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Don’t let IMF, World Bank off the hook in Kosovo


In the mainstream media, a conventional wisdom has quickly emerged to explain the bloodletting in Kosovo. The standard culprits are historical grievances, religious intolerance, misguided nationalism and age-old ethnic hatreds. Influential as these factors undoubtedly are, however, exclusive attention to them lets more immediate economic causes off the hook.

Most particularly, the roles played by the World Bank and the International Monetary Fund have yet to be clearly articulated. These agencies, acting on behalf of Western capitalist interests, helped prepare the ground for the current atrocities and social disruption.

With NATO now trying to bomb Serbia into submission, it may be inconvenient to assign Western economic interests any responsibility for the crisis. Yet it is undeniable that these financial institutions share blame along with President Slobodan Milosevic and his military and civilian supporters.

Both the International Monetary Fund and the World Bank counted the reduction of poverty as among their most important objectives 50 years ago. However, in today’s global economy when a borrowing country is unable to pay interest on loans, structural adjustment programs are imposed. Invariably this means that wages are cut or kept low, unions are forbidden or harassed and funds for education, health care and other social programs are slashed.

Usually agricultural crops are produced for export on small plots previously used for subsistence farming to the detriment of the food supply. The local population must get by with what they can purchase of foodstuffs imported in accordance with market values rather than peoples’ needs. Often, the structural adjustment programs require privatization of state-owned or publicly owned banks, communications systems and factories.

In this way individuals or small groups of shareholders are enriched by socially produced wealth, to the detriment of workers -- especially the poorest who are most often women, children and the elderly.

We’re used to seeing this phenomenon in the Third World -- Rwanda, Brazil and the Philippines offer outstanding examples -- but mounting evidence suggests that it has taken a toll in the Balkans as well.

Michel Chossudovsky, an economics professor at the University of Ottawa, offers in his book The Globalisation of Poverty: Impacts of IMF and World Bank Reforms (Third World Network, 1997) an impressive presentation of the destructive effects macroeconomic restructuring has had on Yugoslavia and its 24 million people.

As early as 1980, restructuring demanded by external creditors was begun in Yugoslavia with support from Germany and the Reagan administration, in order to integrate Eastern Europe into neoliberalism and its market-oriented economy. An economic package arranged by the IMF and the World Bank in 1990 called for budget cuts, forcing Belgrade to stop transfer payments to the governments of the republics and autonomous provinces -- thereby, Chossudovsky argues, “fueling the process of balkanisation and secessionism.”

Inflation cut into wages, which were frozen, and prices continued to rise as devaluation of the dinar worsened the economic plight of workers. Prior to the secession of Croatia and Slovenia from Yugoslavia in 1991, the IMF-engineered financial arrangement caused the collapse of the federal financial structure. Coupled with German businesses eager to exploit interests in the Balkans, this sped up the process of breaking the country apart.

Socially owned units under workers’ management were privatized and other social programs beneficial to workers were dismantled. Socially owned banks were also converted into privately owned for-profit enterprises. Firms were steered into bankruptcy or outright liquidation leading to the eventual layoff of 600,000 workers predominantly in Serbia, Bosnia-Herzegovina, Macedonia and Kosovo.

The World Bank itself acknowledged that its programs led to outbreaks of mumps and measles and deterioration of health care in a region where until then health care had been regarded as a right. In general, unemployment and massive layoffs created a mood of social despair and hopelessness, the horrendous consequences of which we are now witnessing and deploring -- all the while largely ignorant of these contributory causes.

Chossudovsky argues that the 1995 Dayton agreement, which halted the killing in Bosnia, sanctioned “ethnic cleansing,” and was mainly inspired to provide the American Oil Company with access to Bosnian oil deposits as well as allowing Western multinationals opportunities to exploit other resources in the region.

Already in 1997 Chossudovsky had written: “What is at stake in Yugoslavia are the lives of millions of people. Macroeconomic reform destroys their livelihood and derogates their right to work, their food and shelter, their culture and national identity. Borders are redefined, the entire legal system is overhauled, the socially owned enterprises are steered into bankruptcy, the financial and banking system is dismantled, social programs and institutions are torn down.”

All this in a region that between 1960 and 1980 had a gross domestic product growing at a rate of more than 6 percent annually, and where “there was free medical care with one doctor per 550 population, the literacy rate was of the order of 91 percent and life expectancy was 72 years.”

No one wants to subscribe naively to a conspiracy theory, and it’s clear that Milosevic bears great blame for the horrors presently unfolding. However, if Chossudovsky is correct that a process of economic and political fracturing preceded the killing, then the world must note this and take measures to counter the propaganda being used to demonize the Serbian people -- which is causing murders on a massive scale as well as other social pathologies that may take centuries to resolve.

Fr. Paul Surlis is associate professor of social ethics at St. John’s University in New York.

National Catholic Reporter, April 16, 1999