Kostunica Coalition Drives Up Prices & Blames...Milosevic

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Tue Oct 24 18:27:34 MDT 2000


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http://emperors-clothes.com/articles/chuss/triples.htm

Kostunica Coalition Drives Up Prices & Blames...Milosevic

by Michel Chossudovsky (10-19-2000)

www.tenc.net
[Emperor's Clothes]

"Immediately after taking the office, the new government shall abolish all
types of subsidies. This measure must be implemented without regrets or
hesitation, since it will be difficult if not impossible to apply later, in
view of the fact that in the meantime strong lobbies may appear and do their
best to block such measures... This initial step in economic liberalization
must be undertaken as a 'shock therapy' as its radical nature does not leave
space for gradualism of any kind." (From the G-17 'Program of Radical
economic Reform' www.g17.org.yu/english/programm/programr9.htm )

The Kostunica government has already started to implement deadly IMF
'economic medicine'. The first step consisted in lifting price controls on
basic consumer goods, fuel and services. Prices have increased, as much as
three times, causing extreme hardship for Yugoslav working people.

The country had been impoverished by years of economic sanctions, not to
mention the IMF reforms applied in 1989-90 before the break-up of federal
Yugoslavia. But a system of State subsidies and price controls nonetheless
prevented a total collapse in the standard of living, such as occurred in
neighbouring Bulgaria.

That system of price controls is now being disbanded by the DOS
semi-government on orders of the International Monetary Fund (IMF):

"..when Kostunica supporters forced out most managers in state-owned shops
and factories and put their own people in charge, that system of controls
collapsed and prices immediately shot up. The cost of cooking oil has more
than tripled since last Friday, when Milosevic announced that he was stepping
aside.. The prices of sugar and cigarettes are about to jump again. After
Kostunica's supporters forced out Milosevic-era factory directors, the new
ones are moving quickly to make their plants more profitable. ('Los Angeles
Times', October 15, 2000)

Freezing the Money Supply

To make sure the government could not finance subsidies, the G-17 economists
forcefully took control of the Central Bank and immediately imposed a freeze
on money creation ("printing of money"). This held up the outflow of cash
which the government needed to sustain price controls on basic consumer
goods.

At first, the DOS announced that 'removing controls' was a great achievement.
And the Western media applauded Kostunica's determination, presented in sharp
contrast to the supposedly devious Milosevic:

"One of the ways Milosevic tried to buy support among his impoverished people
was by using price controls to keep down the cost of basic foods such as milk
and cooking oil." ('Los Angeles Times', October 15, 2000).

According to interviews we did with Belgrade residents today, the price of
milk has almost doubled from 8 to 14 dinars per liter, largely affecting
children; cooking oil has more than tripled, from 13.5 to 55 dinars; sugar
has gone from 8 to 45 dinars. These interviews support the earlier 'Los
Angeles Times' report.

Shoppers are commenting, "Ahh, democratic prices!" The Serbian use of black
humor masks rising anger among ordinary people.

Faced with this simmering rebellion, Kostunica supporters, including the G-17
economists, have performed a dazzling flip:

"The new leadership [meaning Kostunica's DOS coalition] has accused Slobodan
Milosevic's supporters of trying to causing chaos on the markets with a
sudden liberalisation, which they say could undermine the fledgling
democracy. The Serb republic's government, still dominated by Milosevic
loyalists, has started allowing the liberalisation prices of basic goods that
had been state-controlled. But reformists said the liberalisation could cause
suffering among a population used to state-fixed prices, and some even called
for the government to regain control of part of the market." (AFP 16 October
2000)

The Western media, which just a few days earlier congratulated Kostunica for
removing price controls, now uncritically trumpets the line that it's all
Milosevic's fault:

"'This decision by the Serbian government is a kind of shock therapy,' said
Branko Radulovic of the G-17, a group of economists close to the opposition
Democratic Opposition of Serbia (DOS). 'These measures will cause a lot of
suffering among the people,' Radulovic warned.

"G-17 director Mladjan Dinkic went further. The move was an 'attempt to
create chaos on the market and provoke anger among the people directed at the
DOS,' he said.

"'This revenge by the government will not succeed, but if an interim expert
government is not formed soon we will have a lot of trouble controlling
prices,' he said..

