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    Copyright: The following text is for personal information only. Any professional use or publication in written or electronic form is subject to an agreement with AIM, 17 rue Rebeval, F-75019 Paris, France

    TUE, 21 FEB 1995 21:12:39 GMT

    Debts of the SFRY and their inheritors


    AIM, LJUBLJANA, February, 12, 1995

    When Lojze Skok, a delegate in the Assembly of former SFR of Yugoslavia, put the question on Yugoslav debts, the unquestioned financial authority at the time (a want of such an expert is felt nowadays ), Janko Smoje, was against publicizing these data. His main argument was that this was the matter of expertise, not politics. But a paradox situation occurred then, and it still persists. Namely, expertise neither could, nor knew how (or wished?) to answer the question, so that world experts were engaged on the job and established that the SFR of Yugoslavia owed 19 billion dollars, which was later reduced to 17 billion by purchases in the secondary market of debts. It was determined that out of that sum, the Federation owed 4.5 billion and the republics the remaining 12 billion. The conclusion is that expertise and experts at the time had nothing to do with incurring foreign debts, and even if they did, they acted as representatives of politics and politicians, that is - expertise served only as an alibi for republican politcians, because the debt of the federation was the smallest, and the dispute about it is nowadays most acute, because there is no way of knowing what was the share in it of each of the former republics, that is how much they spent out of the now called non-allocated debt.

    It is no wonder that Lojze Skok was the one to talk about debts at the time, since he was the Director of ZTP (Railway Transportation Enterprise) Ljubljana at the time. Since debts (money) were not the subject matter dealt with by experts (and it is questionable whether it is now), nor the central bank (it is questionable whether central banks of the successor states deal with it now, except concerning the strategy of paying back the money), one thing is certain - debts, or analysis of financial politics is something seriously dealt with on the level of enterprises.

    Debts owed to the International Monetary Fund at the time, according to what experts claim nowadays, were distributed as follows: Serbia 3.2; Croatia 2; Slovenia 1.8; B&H 1.5; Vojvodina 0.8; Kosovo 0.7; Montenegro 0.10 billion dollars.

    What today's negotiators on debts, as state and other secrets, do not wish to say is also the following: credits and debts handed down to the successors were not taken pursuant to international law, because there is no such thing in this sphere, but pursuant to national law, provisions of the Paris Club when speaking of debts to the consortium of commercial banks, or pursuant to American iuris prudence when speaking of debts to the IMF (allocated debts). This simply means that if you wish to be granted new credits, you must first pay back the old ones. The lack of regulations in this field is best illustrated by instances of certain big states - debtors even faked coups d'etat just to avoid paying back debts of the previous regime. Slovenia did something similar, turning its foreign currency debt to Croat savers of the Ljubljanska banka into a debt registered in the New Ljubljanska Banka, repeating political and not expertise arguments in favour of such a decision. Analysts would probably be able to list a number of similar cases of "transformation" used to evade payment of obligations.

    In fact, all the successor states of the SFRY which exist as economic subjects, claim that they have never fared better: in Serbia and Montenegro they celebrate the new dinar popularly called the "Avram" after its creator, the Governor of the National bank, Dragoslav Avramovic, in Croatia their national currency - the kuna, and in Slovenia the tolar. There is, unfortunately, no use to waste words in this context on B&H destroyed by the war, at least not when speaking of repaying debts. At least three of the former SFRY republics claim that they have got it made now. Is that true? Serbia and Montenegro, or the FRY, have not created new value in the past four years, they have lived on account of foreign currency reserves of six billion dollars deposited in the National Bank of Yugoslavia, which were in fact property of all the former republics. After this money was spent, just as money made by the notorious "loan for rennovation of Serbia", after Serbia had abolished the autonomy of Vojvodina and Kosovo, after money obtained when Serbia "raided the payment system of the country" was spent, and the money made by Jezda and Dafina's manipulations with a blessing by the state, the only thing that remained to be done was to somehow patch up the situation and - wage the war and try to exploit it the best possible.

