The Guardian October 4, 2000

G17 and the West's agenda for Yugoslavia

by Michel Chossudovsky & Jared Israel

Recently there has been a lot of interest in the economists in the Yugoslav 
group G-17. They wrote the Program adopted by the so-called "democratic" 
opposition and its Presidential candidate, Vojislav Kostunica.

The G-17 likes to give the impression it is independent and Yugoslav-
oriented. In fact it is funded mainly through the Washington-based "Center 
for International Private Enterprise" (CIPE).

CIPE describes itself as "an affiliate of the US Chamber of Commerce". But 
in fact it is "a core institute" of the National Endowment for Democracy.

The National Endowment for Democracy has nothing to do, as far as we can 
discern, with Democracy. Rather, the Endowment was created in 1983 to solve 
a problem of Empire.

People knew that the CIA bribed intellectuals and leaders and set up phony 
front groups to carry out US policy:

"When these covert activities surfaced (as they inevitably did), the 
fallout was devastating." (Washington Post, Sept 22, 1991)

So Congress created the National Endowment for Democracy. Allen Weinstein, 
who planned the Endowment, said:

"A lot of what we do today was done covertly 25 years ago by the CIA." 
(Washington Post, Sept 21, 1991)

So the National Endowment (a sort of spin-off from the CIA) controls and 
pays for the Center for International Private Enterprise which in turn 
funds the G-17. In addition, the leading G-17 economists hold important 
positions in the World Bank and International Monetary Fund, and have for 
many years.

If the "democratic" opposition got into power, the G-17 economists would be 
in charge of the Yugoslav economy. This is not a matter of speculation. The 
"democratic" opposition program calls for working with the International 
Monetary Fund and the Fund does not work on a casual basis.

It invariably insists that its men (who conveniently happen to be the G-17 
economists) run the show. That is not open for negotiation.

Let us take a look at three of the leading G-17 economists. Their record is 
most disturbing.

Effects of IMF/WB economic "medicine"

The G-17 program contains the same economic measures they forced on Russia, 
the Ukraine, Bulgaria and Peru, among many others.

The results: social and economic devastation. But because of the long-term 
US/German attack on Yugoslavia, the results in the Yugoslav case would be 
much worse.

G-17 economists are fond of phrases like "free markets" and 
"privatisation", but their International Monetary Fund "reforms" wreck 

First, they force governments to do away with any social protections  
subsidised food or rent, free transportation, free medical care.

Out the window

Second, they use economic manipulation and new laws to force businesses  
public and private  into bankruptcy.

Then these businesses are taken over by a small clique of thieves, 
international banks, rich speculators and foreign companies. They purchase 
the businesses at rock bottom prices. This is called "Privatisation through 

A case in point is Yugoslavia, 1989.

The elder statesman of the G-17 is Professor Veselin Vukotic. Presently he 
is one of the brains behind Montenegrin secessionism. But in 1989 he was 
Minister of Privatisation under Yugoslav Premier Ante Markovic.

Yugoslavs have bitter memories of 1989-1990. But do they "put a human face" 
on the nightmare? Perhaps people think the economic disaster that befell 
Yugoslavia that year was the natural result of "market mechanisms" or the 
fault of "incompetent government."

It wasn't. There was somebody pulling the strings. That somebody was 
Veselin Vukotic.

In 1989-90, Professor Vukotic worked out of governmental offices in 
Belgrade alongside an army of Western lawyers and consultants to impose the 
Financial Operations Act. It was a World Bank plan.

Under this law, companies were selected for bankruptcy or liquidation. They 
were forced to meet impossible conditions. In this way, Vukotic 
orchestrated the breakup of 50 per cent of Yugoslav industry. 50%!

World Bank data confirms that under his direction more than 1100 industrial 
firms were wiped out from January 1989 to September 1990 And that was only 
the beginning.

Over 614,000 industrial workers were laid off out of 2.7 million.

The areas hardest hit were: Serbia, including Kosovo, and Bosnia-
Herzegovina and Macedonia.

Real wages did a nose-dive. Social programs collapsed. Unemployment shot 

And now this same Vukotic, a key man in G-17, wants to return to power.

When the IMF gets its jaws on a country it forces the government to work 
under people like Vukotic. So Vukotic could finish the job he started in 
1989 and which ironically was discontinued when economic sanctions were 
imposed in 1992.

(Bulgaria would probably be better off today if it had been hit with 
sanctions instead of with the International Monetary Fund!)

Practising on Montenegro

While hoping to get his hands on all of Yugoslavia once again, Mr Vukotic 
is practicing on the co-operative regime in Montenegro.

Montenegrin boss Milo Djukanovic, his former student, has appointed Vukotic 
Deputy Chief of the Privatisation Commission which is auctioning off state 
property in Montenegro.

Recently we discovered a US Commerce Department advertisement on the 

The title is: "Montenegro: Seeks Privatization Fund Managers."

The advertisement explains that these Managers are needed in Montenegro, 
where US officials are "providing technical support" for so-called 

The managers would control "funds" that would take over ownership of what 
is now public property.