"To counter this 'sabotage' Dinkic said he favoured a 'return to regulations
of prices for certain basics as well as imports of cheaper equivalents from
abroad to tackle unjustified price hikes.'" (AFP 16 October 2000, my
emphasis.)

G-17 economist Dinkic is worried about "suffering"? But isn't a tolerance for
mass suffering the very basis of the IMF program which Mr. Dinkic negotiated
in secret meetings with the IMF in Bulgaria, shortly after the elections of
24 September?

While in Bulgaria, Dinkic also met with representatives of NATO countries. He
was told that Yugoslavia would have to eliminate price controls as a first
step towards establishing 'a free market'. This is called 'price
liberalization' and it is often an IMF precondition for loan negotiations.

"'This revenge by the [pro-Milosevic] government will not succeed, but if an
interim expert government is not formed soon we will have a lot of trouble
controlling prices,' he said. To counter this 'sabotage' Dinkic said he
favored a 'return to regulations of prices for certain basics as well as
imports of cheaper equivalents from abroad to tackle unjustified price
hikes.' (Ibid.)

Note that under the guise of lowering prices Dinkic is talking about shipping
in cheap 'equivalents'. In other words, dumping. This practice has destroyed
local businesses and farms in Bulgaria and other countries.

Prior to the Oct. 5 coup d'état, the government made some attempt to protect
domestic producers and ensure (under very difficult conditions) the
distribution of essential food staples, fuel and electricity at controlled
prices. The Kostunica coalition has abolished price controls and seems to be
using the suffering it has created to justify the dumping of low priced
(often inferior) food and products, thus destroying small producers.

If Dinkic really wanted to go back to the price controls in existence prior
to the elections why did the ''democratic" gangs who illegally seized state
stores abolish all the price controls? In fact, Dinkic wants to have it both
ways: get rid of the controls and try to blame the legal government for this
action, taken by his men and himself. For it is Dinkic himself who has seized
control of the Central Bank, and quite illegally. (See: "Yugoslav Central
Bank Tries to Stabilise Public Finances", By Gordana Filipovic,
'Reuters.', Oct 12, 2000)

Concerning the rapid increase in prices, the program drafted by Mr. Dinkic's
G-17 Plus is rather explicit:

"Immediately after taking the office, the new government shall abolish all
types of subsidies This measure must be implemented without regrets or
hesitation, since it will be difficult if not impossible to apply later, in
view of the fact that in the meantime strong lobbies may appear and do their
best to block such measures... This initial step in economic liberalization
must be undertaken as a "shock therapy" as its radical nature does not leave
space for gradualism of any kind. (From the G-17 'Program of Radical economic
Reform' www.g17.org.yu/english/programm/programr9.htm )

The program they wrote attacking Milsoevic said they would do it.

They have driven Milosevic out and begun to do it.

Naturally it is Milosevic's fault.

Further reading

For more on the IMF-G-17 connection see "The IMF and the Yugoslav Elections"
by Michel Chossudovsky and Jared Israel at
http://emperors-clothes.com/analysis/1.htm

For details on the creation and funding of a U.S. controlled apparatus in
Yugoslavia, see 'U.S. Arrogance and Yugoslav Elections' by Jared Israel,
Prof. Michel Chossudovsky, Karen Talbot, Nico Varkevisser and Prof. Petar
Maher.
http://emperors-clothes.com/engl.htm

For independent verification of this 'funding' process, see 'NY Times'
Confirms Charge: U.S. Gov't Meddles in Yugoslavia' With comments by Jared
Israel, editor, Emperor's Clothes. In this article, the 'N.Y. Times' refers
to the opposition getting 'Suitcases full of cash.'
http://emperors-clothes.com/news/erlang.htm

'Emperor's Clothes Interviews Radio B292'
Revealing interviews by Jared Israel with two staff members at the U.S.
"independent" radio station in Belgrade.
http://emperors-clothes.com/interviews/emperor.htm

'Criticism of Emperor's Clothes on the Yugoslav Elections, with Reply'
Prof. Robert Hayden & Jared Israel
http://emperors-clothes.com/letters/yugoltr.htm

'U.S. Law Passed by House of Representatives on Funding Yugo Opposition and
Harsh Terms for Lifting Sanctions' at http://emperors-clothes.com/news/HR.htm

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