    According to the latest data, 70 per cent of the FRY budget is directly used to finance the war "which Serbia is not involved in". What will happen when the FRY, that is Serbia and Montenegro, receive the accounts for war indemnities - from Slovenia for TV transmitters: Medvjedek, Radgona, from Croatia for demolished cities and killed people, destroyed and robbed production facilities, nothing to say about B&H and everything that has been destroyed and taken away from it. The situation is absurd: Serbia and Montenegro, or the so-called FRY are fighting desperately to be recognized the status of the only successor of the SFRY. Why would not politicians consider the possibility to recognize them as such and then make out bills for war reparations and debts of the SFRY? If Serbia has repurchased a part of the joint debts via Cyprus branch offices of its Beobanka or Brothers Karic Bank or through the good offices of Russian banks, why is so much fuss made because of it, allegedly - some day it will come knocking at everybody's doors and demand parts of the debts back. If the clause on solidarity repayment of debts is valid, then Serbia has purchased Yugoslav debts, not Slovenian, Croat or Macedonian. This situation is identical to the one in spring 1992 when Slovenia purchased a part of the debts, but instead of reducing the Slovenian debt (16.4 %) by doin it, the Yugoslav debt was reduced by 0.9 %.

    Croatia has no money either, although it claims that it has achieved internal convertibility. In Croatia, the greatest portion of money is allocated for the army, too. It is questionable how long its economy will last. That is why the role of Slovenia is important, which is the only one that is economically sound and capable of repaying debts. The issue of debts was first initiated in 1933 when an American businessman and banker, Fulvio Dobric, once the President of the ICC (International Consortium of Commercial Banks, creditors of SFRY), later of Manufacturers Hannover Bank, and founder of a Finnacial enterprise DLF which trades with debts of developing countries, declared that Yu-debts could be bought at 25 to 30 cents a dollar and that was the reason why he intended to open the Factor Bank in Ljubljana. That he means it seriously is verified by the fact that just in 1992 he made a turnover worth 573 million dollars just in 1992. In 1988, he purchased at the secondary market the so-called "Brady's bonds", debts of countries which had problems in repaying debts covered by American state securities, and nowadays, the New York branch office of the American Central Bank is a partial guarantor.

    It is obvious that international capital has fully grasped the situation and started to exert prssure on the only apt economy - that of Slovenia. This means that none of the successor states of the SFRY have any influence on the destiny of its debts. The destiny of the debts will depend on international political relations, or on the fact which and whose interests in the region will prevail. The fact that all who attempted to purchase debts, except Serbia, were faced with a terrible blockade of Russia, and when data about Serbia having purchased a part of the debts were reavealed, their price on the secondary market went up. That is why Dobric's action, and Dobric is just an exponent of creditors' banks, is in fact a form of psychological pressure on expert public and political centres of decision-making to accept the conditions for purchasing debts, intensified by the political pressure that the vampire is awakened (a powerful Serb-Montenegrin federation which is in fact not powerful at all nor can it ever be, at least not economically), because Slovenia is simply the only capable to make payments and the only sound environment. Debts are thus turned into weapons which will define the political and any other system in the Balkans. This is an attempt to maintain by force links among the former Yugoslav republics by means of debts, which only means that future political systems and relations between the successor states will depend on who is with who, who is stronger, whose partners and allies are more powerful. This means that Slovenia is in the third or the fourth round for joining the EU, while the former Socialist paupers are in the first round - Albania, Bulgaria, Poland, Hungary, Romania?

    It is obviously not important how big the debts are and how they will be distributed, because even in the best of times, this is not decided by the debtor countries. There is a number of examples: Allende was not overthrown by debts, but by threatened monopoly of United Fruits and ITT. When he nationalized copper mines and agriculture, he was forced to leave. Chauseskou became dispensable and he was overthrown six months after he had declared triumphantly that Romania was living at 16 watts, but owed nothing to anyone. When the allies in the second World War threatened Switzerland with sanctions for trading with Germany, they got the answer that this was in accordance with the theory on neutrality. It was true that Switzerland traded with Germany for six days, but on the seventh it prayed for victory of the allies. Sanctions were never introduced.

    Regardless of who the politicians in power in the states established on the territory of SFRY are, the debts have become an exceptional weapon in the hands of those who decide about war and peace. Europe has been traditionally successful in resolving all economic problems, but it has never managed to resolve any political problem except by war. That is why debts in the Balkans are a weapon in the hands of modern Europe multi-capital, only because they are an additional contribution to political instability, just like war which still continues. Instability is in the interest of multi-capital, that is, of policy which finds its interest in instability, simply because it would have to face resolving real problems which peace brings.

    Only policy which is aware that the only real problems are political, and not economic problems can oppose this, and therefore, it is capable of reaching decisions which will change such policy and not negotiate about percentages and millions. If dollars were to decide, the USA would not even appear on the political map of the world, because it is still the country with the largest (absolute and relative) deficit in the world.

    Zoran Odic