The first victim of austerity? The impact of the worldwide 'neoliberal turn' on the breakdown of the Yugoslav Federation

The first victim of austerity? The impact of the worldwide ’neoliberal turn’ on the breakdown of the Yugoslav Federation

The Essay descri­bes the break­down of Yugo­s­la­via as a result of the dest­ruc­tion of the wel­fa­re sys­tem and thus the soci­al fabric by aus­teri­ty mea­su­res. It tri­es to show how European and world­wi­de neo­li­be­ral poli­tics had a major influ­ence on the eco­no­mic down­turn and thus lead to the emer­gence of so­ far unim­portant eth­nic dif­fe­ren­ces, to natio­na­lism, and final­ly to war.

edit: my word­press-skills aren’t qui­te enough sol­ve all the for­ma­ting and style pro­blems of the arti­cle, sor­ry for chan­ges of typeface and some red lines in the online ver­si­on!

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the domestic order of socia­list Yugo­s­la­via was stron­gly influ­en­ced by its place in the inter­na­tio­nal order: its geo­po­li­ti­cal loca­ti­on, its pat­terns of tra­de, and for­eign alli­an­ces, and the requi­re­ments of par­ti­ci­pa­ti­on in the inter­na­tio­nal eco­no­my and its various orga­ni­za­ti­ons.“ (Wood­ward 1995: 16)

1. Intro­duc­tion

The break­down of Yugo­s­la­via and the fol­lo­wing war is com­mon­ly descri­bed as a result of (his­to­ri­cal) eth­nic ten­si­ons, exces­si­ve natio­na­lism, an inef­fec­tive federa­list sys­tem and repres­si­on of free­dom under socia­lism (see Wood­ward 1995: 7–8 or wiki­pe­dia: Yugo­s­lav wars). While con­flict par­ties on all sides surely show­ed a frigh­ten­ing racist and natio­na­list face and wit­hout deny­ing the eco­no­mic pro­blems of the socia­list peri­od, I argue that one of the most important rea­sons for the mel­tdown is usual­ly omit­ted: The dest­ruc­tion of the wel­fa­re sys­tem and thus the soci­al fabric by neo­li­be­ral aus­teri­ty poli­tics. Even US based intel­li­gence com­pa­ny Strat­for (not know as a very cri­ti­cal or lef­tist orga­ni­za­ti­on) wri­tes in an inter­nal Email published by Wiki­leaks, that “the IMF [Inter­na­tio­nal Mone­ta­ry Fund] aus­teri­ty mea­su­res impo­sed on Yugo­s­la­via was [sic] in part to bla­me for the start of the war there”(Wikileaks/Stra­te­gic Fore­cas­ting, Inc. 2009). As I will show in Part 3, the­re was a world­wi­de neo­li­be­ral turn of eco­no­mic poli­cy after the eco­no­mic down­turn in the wake of the 1973 oil cri­sis that also chan­ged the EU and its dealings with Yugo­s­la­via. The kind of Aus­teri­ty poli­tics that have been imple­men­ted sin­ce 2008 by the Troi­ka (European Com­mis­si­on, European Cen­tral Bank and Inter­na­tio­nal Mone­ta­ry Fund) in Greece and Spain had alrea­dy been forced on Yugo­s­la­via from the 70s on. They aimed at redu­cing the for­eign tra­de defi­cit by bud­get cuts in the wel­fa­re sys­tem and government insti­tu­ti­ons and by ope­ning the coun­try to for­eign invest­ment. But ins­tead of increa­sing the eco­no­mic sta­bi­li­ty of the Fede­ra­ti­on, they only lead to increa­sing for­eign debt, mas­si­ve unem­ploy­ment and the dis­mant­ling of soci­al pro­tec­tion sys­tems. As eco­no­mic pro­blems were always ans­we­red with even more seve­re aus­teri­ty mea­su­res, the eco­no­my spi­ra­led down­wards to a point whe­re “One mil­li­on peop­le were offi­ci­al­ly regis­te­red as unem­ploy­ed. The increa­sing rate of unem­ploy­ment was above 20 per­cent in all repu­blics except Slo­ve­nia and Croa­tia. Infla­ti­on was at 50 per­cent a year and clim­bing. The house­hold savings of appro­xi­mate­ly 80 per­cent of the popu­la­ti­on were deple­ted“ (Wood­ward 1995:73). As the peop­le strugg­led for secu­ring basic neces­si­ties and ser­vices they could­n’t afford any more, natio­na­list move­ments beca­me more and more appe­aling. Ten­si­ons aro­se out of the dif­fe­rent abi­li­ties of the repu­blics to com­pe­te in the glo­bal mar­ket. While Slo­ve­nia and Croa­tia were rela­tively well off, the situa­ti­on in the other repu­blics was even more dra­ma­tic. The for­mer accu­sed the lat­ter of inhi­bi­t­ing the growth and com­pe­ti­tiveness of their indus­try and saw inde­pen­dence as a way to impro­ve their con­di­ti­on. It seems plau­si­ble that natio­na­list sym­bols and a new inter­pre­ta­ti­on of his­to­ri­cal deve­lop­ments aro­se as a jus­ti­fi­ca­ti­on for this sepa­ra­ti­on. Con­si­de­ring the seve­ri­ty of the pro­blems and ima­gi­ning how it must feel to live in a once suc­cess­ful but now rapidly dete­rio­ra­ting eco­no­my it seems that Susan Wood­ward is cor­rect when she says “to exp­lain the Yugo­s­lav cri­sis as a result of eth­nic hat­red is to turn the sto­ry upsi­de down and begin at its end.“ (Wood­ward 1995:18). Thus, I will begin at the begin­ning and try to show how European and world­wi­de neo­li­be­ral poli­tics had a major influ­ence on the eco­no­mic down­turn and thus lead to the emer­gence of so-far unim­portant eth­nic dif­fe­ren­ces, to natio­na­lism, and final­ly to war.

