programme.
In Yugoslavia, the strategic objectives of Western intervention had been formalised in 1984 in a US National Security Decision Directive (NSDD 133) entitled "United States Policy towards Yugoslavia" labelled SECRET SENSITIVE. A censured version of this document was declassified by Washington in 1990. It largely conformed to a previous National Security Decision Directive (NSDD 54) issued in 1982 pertaining to Eastern Europe. The objectives contained in the latter document included "expanded efforts to promote a 'quiet revolution' to overthrow Communist governments and parties" while reintegrating the countries of Eastern Europe into a market oriented economy.
After ten years of impoverishment under the structural adjustment programme, the Yugoslav economic reforms reached their climax in the late 1980s. A critical turning point was marked under the pro-US government of Mr. Ante Marcovic. The Federal Premier had travelled to Washington to meet President George Bush in the Autumn of 1989 just prior to the collapse of the Berlin War. A substantial bilateral aid package combined with the usual IMF-World Bank support had been promised in exchange for sweeping economic reforms including a new devalued currency, the freeze of wages, the curtailment of government expenditure and the closure of
"unprofitable" State enterprises. A new round of budget cuts and the redirection of federal revenues towards debt servicing were conducive to the curtailment of transfer payments by Belgrade to the governments of the states and autonomous regions thereby fuelling the process of political balkanisation and secessionism. The government of Serbia rejected Marcovic's austerity programme outright leading to a walk-out protest of some 650,000 Serbian workers directed against the Federal government.
A second phase of economic reform was implemented with the support of the Bretton Woods institutions in June 1990 leading to further cuts in public expenditure and a programme of wholesale privatisation of state enterprises under World Bank supervision. 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. The 1989-90 austerity measures had engineered the de facto collapse of the federal fiscal structure. This situation acted in a sense as a "fait accompli" prior to the formal declaration of secession by Croatia and Slovenia in June 1991. Political pressures on Belgrade by the European Community combined with the aspirations of Germany to draw the Yugoslav region into its geopolitical orbit, further facilitated the process of secession. Yet the economic and social conditions for the break-up of the federation resulting from ten years of economic stabilisation and structural adjustment had already been firmly implanted...
It is worth noting, however, that while IMF-World Bank conditionalities did not explicitly address constitutional issues, the promise of European aid was simultaneously tied to "the adoption of economic reforms" and "the respect for minority rights". Supporting broad strategic interests, the austerity measures had laid the basis for "the re-colonisation" of the Balkans. The separation of Croatia had by 1990 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. 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 first IMF-backed structural adjustment programme adopted shortly prior to the death of Marshall Tito in 1980 "wreaked economic and political havoc [on the Yugoslav economy]... Slower growth, the accumulation of foreign debt and especially the cost of servicing it as well as devaluation led to a tall in the standard of living of the average Yugoslav... The economic crisis threatened political stability... it also threatened to aggravate simmering ethnic tensions".
Sean Gervasi 27 International Viewpoint #267 June 1995