Is Serbia socialist?


By Michael Karadjis

One view expressed about the war in the Balkans is that NATO is attacking Serbia because the Milosevic regime somehow stems the advance of Western economic penetration of the region, or, in more extreme versions, that it is "socialist".

Yet Serbia is anything but socialist. Slobodan Milosevic himself launched the economic program that overthrew the vestiges of socialist planning in Yugoslavia in 1988, through the "Commission of the Presidency of the Republic of Serbia: The Commission for Questions of Economic Reform".

In these "reforms" in 1988-89, the Yugoslav economy was opened up to 100% foreign ownership (Milosevic called on Yugoslavs to abandon their "primitive fear of exploitation by foreign capital"). Private property was given equality with public property; enterprises were allowed to collapse and create mass unemployment; and "workers' self-management" was essentially abolished, workers being encouraged to become shareholders.

Milosevic exhorted these enterprises to "function on economic principles, strive to create profits and constantly struggle for their share and place in the market".

As Milosevic used Serb nationalist crowds to overthrow the Communist governments of Vojvodina, Montenegro and Kosova, he blamed these bureaucrats for "obstructing" economic reform, and told workers striking against the negative effects of the changes to trust him to carry the reforms through more successfully.

According to a New York Times article in 1988, top US policy makers were torn between their concerns that Serb nationalism could tear Yugoslavia apart and "their appreciation of Mr Milosevic as a catalyst for sorely needed political and economic changes".

Other republics

A widespread view on the left is that Croatia and Slovenia were more pro-capitalist than Serbia and the federal government. In fact, it was the Western-backed federal government of Prime Minister Ante Markovic that pushed the most radical economic "reforms", while all republics slowed it down as they squabbled over the spoils.

Slovenia suspended the federal scheme in 1990 and did not pass its own legislation until November 1992 — the last country in eastern Europe to do so. Even by 1995, only 200 of the 1500 enterprises scheduled for privatisation had passed into private hands.

Croatia also suspended the federal scheme and introduced its own in April 1991, but its main results were with small enterprises. According to the World Bank in 1996, "The largest enterprises, accounting for some two thirds of social assets and employment, remain in state hands, and their privatisation has virtually stalled".

However, according to the British Foreign Affairs Committee in 1991, "There have been rather more economic innovations in Serbia ... there has been some sort of effort to privatise industries in Serbia, the like of which there has not been in Croatia."


Serbia introduced its own privatisation legislation in August 1991, in the midst of its war with Croatia. The number of private firms in Serbia doubled in 1991, to 42,697, about 50% of all firms.

Foreign capital played an important role, 370 private businesses being fully owned by foreigners in 1991. A "free economic zone" for foreign business was established in March 1992.

Next to privatisation, a certain amount of "nationalisation" occurred in both Serbia and Croatia. This meant that "social" firms — those in theory collectively owned by the workers — were removed to direct state control, enabling them to be privatised subsequently. Serbia's privatisation legislation was based on the previous federal legislation, allowing workers and managers to buy out firms. By first removing them from workers' control, the "Socialist Party" managers were able to take as much as they wanted.

According to the Alternative Information Mreza, by 1994 "half of Serbian industry has been quietly privatised at a rapid rate ... already in 72.6% of state enterprises, 660,000 employees have bought shares ... Behind these shares, however, hide several hundred managers, from the Socialist Party, who make business dealings of a frankly capitalist character and virtually thieving manner, taking the lion's share."

Because much of this share buying was done in house, by workers and managers, in the murky world of Serbia's legal system, many of these enterprises can still be called "state" enterprises. The same process has been at work in Croatia's "state" industries. In both countries, the shares of the workers are often useless, not only because of the relative weight of management shares, but because these "managers" often rob the assets they manage to build other private enterprises they own outright.

Snouts in trough

Most state ministers are also big business people. Milosevic's son Marko owns the duty free shops at Serbia's borders and airports. Prime Minister Mirko Marjanovic has in the area of $50 million, largely through questionable deals by the trading firm Progres, which he "manages".

Former vice-premier Slobodan Radulovic runs a retail chain, and was accused by workers of ripping off $372 million. Zoran Todorovic, former leader of the "Yugoslav Left", set up by Milosevic's wife, directed state petrol firms while building the giant privately owned T&M Trade company, becoming one of the richest men in Serbia. He was assassinated just after the latest privatisation plan was announced in October 1997 and a scramble for spoils began.

The "Yugoslav Left" — part of Milosevic's four-party ruling coalition, is ironically named: it is the major party of Serbian big business.

The economic sanctions on Serbia during the Bosnian war helped build this elite while ordinary Serbs suffered. Milosevic and his ministers stole $3.8 billion in foreign exchange owned by citizens, under the cover of placing it in more secure places abroad. It was deposited in their private accounts in Cyprus and Moscow.

Foreign interests

Milosevic has continued selling strategic parts of the Serbian economy. In 1997, he sold half of Serbian Telecom to Greek and Italian investors.

Italian capital also has an interest in the construction of an oil pipeline from the Caspian reserves, to run from Russia through Yugoslavia to the Adriatic and Italy.

Greek capital has had played a major role in Serbia and Kosova, as in the rest of the southern Balkans. A host of giant Greek companies — Telecom, the National Bank, Kokkalis, Delta, Viochalko and others — have become a major force in the region. The Greek company Mytilinaos AG bought out the famous Trepca zinc mines in Kosova, from which the Milosevic regime had sacked 13,000 Albanian workers. Kosovan leaders have called on foreign companies not to take part in Milosevic's fire sale of Kosova's assets.

Following the Bosnian war, Milosevic employed the British consultancy firm Nat-West Markets to advise on privatisation. On the board of Nat-West is former foreign secretary Douglas Hurd, who was chiefly responsible for Britain's pro-Serbian position on the Bosnian war, and his former intelligence committee chair, Pauline Neville-Jones, also a noted Milosevic apologist.

The large Beocin Cement Factory was sold to French and British investors in 1998, despite the new "investment ban" following the outbreak of Kosova violence, while the giant Pancevo Petrochemical Industry was recently evaluated at a billion German marks and was ready to offer shares on the London capital market.

Imperialism is not attacking Serbia for "socialism", but despite these considerable opportunities for investment. As Serbian economist Mladjan Kovacevic notes, the main reason that foreign investment was not higher was "the risk factor", i.e., the conflict in Kosova.

This instability is due to the Serbian bourgeoisie's inability to complete its nationalist agenda by subduing or partitioning Kosova. Its chosen methods — maintenance of apartheid, denial of all rights to Albanians and slaughter of the first signs of opposition — gave birth to what the West saw as a new instability, the Kosova Liberation Army fighting for independence.

Sometimes, imperialism can use the excuse of outrage over the actions of extreme right-wing regimes to justify its interventions, as with the US invasion of Haiti in 1993 to throw out the military butchers whose policies were creating a massive refugee outflow to the US. The attack on Serbia is in the same tradition — Serbia was not "too socialist", but too racist, and these extreme methods were leading to instability. Imperialism's aims, however, are equally opposed to the self-determination of Kosova and of other peoples in the region.