The Managers could "restructure" these privatised companies  lay off the 
workers and sell the most valuable components. The Commerce Department 
promises that this "should be quite profitable".

Note how brazenly the US Commerce Department celebrates the transformation 
of Montenegrin property into foreign profits.

Vukotic is helping in other areas as well. For example, last June NATO 
marched into Kosovo, and the UCK along with them. Wherever they went, they 
drove loyal Yugoslav citizens from their homes, stole or destroyed their 
property and threatened them with death. By June 26, the expulsions were at 
a peak.

Vukotic could no longer remain silent. According to the Associated Press, 
on June 26 Vukotic demanded that Kosovo have its own currency, separate 
from the dinar!

One of the most prominent G-17 people is Dr Dusan Vujovic, a senior 
economist at the World Bank. He acts as a link between G-17 and Washington.

He has been very active overseeing "reforms" in so-called "transition 

Shock treatment for Ukraine

In August 2000, Vujovic was in charge of negotiating one of the World 
Bank's most deadly economic packages, imposed on the Ukraine, already 
devastated by previous International Monetary Fund measures.

What happened to the Ukraine?

The Ukraine disaster started in the fall of 1994 in Madrid, Spain. Prime 
Minister Vitali Masol signed an agreement with the International Monetary 

In exchange for accepting "economic shock treatment" Ukraine got a $360 
million loan, a very small amount as these things are calculated.

Reforms were launched in mid-October, 1994. The IMF ordered the Ukrainian 
authorities to abandon State controls over the exchange rate.

This led to the collapse of the currency. The price of bread increased 
overnight  300 per cent. Electricity shot up  600 per cent. Public 
transportation  900 per cent.

"Dollarised" prices were forced on a population with earnings below $10 a 
month. Credit was frozen. With super high electricity prices and no credit, 
public and private industry was destroyed.

The international speculators moved in like sharks in a frenzy.

Then in November 1994, World Bank negotiators were sent in to "advise" the 
government on overhauling Ukraine's agriculture. The grain market was 

This opened Ukraine up to the dumping of US grain surpluses.

Ukraine went from being a grain exporter to begging for Food Aid from the 
European Union and the US.

Thanks to the International Monetary Fund, Ukraine is a starving political 
protectorate of the US and Germany. And remember, Ukraine never did 
anything to offend the US, unlike Yugoslavia.

The Rape of Bulgaria

G-17 member Dr Zeliko Bogetic has a senior position at the International 
Monetary Fund. Bogetic has been doctor in many economic cures. The patient 
always dies.

In 1994-96, he played a key role in forcing a structural adjustment program 
(SAP) on Bulgaria. All social defences  price controls, subsidised food, 
housing and medical care, were stripped away.

The program led to mass poverty. By 1997, old age pensions (according to 
World Bank sources) had collapsed to $2 a month.

The World Bank admits that 90 per cent of Bulgarians now live below the 
extreme poverty level but, they say, much economic progress is being made.

Apparently perfection will be achieved when there are no Bulgarians left 

Yugoslavia next?

What would Mr Bogetic do if he and his G-17 colleagues came to power under 
a "democratic" opposition government?

Bogetic was dispatched by the International Monetary Fund to Podgorica, 
Montenegro, to advise the pro-secessionist government of President Milo 

Bogetic was to set up a currency board modelled on that of Bosnia under the 
Dayton Accord.

Bogetic's advice was to stop using the Dinar, the Yugoslav currency. He 
said that under no circumstances should Montenegro establish a Central 

Now remember, the Djukanovic Government in Montenegro says it wants 
"independence" from Yugoslavia  but a Central Bank is a requirement for 
real independence.

No, said Bogetic, that is the "worst possible solution". Meaning: 
independence in the colonial sense.

Bogetic would be the likely candidate for Yugoslav Central Bank Governor if 
the "democratic" opposition were to win.

What would he do?

The same thing he's been doing in Montenegro  establish a colonial style 
currency board linked to the Deutschmark. Then monetary policy would be 
controlled by the country's creditors.

This would be an excellent state of affairs for the creditors, but very bad 
for the common people.

It would make it impossible to finance economic reconstruction through the 
mobilisation of Yugoslavia's own domestic resources. The country would be 
in a straightjacket.

What would International Monetary Fund-Type Reforms mean for Yugoslavia?

If the "democratic opposition" came to power they would enforce 
International Monetary Fund economic medicine. That's what they say in 
their Program.

But would this be the same medicine that the Fund (including some of the 
people who lead the G-17) have prescribed for Russia, Bulgaria and Ukraine?

Co-operative countries

Russia, Bulgaria and Ukraine co-operated fully with Washington. As nations, 
they never resisted being turned into colonies. Was the West merciful?

Consider Russia. During the first year that the reforms were applied, 1992, 
wages collapsed by 86 per cent. And in many of the countries of the Balkans 
and Eastern Europe, economic activity has been cut in half, even if it was 
low before.

And these are co-operative countries. As everyone knows, the US is very 
annoyed with Yugoslavia. Yugoslavia has not been a good slave. It has not 
kissed the hand of the bombers.

