The class nature of sanctions - Wildcat

Hyperinflation: a 500 billion dinar note
Hyperinflation: a 500 billion dinar note

Wildcat UK show how international sanctions imposed on former-Yugoslavian countries during the Yugoslav wars acted as attacks on the living conditions of the working class.

Submitted by Spassmaschine on August 25, 2009

International trade sanctions imposed against various states in recent years can be roughly divided into two categories:


  • Token sanctions like those imposed on South Africa in the 1980s. The function of these is more diplomatic than economic.

  • Real blockades like those imposed on Iraq and Haiti. These are designed to directly crush the proletariat through mass starvation and to reinforce national unity by enabling the regime to blame austerity measures on the foreign blockade.

    The arms embargo against the whole of ex-Yugoslavia is an example of the first type. It certainly hasn't prevented Croatia from developing a formidable army, as has clearly been shown since August 1995, when "Republika Srpska Krajina" was overrun by the Croatian Army in a few days.

    The general sanctions against Serbia and Montenegro are an example of the second type which became a lot less successful than intended.

    A general economic blockade was declared by the UN Security Council on 30 May 1992, just a month after the declaration of the "Federative Republic of Yugoslavia" (SRJ) at the end of April. A month after the blockade began the SRJ authorities put a set of austerity measures in place involving a partial freezing of prices preceded by large increases in the prices of petrol and electricity. As the effect of sanctions increased there was an almost complete shut down of industry – jokes became common about how Belgrade had become an "ecological city" with almost no industry or cars. There was a spate of suicides by elderly people who did not want to be a burden on their families, but real starvation was rare. This was because Serbia was largely self-sufficient in food due to the existence of a large peasant sector.

    The policy of the state became more and more one of simply attacking working class living standards through inflation – a traditional method of paying for a war. Whilst in 1992 the annual rate of inflation was a mere 20,000%, towards the end of 1993 it reached 100% per day! The effect of this was to render wages virtually worthless – people carried on going to work just so as not to lose their jobs and to steal or reappropriate whatever their work-places had to offer. The Deutschmark became the de facto currency. This meant that many proletarians who had acquired savings in DM which they used to buy occasional luxury items had to use them up to buy food. Inflation, though, is a double-edged sword – it wipes out income and debt. In the modern world it's very easy to go into debt – for example, by writing a cheque or by having an outstanding bill. Electricity and telephones became effectively free, as did train journeys – before long there weren't any notes of low enough denomination to pay the fares with. You could even pay your taxes in full at almost no cost. This meant that effectively the state had no revenue.

    The state had, however, developed a novel form of taxation/fraud in the form of banks taking hard currency deposits and offering generous rates of interest. One of these was the Dafiment bank which collapsed in April 1993. It had links with many famous politicians and paramilitary leaders. As long as deposits kept pouring in it could keep making the interest payments. The bubble inevitably burst and the founders of the bank disappeared with the deposits of hundreds of thousands of customers. The bank's half-built headquarters still towers over Slavija Square in Belgrade.

    At the end of 1993 and the beginning of 1994 the working class became increasingly rebellious with strikes of some description breaking out in most of the sectors still functioning. In particular, there were industry-wide simultaneous strikes by the miners and the railworkers at the end of 1993 which paralysed the country. Partly in response to this the ruling class simply abolished inflation. This was done literally overnight (23-24 January 1994 to be precise) by the introduction of a New Dinar, tied to the Deutschmark. This brought inflation down to a manageable 100% per year and, to some extent, restarted the economy and, most importantly, restored state revenue. The restarting of the economy was possible because sanctions were becoming less and less effective as appropriate prices were negotiated with capitalists in the surrounding countries.

    It hardly needs saying that this didn't improve matters very much for the working class. In the words of a leaflet distributed by the Torpedo group:

    "There are more and more people who openly yearn for the days of hyperinflation when they manipulated cheques to be able to survive and to pay all the 'obligations' to the state. Today, with miserable wages and high prices of food, electricity, clothes and shoes, and those high taxes, it is almost impossible (of course, we must also consider the mean-spirited partial payment of wages, with a delay and partly in food or with a loan with interest). Then, besides the 'regular' job there is the indispensable speculation on the black market necessary for bare survival."

    Sanctions have certainly enabled leading members of the ruling party, and their gangster allies, to amass enormous personal fortunes through black market operations, but the ruling class have also had to sacrifice profits in order to maintain the social peace.

    At the time of writing (early 1996) the official economy is still largely state controlled and the economic policy of the state is still oriented towards providing something approaching full employment, or at least something closer to it than in most other parts of Europe... Even during 1993 there were no mass lay-offs. This is changing, but most of the state sector still carries on providing the same level of jobs – a large percentage of the workers on the pay-rolls of big factories literally have nothing to do. State owned shops are also a major source of employment – even a small one might employ several staff and do almost no business. For a worker the best situation is to be laid off on reduced pay, that way you get a guaranteed income from the state and you can use your time to make money on the black market. The existence of the black market means that workers are less afraid of being sacked because they can easily find some kind of work there. Essentially the black market functions as a very large inefficient retail sector. You're never going to get rich selling cigarettes and chocolate by the side of the road but you can probably earn as much as working in a factory. Not surprisingly the state has recently starting trying to reduce the role of the black market with increased police raids on street sellers. There is even a proposal to legalise black market activity but in designated places where it is easily controlled. The absurd pretence that the New Dinar is worth one Deutschmark has been abandoned and the official rate is now very close to the black market rate.

    All the while the ruling class have blamed every attack on living standards on sanctions and tried to claim that the lifting of sanctions will solve everyone's problems. In reality this will almost certainly be the signal for a generalised restructuring of Serbia's archaic industry and the removal of social guarantees. The reintroduction of sanctions will remain a real possibility if the resulting social revolts cannot be contained.

    In January 1996 the UN chief war crimes prosecutor Richard Goldstone said that sanctions might have to be reimposed (they were suspended as part of the Dayton agreement) if the Serbian government didn't cooperate in handing over "war criminals". In February the US Secretary of State pitched in with a statement that SRJ could not be rehabilitated until it not only handed over war criminals but also "restores human rights" in Kosovo. This effectively gives Miloševic and the rest of the international bourgeoisie the capability of restoring sanctions any time they think it's necessary for the control of the working class in Serbia.

    Taken from the No War But The Class War website.

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