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Capitalism at the crossroads and the opportunity of the Yugoslav crisis



Capitalism at the crossroads and the opportunity of the Yugoslav crisis



The Yugoslav crisis has spanned the entire post cold war transition period for capitalism. This crisis has given the US an opportunity to reshape world institutions and rebuild its hegemony over the world capitalist system. The war over Kosovo was the high point in US strategic operations to maintain its hegemony over Europe so far in the post-Soviet era. This article looks at the Kosovo situation from two perspectives, that of US hegemonic interests and that of localized struggles within the context of global capitalism. In doing so it attempts to undermine the dominant mystifying stories told about the Yugoslav crisis and our present world system, many of which are often acritically accepted by anarchists and those on the left. The rhetoric that frames globalization as a lessening of government control misses the obvious reality that this lessening of control applies only to capital and not to people. The process of ‘globalization’ of capital is achieved through an alliance between state and capital, just like its close cousins, imperialism and colonialism—only now the state is retooled.

Global context:

With the fall of the Soviet Union, the old global institutions set up to manage capitalism and the international state-system were no longer tuned to operate smoothly with global capitalism. While the US was certainly in the dominant position economically and militarily in the post-Soviet world, US political hegemony over Europe was weakening. The Soviet threat had provided the US with the role of protector of Europe and this allowed the US to gain political control in Western Europe in order to maintain and extend its interests (especially the direction of accumulation strategies) on the continent. Thus NATO was the institutional key to US hegemony in Europe. The collapse of the Soviet Union in 1990 brought about a radical shift in the balance of power. The US lost its primary role in Europe. At the same time, European countries, Germany in particular, began to pursue a more independent policy. US allies were beginning to threaten US interests. Germany, for example, was well placed to take advantage of the opening of Eastern Europe to capitalist investment. The UN Security Council was another institution of the old post-war order that the US needed to reconfigure. In response, the US has taken on an activist policy in order to reshape its role in respect to Europe and the global economy. The crisis in Yugoslavia has been the primary terrain on which the US has attempted to carve out a new, but still dominant, position. In particular, the US has undermined the role of the UN Security Council and expanded US authority to act independently of any international mandate. European countries also tried to stake out a position independent of the US on what action to take in Kosovo, but they were out-flanked by the US. Not only did Kosovo offer the US an opportunity to reassert its hegemony, but, in doing so, the US also managed the situation so as to maintain the need for NATO. Therefore, we have to be weary of arguments that make the US war in Kosovo seem like an inept or evil response to local events. The reality is that the US used the Yugoslav crisis as an opportunity to reorganize and reinvigorate its role in the world. For the US, the war was a strategic response to a much greater problem, that of maintaining its hegemony over the global economy. It was, therefore, part of the same process that created the World Trade Organization and the revamping of international trade laws.

The retooling of global institutions within this new context includes the retooling of the nation-state. It does not mean that the nation-state is disappearing--it certainly still has an extremely important role in the new- world order--only that its role is changing. This is something that anarchists and anti-authoritarians must theoretically map out. We must also not fall back on a simplistic position of supporting the old system of nation-states against the new--as some anarchists have proposed--as if the state could ever be used to overthrow the capitalist economy.

The IMF, capitalist rationalization and the mediating force of Nationalism

The story of Serb and Albanian nationalism is usually told in terms of an eternal conflict that periodically bubbles to the surface. The explosion of nationalism in the late 80s and 90s is explained as a natural outpouring of nationalism that had been suppressed by the Communist State. Here, we tell a different story. One that shows that there is nothing natural about nationalism, but instead, that the violence that occurred in Yugoslavia was the combined result of global capitalist forces, local working-class action, and Serb state reaction. The US took advantage of this situation to pursue its global strategic goals. In order to denaturalize the recent Yugoslav ethnic conflict in recent years, we have to place the story in this context and spell out the history of these combined forces.

In the 1970s, the specter of nationalism rose in Yugoslavia. This was due largely to the contradictions of ‘Market Socialism,’ which allowed a very uneven development of the Yugoslav economy. Tito responded in 1974 by recentralizing the state and economy. However, at the same time the Yugoslav economy was in trouble; it was much more exposed to the international economy than other ‘Communist’ countries and was running a huge deficit that was paid for by foreign borrowing. Due to the high cost of money since the 1976 oil crisis, the cost of financing this debt shot up tremendously. By 1980, Yugoslavia had a foreign debt of $14 Billion, they joined the IMF that year in order to finance their debt. Therefore in the early 80s, the government tried to cut imports and raise exports. At the same time, more and more corporations began operating at a loss. The less developed regions of Yugoslavia (Kosovo, Montenegro and Macedonia) suffered the worst. Unemployment began to rise.