2. Yugo­s­la­via, Part I

Self-manage­ment and the balan­ce of powers

When the Socia­list Federal Repu­blic of Yugo­s­la­via was foun­ded in 1946 by com­mu­nist par­ti­san forces, its con­sti­tu­ti­on was clo­se­ly mode­led on Leni­nist ide­as of the sta­te and very simi­lar to that of the USSR. But just two years later, in the Tito-Sta­lin split, it beca­me an inde­pen­dent com­mu­nist sta­te and refu­sed to align its­elf with eit­her the capi­ta­list nor the socia­list bloc. Its eco­no­mic and soci­al poli­cy after­wards reflec­ts this fra­gi­le sta­tus bet­ween the two sys­tems, try­ing to for­mu­la­te its own inde­pen­dent agen­da. It was in many respec­ts a child of two worlds. To pro­tect its­elf from mili­ta­ry aggres­si­on and build eco­no­mic con­nec­tions, Yugo­s­la­via beca­me an obser­ving mem­ber in both wes­tern and com­mu­nist inter­na­tio­nal Orga­ni­za­ti­ons. It mana­ged to obtain an obser­ver sta­tus in the (com­mu­nist) Coun­cil for Mutu­al Eco­no­mic Assi­s­tan­ce and the (com­mu­nist) War­saw Trea­ty Orga­ni­za­ti­on as well as the (wes­tern) OECD and it met the requi­re­ments of the (wes­tern) Gene­ral Agree­ment on Tariffs and Tra­de (GATT). In Addi­ti­on, Yugo­s­la­via was in major play­er in the Non-ali­gned-Move­ment, try­ing to build a coali­ti­on of sta­tes that refu­sed to take sides in the cold war.

The eco­no­mic poli­cy had lar­ge “socia­list” ele­ments, the most visi­ble of the­se worker self-manage­ment. In a uni­que move, the com­mu­nist lea­dership trans­fer­red a huge amount of power to local aut­ho­ri­ties and coun­cils of workers that were enab­led to deci­de on a wide ran­ge of mat­ters. “Local governments were respon­si­ble for con­su­mer mar­kets, wel­fa­re, housing, local roads, ele­men­ta­ry schools, health care and unem­ploy­ment” (Wood­ward 1995:39) and ‘coun­cils of pro­du­cers’ were instal­led “as legis­la­ti­ve cham­bers on all levels of the sta­te” (Unkov­ski-Kori­ca 2015:26). In the public sec­tor, workers were gua­ran­te­ed to recei­ve equal pay for equal work, the­re was a mini­mum wage in all sec­tors and sub­stan­ti­al wel­fa­re and health-care sys­tem. Unli­ke other com­mu­nist sta­tes, Yugo­s­la­via had a signi­fi­cant pri­va­te sec­tor. Soci­al ine­qua­li­ty was not along eth­nic lines, but depen­ded main­ly on if you were employ­ed in the public sec­tor and were ent­it­led to access the health­ca­re and wel­fa­re sys­tems con­nec­ted to it, or in the pri­va­te sec­tor wit­hout many of the­se bene­fits. As most of the jobs were crea­ted in urban are­as, rural envi­ron­ments were also signi­fi­cant­ly poo­rer. But over­all, the Fede­ra­ti­on was eco­no­mi­c­al­ly pro­spe­ring, it was one of the fas­test-gro­wing eco­no­mies of the 1950s and peop­le enjoy­ed rela­tively high living stan­dards (see Unkov­ski-Kori­ca 2015). Yugoslavia’s midd­le-class could free­ly tra­vel the world and all its citi­zens enjoy­ed a free­dom that was unknown in other “socia­list” sta­tes. Yugo­s­la­via was also a major play­er in inter­na­tio­nal poli­tics. It had ties to both wes­tern and eas­tern super­powers and was a major lea­der of the Non-ali­gned-Move­ment that refu­sed to take sides in the cold war. But very soon after, the eco­no­mic poli­cy of the ruling par­ty, the League of Com­mu­nists of Yugo­s­la­via (LCY) chan­ged and led the coun­try into a debt trap it never reco­ve­r­ed from. To under­stand why the LCY embar­ked on a export- and mar­ket-ori­en­tend stra­te­gy that was ulti­mate­ly incom­pa­ti­ble with self-manage­ment, one has to con­si­der the world­wi­de trend towards a dif­fe­rent eco­no­mic sys­tem, a deve­lop­ment I will call the “neo­li­be­ral turn”.

