Origins of the breakup—a U.S. law

A year before the breakup of the Socialist Federal Republic of Yugoslavia, on Nov. 5, 1990, the U.S. Congress passed the 1991 Foreign Operations Appropriations Law 101-513. This bill was a signed death warrant. One provision in particular was so lethal that even a CIA report described three weeks later in the Nov. 27, 1990, New York Times predicted it would lead to a bloody civil war.

A section of Law 101-513 suddenly and without previous warning cut off all aid, trade, credits and loans from the U.S. to Yugoslavia within six months. It also ordered separate elections in each of the six republics that make up Yugoslavia, requiring State Department approval of election procedures and results before aid to the separate republics would be resumed. The legislation further required U.S. personnel in all international financial institutions such as the World Bank and the International Monetary Fund to enforce this cut-off policy for all credits and loans.

There was one final provision. Only forces that the U.S. State Department defined as "democratic forces" would receive funding. This meant an influx of funds to small right-wing nationalist parties in a financially strangled region suddenly thrown into crisis by the overall funding cut-off.

The impact was, as expected, devastating.

This law threw the Yugoslav federal government into crisis. It was unable to pay the enormous interest on its foreign debt or even to arrange the purchase of raw materials for industry. Credit collapsed and recriminations broke out on all sides.

At the time there was no civil war. No republic had seceded. The U.S. was not engaged in a public dispute with Yugoslavia. The region was not even in the news. World attention was focused on the international coalition the Bush administration was assembling to destroy Iraq—a war that reshaped the Middle East at a cost of half a million Iraqi lives.

What was behind the sweeping legislation directed at Yugoslavia, especially when U.S. policy makers themselves predicted that the sudden unraveling of the region would lead to civil war?

With the collapse of the Soviet Union, U.S. big business was embarking on an aggressive march to reshape all of Europe. Nonaligned Yugoslavia was no longer needed as a buffer state between NATOand the Warsaw Pact. A strong, united Europe was hardly desirable. Washington policy makers considered both to be relics of the Cold War.

Control of the purse strings

This one piece of legislation—Law 101-513—demonstrates the U.S. government’s enormous power. It was one part of annual legislation that defines in detail policies to be pursued in every region of the globe. The Foreign Operations Act implements U.S. corporate control through major funding to international financial institutions such as the Inter-American Development Bank, Asian Development Fund, the African Development Fund, and through direct assistance to individual countries.

The deadly restrictions on Yugoslavia took a mere 23 lines. Compare this to the more than nine pages that detail sanctions to be imposed on Iraq. As of January 1995, the U.S.-UN sanctions on Iraq had killed more than half a million children. This projection is from Thomas Ekfal, the United Nations Children’s Fund representative in Baghdad. (New York Newsday, Dec. 19, 1994)

The 1990 foreign appropriations law also prescribed various forms of economic strangulation for several other countries deemed enemies, including Angola, Cambodia, Cuba, Iran, Iraq, Libya, Syria, Korea (DPRK) and Vietnam. On the other hand countries moving hastily toward a capitalist market economy in 1990, such as Poland, were to receive special funding.

In all the expressions of concern and sympathy for refugees and displaced people in countries all over the globe, but especially in the former Yugoslavia, no U.S. official ever mentions the terrible suffering caused by U.S. economic strangulation.

Of course, financial strings were hardly new to Yugoslavia in 1990. Yugoslavia had become utterly dependent on loans from Western banks. The increasingly onerous conditions had dislocated the economy. A year earlier, the price of continued U.S. loans and credits was a brutal austerity program that devalued the currency, froze wages, cut subsidies, closed many state industries deemed unprofitable for capitalist investors and increased unemployment to 20 percent. The result was strikes, walkouts, a sharp increase in political and economic tension, and, above all, an upsurge in national antagonisms on all sides.

Once the U.S. acted so decisively toward Yugoslavia in 1990, the European powers were hardly willing to be bystanders to the enforced break-up of a country in their own backyard. The U.S. Foreign Appropriations Bill sent a clear message to the European powers that Yugoslavia and the whole Balkan region of Europe were again up for grabs. On their own they might never have dared to act. Now they dared not be out of the action.

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