In the early 1980s, the IMF imposed strict conditions on Yugoslavia in return for a postponement on a small portion of the national debt. (This process that the IMF began must be seen as part of a conscious strategy by the US and probably Europe to bring the Yugoslav economy firmly under the control of global capitalist institutions.) Under these conditions, most prices were to be set by the market, interest rates were hiked, the Yugoslav currency (the dinar) was devalued, and the level of consumption by the average Yugoslav was to be cut drastically. The terms for foreign business investment were also relaxed. And, with the devaluation of the dinar, labor power became very cheap. Foreign businesses, especially from West Germany, Italy and Austria, set up small factories there to exploit the situation created by the IMF. The rise in interest rates meant that many more companies fell into bankruptcy and unemployment rose even further. As with all IMF restructurings, in Yugoslavia it was the working class that was to pay for the debt. Wage controls, which squeezed the working class, were set by the federal government. This was the final blow to the already weakened ‘self-management’ system.

The IMF operated through the central government and encouraged the centralization of control over the economy at the federal level. And it was through the federal government that the IMF decided which region was going to prosper and which region was not, perpetuating preexisting inequalities between republics. This was one cause for the resurgence of nationalism in the mid-to late 1980s. By 1984 many workers were being paid primarily in food. There was not much more that could be squeezed out of the workers. As one Yugoslav economist put it, "It is true that the workers have not eaten the accumulation; but they will nevertheless have to pay for all the wrong investment made by borrowing abroad. Somebody must pay, and it must be industry." Meanwhile, the Party was at a loss what to do. They were stuck between the working class—which was where their legitimacy came from—and the IMF. In their vacillation, the IMF took charge. As the center of the Party was split from what working-class support it had, it began to fracture.

As the Party increasingly committed itself to a liberalization of the economy under the pressure of the IMF, the social welfare of the working class was ignored. Strike activity increased in 1987 in response to wage cuts, particularly in Zagreb and Belgrade, bringing the whole party-class alliance into to an end. 1988 saw the largest wave of strikes yet. In Eastern Croatia, Croatian and Serb workers united to strike but by two years later, in 1990, this alliance had been broken. By the end of 1988, the massive strikes had forced the leaders of the federal government to resign. Under this tension, the federal and republic states came into greater and greater conflict. And it was nationalism that provided the clearest tool for the republican governments to channel the worker revolt to their advantage. With the loss of the legitimizing party-class alliance and in a bind between the IMF and a combative working class it was ethnic nationalism that provided legitimacy for republican governments.

By 1987, Kosovo, Macedonia, and Montenegro were bankrupt. Bosnia-Herzegovina was also in trouble. And with the vacillation of the center, power shifted into the hands of the leaders of Serbia, Croatia and Slovenia. The economic crisis pushed the republic and provincial parties to entrench themselves in local nationalist constituencies. In a period of economic collapse, the Macedonian party channeled the despair of the working class into a nationalist, anti-Albanian form. Slovenia, where the economic situation was not so bad, took a turn towards democracy. In Serbia, a sharp intra-party struggle and a very combative working class led to a very nationalist reaction by some within the Serbian Communist Party in order to contain the worker revolts and take control of the Republic.

The Serbian Republic contained two Autonomous Provinces, Vojvodina (over 50% Serb) and Kosovo (90% Albanian). As the Serb Party tried to centralize its control and move to a more nationalist stance, both provinces, but Kosovo in particular, stood in its way. At the same time, Kosovo offered certain factions of the Serb elite an opportunity to channel worker revolt. As economic conditions worsened (unemployment was over 50% for the working class), Serbs in Kosovo played the nationalism card. In 1987, Serbs in Kosovo began to create Serb only factories to protect against the massive lay-offs of workers in the province. The 1981 Albanian movement for Republic status was described as a ‘counter-revolution’ and Serb leaders in Kosovo who sent delegates to Belgrade to lobby for ‘protection.’ This situation became central to the power struggle within the Serbian Communist Party. Two factions had developed: the ‘liberal’ faction led by Stambolic and the conservative-nationalist faction led by Milosevic. Milosevic built his support by chanelling worker discontent into Serb nationalism, especially against the Albanians, and, in 1987, Milosevic won the Party struggle and Stambolic was out. In 1988, Vojvodina lost its status as an autonomous province and Kosovo was brought under the rule of the Serbian Party. Milosevic’s party and the media under his control encouraged huge nationalist protests in Belgrade. The federal government called on the Serbian Party to end the demonstrations, but Milosevic refused. When the Serbian party imposed its own officials on Kosovo’s assembly in February 1989, Albanians, under pressure from both nationalist Serbs and terrible economic conditions, began a general strike led by miners in order to demand the reinstatement of Kosovo’s autonomy. Support for the strike came from workers in Croatia and Slovenia. A state of emergency was declared, troops were sent in, and the leaders of the strikes were arrested. At the same time, Serbs began to form paramilitaries. In March 1989 when the Kosovar assembly agreed to accept direct rule from Belgrade, Kosovar workers rioted until they were violently suppressed. By 1989, Milosevic was in control of the Kosovan, Vojvodinan, and Montenegrin, as well as Serbian, votes at the federal level. The center was losing hold and the nationalist republics were competing with the working class to fill the void.