3. The world­wi­de neo­li­be­ral turn

3.1 Class war – from above

After World War II, near­ly all ‘wes­tern’ eco­no­mies were gro­wing rapidly, pro­duc­tion was get­ting more and more effi­ci­ent and new con­su­mer goods beca­me wide­ly avail­ab­le. Despi­te other dif­fe­ren­ces bet­ween the US, Japan and Euro­pe „what all of the­se various sta­te forms had in com­mon was an accep­tan­ce that the sta­te should focus on full employ­ment, eco­no­mic growth, the wel­fa­re of its citi­zens, and that sta­te power should be free­ly deploy­ed […] to achie­ve the­se ends. Fis­cal and mone­ta­ry poli­ci­es usual­ly dub­bed ‘Keyne­si­an’ were wide­ly deploy­ed to dam­pen busi­ness cycles and to ensu­re rea­son­ab­le full employ­ment“ (Har­vey 2005: 10). In a ‘class com­pro­mi­se’ with Capi­tal, Tra­de uni­ons were inte­gra­ted into the regu­lar insti­tu­ti­ons of the sta­tes and had a major influ­ence “that cur­bed the power of capi­tal and exten­ded the power of labour even into the work­place” (Har­vey 2005:112, see also Apel­do­orn 2002: 63–65) Through tra­de libe­ra­li­sa­ti­on under GATT (Gene­ral Agree­ment on Tariffs and Tra­de) com­pe­ti­ti­on on the glo­bal mar­ket began to grow, but natio­nal regu­la­ti­ons accord­ing to for­eign tra­de and invest­ment limi­ted this com­pe­ti­ti­on. It seems that the situa­ti­on in Yugo­s­la­via was very simi­lar to that of most emer­ging and deve­lo­ped coun­tries, only that the­re was an even stron­ger influ­ence of the working class which led to the intro­duc­tion of the “self-management”-approach.

Things star­ted to chan­ge when “at the end of the 60s for the first time pro­duc­tivi­ty gains began to decli­ne whe­re­as wages con­ti­nued to rise – resul­ting in a fal­ling sha­re of pro­fits wit­hin the inco­me dis­tri­bu­ti­on” (Apel­do­orn 2002: 65), becau­se of the Tra­de Uni­ons’ strong bar­gai­ning posi­ti­on. Har­vey argues, that the “upper clas­ses ever­y­whe­re felt threa­tened“ (Har­vey 2005:15) by this deve­lop­ments, as “real inte­rest rates went nega­ti­ve and and paltry divi­dends and pro­fits were the norm” (ibid). Piket­ty shows this rela­ti­ve loss of eco­no­mic wealth in the upper clas­ses hap­pen­ed from 1910 onwards but was rever­sed in the 1970s (see Table 1). This rever­se hap­pen­ed becau­se, in an iro­nic refe­rence to Marx, the capi­ta­list class beca­me awa­re of its com­mon inte­rests and star­ted to wage class war – from above (see Har­vey 2005:43,44). Alrea­dy intro­du­ced in works like F.A. Hayek’s “The road to serfdom”(1944) the con­cept of Neo­li­be­ra­lism that did have much influ­ence so far beca­me their main ‘wea­pon’. As defi­ned by Har­vey: „Neo­li­be­ra­lism is in the first instan­ce a theo­ry of poli­ti­cal and eco­no­mic prac­tices that pro­po­ses that human well-being can best be advan­ced by libe­ra­ting indi­vi­du­al entre­pre­neu­ri­al free­doms and skills wit­hin an insti­tu­tio­nal frame­work cha­rac­te­ri­zed by strong pri­va­te pro­per­ty rights, free mar­kets, and free tra­de“ (Har­vey 2005:2). It soon beco­me appa­rent, that only a very limi­ted num­ber of peop­le pro­fi­ted from this kind of free­dom, but capi­ta­list orga­ni­za­ti­ons took gre­at efforts to pro­mo­te the new para­digm. In 1972, the US-Ame­ri­can Cham­ber of Com­mer­ce star­ted to hea­vi­ly expand its base of cor­po­ra­te mem­bers and star­ted a free mar­ket and pro-busi­ness lob­by cam­pai­gn. In the same year, the US ‘Busi­ness Round­ta­ble’ was foun­ded and its mem­bers “spent clo­se to $900 mil­li­on annu­al­ly (a huge amount at that time) on poli­ti­cal mat­ters.” (Har­vey 2005:44). The pro-neo­li­be­ra­lism move­ment had its first suc­ces­ses in the US, but soon expan­ded world­wi­de.

