A “Model” for the Balkans

N. Dajkovic

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.

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.

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.”

“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.”

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.

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.”

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

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.

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.