Who Are the G-17? They are the "neoliberal planners" behind the Yugoslav "democratic" opposition...
THE INTERNATIONAL MONETARY FUND AND THE YUGOSLAV ELECTIONS
by Michel Chossudovsky and Jared Israel, October 2000
"We want to be open colony and open society." G-17 coordinator VESELIN VUKOTIC interviewed on "The News Hour with Jim Lehrer", US Public Television, July 14, 1999
Recently there's 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. (For a discussion of that Program, see "US Arrogance & Yugoslav Elections" at www.emperors-clothes.com/engl.htm)
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 U.S. Chamber of Commerce." But in fact it is "a core institute" of the National Endowment for Democracy which 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). This is why 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) Thus the National Endowment for Democracy (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.
Three of the leading members of G-17 are Washington-based staff members of the International Monetary Fund and World Bank. They are, Dusan Vujovic, Zeliko Bogetic and Branko Milanovic. In addition, G-17 coordinator Professor Veselin Vukotic has worked closely with the World Bank. He was in charge of the World Bank "bankruptcy program" in Yugoslavia during 1989-1990, which led to the devastation of the Yugoslav economy and set the stage for the breakup of Yugoslavia. While on IMF/WB payrolls, they are heavily involved in politics in Serbia and Montenegro. Other members of the G-17 are involved in numerous "consultancies" and regularly attend meetings organized by the World Bank.
If the "democratic" opposition, which works with and has endorsed the G-17 Economic program, got in power, the G-17 economists would be in charge of transforming Yugoslav institutions. This is not a matter of speculation. The "democratic" opposition Program, written by the G-17, calls for working closely with the International Monetary Fund and the Fund invariably insists that its men (who conveniently can be found among the leading members of G-17) run the show. That is not open for negotiation.
On their Website, the G-17 states that their 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." This constitutes a network which the International Monetary Fund and World Bank are using to impose their policies on Yugoslavia while presenting the fiction that G-17 is a home-grown alternative. But G-17 Coordinator Milo Dinkic has confirmed that the first thing an opposition government would do would be to prepare a "Letter of Intent" for IMF approval outlining the economic reforms to be undertaken. "And we hope they will accept it".
Let us take a look at three of the leading G-17 economists. Their record is most disturbing. One of the writers of this article, Prof. Chossudovsky, studies the effects of the economic "medicine" imposed by the International Monetary Fund and World Bank. 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 Yugoslavia has resisted NATO assaults on its national sovereignty, the IMF is likely to strike with a vengeance. The "economic medicine" in the Yugoslav case would be much worse.
G-17 economists are fond of phrases like "free markets" and "privatization," but their International Monetary Fund "reforms" wreck countries. First, they force governments to do away with any social protections - subsidized 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 leveraged buyout speculators and other powerful foreign economic interests. They purchase the businesses at rock bottom prices. This is called "Privatization through Liquidation" which is standard practice in the Balkans and Eastern Europe.
A case in point is Yugoslavia, 1989.
The elder statesman of the G-17 is Professor Veselin Vukotic. Presently he is one of the economic brains behind Montenegrin secessionism. But in 1989 he was appointed Minister of Privatization under Yugoslav Premier Ante Markovic.
Yugoslavs have bitter memories of 1989-1991. 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 people in the Ante Markovic government who were pulling the strings. In 1989-90, Professor Vukotic worked with his Cabinet colleagues 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 carefully selected for bankruptcy or liquidation. They were forced to meet impossible conditions. In this way, the World Bank, through the Ministry of Privatization headed by Professor Vukotic orchestrated the breakup of fifty percent of Yugoslav industry. 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 up.
And now this same Professor Vukotic, a key man in the 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 Professor Vukotic (who have already served the Washington based institutions). So Vukotic could finish the job he started in 1989 under the World Bank 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!)
While Prof. Vukotic aspires to gain cabinet status in a "democratic" opposition government in Yugoslavia he has also been working closely with the secessionist government of Montenegro. Montenegrin President Milo Djukanovic, his former student, had put him in charge of the privatization program which is auctioning off state property in Montenegro. Recently we discovered a US Commerce Department advertisement on the internet. 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 privatization. The managers would control "funds" that would take over ownership of what is now public property. The Managers could "restructure" these privatized 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 U.S. Commerce Department celebrates the transformation of Montenegrin property into foreign profits.
Professor Vukotic has also been vocal on the political and economic status of Kosovo. 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. While this was happening, (Associated Press, June 26) Professor Vukotic stated that: "Kosovo should also have its own currency" which is tantamount to saying that Kosovo should be a separate country. The Deutschmark was adopted as legal tender and almost the entire banking system in Kosovo was handed over to Germany's Commerzbank A.G. And the G-17 economists applaud…
The G-17 on IMF-World Bank Payroll
One of the most prominent members of the G-17 is Dr. Dusan Vujovic, a senior economist at the World Bank. He acts as a link between the G-17 and Washington. He has been very active overseeing "reforms" in so-called "transition countries". In August 2000, Vujovic was put in charge of negotiating one of the World Bank's most deadly economic packages, imposed on the Ukraine, already devastated by previous IMF-World Bank reforms.
