17. IMF and World Bank Staff Tightly Connected to New Yugoslav Government

by Project Censored
Published: Last Updated on

Emperor’s New Clothes, September 28, 2000
Title: The International Monetary Fund and the Yugoslav Election
Author: Michel Chossudovsky and Jared Israel

SF Bay Guardian, 8/23/2000
Title: Colony Kosovo
Author: Christian Parenti

Faculty evaluator: Peter Phillips Ph.D.
Student researchers: Jaleah Winn, Katie Sims, Dana Balicki, Steve Quartz

The G-17 is a Yugoslav economist group that supported presidential candidate Vojislav Kostunica and wrote the policy statements for the post-election economic reform of Yugoslavia.

The impression the G-17 likes to give is that it is an independent and Yugoslav-oriented group. The reality is vastly different. It is actually funded through the Washington-based “Center for International Private Enterprise” (CIPE), a group set up through the National Endowment for Democracy, in return a CIA-related group created in 1983.

The G-17 group calls for Yugoslavia to work more closely with the International Monetary Fund (IMF) toward the development of a market economy. Former Eastern bloc neighboring countries that have followed this tact have had massive wage deflation and increased poverty for the bulk of their citizens.

One of the key participants in the G-17 group is Veselin Vukotic. It was Vukotic who in 1989-90 orchestrated the breakup of more than 50 percent of Yugoslavia’s industry, some 1,100 firms, resulting in the layoff of more than 614,000 workers.

Three of the G-17 members, Dusan Vujovic, Zeliko Bogetic, and Branko Milanovic are Washington-based staff members of the IMF and World Bank. Dusan Vujovic, a senior economist at the World Bank is the key link between the G-17 and Western institutions. From 1994-96, Vujovic played a key role in forcing structural adjustments programs in Bulgaria. Social services, including price controls, subsidized food, housing, and medical care, were stripped away. The World Bank now admits that more than 90 percent of Bulgarians live below extreme poverty level.

On its website the G-17 states that its aim is to establish, “…a network of experts in all Serbian towns able to create and practically implement necessary changes in all fields of social life. With Kostunica in power in Yugoslavia, the G-17 will try to implement market reforms. They are not simply a group of economists, but rather a network supported by the IMF and the World Bank.

Other former Socialist/communist countries have followed IMF and World Bank recommendations. Their first activity is to do away with social service protections. Second, they use economic manipulation and new laws to force business-public and private-into bankruptcy. These businesses are then purchased at rock bottom prices by multinational corporations. In Hungary, market reforms led to the closing of the only light bulb manufacturing firm, forcing everyone in Hungary to now buy light bulbs manufactured by General Electric.

The Ukraine signed an agreement with the IMF in 1994. They received a $360 million loan in exchange for “economic shock treatment” policies for their citizens. The price of bread shot up 300 percent, electricity 600 percent, and public transportation 900 percent, and the Ukraine currency collapsed. People were forced to buy necessities at “dollarized” prices when they were earning, on average, $10 a month. The U.S. dumped grain surpluses on the Ukraine market, destroying the domestic agriculture market. Misery and poverty skyrocketed in the Ukraine after IMF policies were implemented.

According to writer and IMF researcher Professor Chossudovsky, the G-17 paradigm economic program for Yugoslavia contains the same measures the IMF forced on Russia, Ukraine, Bulgaria, Peru, and many other nations. The results have been social and economic devastation. The same thing will happen in Yugoslavia if the G-17 is allowed to implement their policy recommendations.

Update by Michel Chossudovsky and Jared Israel
Kostunica Coalition Drives Up Prices & Blames…Milosevic

The Kostunica government has already started to implement deadly IMF “economic medicine.” The first step consisted of lifting price controls on fuel and basic consumer goods, and services. Prices have increased, as much as three times, causing extreme hardship for Yugoslav working people.

The country had been impoverished by years of economic sanctions, not to mention the IMF reforms applied in 1989-90, before the break-up of federal Yugoslavia. But a system of state subsidies and price controls nonetheless prevented a total collapse in the standard of living, as occurred in neighboring Bulgaria.

That system of price controls is now being disbanded by the Kostunica government on orders of the International Monetary Fund (IMF):

“When Kostunica supporters forced out most managers in state-owned shops and factories and put their own people in charge, that system of controls collapsed and prices immediately shot up. The cost of cooking oil has more than tripled since last Friday, when Milosevic announced that he was stepping aside. The prices of sugar and cigarettes are about to jump again. After Kostunica’s supporters forced out Milosevic-era factory directors, the new ones are moving quickly to make their plants more profitable.” (Los Angeles Times, October 15, 2000)

To make sure the government could not finance subsidies, the G-17 economists forcefully took control of the Central Bank and immediately imposed a freeze on money creation (“printing of money”). This held up the outflow of cash, which the government needed to sustain price controls on basic consumer goods.

According to interviews conducted with Belgrade residents shortly after the election, the price of milk had already doubled from 8 to 14 dinars per liter, largely affecting children; the price of cooking oil had more than tripled, from 13.5 to 55 dinars; sugar had gone from 8 to 45 dinars. These interviews support the earlier Los Angeles Times report.

Shoppers are commenting, “Ah, democratic prices!” The Serbian use of black humor masks rising anger among ordinary people. Faced with this simmering rebellion, the Kostunica government, advised by the G-17 economists, have performed a dazzling flip.

Prior to the Oct. 5 coup d’état, the government made some attempt to protect domestic producers and ensure (under very difficult conditions) the distribution of essential food staples, fuel, and electricity at controlled prices. The Kostunica coalition abolished price controls then seemed to be using the suffering it created to justify the dumping of low priced (often inferior) food and products, thus destroying small producers.

The Western media, which just a few days earlier had congratulated Kostunica for removing price controls, now uncritically trumpets the line that it’s all Milosevic’s fault.

Concerning the rapid increase in prices, the program drafted by Dinkic’s G-17 Plus is rather explicit:
“Immediately after taking the office, the new government shall abolish all types of subsidies. This measure must be implemented without regrets or hesitation, since it will be difficult if not impossible to apply later, in view of the fact that in the meantime strong lobbies may appear and do their best to block such measures… This initial step in economic liberalization must be undertaken as a “shock therapy” as its radical nature does not leave space for gradualism of any kind. (From the G-17 ‘Program of Radical economic Reform’http://www.g17.org.yu/english/programm/programr9.htm )

The G-17 program they wrote attacking Milosevic had stated in no uncertain terms that “they would do it,”-that is, they would get rid of price controls. They have driven Milosevic out and begun to “do it.” Naturally if prices have spiraled, it is Milosevic’s fault.

Michel Chossudovsky: chossudovsky@videotron.ca
Jared Israel: Emperors1000@aol.com