Serbia after Milosevic

Louis Proyect lnp3 at
Thu Mar 22 11:10:44 MST 2001

Dollars and Sense, Jan./Feb. 2001

Serbia After Milosevic: Let the Neoliberal Games Begin

By Jeremy Scahill

Not everyone is taking time to smell the flowers. A small group of
neoliberal economists, in collaboration with key politicians from the new
power structure, are working diligently to push through stringent economic
reforms. They are meeting almost no public resistance, while enjoying
praise from a largely uncritical domestic media (which is receiving
substantial sums of money from private sources in the West).

Meet the men of G-17 (short for "Group of 17 Economists"), a Belgrade-based
group of maverick capitalists who have almost overnight soared to become
the new economic power brokers in Yugoslavia. Its leaders wear expensive
suits and use cocky rhetoric. "We want to implement Polish shock therapy,
Scandinavian social security systems, and Slovenia's model of
privatizations," says Mladjan Dinkic, a top G-17 official and new governor
of the Yugoslav Central Bank. "We will start to make an economic
environment favorable for private and other investments." The promise of
social security seems disingenuous, considering how G-17 intends to proceed.

The economists of the "new" Yugoslavia vow to bring a swift death to what
they call "the old political establishment." That seems benign enough, if
they are talking about crony capitalism, corruption, and economic
mismanagement, all of which were prevalent under Milosevic. But in
Yugoslavia, killing the old system also means ending state subsidies and
price controls. The Milosevic government, for all its corruption, protected
public utilities, public transportation, and energy as well as basic
consumer goods, keeping prices affordable to average people. G-17's
official program, currently being enacted by the new government, threatens
to "abolish all types of subsidies." "This measure must be implemented
without regrets or hesitation," the program states, "since it will be
difficult if not impossible to apply later, in view of the fact that…strong
lobbies may appear and do their best to block these measures."

Within days of the new government taking office, the effects of these
measures sharply kicked in. The prices of basic food items doubled and
tripled: A gallon of milk rose from $1.01 to $2.32; a kilogram of sugar,
from $.25 to $.55; and a liter of vegetable oil, from $.15 to $.71.
Gasoline prices skyrocketed from $1.15 to $2.27 a gallon. These were
devastating jumps, considering that the average monthly wage is about 3,000
Yugoslav dinars, the equivalent of U.S. $45. Economists appeared on the
"new" state-run media to explain that the Milosevic government had kept
prices "artificially low" to quell "dissatisfaction with his regime."

In fact, it was after the new ruling coalition, the Democratic Opposition
of Serbia (DOS), began seizing state-run factories that the system of
controls collapsed and prices started to shoot up. These takeovers, which
have subverted the authority of existing worker-management and
state-management structures, are unconstitutional. Also, many institutions
were run by the Serbian Republic, not the federal government. Since the DOS
currently holds power only at the federal level (as of this writing), it
technically has no right to seize those enterprises. The new Minister of
Foreign Trade (and head of G-17) Miroljub Labus concedes that these actions
are illegal, but, he says "they are needed to consolidate victory over Mr.

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Louis Proyect
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