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The Cost of Living
Henry A. Giroux
Alex n. Dajkovic
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A "Model" for the Balkans
Montenegro surrenders independence to USAID control
There are some persistent themes in the history of the Balkans. After an eclipse of about 50 years following World War II, they have forcefully and often violently reemerged over the past decade. Reflecting on the pattern, George Kennan asserts that “obviously, it is a problem with very deep historical roots.” “Aggressive nationalisms” rooted in “deeper traits of character inherited, presumably, from a distant tribal past” continue to plague the region and “seem to be decisive as a determinant of the troublesome, baffling and dangerous situation that marks that part of the world today.” Kennan expresses a view that prevails in the Western political and intellectual elite circles, and serves to justify policy.
Indeed, a look at Balkan history reveals a major historical signature. But the Balkans are no more prone to turbulence or ethnic hatreds than any other part of the world, historians agree. Outside forces, much more than internal rifts, have traditionally been “decisive determinants” of regional history. Far from being passive observers reluctant to get involved, foreign powers have coveted the region for centuries and sought to assert their hegemony there—whether by establishing direct control through military conquest or by controlling the internal political elements indirectly. Their domination was invariably accompanied by exploitation of local resources and disenfranchisement of the population. If one historical theme is to be emphasized for its effects on Balkan history and its persistence over time, it is foreign hegemony, not “ethnic hatreds.”
The situation in the current version of Yugoslavia is illustrative. Though it is formally still a federation of Serbia and Montenegro, Kosovo being a province of Serbia, Yugoslavia is not recognized by the dominant powers, apparently awaiting final resolution of its status, consistent with their interests. At present, Kosovo is ruled by outside powers, formally through the UN. Montenegro has joined “transatlantic integrations,” Serbia's status remaining uncertain.
Montenegro is hailed as an example for the Balkans by Western officials. When, in February of this year, the Montenegrin prime minister visited Washington, U.S. Secretary of State Madeleine Albright “reinforced U.S. support for the government of Montenegro's efforts on democratization and economic reform.” At the time the State Department emphasized that Montenegro is “serving as a model and stimulus for change” in the region. Robert Gelbard, former U.S. envoy to the Balkans, expressed a similar sentiment when he called Montenegro a “guiding light” in his testimony to the Senate Foreign Relations Committee.
Given the exalted rhetoric, a close look at the “efforts on democratization and economic reform” that Montenegro is pursuing, would give an indication of the “change” that the U.S. is stimulating in the Balkans. It would show the direction in which the “guiding light” is pointing the whole region. During the early years of the disintegration of Yugoslavia, official Montenegro supported unity. It remained federated with Serbia even after other republics had seceded. The vast majority of the population also remained committed to Yugoslavia, so Montenegrin nationalism with secessionist tendencies found scant support. In 1997 there was a split in the ruling party, Democratic Party of Socialists (DPS), which had been up to that point loyal to the Yugoslav regime. The split was caused primarily by differences in favored policy towards assertive outside forces, with the Djukanovic-led faction taking a more submissive approach and the rest of the party remaining recalcitrant and committed to Yugoslav statism with some leftist rhetoric. The U.S. took advantage of the split, caused in no small measure by U.S. pressure, to further its goals in the area, and changed its policy towards Montenegro.
Zbigniew Brzezinski, a leading American strategic thinker, describes in his book, The Grand Chessboard: American Primacy and its Geostrategic Imperatives, the co-optation of foreign political elites as an important method for furthering U.S. global hegemony. Following Brzezinski's prescription, Robert Gelbard “began meeting Djukanovic even before he became the President of Montenegro,” as he informed the Senate Foreign Relations Committee. Ties between the U.S. and Montenegro only strengthened after Djukanovic was elected president and his coalition won the subsequent parliamentary elections, in part due to outside financial and diplomatic support.
Outside support, in the form of budget assistance, helped to prop up the power of the current government, which is otherwise faced with immense social problems caused by a decade of economic strangulation and wars. With the same goals in mind, the U.S. exempts Montenegro from its sanctions on Yugoslavia and Montenegrin and U.S. officials meet regularly to coordinate policy. In addition to budget support, Montenegro is receiving substantial foreign aid directed to so-called “technical assistance” programs designed to bring about “democratization and economic reform.”
