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Who Are the G-17 economists? They are the neoliberal planners behind the Yugoslav 'democratic' opposition...

The International Monetary Fund And The Yugoslav Elections

(This article has been reprinted in newspapers in Yugoslavia, Germany, Italy, Korea, Australia and perhaps elsewhere. A shortened version, entitled 'Lethal Medicine', was published by the leading Swedish newspaper, 'Aftonbladet.' The article was read several times, in its entirety, on Yugoslav TV.)

by Jared Israel and Michel Chossudovsky (9-28-2000)
[Emperor's Clothes]

"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.

How the International Monetary Fund and World Bank operate: "First, they force governments to do away with any social protections - subsidized food or rent, free transportation, free medical care. Second, they 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." (From the text below)

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 )

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 tell, 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 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)

The National Endowment for Democracy (a sort of CIA spin-off) 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 consult for the World Bank and attend World Bank-organized meetings.

The "democratic" opposition works with the G-17. It has endorsed the G-17 Economic program. If it got into power, the G-17 economists would be in charge of remaking Yugoslavia. This is not a guess. The opposition Program calls for working closely with the International Monetary Fund. The Fund always insists that its men run the show. That is not open for negotiation. And the IMF's men can conveniently be found among the leading members of G-17.

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 is not simply a group of economists. It is a network. The International Monetary Fund and World Bank are using this network to impose their policies on Yugoslavia. Meanwhile they tell everyone the fiction that G-17 is a home-grown alternative.

G-17 Coordinator Mladjan Dinkic is right now on his way to Bulgaria to draw up a "Letter Of Intent" with his colleagues at the International Monetary Fund. This will be the first step toward enforcing IMF "economic medicine." "We hope they will accept it," Dinkic said to a Pacifica Radio reporter.

Economic Medicine Worse than Russia and Ukraine

What happens when the IMF takes over a country?

One of the writers of this article, Prof. Chossudovsky, studies the International Monetary Fund and World Bank and what their policies do to countries. The G-17 Economic Program contains the same measures they forced on Russia, the Ukraine, Bulgaria and Peru, and many others. The results: social and economic devastation.

But Yugoslavia has resisted NATO's attack on its national sovereignty. So the IMF will hit Yugoslavia with even harder economic medicine.

Forced Bankruptcies and Mass Misery

G-17 economists like to talk about "free markets" and "privatization." But in fact their International Monetary Fund wrecks 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" and it is standard practice in the Balkans and Eastern Europe.

A case in point: 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 what was he doing before the breakup of Yugoslavia?

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 resulted from "market mechanisms" or "incompetent government." In fact it resulted from a World Bank plan.

People in Ante Markovic's government pulled the strings. In 1989-90, Professor Vukotic worked with his Cabinet colleagues and an army of Western lawyers and consultants. They imposed 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 who have already served the IMF and World Bank before. People like Professor Vukotic. Vukotic could finish the job he started in 1989 under the World Bank, a job ironically 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!)

Giving Montenegrin Property to Foreign Speculators

While Prof. Vukotic hopes to regain 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 found 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 turning Montenegrin property into foreign profit.


Professor Vukotic has also been vocal on the political and economic status of Kosovo. Last June NATO marched into Kosovo, and the UCK (or Kosovo Liberation Army) 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 Kosovo was devastated, Professor Vukotic said: "Kosovo should also have its own currency." That's virtually the same as saying Kosovo should be a separate country. ('Associated Press,' June 26, 1999)

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 the 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. It was imposed on the Ukraine, already devastated by earlier IMF-World Bank reforms.

What happened to the Ukraine? The Ukraine disaster started in the fall of 1994. 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. That's a very small amount for a country. "Reforms" began in mid-October, 1994. The IMF ordered the Ukrainian authorities to end State controls over the currency exchange rate. This led to the collapse of the currency. The price of bread shot up overnight - 300%. Electricity - up 600%. Public transportation - up 900%.

The population was forced to buy necessities based on "dollarized" prices. Meanwhile people were earning less than ten dollars a month. Credit was frozen. With electricity prices sky high and no credit, public and private industries were destroyed. The international speculators moved in like sharks in a frenzy.

Then in November 1994, World Bank negotiators were sent in to further "advise" the government. This time they overhauled Ukraine's agriculture. The grain market was deregulated. This allowed the US to dump grain surpluses on the Ukraine market. 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 now a starving political protectorate of the US and Germany. And remember, Ukraine never did anything to offend the U.S. It didn't rebel for 10 years, like Yugoslavia.

The Case of Bulgaria

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 and terrible suffering. 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 announce, much economic progress is being made. Perhaps when all the Bulgarians are dead they will announce the achievement of perfection.

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 the requirement for real independence. No, said Bogetic, that is the "worst possible solution". So this "independence" really means "colony"!

Bogetic would be the likely candidate for Yugoslav Central Bank Governor if the "democratic" opposition were to win. He'd do the same thing he's doing in Montenegro. He'd establish a colonial style currency board linked to the Deutschmark. Then monetary policy would be controlled by the country's creditors. This would be excellent for the creditors but very bad for the common people including local businessmen and farmers. 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.

If the "democratic opposition" were to come to power they have said they would introduce International Monetary Fund economic medicine. That's what they say in their Program. But would this be the same medicine that the IMF has 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, which was 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. 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 International Monetary Fund Responds

The country was immediately put on a black list by the IMF. This disrupted Peru's foreign trade. It damaged the economy. It produced discontent.

Enter Professor Alberto Fujimori.

It was the 1990 elections. With help from Washington, Peru was having economic problems. Many people wanted change. Professor Fujimori was unknown. People felt he was "honest" and "promising". He led a tiny party that had never held power. He was the winner 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 bread increased more than twelve times (1,150 per cent). The price of fuel increased by 31 times (2,968 per cent) with the result that 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.A.

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 )

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. What are they good for?

They are good for driving 350,000 unarmed civilians from their homes, kidnapping hundreds of people, killing hundreds or perhaps thousands. They can be used again in Serbia north of Kosovo - if the US gives them the nod.

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 postwar 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. This was a puppet regime set up by Washington. It had gone into debt borrowing money from the US, money which was mainly used 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 also wants to "normalize" Yugoslavia's relationship to the IMF 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, NATO military repression is coordinated with actions of the IMF and the World Bank.

Under the IMF, the country would be transformed into a protectorate. "Economic warfare" would devastate the society. The Yugoslav people have done remarkable work rebuilding what was destroyed by the NATO bombing last year. But the IMF working through G-17 economists would work to liquidate national industry. (We have seen a sample of this in Kosovo with the Trepca mining complex. It was handed over on a silver platter to the powerful "Washington Group", a US based construction, mining and defence contractor. The local employees have been discharged.)

This economic assault would tend to increase ethnic tensions, providing opportunities for provocateurs. NATO could use the excuse of "age old ethnic hatreds" to bring troops into the country. Meanwhile, as indicated in the G-17 Program, the IMF would order cuts in military spending. With a weakened army it would be much more difficult to deal with the influx of Kosovo Liberation Army terrorists.

Of course, the Yugoslav people could and undoubtedly would organize to oppose these measures. But people should be aware that this can be the result of letting the International Monetary Fund get a grip on Yugoslavia.


Further Reading

For more on the attack on Yugoslavia, see "U.S. Arrogance and Yugoslav Elections," at


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