When the US feared Yugoslavia's resistance against the IMF tyranny

CIA Files

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In the newly released archive of 13 million pages by CIA, we found another report concerning the IMF and the imposed austerity on former Yugoslavia.

In this report, dating back in 1986, under the title "Yugoslavia's Anti-IMF Tactics", serious concerns expressed about the fact that Yugoslavian leaders wanted to loosen the tight rope of austerity around Yugoslavia imposed by the IMF cruel strategy, which had changed just a year ago and monitored by the CIA, fearing that it will bring political unrest to the debtor countries as already being revealed in another document.

It is characteristic that the report acknowledges that Belgrade felt like being humiliated by the fact that the IMF and the United Kingdom didn't let Yugoslavia to roll back interest rates against the new tight rules imposed.

As a consequence, the report reveals the US concern about the fact that Yugoslavia might had walk away from the Western model of free market and cruel austerity, toward the influence of the Soviet Union. Another concern was that Yugoslavia could have become a leading example of resistance against the IMF tyranny among the group of NAM (Non-Aligned Movement) countries.

There are plenty of similarities in today's debt-enslaved Greece under the Troika of destruction (IMF/ECB/European Commission). Various information shows that the West feared that Greece would attempt to escape from the cruel policies imposed by the creditors, finding alternative finance through Russia, China, or, BRICS. Such a potentially successful attempt by Greece, might had become an example for other countries to escape from the eurozone madhouse, away from austerity and Berlin's sado-monetarim.

Some characteristic parts of the report:

Belgrade has charted an approach toward the IMF which may bring it into conflict with Western lenders over rescheduling conditionality beginning in Mid May. The Yugoslavs since late 1985 have been planning to unilaterally soften some austerity measures [...] however, most of the planning group appears confident that the West will back down from a showdown rather than damage Belgrade, always tough in rescheduling negotiations anyway, is likely to be downright truculent this year. This might well thrust Yugoslavia into the limelight as a banner carrier for third world debtors as the NAM summit preparations begin.

Into its fourth year of financial crisis and IMF supervized austerity, Yugoslavia is anxious to restart its lagging economy in the hopes – probably vain – that new growth will show a way out of its seemingly hopeless financial fix. Lacking a consensus or commitment on market-style reforms which they earlier promised to try, many leaders are now willing to revert to artifices which led the boom in the last decade – at the risk of deepening structural weaknesses and feeding inflation.

In December Belgrade tried to roll back interest rates without IMF agreement. The plan failed – largely because the IMF and the United Kingdom insisted the Yugoslavs adhere to commitments or be declared in default of rescheduling agreements for 1985. Belgrade backed off and added this humiliation to its other simmering resentments against the IMF and the West.

Belgrade thus is ready to go back to its old wasteful ways and to defy the West when it protests. [...] The chances of an orchestrated campaign against the IMF would increase during such transitional junctures in Yugoslav politics.

The Soviets may feel that their waiting game is paying dividends now that the IMF and the West are becoming the scapegoats for Yugoslavia's economic problems. A few Yugoslav leaders - angry at the West and frustrated by the divisions within NAM – have begun to urge a swing eastward. Serbia's new President-to-be Ivan Stambolic reportedly has expressed the view that Yugoslavia's future lies more with the USSR because it would somehow advance the Serbs' cause against Albanian nationalists in Kosovo.

In sum, we think that the Yugoslav leadership is becoming more inclined than in the past to join or even lead the NAM [Non-Aligned Movement] debtors in some new demands against the West's debt strategy. And one side effect of such policy switch could be that Belgrade would willy-nilly be aligned with Moscow's strategy to an extent that we have not seen since Tito's last eastward “tilt” after the October War in 1973.

Also, another piece is particularly characteristic:

Since backing down from its initial attempt to decrease interest rates Belgrade has drafted new measures – probably to be promulgated in May after the new government is in place – which will again roll back interest rates and lessen the bite of austerity in other ways. One new measure would “restructure” domestic debt, which in fact would be a first step in erasing a largely worthless collection of paper debt from loans long ago squandered. The IMF agrees that this problem needs to be cleaned up as firms still use these ficticious assets to secure new credit. But as Belgrade still has not demonstrated that it can control local borrowing, the IMF rightly fears a new borrowing binge would result.

The outrageous contradiction here is quite evident. While the most reasonable action for a government is indeed to clean up the "worthless collection of paper debt" to re-start the economy, something that even the IMF clearly acknowledged, a lame excuse is provided in order to forbid the government take such an action. The excuse is simply that "Belgrade still has not demonstrated that it can control local borrowing". In other words, the 'logic' provided by the Western neoliberal sadists was that 'we will let the cancer continue eating your economy because we assume that you are unable to clean it!'