3.2 The neo­li­be­ral turn in Euro­pe

The advo­ca­tes of neo­li­be­ra­lism also mana­ged to chan­ge the eco­no­mic poli­cy of all European Coun­tries, albeit not wit­hout a strugg­le and not as much as in the US, Chi­na and Japan. After WWII, all European governments had expan­ded their wel­fa­re sys­tems and thus public sec­tor expen­dit­u­re. When growth and pro­fits began to fall in the 60’s, European coun­tries first expe­ri­men­ted with nati­on-sta­te-cen­te­red solu­ti­ons to impro­ve their eco­no­mic con­di­ti­on. Apel­do­orn iden­ti­fies three dif­fe­rent approa­ches: The Bri­tish, the Ger­man and the French model. (Apel­do­orn 2002:72–77) Bri­tain under Mar­ga­ret That­cher embar­ked on a neo­li­be­ral cour­se with a firm com­mit­ment to inter­na­tio­nal free tra­de, reli­an­ce on mar­ket mecha­nism with litt­le inter­fe­rence from the sta­te and finan­ci­al dere­gu­la­ti­on. Ger­ma­ny was also “ful­ly com­mit­ted to inter­na­tio­nal free tra­de” (Apel­do­orn 2002: 74), but in its “soci­al” mar­ket eco­no­my pre­ser­ved a rela­ti­ve high degree of Uni­on power (“Mit­be­stim­mung”) and its banks were more clo­se­ly tied to the indus­try and less libe­ral than the Bri­tish banks. Fran­ce first tried to natio­na­li­ze huge parts of the eco­no­my and under­took a big Keyne­si­an refla­ti­on pro­gram­me. Here, the sta­te retai­ned a strong influ­ence over eco­no­mic poli­ci­es and mar­ket mecha­nisms were limi­ted to a rela­tively small degree.

In the 80’s, most governments began to ack­now­ledge that a “European” solu­ti­on to the eco­no­mic cri­sis was necessa­ry and began to relaunch efforts to crea­te an inter­nal mar­ket and what in 1992 beca­me the EU. The dif­fe­rent natio­nal models of capi­ta­lism spar­ked a con­tro­ver­sy about what kind of Euro­pe was to be crea­ted. Jac­ques Delors, pre­si­dent of the European Com­mis­si­on from 1985–1995, envi­sio­ned a ‘European soci­al model’ that com­bi­ned “the com­pe­ti­ti­ve mar­ket with a sys­tem of soci­al soli­da­ri­ty, all in a long-term per­spec­tive of sustainab­le growth and wel­fa­re” (Apel­do­orn 2005: 79), resemb­ling the ‘ger­man’ model men­tio­ned ear­lier (which saw a con­si­dera­ble pro­tec­tion of the inte­rests of labour). But when the European Com­mu­ni­ty was for­mal­ly estab­lished with the Maas­tricht Trea­ty in 1992, very litt­le of this pro­tec­tion remai­ned and the EC had beco­me a main­ly neo­li­be­ral pro­ject with “free” tra­de, “fle­xi­ble” labour mar­kets and huge pri­va­tiza­ti­on efforts. Apel­do­orn claims, that “the fail­u­re of the soci­al dimen­si­on must be attri­bu­t­ed not only to the intran­si­gence of the Bri­tish oppo­si­ti­on […], but also to the strong resis­tan­ce put up by the trans­na­tio­nal busi­ness lob­by” (Apel­do­orn 2005: 148).