It wasn't until Montenegro became committed to “implementing economic reforms recommended by a technical assistance team” provided by the U.S. that it was designated as the “guiding light” and a “model” for others. James Pardew, U.S. envoy to the Balkans, emphasized this commitment as a success of U.S. policy in the region in his testimony to the House Foreign Relations Committee in March 1999. Putting methods by which this “commitment” was obtained aside for the moment, let's examine the mandate of the “team.”
The “technical assistance team” is supplied through the U.S. Agency for International Development (USAID) and is therefore governed by its mandate and its overall policy objectives. USAID is an instrument of U.S. foreign policy, not an independent agency with humanitarian objectives, so its overall strategic planning is directed by the State Department and subordinated to the imperatives of U.S. foreign policy. Assistance to countries in transition —indeed, the whole process of transition—is therefore coordinated to further U.S. interests, the interests of other peoples, including the residents of Montenegro, being merely incidental in policy planning.
The objectives of USAID are spelled out in its strategic document for formerly socialist countries, From Transition to Partnership. Three assistance areas are outlined: economic restructuring, democratic transition, and social transition. The U.S. government's vision for the terminus of this transition is “to establish sustainable partnerships between the United States and the countries of Europe and Eurasia, between these countries and other regions of the world, and among the countries themselves.”
Before proceeding, it should be noted that most countries currently in “transition” had partnerships between themselves, Europe, and the rest of the world. Yugoslavia was a successful state that had relations with both East and West as well as the developing world, and occupied a position of prominence in the international arena. The West, especially the United States, implemented policies towards Yugoslavia that were instrumental in the country's demise. The only way to interpret the current focus on establishment of partnerships where partnerships were destroyed is that their new incarnation would be decided upon by the world's “regent”—to borrow Brzezinski's designation—and therefore fashioned in its interest.
In Montenegro, USAID has become a major force in restructuring the economy and the society. It is in the process of orchestrating a social revolution of vast proportions, one whose impact is sure to be felt in all sectors of society and by people from all economic classes. USAID experts provide “technical assistance” that involves the writing of various laws subsequently sent to the parliament for rubber stamping. Alternatively, policies are dictated directly to the executive branch.
In the domain of “economic restructuring” the most notable example is the recent law on foreign investment. Crucial for the economic life of a country, investment in Montenegro was regulated by an older law, which was passed in 1994 and was entirely consistent with a market economy. It was written without the help of foreign experts and it provided some protections for the country's strategic assets, preventing their easy transfer to unaccountable foreign control. Because this law didn't conform to U.S. policy objectives, its recent revisions were facilitated by USAID experts. Not surprisingly, they abolish any preference for domestic investors, putting Western transnationals on par with sanctions-ravaged domestic firms and individuals.
One predictable consequence of the new liberalization of foreign investment is that the most profitable Montenegrin assets will be acquired by foreign firms, leaving Montenegro's population to serve as labor force, as well as assuring that the profits thus generated are repatriated to the safety of the investors' own country and not used locally for investment. The U.S. government is recruiting potential suitors among U.S. firms. Thomas Pickering, under secretary of state for Political Affairs, encouraged American business leaders to invest in the Balkans because, in his estimate, the economies of Balkan states hit “rock bottom” sometime during 1999 in the aftermath of the “humanitarian” triumph in Kosovo. “Of course the bottom is the time to buy, when the market is despairing and the demand is weak,” he said to Business Council for International Understanding in Washington. The allegedly altruistic “humanitarian intervention” therefore, presumably fortuitously, becomes beneficial for powerful constituencies in the U.S.
In order to facilitate transfer of Montenegrin public wealth to American transnationals at “rock bottom” prices, the U.S. and Montenegro concluded an investment incentive agreement earlier this year. The Overseas Private Investment Corporation, the U.S. federal agency which offers investment services to American business expanding into developing nations and emerging markets, made “available to U.S. investors a full range of its services,” including “political risk insurance and financing of projects.”
The legal basis for this transfer of wealth having been prepared by USAID “technical assistance,” foreign investors are now free to pick and choose between the best of Montenegrin enterprises devalued by years of sanctions and wars. U.S. investors have considerable advantage, given the support of U.S. government agencies, so that American economic dominance in the region will be assured.
