News & Politics

Balkans Beachhead


Washington— It was late in the day when the industrial contractor called. “We’re ready to do business in Kosovo,” he told the senior administration official on the other end of the line. “Who do we talk to?”

The official paused. “I haven’t the faintest idea,” he said. “My advice: call Brussels.”

That was not the counsel the official had expected to give, but, he said, unlike the situation at the end of the Gulf War, it doesn’t seem that the U.S. government has made ensuring U.S. companies a piece of the rebuilding action in Kosovo a high priority. Nor does it seem probable, say numerous European observers, that the European Union— the body largely responsible for underwriting and overseeing Kosovo’s physical reconstruction— is going to look favorably upon American bidders, as most EU members are still quietly disdainful of the U.S. for essentially forcing them into military conflict with Yugoslavia.

In fact, they say, the contracting process could be a crucial part of Europe’s continued efforts to assert its independence from American authority. Yet the Europeans are likely to find their burgeoning sense of autonomy undercut by the U.S. through two other institutions that, ironically, could end up further complicating the Balkans situation: the International Monetary Fund and the World Bank.

“One could very cynically say one of the reasons for U.S. entry into the Balkans was the opportunity to impose its economic stamp on the region,” says Steve Helliger, president of the Development Gap, a Washington-based global economic watchdog. “The IMF and World Bank are still U.S.­led institutions, and what this means is we can expect— even in the countries not involved in hostilities— increasing openings to foreign investors at the expense of local investors, lower wages, more inequality, more concentration of wealth, and control of the economic agenda from the outside. And if the Balkans don’t accept that, they’ll be cut off from all international capital.”

In terms of physically rebuilding Kosovo, however, there’s little question that European firms are liable to dominate, thanks to adroit advance planning. Even though the EU isn’t likely to award the first tenders until later this summer, Britain’s Department of Trade and Industry— which took a public drubbing earlier this decade for failing to help get British contractors into Kuwait and Bosnia quickly enough— has already set up a public-private task force charged with lobbying the EU, and has dispatched a senior economic office to Japan to inquire about pitching joint British-Japanese contract proposals to the EU. Meanwhile, the German government— which sees Kosovo contracts as an avenue for reducing a 12 percent unemployment rate— is aggressively working to make sure that firms like Siemens, RWE, Hochtief and others are positioned to profit. (Having recently spent $114 billion on the massive reconstruction of Berlin, German firms are at the top of their game skillwise.) Swiss-Swedish engineering behemoth Asea Brown Boveri has made its intentions clear, and may have a leg up, as its CEO, Goran Lindahl, suggested before the war was over that the EU set up a rebuilding oversight authority. Even the Romanian government has its own public-private lobbying effort.

The U.S., by contrast, has merely announced plans to send a commercial service officer from the Commerce Department to Thessaloniki, Greece, to “make sure that U.S. firms have a fair chance in the bidding process,” as Commerce’s undersecretary for international trade, David Aaron, put it last week. Among international observers, there’s almost universal consensus that whomever Commerce sends will not have an easy time.

“Even though no one will say it publicly, the U.S.­led war in Kosovo has been very much resented by the European governments, and to have Clinton saying ‘we bombed and now you rebuild’ is unpopular indeed,” says Martin Butcher of the British American Security Information Council. “This approach by the U.S. of unilaterally imposing policies on its allies is not well-taken at all. What this means for U.S. businesses is that they’re going to be cut out.”

Although most mainstream analysts have decreed Kosovo a victory for NATO and hold that the alliance’s future is secure, Butcher and others believe that the American foreign policy establishment is failing to grasp just how uncomfortable and disillusioned the Europeans are. Trepidation has been growing since last year, he says, when Madeline Albright told a London audience that NATO should be used as a force for peace from the Middle East to Central Africa— a mission far beyond the scope of NATO’s charter.

While the British-led faction in NATO continues to favor a strong U.S. military role in Europe, the EU’s recent decision to create a European-only defense body shows that the more Eurocentric Franco/German-led bloc of NATO is prevailing. Publicly, the Clinton administration has taken a somewhat bemused and condescending view of the new EU defense plan.

To some extent, the attitude isn’t untoward, as conventional wisdom holds that the EU countries will never be willing or able to expand their defense budgets to enable military independence from the U.S. However, says Butcher, discussions at the EU summit focused on the obvious solution: reforming each country’s inefficient military buying programs and shifting toward joint procurement. “I think the U.K. thinks it can put the brakes on this policy, but that won’t happen, because there’s already an enormous impetus built up behind this,” he says.

Nevertheless, whatever power the EU attempts to exert in the rebuilding of Kosovo may be offset by the involvement of two institutions that, ironically, played roles in Yugoslavia’s breakup: the IMF and the World Bank.

Regarded by many in the developing world as global loan sharks, the World Bank and the IMF are happy to advance money so long as recipient countries submit to “structural adjustment,” a euphemism for cramming neoliberal Western-style capitalism down a nation’s throat. Under Tito, IMF money was rarely distributed equitably among Yugoslavia’s six republics and two provinces, and rather than pool income the enclaves that made the most kept it. Already hurt by the world economic crisis of the 1970s, arguably the last thing Yugoslavia needed was more IMF austerity demands; by the early ’80s, unemployment had skyrocketed, and by 1990 inflation had soared while wages had fallen.

Though the IMF and the World Bank weren’t the most prominent players in Yugoslavia’s breakup, “their adjustment policies certainly created tensions and contributed to pitting population groups against one another,” says Hellinger. “There’s anticipation that any program initiated in the wake of hostilities that’s managed by the World Bank or IMF will mean more adjustment, which is cause for concern because it means liberalization of trade, which wipes out small and medium-sized producers; liberalization of foreign investment laws, which lets multinational corporations buy up smaller firms; and labor market reform, which is another way of saying ‘undermining unions.’ ”

According to Hellinger, while the EU doles out contracts to construction firms and merchants, the World Bank and IMF can be expected to take advantage of Kosovo’s international protectorate status to make it a Balkans beachhead for neoliberal expansion, and it’s here that U.S. corporate hegemony is apt to assert itself. “Someone has to manage on privatization and rewrite foreign investment laws, and there’s likely to be a fight between the big U.S. finance houses, like Goldman Sachs and Merrill, for handling those privatizations,” he says. “This is their opportunity to impose the same economic agenda they’ve imposed everywhere else around the world.”

Archive Highlights