What is known as “lob­by­ism” today, was most likely born, or at least hea­vi­ly increa­sed in the years bet­ween WWII and the Maas­tricht trea­ty. Neo­li­be­ral Think Tanks like the Mont Pèle­rin Socie­ty (1947) emer­ged and shaped public dis­cour­se. Simi­lar­ly to the US, the capi­ta­list class beca­me awa­re of their com­mon inte­rest and how they could pur­sue them. One examp­le is thatfrom the mid-1970s onwards, the Swe­dish Employer’s Fede­ra­ti­on […] laun­ched a pro­pa­gan­da cam­pai­gn against exces­si­ve regu­la­ti­on and for the increa­sing libe­ra­li­za­ti­on of the eco­no­my “ ( Har­vey 2005: 113) A litt­le later, in 1983, the European Round­ta­ble of Indus­tria­lists was foun­ded, quick­ly estab­lished links to top poli­ti­ci­ans in the European com­mis­si­on (it was co-foun­ded by Vis­count Eti­en­ne Davi­gnon “at the time one of the vice-pre­si­dents of the European Com­mis­si­on and char­ged with indus­tri­al affairs” (Apel­do­orn 2005: 84) and beca­me the sin­gle most influ­en­ti­al inte­rest group in Euro­pe. Apel­do­orn quo­tes for­mer For­mer Com­mis­sio­ner Peter Suther­land, who sta­tes that: “I belie­ve that it [the ERT] did play a signi­fi­cant role in the deve­lop­ment of the 1992 pro­gram­me. In fact one can argue that the who­le com­ple­ti­on of the inter­nal mar­ket pro­ject was initia­ted not by governments but by the Round Table, and by mem­bers of it” (Apel­do­orn 2000: 168). As the pro­gram­me of the European Uni­on was increa­singly shaped by neo­li­be­ral think tanks and busi­ness lob­by orga­ni­za­ti­ons, Uni­on Power vanis­hed and with it, the Visi­on of a “soci­al” Euro­pe. This also chan­ged poli­cy towards other coun­tries in Euro­pe and the pos­si­bi­li­ty of trans­na­tio­nal inter­ven­ti­ons of orga­ni­za­ti­ons like the IMF (Inter­na­tio­nal Mone­ta­ry Fund), as we will see in the case of for­mer Yugo­s­la­via.

4. Yugo­s­la­via, Part II

4.1 Ori­en­ta­ti­on on the export mar­ket

The turn to neo­li­be­ral eco­no­mic poli­ci­es also had its influ­ence on Yugo­s­la­via. The eco­no­mic stra­te­gy of the LCY shifted to more mar­ket- and export-ori­en­ted poli­ci­es. Accord­ing to Unkov­ski-Kori­ca “becau­se a gro­wing eco­no­my was important for the main­ten­an­ce of natio­nal inde­pen­dence, quick returns on invest­ments beca­me ever more cen­tral to the cal­cu­la­ti­ons of the Yugo­s­lav com­mu­nist lea­dership” (Unkov­ski-Kori­ca 2015:28). A series of new laws based the inco­me of workers on the suc­cess of their pro­duc­ts on the inter­na­tio­nal mar­ket ins­tead of recei­ving a fixed inco­me for a cer­tain type of work. This lead to a (pro­bab­ly inten­ded) rise in com­pe­ti­ti­on bet­ween dif­fe­rent enter­pri­ses, but also to a (pro­bab­ly less inten­ded) wide­ning inco­me gap bet­ween the workers in dif­fe­rent indus­tries and repu­blics. To redu­ce the for­eign tra­de defi­cit, the YLC tried to deve­lop the indus­tri­al are­as (that were main­ly situa­ted in Slo­ve­nia and Croa­tia) and the agri­cul­tu­ral hubs (main­ly found in Ser­bia). This hap­pen­ed at the expen­se of lar­ge are­as of Bos­nia that saw a huge decli­ne in sub­si­dies from the Fede­ra­ti­on (and sub­se­quent­ly in living stan­dards). This une­qual dis­tri­bu­ti­on spar­ked con­tro­ver­sies bet­ween the repu­blics and the Fede­ra­ti­on and recei­ved cri­ti­cism from all sides. The more indus­tri­al (and thus more suc­cess­ful on the world mar­ket) Repu­blics Slo­ve­nia and Croa­tia fea­red that their own pro­gress could be retar­ded by the other repu­blics (See Unkov­ski-Kori­ca 2015:31). The other repu­blics pro­bab­ly unders­tood this as a lack of com­mit­ment to the inte­gri­ty of the Yugo­s­lav Fede­ra­ti­on and war­ned of the dan­gers of decen­tra­li­za­ti­on. For examp­le, “Bos­nia com­p­lai­ned about its Deve­lop­ment Fund allo­ca­ti­on and Alba­ni­ans in Koso­vo and Mace­do­nia pro­tested long years of neglect and opp­res­si­on in 1968” (Unkov­ski-Kori­ca 2015:33). Alt­hough most likely awa­re of the ten­si­ons, the YLC con­ti­nued their cour­se by res­to­ring hier­ar­chies in the work­place and dis­mant­ling the self-manage­ment sys­tem by intro­du­cing a new “busi­ness board” in all enter­pri­ses in 1969 to increa­se their com­pe­te­tiveness. In 1970 and 1980 they signed “free tra­de agree­ments” with the EEC (European Eco­no­mic Com­mu­ni­ty) which “acce­le­ra­ted depen­den­cy on capi­tal and hard cur­ren­cy imports to finan­ce export growth” (Ziko­vic 2015: 48) and con­se­quent­ly bor­ro­wed huge amounts of for­eign cur­ren­cy, most dol­lars, “to import advan­ced tech­no­lo­gy to impro­ve its (Yugoslavia’s) com­pe­ti­tiveness” (Wood­ward 1995: 47).