Minimum guaranteed income in Montenegro is among the lowest in Europe, under $50 a month. Average monthly salaries are less than $100 and unemployment is at 30 percent. Given the fact that the Montenegrin population is generally well educated, the flexible labor market is unquestionably attractive to foreign firms seeking to maximize profits by cutting costs in the competitive global economy. Problems in developing countries arise, the UN's World Investment Report remarks, “when private interests of investors diverge from economic interests of host countries.” Nevertheless, the asymmetry of bargaining power between the governments of these countries and foreign transnationals prevents effective management of foreign investment to the country's advantage. While the current arrangement is certain to serve the interests of foreign investors, the population is likely to extract benefits that are at best marginal.
To assure that correct interests are catered to, the government, advised by USAID experts, is pressuring the labor unions not to demand higher wages, given that such indiscretion may deter foreign investors, direly needed to revive the economy. In one typical enterprise that is being re-structured with the help of American experts, workers haven't been paid in months, even though their average monthly earnings are $60 in a country where the monthly cost of subsistence is $260. Despite this, union activity is near impossible due to government and USAID pressure, so that one union representative recently called the conditions “intolerable.”
Another important dimension of “economic reform” in Montenegro has been the radical change in monetary policy. Under the guidance of Steve Henke, an American economist, Montenegro has introduced the German mark, therefore the Euro, as legal currency in the republic, soon to completely replace the Yugoslav dinar. According to the plans, Montenegro is to have a central bank with no real power, only an oversight function. Though available evidence on the consequences of “dollarization” (a term often used as shorthand to refer to the use of any foreign currency, not only the U.S. dollar, as legal tender) is scant, economists agree that relinquishing control of monetary policy eliminates one of the levers governments use to manage the economy. “Losing a domestic central bank as a lender of last resort” poses problems in securing “adequate liquidity to individual banks in need,” making them dependent on “credit lines from foreign banks,” an expert in the field maintains. Furthermore, “there is a cost of linking business cycles…with the country whose currency is used. Interest rates rise and fall with those of the foreign country” whose “monetary authority…directs policy for its own perceived benefit, not necessarily that of the dollarizing country.”
Overall, in the economic realm the policies promoted by the State Department through USAID are completely incongruous with historical precedents for economic development. They are based on the assumption that “distribution of the economic benefits, both internally and internationally, will be uneven,” and dogmatically insist on the unconditional opening of markets, as well as the reduction or elimination of trade barriers. Economic historians, however, observe the unvaried record of development and industrialization that shows a favorable regulatory environment, including trade barriers, to be crucial in promoting growth by protecting domestic industries against cheaper imports.
The insistence on “free trade” can be understood in light of the professed strategic objectives of U.S. foreign policy, designed to advance American interests, not the interests of remote peoples in the Balkans. As development economist Arthur MacEwan observes, “highly developed nations can use free trade to extend their power and their control of the world's wealth, and businesses can use it as a weapon against labor. Most important, free trade can limit efforts to redistribute income more equally, undermine progressive social programs, and keep people from democratically controlling their economic lives,” thus maintaining the current “distribution of wealth, both internationally and internally,” as planned.
The policies implemented by USAID in the Balkan countries, then, will assure that they don't undergo independent economic development but function as service zones to the developed economies, providing raw materials and cheap labor, as well as serving as markets for production surpluses from the developed West. Conceptually, the current economic vision for the Balkans is identical to that of Erganzungswirtschaftsraum, or supplementary economic space, used in strategic planning by the only other hegemonic power which had comprehensive plans for the region.
But reforms in Montenegro are advancing in other spheres as well. To eliminate a potential threat from civil society, a new law was passed regulating non-governmental organizations. It was also written with the help of USAID experts and it has a peculiar provision whereby the government has the power to refuse registration—hence legal operation—to any non-governmental organization. This law could prove to be instrumental in exerting government control over civil society in cases where civil society proves to be inconveniently independent. In fact, this provision was recently invoked to prevent registration of an NGO whose objectives weren't compatible with “social transition” as envisioned by USAID experts advising the Montenegrin government.
Questions of “democratic transition” will be put aside, given that the realities of economic and social transition indicate that substantive democracy is impossible under the current system.