Unlike in the 1960s, when radical students and intellectuals joined the worker’s movement, in the late 1980s intellectuals joined the Serb nationalists—those of the Praxis group, for example. Serb intellectuals participated in this process of "nationalizing" the crisis by rewriting Serb history. The anti-communist Chetniks were rehabilitated. Sympathy for pre-World War II, Serb bourgeois politicians was invoked. More serious, the Yugoslav State was painted as being hostile to the natural nationalism of the Serb people. The prime enemy, however, was the Kosovo Albanians, who were represented as attacking Serbs and interrupting the integrity of the Serb state. The conflict with the Albanians was also represented as part of an eternal conflict between ethnic groups. These views were broadcast widely as Milosevic took firm control of media.

In 1989, the federal government continued its economic reforms still trying to deal with its large debt. The reforms targeted large industries for privatization or bankruptcy. These reforms, under the guidance of the IMF and World Bank, tightened the money supply and, thus, speeded up the bankruptcy process. In 1989, almost 100,000 workers were fired out of an industrial work force of 2.7 million. In 1990, a new IMF/World Bank program was adopted that funneled even more money into debt payments and put another 500,000 workers out of work and 1.3 million more were targeted for future layoffs. Even more firms attempted to avoid bankruptcy by not paying wages. The 1990 program also deregulated trade, allowing a flood of imports. There were violent strikes throughout the republics in response to these changes forcing a postponement of both the privatization of enterprises and the abandonment of the so-called self-management apparatus.

While these latest reforms ate their way through the lives of Yugoslavia’s workers, separatist coalitions ousted the Communists in Croatia, Bosnia-Herzegovina and Slovenia. The German government, with its eyes on cheap workers, quickly recognized Croatia and Slovenia and pushed the EC to encourage "ethnically based" nations. Slovenia and Croatia were the wealthiest of the Yugoslavian republics. This was a result of the fact that they had both been a part of the Austro-Hungarian empire, they endured less infrastructural damage during WWII, and they had had strong ties with German and Italian Capital. This wealth was one of the main reasons these two republics tried to secede first, and it explains the growth of nationalism among the Slovenian and Croatian elite. The Yugoslav State demanded money for development funds for the poorer republics, whereas independence promised increased trade with Germany and therefore economic gain for the Croatian and Slovenian elite. Soon after Germany recognized the republics the wars between these states and Serbia began. These wars destroyed what was left of working class solidarity. At the same time, Milosevic’s position was strengthened over Serbian workers: he was now able to deepen his attack on their living conditions. The results for US hegemony were far more ambiguous: US policy in the Balkans had not defined a clear and dominant role for the US in the management of global conflict. But the growing conflict over Kosovo offered them a new opportunity to rebuild their hegemonic position in Europe.

The Kosovo War:

For over a year before the Kosovo war, Europe and Russia conflicted with the US over Kosovo policy. In particular, the US sabotaged every attempt at peaceful settlement of the issue up to the point that it launched the war and invited the killing of Kosovo Albanians. Through this, the US was able to cut Russia out the decision making process and channel the Europeans into supporting its policy. After the Dayton accords, the US had supported the maintenance of the borders of what remained of Yugoslavia. In 1998, the US administration’s policy with regard to Kosovo was reversed. This was due in part to the 1998 financial crisis which had destabilized Russia, creating an increased possibility of an ultra-nationalist/communist alliance. Russia was also a threat to the further spread of NATO allied states in Eastern Europe. Beginning in 1998, the US sent conflicting signals to Serbia. The US stated publicly that it thought the Serbians were going to do in Kosovo what they did in Bosnia and that the US would not let that happen. At the same time, the US stated that it believed the Kosovo Liberation Army (KLA) was a terrorist group, thus encouraging Serbian counter-insurgency measures. Also in 1998, the Serbians indicated that they would agree to a negotiated solution to the Kosovo situation including a degree of autonomy for the region. This solution was being pushed by Europe and Russia, and the Rugova Albanian opposition in Kosovo came to support it as well. Only the KLA and the US (especially Albright) opposed the plan. While Richard Holbrooke, Albright’s rival in the Clinton administration, did negotiate a cease-fire in October, the White House undermined it. They reorganized the "monitoring force" in order to use it to survey the infrastructure of Kosovo to facilitate a future NATO attack. The KLA stepped up its attacks as noted by the Europeans.