The­se loans beca­me a major pro­blem in the world­wi­de reces­si­on after the oil pri­ces shock. First­ly, tra­de libe­ra­li­sa­ti­on under the EEC was a one-way-street as the other european coun­tries “rai­sed tra­de bar­ri­ers in exac­t­ly tho­se are­as whe­re Yugo­s­la­via enjoy­ed com­pe­ti­ti­ve advan­ta­ge (steel, tex­ti­les, tob­ac­co, beef and veal)” (Zivko­vic 2015: 48) and the pro­duc­ts of the machine­ry bought by the­se loans could not be sold at good pri­ces any more. Second­ly, as the IMF chan­ged its poli­cy towards mone­ta­ry sta­bi­li­ty in 1979, “the inte­rest rate on the U.S. dol­lar sky­ro­cke­ted, and with it the for­eign debt of all coun­tries hol­ding debt in tho­se dol­lars” (Wood­ward 1995:48) lea­ding to a even hig­her finan­ci­al bur­den for Yugo­s­la­via.

4.2 The Aus­teri­ty regime of IMF and EEC

Unab­le to com­pe­te on the glo­bal mar­ket and suf­fe­ring from an increa­sing for­eign debt, the Fede­ra­ti­on was on the “brink of bankrupt­cy” (Unkov­ski-Kori­ca 2015: 39). To avo­id not being able to ser­ve Yugoslavia’s debt obli­ga­ti­ons, the LCY took more short-term loans from the IMF, recei­ving the lar­gest loan in the histo­ry of the IMF in 1981. The IMF and the EEC (European Eco­no­mic Com­mu­ni­ty) pre­sen­ted the LCY a pro­gram­me they had to fol­low in order to recei­ve the­se loans and and pro­mi­sed them they would reco­ver eco­no­mi­c­al­ly if they would fol­low it rigo­rous­ly. The program­me was basi­cal­ly one of aus­teri­ty and also “one of the first struc­tu­ral adjust­ment pro­gram­mes in the world” (Zivko­vic 2015: 49). The Yugo­s­lav Fede­ra­ti­on aban­do­ned Food and basic com­mo­di­ty sub­si­dies to decrea­se import, “pri­ces rose by one-third 1983” (Wood­ward 1995: 51). All imports not cri­ti­cal to pro­duc­tion were pro­hi­bi­ted. Hig­her inte­rest rates on for­eign cur­ren­cy bank accounts were meant to pro­vi­de the Fede­ra­ti­on with more liqui­di­ty. Invest­ment in soci­al ser­vices and infra­st­ruc­tu­re were com­ple­te­ly fro­zen to mini­mi­ze spen­ding. All firms were obli­ged to lay off workers if facing los­ses to impro­ve their com­pe­ti­tiveness (see Wood­ward 1995: 51).

Tog­e­ther, the­se mea­su­res lead to mas­si­ve unem­ploy­ment of up to 50% in some repu­blic and to a gene­ral fee­ling of having to sur­vi­ve in an increa­singly com­pe­ti­ti­ve and hos­ti­le envi­ron­ment, even in the wealt­hi­er repu­blics. 25% of Yugoslavia’s inha­bi­tants were con­si­de­red to be under the pover­ty line (Wood­ward 1995: 52). Peop­le may have coped with rising unem­ploy­ment and scar­ce resour­ces if the­re had been a soci­al net like twen­ty years ago, but tho­se wel­fa­re insti­tu­ti­ons had also fal­len vic­tim to aus­teri­ty mea­su­res and could do very litt­le to relax the situa­ti­on. As the­se were gone, peop­le were desper­ate­ly sear­ching for new ways to pro­tect them­sel­ves and their fami­les and also for the rea­sons behind this sud­den dete­rio­ra­ti­on of their living stan­dards.

4.3 The end of soli­da­ri­ty

The IMF had dis­mant­led the wel­fa­re insti­tu­ti­ons but rea­li­zed that a strong cen­tral government was nee­ded for the eco­no­mic poli­cy chan­ge it deman­ded. It thus ”began to tie con­di­ti­ons for new credits to poli­ti­cal reform” (Wood­ward 1995:74). The “IMF and EEC deman­ded the recen­tra­li­sa­ti­on of the Yugo­s­lav fede­ra­ti­on to dri­ve through macroeco­no­mic sta­bi­li­sa­ti­on and finan­ci­al disci­pli­ne” (Zivko­vic 2015: 49). It seems very likely that this very demand was the cata­lyst for the split-up of Yugo­s­la­via and the con­se­quent war. The rea­son why the demand for recen­tra­li­za­ti­on pro­ved to be so dest­ruc­tive was the fier­ce com­pe­ti­ti­on on the inter­na­tio­nal mar­ket and the very une­qual posi­ti­on on this mar­ket of the dif­fe­rent repu­blics.