Let's return to the methods by which Montenegrin “commitment” on “reforms recommended by a [U.S.] technical assistance team” is obtained. Primarily, the standard geostrategic devices are employed, including political and economic pressures, and displays of military might, all of which Montenegro has witnessed at various points from the early days of U.S. involvement in the Yugoslav crisis. Doubtless, all these methods have had an effect on this country of 650,000 people. But, at the behest of NATO's Supreme Allied Commander, Wesley Clark, the Institute for Defense Analysis from Washington developed a multi-million dollar computer simulation expressly for the purpose of “show[ing] leaders in the former East bloc the economic impact of their decisions.” The name of the computer simulation is SENSE, Synthetic Environments for National Security Estimates, and it “allow[s] participants to influence the economic growth and development of a fictitious country through interactive decisions,” in the process “teach[ing] the principles of political, economic and military interrelationships.” The name of the fictitious country is Akrona, its immediate neighbor being Kolonia.
In February 1999, Montenegrin “government and business leaders…who are working daily to transform the Montenegrin economy” participated in the “first-ever” SENSE exercise, held at the NATO Consultation, Command and Control Agency in the Hague. The purpose was to provide them with “important insights about the implications of their proposed courses of action,” assuring a priori that policies inconsistent with the interests of the United States and other NATO countries wouldn't even be considered.
Because of its “far-reaching value,” “several Permanent Representatives to the North Atlantic Council as well as the NATO's Supreme Allied Commander [attended] the exercise as observers.” The power behind lessons taught by SENSE was made abundantly clear to the participants less than a month later during NATO's “humanitarian” intervention in Yugoslavia that targeted the civilian infrastructure with radioactive missiles and destroyed a large portion of its production capacity.
The ominous timing and setting of the SENSE exercise inspired concern in some participants about being “puppets.” When one of them telephoned NATO to inquire about the real nature of the game, he was told to “be quiet and keep [his] head down.” With these lessons learned, the Montenegrin leaders are pursuing the sole permissible policies, in order to avert violently persuasive methods employed on other, less educated, states.
And so we have it: a “model” and a “guiding light” for the entire region. To qualify for such kindly designations, Montenegro has had to surrender its sovereignty and independence in most critical domains to the world's regent, transferring decision-making in economic and social policy to USAID strategic planners, who are fulfilling their expressed purpose of advancing American, not Montenegrin, interests.
The threat of popular protest is reduced by shifting the attention and political energy of the masses to nationalist discourse, and by deliberating on the merits of independence from clearly inferior Yugoslavia, whose domination has been endured for all too long. The population is inculcated with vulgar, petty nationalism through a constant barrage of propaganda faithfully disseminated by the doctrinal system.
Since it became a “model,” Montenegro's media landscape has changed radically. Where there used to be divergent points of view in the newspapers, now there is near uniformity in the picture presented. Yugoslavia, and federal institutions in general, are shown as hegemonic. In contrast, the West is portrayed as benevolent, having only Montenegrin interests in mind, protecting them against Yugoslav domination. The propaganda campaign is waged throughout the doctrinal system. Roughly a year ago, the director of the People's Library in Podgorica was dismissed for ideological reasons, his political outlook not coinciding with the party line. Universities are likewise dominated by vocal adherents to the permissible doctrines, as are the high courts. The new Academy of Arts and Sciences (Dukljanska Akademija Nauka i Umjetnosti), founded by an affirmed nationalist poet and with exclusively nationalist nembership, is slowly replacing the older one, which survived from the Socialist Yugoslavia.
The propaganda campaign, as expected, is producing results. In the two years since it became a “model,” Montenegro has witnessed an extraordinary rise of nationalism. Currently, some 35 percent of the population supports outright independence from Yugoslavia, and another 20 percent desires a looser, confederal arrangement with internationally recognized Montenegro. This is a massive increase over a relatively short period of time, during which objective conditions in the country have improved slightly.
Indicative of the patterns present in the region over the past decade, noteworthy nationalism in Montenegro, as in the other republics which seceded from Yugoslavia, followed—not preceded—the change of policy at the highest levels, which was itself brought about by a confrontation with outside forces. Nationalism had to be (and still is) manufactured by restoration of atavistic and irrelevant sentiments, resurrected to champion elite projects, which are coupled with powerful foreign elements. The interests of the population are being ignored, as in the past, and the contours of likely developments are not hard to discern, given the magnitude of power “stimulating” implementation of the exalted “model” in the entire region and the persistence of historical patterns. Z
Alex Dajkovic is a doctoral candidate in molecular biology at the University of Kansas. Originally from Yugoslavia, he has been in the U.S. since 1991. He writes and gives talks about social affairs and the Balkans.