What happened to the Ukraine? The Ukraine disaster started in the fall of 1994 in Madrid, Spain at the IMF-World Bank 50th anniversary meetings. Prime Minister Vitali Masol signed an agreement with the International Monetary Fund. In exchange for accepting "economic shock treatment" Ukraine got a 360 million dollar 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%. Electricity shot up - 600%. Public transportation - 900%.
"Dollarised" prices were forced on a population with earnings below ten dollars 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 deregulated. 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 U.S. 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 U.S., unlike Yugoslavia.
Another key member of the G-17 is Dr. Zeliko Bogetic who holds a senior position at the International Monetary Fund. The International Monetary Fund has been the doctor in many economic cures. The patient always dies. In 1994-96, Bogetic participated on behalf of the IMF in forcing a structural adjustment program (SAP) on Bulgaria. All social defenses - price controls, subsidized 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 two dollars a month. The World Bank admits that 90 percent of Bulgarians now live below the poverty line but, they say, much economic progress is being made. Apparently perfection will be achieved when there are no Bulgarians left alive.
In early 2000, Bogetic was dispatched by the International Monetary Fund to Podgorica, Montenegro to advise the pro-secessionist government of President Milo Djukanovic. Bogetic was to help set up a currency board modeled 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 Bank. 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.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 mobilization 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 and who currently are also staff members of the International Monetary Fund and the World Bank) have prescribed for Russia, Bulgaria and Ukraine?
Russia, Bulgaria and Ukraine cooperated 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 percent. And in many of the countries of the Balkans and Eastern Europe, economic activity has been cut in half. And these are cooperative countries. As everyone knows, the U.S. 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 International 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 economy. 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 was the top vote getter in the 1990 elections.
Once in office, Fujimori 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 twelve 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 $7.50 a month (US). 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 compared to the levels in the 1970s.And this was the just beginning of ten years of deadly reforms under Fujimori.
And remember, Peru didn't really do anything. Just resisted a few International Monetary Fund Measures. But Yugoslavia? Yugoslavia resisted colonial domination by Germany during World War II and now by the U.S. Washington and Berlin would like nothing more than to make Yugoslavia an example of what happens when you resist. That is, they would like to make it a "model" protectorate.
Haven't the U.S. and Germany made this perfectly clear in Kosovo? A gangster-fascist regime with links to the drug trade 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 hate-speech'. " (quoted in "How Will You Plead at your Trial, Mr. Annan?" at http://emperors clothes.com/news/howwill.htm) What would Washington do if it's G-17 employees got hold of Yugoslavia? They would institute the most extreme economic "reforms". Prices would go sky high; farmers would lose their land; businesses would be bought up and closed down.
This kind of suffering produces ethnic tension. Washington would whip this up by sending in their UCK (KLA) 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 terrorizing 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 Republic. 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.
The example of post-war relations between the US and Vietnam is informative. When the Vietnam War ended, the US government ordered an embargo which seriously hurt Vietnam, socially and economically. A few years ago, Washington agreed to lift the embargo following a secret agreement under the Paris Club of official creditors. Vietnam agreed to pay the debts of the former South Vietnamese government, a puppet regime controlled by from borrowing money from the US to buy weapons from the US to kill Vietnamese. And now Vietnam must repay Washington this odious debt.
While Kostunica presents himself as a nationalist critical of Nato, he wants to "normalise" Yugoslavia's relationship to the IMF, the United Nations and the OSCE. But these are "sister institutions", they work together in one big family. NATO is the "military arm" of Western financial interests. It does not operate independently but works in close consultation with Wall Street and the IMF. In Bosnia and Kosovo, the various military operations under NATO were closely coordinated with appropriate "economic interventions" under the IMF and the World Bank.
Under a IMF-G-17 mandate, the country would be transformed into a protectorate on the model of Bosnia and Kosovo. The ultimate objective is "conquest", "economic warfare" is the instrument. What was not destroyed as a result of the 1999 NATO bombings would be dismantled under a new bankruptcy program devised by the International Monetary Fund and implemented by the G-17 economists. Under a G-17 economic mandate, national industry would be confiscated by foreign capital as occurred in Kosovo with the Trepca mines--which was handed over on a silver platter to the powerful "Washington Group", a US based construction, mining and defence contractor. In this process, Yugoslavs – whose standard of living has already collapsed as a result of economic sanctions and previous IMF ministrations – would be precipitated into abysmal poverty.
Michel Chossudovsky is Professor of Economics at the University of Ottawa. He is author of The Globalization of Poverty, Impacts of IMF and World Bank Reforms, TWN, Penang and Zed Books, London, 1997. Jared Israel is editor of Emperors Clothes.
Michel Chossudovsky
Department of Economics,
University of Ottawa, Ottawa, K1N6N5
Voice box: 1-613-562-5800, ext. 1415, Fax: 1-514-425-6224
E-Mail: chossudovsky
videotron.ca; (Altern. E-mail: chossudovskysprint.ca)