Slo­ve­nia had a strong, export ori­en­ted eco­no­my which was able to com­pe­te on the glo­bal mar­ket and impor­ted most of its pri­ma­ry com­mo­di­ties from out­si­de of Yugo­s­la­via. Ser­bia and its auto­no­mous regi­ons Koso­vo and Voj­vo­di­na on the other hand, were still lar­ge­ly agri­cul­tu­ral and more depen­dent on the inter­nal mar­ket and also redis­tri­bu­ti­on on the federal level to deve­lop their eco­no­my. This redis­tri­bu­ti­on on the federal level and the expen­ses for the federal army were increa­singly seen as an unne­cessa­ry bur­den by the Slo­ve­ne Lea­dership. Tog­e­ther with the Croa­ti­an government, it oppo­sed expen­dit­ures for defen­se and deve­lop­ment in the south with a neo­li­be­ral “trick­le-down” rea­so­ning. “They argued that pro­duc­tivi­ty was decli­ning becau­se redis­tri­bu­ti­on sap­ped the incen­ti­ve of firms and workers and that growth and exports would revi­ve fas­test of firms that were pro­fi­ta­ble (and the repu­blics in which they were loca­ted) made decisi­ons on investment”(Woodward 1995:69). It was in this cli­ma­te of dwind­ling inter­nal resour­ces, increa­sing debt and vanis­hing soli­da­ri­ty that natio­na­list ide­as beca­me more and more appe­aling. For Slo­ve­nia, natio­nal inde­pen­dence was a way to get rid of the obli­ga­ti­on to con­tri­bu­te to the Fede­ra­ti­on. For Ser­bia, the inte­gri­ty of the Fede­ra­ti­on and the IMF reform cour­se see­med the only way to a sta­ble eco­no­my, but it had to face gro­wing pro­test, espe­ci­al­ly in Alba­nia. The Ser­bi­an government’s refu­sal to accept the sepa­ra­tist move­ments in Alba­nia, Slo­ve­nia and Croa­tia was increa­singly seen as an attempt to domi­na­te the others repu­blics and thus its peop­le. Alt­hough Slo­ve­nia and the inter­na­tio­nal credi­tors (IMF and EEC) had oppo­si­te aims in the cen­tra­li­za­ti­on-decen­tra­li­za­ti­on deba­te, “they both atta­cked the sta­bi­li­zing poli­ti­cal mecha­nisms of the socia­list peri­od” (Wood­ward 1995:80). When Slo­ve­nia fai­led to con­vin­ce the other repu­blics with its idea of more inde­pen­dent repu­blics at the Extra­or­di­na­ry Con­gress of the League of Com­mu­nists in Janu­a­ry 1990, it left the League for good. The remai­ning par­ties could not agreed on how to deal with Slovenia’s exit and the LCY was effec­tively dis­sol­ved (see Wood­ward 1995: 115). When the army – in an attempt to pro­tect the inte­gri­ty of the Fede­ra­ti­on – took actions against pro­tes­ters in Croa­tia, kil­ling twen­ty eight peop­le, poli­ti­cal ten­si­ons esca­la­ted fur­ther. In the same year, the fol­lo­wing mul­ti­par­ty elec­tions streng­t­he­ned natio­na­list par­ties, like the HDZ of Fran­jo Tudj­man which cam­pai­gned for “sover­eig­n­ty” and the SPS of Slo­bo­dan Milo­se­vic which won with the slo­gan “With us the­re is no inse­cu­ri­ty” (see Wood­ward 1995:120–121). The fol­lo­wing esca­la­ti­on of the con­flict bet­ween tho­se par­ties is not part of this essay, but it should have beco­me appa­rent how they them­sel­ves were the pro­duct of the eco­no­mic situa­ti­on in Yugo­s­la­via.

5. Con­clu­si­on

A neo­li­be­ral coup d’etat?