Meanwhile, the French pushed for negotiations which began in Rambouillet, France in February, 1999. But real negotiations never occurred. Before they were to begin, the US brought the French and the British in line. The Serbs wanted face to face negotiations as, it seems, did the Rugova (Albanian) government of Kosovo. Yet the US replaced the elected Rugova government with the KLA at the last moment, and instead of negotiations, the Serbians were given an ultimatum. They were told they had to sign the US written agreement or it would be war. Even though the agreement wouldn’t have been legally binding under international law as it would have been made under threat of aggression, the Serbs didn’t sign it. The US knew the Serbs couldn’t sign. Under the "agreement" NATO, not the Albanians, would have controlled Kosovo. After a few years, Kosovo would have the chance to become independent. The agreement also stated that NATO could move forces over the whole of Yugoslavia and alter the infrastructure of Yugoslavia as it saw fit. The agreement gave NATO the right to control the economy of Kosovo and stated: "The economy of Kosovo shall function in accordance with free market principles," and that there must be complete compliance with the dictates of the IMF and World Bank.

On the 19th of March, Clinton announced that the bombing would begin soon (it started five days later). Thus, the Serbs were given five days to do what they liked in Kosovo. The first week of bombing was aimed at targets outside of Kosovo, giving the Serbs even more time to clear strategic villages of the KLA. Why did NATO do this? It wasn’t bad planning on the part of NATO; they had been planning the attack for 14 months. NATO was letting the Serbs give them justification for their bombing which would bring European public opinion in line with the campaign. As the bombings wore on, the Serbs didn’t tow the US line and commit wholesale genocide. Nor did they quickly cave in to US demands. At that point, the Germans and Russians tried to end the war through diplomacy, threatening to undermine the US hard-line. This process was ended, however, when the US bombed the Chinese embassy (it has since come out that the Chinese were retransmitting radio signals for the Serbian Army, and the bombing certainly seems to have been no mistake at all). When NATO finally brought the war to an end, the US had reexerted its control over NATO policy and rebuilt the role of NATO in managing global conflict. In addition, through the conflict the US had extended the authority of NATO to act independently of the UN and the Security Council, thus sidestepping Russian and Chinese attempts to counter US hegemony.

After the war, the US agreed to the same conditions that the Serbs had proposed before the war. The two conditions of the US ultimatum that Milosevic had originally opposed--NATO access to Serbia and a NATO only occupying force in Kosovo--were dropped. So the motivating factor for the war must be looked for beyond the terms of the Rambouillet accords, beyond the terms of a local conflict. The war must be understood in terms of a conjunction of both global and local forces: the restructuring demands of global capital through the IMF, the workers’ resistance to attacks on their livelihood, the factional struggle for power within the Yugoslav state, and the attempt by the US to maintain hegemony.

As IMF rationalization began to bite into the Yugoslav economy in the 1980s, a strong working class responded with a wave of strikes. Caught between the institutions of global capital and a rebellious populace, the Yugoslav central government was weakened leaving a space for rising nationalist politicians, who took on a new form of mediation between capital and the working class. These politicians generated a nationalism that split the working class and channeled their revolt. Nationalism, therefore, was less a reaction against global capitalism than a form of mediation that allowed a new elite to come to power and to implement drastic economic measures. At the same time, the Yugoslav crisis afforded the US an opportunity to reconstitute its role in Europe and, thus, maintain its hegemonic position vis-à-vis Western Europe and Russia.

Of course, working class and anti-systemic revolt continues, which brings up the issue of solidarity. In Krajlevo, Serbia there was mass draft refusal in March, 2000. Residents greeted draft officials with sticks and agricultural tools. Only 15% of reservists from that town showed up when called to duty. In the neighboring town of Cacak, residents took over the local TV station and placed a 24 hour armed guard there and bear traps around the station. There have been several similar acts of defiance recently in other Serbian cities. Solidarity with these acts of insurrection should not be only verbal, for such solidarity is empty. We need to attack capital in solidarity with the struggles of Serbs who refuse nationalism and refuse to measure their lives with the ruler of international capital.


Further Reading:

Aufheben "Class Decomposition in the New World Order: Yugoslavia Unravelled."

Bjekic, Vesna. Serbs opt for Rebellion. (BCR No. 129, 31-Mar 00).

Flipovic, Miroslav (BCR No. 128, 28 Mar-00)

Gowan, Peter. Counterpunch "Twilight of the European Project

Magas, Branka. The Destruction of Yugoslavia: Tracking the Breakup 1980-92. Verso: London, 1993.

Mojzes, Paul. Yugoslavian Inferno: Ethnoreligious Warfare in the Balkans. Continuum: New York, 1994.

Wildcat "Yugoslavia: from wage cuts to war"

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