History shows that if the Monetary Fund gets hold of a country that has 
been rebellious the treatment is vicious. And we are not talking about 
major rebels, like Yugoslavia. We are talking about very moderate rebels, 
like Peru.

In Peru, the government of President Alan Garcia (1985-1990) refused to do 
some of what the International Monetary Fund ordered it to do.

In 1985, it decided to pay international debts at a reduced rate. It 
instituted an economic program that would help (instead of destroying) the 

The country was immediately put on a black list by the International 
Monetary Fund. This disrupted Peru's foreign trade.

Enter Professor Alberto Fujimori. It was the 1990 elections. With help from 
Washington, Peru was having economic problems, so many people wanted a 
change. Fujimori was an unknown. People felt he was "honest" and 
"promising". He led a tiny party that had never held power. He seemed to be 
squeaky clean.

With Washington's help, he was the top runner-up in the 1990 elections.

The electorate chose him over the other candidates "because we did not know 
who he was" and "we thought he was honest" and "maybe if we put in someone 
Washington likes they will go easy on us." They did not understand. 
Washington has no mercy.

Fujimori of course caved in to the International Monetary Fund's demands.

What followed was the most deadly economic "reform" in Latin American 
history. From one day to the next, the price of fuel increased by 31 times 
(2,968 per cent) and the price of bread increased more than 12 times (1,150 
per cent).

People could no longer afford to boil water. A cholera epidemic broke out.

The social consequences were devastating.

An agricultural worker in August 1990 was paid US$7.50 a month. That was 
enough to buy two hamburgers and a drink at McDonalds. Consumer prices in 
Lima were higher than New York.

Real earnings dropped by 60 per cent. By mid-1991 the standard of living 
had declined by 85 per cent.

And this was the just beginning of ten years of deadly reforms under 

And remember, Peru didn't really do anything. Just resisted a few 
International Monetary Fund Measures. But Yugoslavia? Yugoslavia has been 
driving the German Establishment (and now the Americans) crazy for 100 
years or more.

Washington and Berlin would like nothing more than to make Yugoslavia an 
example of total enslavement, to show people what would happen to them if 
they were to resist.

Haven't the US and Germany made this perfectly clear in Kosovo? A gangster-
fascist regime has been installed. And Western leaders are fully aware of 
the horror they have wrought in Kosovo.

UN Secretary General Kofi Annan received a special report about this. The 
report was discussed by the British newspaper, the Observer:

"Murder, torture and extortion: these are the extraordinary charges made 
against the UN's own Kosovo Protection Corps in a confidential United 
Nations report written for Secretary-General Kofi Annan.

"The KPC stands accused in the document, drawn up on 29 February, of 
`criminal activities  killings, ill-treatment/torture, illegal policing, 
abuse of authority, intimidation, breaches of political neutrality and 
(quoted in How Will You Plead at your Trial, Mr. Annan?
at )

What would Washington do if its G-17 employees got hold of Yugoslavia? They 
would institute the most extreme economic "reforms" to devastate the 

Prices would go sky high; farmers would lose their land; businesses would 
be bought up and closed down.

In Hungary they privatised the only light bulb factory and shut it down so 
that now everybody has to buy bulbs from the US company, General Electric.

In Yugoslavia they would take away the lamps. People would be reduced to 

This kind of suffering produces ethnic tension. Washington would whip this 
up by sending in their UCK (KLA) fascist terrorists. Why does Washington 
keep the UCK in power in Kosovo? Because they want to use them again. For 
what? They are incapable of fighting a real army. But they are capable of 
terrorising civilians.

A Washington-controlled government would bring in NATO troops to "help keep 
order". The troops would never leave. The hunt for imaginary war criminals 
would go on, a thousand times worse than it is in the Bosnian Serb 

Croatians, Bosnian Muslims and ethnic Albanians who fled to Serbia to 
escape fascist persecution would be put on the list of phony war criminals.

All loyal Yugoslavs would have to pay for their (imaginary) crimes so that 
"healing can begin."

Every effort would be made to humiliate the people, to break their spirit, 
and to eliminate potential leaders of resistance.

Do you know what the United States did a few years ago to Vietnam? When the 
Vietnam War ended, the US Government ordered an embargo which did Vietnam a 
lot of harm, economically. A few years ago, Washington agreed to lift the 

In exchange, Vietnam had to agree to pay the debts of the former South 
Vietnamese Government, a puppet government controlled by Washington.

Most of its debt came from borrowing money (from the US) to buy weapons 
(from the US) to kill its own people. And now Vietnam is being forced to 
pay this "debt" to Washington, after Washington had invaded Vietnam and was 
driven  out, leaving two million Vietnamese dead.

The "democratic" opposition says that if they can just get into power 
everything will be normal. Washington would treat the Yugoslavs right. Sure 
they would. Just the way they treated the American Indians.

* * *
Michel Chossudovsky is Professor of Economics, University of Ottawa, author Globalization of Poverty Third World Network, Penang, Zed Books, London, 1997 and Jared Israel, editor,'s Clothes). Via Global Reflexion Amsterdam The Netherlands

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