Wood­ward claims that the European governments did very litt­le to resol­ve the Yugo­s­lav cri­sis befo­re the war began in ear­nest (see Wood­ward 1995:152). She exp­lains this fact with the focus on other pro­blems, like to situa­ti­on in the midd­le-east, all the other European coun­tries had, alt­hough an emer­ging war in a near­by coun­try does not seem like a minor issue governments would nor­mal­ly more or less igno­re. One may have to take into account, that around the 1970s “Com­mu­nist and socia­list par­ties were gai­ning ground, if not taking power, across much of Euro­pe […] The­re was, in this, a clear poli­ti­cal thre­at to eco­no­mic eli­tes and ruling clas­ses ever­y­whe­re” (Har­vey 2005: 15) It seems pos­si­ble that the­re might have been litt­le inte­rest in resol­ving the cri­sis in Yugo­s­la­via from the point of view of the capi­ta­list class, as this might have given the Yugo­s­lav “midd­le-way” pro­ject a cer­tain pres­ti­ge that would have ques­tio­ned the hege­mo­nic power of the neo­li­be­ral eli­te.

Apart from what the moti­ves of the IMF and EEC behind the aus­teri­ty regime were, I doubt the war in Yugo­s­la­via would have hap­pen­ed wit­hout it. The ques­ti­on if the break­down of Yugo­s­la­via in the wake of the neo­li­be­ral reforms was an unfo­re­se­en side-effect of a genui­ne belie­ve in the wis­dom of ‘the mar­ket’ or if the neo­li­be­ral eli­tes were awa­re of the likely con­se­quen­ces of such an aus­teri­ty regime and wel­co­med them in order to com­ple­te the rest­ruc­tu­ring, can not be ans­we­red with my cur­rent know­ledge. Har­vey agrees with Dume­nil and Lévy who say that “neo­li­be­ra­li­za­ti­on was from the begin­ning a pro­ject to achie­ve the res­to­ra­ti­on of class power” (Har­vey 2005: 16) and if you see it this way, the rest­ruc­tu­ring of the Yugo­s­lav Fede­ra­ti­on was suc­cess­ful, the self-manage­ment approach seems com­ple­te­ly dis­credi­ted. The total col­lap­se might have been necessa­ry to com­ple­te the neo­li­be­ral reor­ga­ni­sa­ti­on, becau­se “It is only when the inter­nal power struc­tu­re has been redu­ced to a hol­low shell and when inter­nal insti­tu­tio­nal arran­ge­ments are in total cha­os, eit­her becau­se of col­lap­se (as in the ex-Soviet Uni­on and cen­tral Euro­pe) […] , that we see exter­nal powers free­ly orches­tra­ting neo­li­be­ral rest­ruc­tu­rings.” (Har­vey 2005:117) With the richest 1% of huma­ni­ty now owning more than all others com­bi­ned (see Oxfam 2016), class war from above is still thri­ving but the neo­li­be­ral para­digm is also increa­singly cri­ti­zi­sed. It would be inte­res­ting to rese­arch if peop­le in for­mer Yugo­s­la­via are awa­re of the neo­li­be­ral pro­ject and what kind of alter­na­ti­ves are dis­cus­sed at the moment.

6. Sources

6.1 Table

Source: Access 15.09.2016

6.2 Lite­ra­tu­re:

Appel­do­orn, Bas­ti­an van 2002: Trans­na­tio­nal capi­ta­lism and the strugg­le over European inte­gra­ti­on.  Lon­don: Rout­ledge.

Har­vey, David 2005: A Brief Histo­ry of Neo­li­be­ra­lism. New York: Oxford Uni­ver­si­ty Press.

van Apel­do­orn, Bas­ti­an 2002: Trans­na­tio­nal Capi­ta­lism and the strugg­le over European Inte­gra­ti­on. Lon­don: Rout­ledge.

Oxfam 2016: 210 Oxfam Brie­fing Paper. Access 07.10.2016

Unkov­ski-Kori­ca, Vla­di­mir 2015: Self-manage­ment, Deve­lop­ment and Debt: The Rise and Fall of the ‘Yugo­s­lav Expe­ri­ment’. In: Hor­vat, Sreć­ko and Ŝtiks, Igor 2015: Wel­co­me to the desert of post-socia­lism: radi­cal poli­tics after Yugo­s­la­via. Lon­don and Brook­lyn: Ver­so.

Wood­ward, Susan 1995: Bal­kan Tra­ge­dy: cha­os and dis­so­lu­ti­on after the cold war. Washing­ton, D.C.: Broo­kings Insti­tu­ti­on.

Wiki­leaks 2012: Stra­te­gic Fore­cas­ting, Inc 2009: Euro­pe Ana­ly­ti­cal Gui­d­ance. Access 08.09.2016.

Wiki­pe­dia: European Round­ta­ble of Indus­tria­lists.

European_Round_Table_of_Industrialists. Access 08.09.2016.

Ziko­vic, Andrea 2015: From the Market…to the Mar­ket: The Debt Eco­no­my After Yugo­s­la­via. In: Hor­vat, Sreć­ko and Ŝtiks, Igor 2015: Wel­co­me to the desert of post-socia­lism: radi­cal poli­tics after Yugo­s­la­via. Lon­don and Brook­lyn: Ver­so.