BY IVO SKORIC © February 10, 1992; updated in 2001


Title: We don't need NATO. We need Tito. - from New Yorker


Yugoslav president Josip Broz Tito dies. The country is stumbling economically, politically and morally.


The "Slovenian Spring" begins. Slovenia separates from the rest of Yugoslavia culturally and ideologically. The Yugoslav Army decides that this plague of democratization, liberalization and civilization of Yugoslav society must be stopped on the southern border of Slovenia. The Yugoslav Army lives off the slavery of Yugoslav people: while the average person's monthly income was $400, the average army officer received $2300 monthly, an apartment, medical insurance, early retirement and a pension ten times larger than average. (See "The Price of Balkan Pride" by Jack Anderson, The Washington Post, 12/29/91.)


In a communist party purge in Serbia, Slobodan Milosevic takes power and establishes a dictatorship. He uses Serbian nationalism to strengthen his power. In the past, the communist party had been against nationalism. This new emphasis nationalism raises fears among non-Serbian Yugoslavs of violent Serbian nationalists known as "chetniks". It also creates a draft-base of loyal soldiers in Serbia. Milosevic denies freedom of assembly to the Society for Yugoslav Democratic Initiative (the Yugoslav counterpart of East-German Neue Forum) in Belgrade. Milosevic stands for a Yugoslavia under the Army's rule.


In response to Milosevic, communists in Croatia allow a return of Croatian nationalism. Croatian nationalists are released from prisons, becoming a fashionable target of the press. They get passports and meet Croatian political refugees around the world, announcing the good news and accepting contributions. In April 1990 the Croatian Democratic Union wins the first democratic elections in Croatia. The elections were organized by the communist party in a way that made it almost impossible for the Croatian Democratic Union (CDU) to lose the elections.


Franjo Tudjman, president of the CDU waves the old Croatian flag, changes names of streets, gives unbelievable interviews to the press, fires a few Serbs from police and media, and does all sorts of things Milosevic and the army expected him to do. Milosevic sends agents to regions in Croatia that have a Serbian population to prop up a rebellion. He reawakens fears of the past Croatian state that was a part of Nazi controlled Europe.


Yugoslav graveThe Yugoslav Army, while 'allowing' democratic elections in Slovenia and Croatia, mainly to create legitimate enemies, never allows anything close to democracy in Serbia: the Army sends tanks against Serbian students demonstrating in Belgrade on March 9, 1991.
The Yugoslav Army helps instigate war between two Yugoslav major ethnic groups -- Croats and Serbs -- by providing weapons to Serbs. The leadership of the CDU, which consists of a surprisingly large number of former Yugoslav political police officers, acts in a way that can be understood as a cooperation with this war-project. Fortunately, the Croatian National Guard fights for Croatia's liberation.
The war is not fought to protect the Serbian minority in Croatia, as the media often misunderstand. There are 10 million Russians in the Ukraine -- almost 20% of Ukraine's population. There are just 600,000 Serbs in Croatia, less than 12 percent of its population. During World War II, Nazis set up a puppet state in the Ukraine as they did in Croatia, and Russians suffered the same in the Ukraine as the Serbs in Croatia. However, when the Ukraine declared independence, there was no war between Russia and the Ukraine. The Red Army didn't start shelling Yalta as the Yugoslav Army shelled Dubrovnik.

The illusion that the other side is evil is so perfect that it makes it impossible to stand by. Youth are dying. How can you play a pacifist witnessing somebody destroying your home, killing your family, stabbing your best friend? You can run away or stay and fight. Most of the youth who grew up in the spiritual desperation of the self-destructing Yugoslav eighties would decide to stay and fight.
The Yugoslav Army counts on the adrenaline of the technically inferior enemy. The Army's destruction of its own country is what hurts me the most about this war, as well as the support it is quietly receiving from the US, the country that has proclaimed itself the protector of freedom and justice on this planet.


The Yugoslav Army is the largest Yugoslav industry. With annual exports of $3 billion, the Yugoslav Army, whose main offices are in Serbia, is twice as large as the second largest Yugoslav industry, tourism, which is based mainly in the coastal regions of Croatia. After the fall of the Berlin Wall, self-destruction of the Warsaw Pact and the end of the Cold War, countries that have been living off arms sales suffered a harsh economic crisis, as we have seen in the US and Serbia. California, for example, reported a fall in its growth rate of 30% and layoffs of 600,000 workers, mainly from California's large weapons plants.
The Federal Directorate of Supplies and Procurement (FDSP) is the name of the Yugoslav Army weapons dealership. FDSP does its money-transactions through Beobanka, a bank with headquarters in Belgrade, Serbia. Beobanka is the strongest bank of Yugoslavia; it is 359th on the World list of banks, and it is four times bigger than the largest bank in Croatia, Privredna Banka Zagreb. Slobodan Milosevic, who is now president of Serbia, was manager of the Beobanka's subsidiary in New York, and, later, was chairman of Beobanka in Belgrade. While Milosevic headed Beobanka, Lawrence Eagleburger, who is now US Deputy Secretary of State, was a US ambassador to Belgrade (1977-1981), and Cyrus Vance, who now heads the UN sponsored peace-negotiations for Yugoslavia, was the US Secretary of State.

Both Eagleburger and Vance have past and present connections to the US defense industry, and to US defense policy. Vance was the (unsuccessful) negotiator of peace in Vietnam at the conference in Paris 1968. Later he was the Secretary of Defense and he was on the Board of Directors of General Dynamics, a major defense contractor.
Eagleburger was Undersecretary of Defense, a political adviser in the US mission to NATO, assistant to president for operations of national security in the Department of Defense, president and CEO of ITT (also a major defense contractor), president of Kissinger Associates (a powerful think-tank). Kissinger Associates provides advice (global strategic, geopolitical and economic analysis) for a fixed fee of $150,000 to $200,000 per client. Eagleburger was head of ITT and Kissinger Associates at the same time, and ITT was one of his main clients: by consulting himself he collected bonuses from both ITT and Kissinger Associates.
Henry Kissinger, founder and chairman of Kissinger Associates, was accused of being behind the military coup in Chile. Evidence of his activities couldn't be submitted to a court because of national security reasons. Lord Carrington, the former British foreign secretary, a former head of an unsuccesfull peace-negotiating team for Afganistan, and a head of the EC sponsored peace-negotiating team in Yugoslavia is still on the Board of Directors of Kissinger Associates. The president of Kissinger Associates today is Bremer, formerly US Ambassador at large for combating terrorism.

A Yugoslav/Serbian based construction company, Energoprojekt, which had large contracts in Libya and Iraq (ten years ago it was the 16th largest world construction company), was one of Eagleburger's biggest clients while he was president of Kissinger Associates. The Kissinger World Energoprojekt is one of six companies fined 550,000 dollars each by the U.S. Treasury Department on March 6, 1992, because of Energoprojekt's business with Libya from the US. The same fine was imposed on Jugobanka, the other Yugoslav headqurtered company. That means that 1/3 of fined companies are Yugoslav (Serbian) subsidiaries.
Eagleburger was at the same time president of another consulting company: Kent Associates. This company has almost the same staff as Kissinger Associates. The only member of Kissinger Associates who was not at the same time a member of the Kent Associates, was Brent Scowcroft. Brent Scowcroft was US air attache in the Belgrade embassy in the late 1960s. Scowcroft is now a president of the National Security Council. A senior official of the National Security Council told a delegation of the American Croatian Society on November 25, 1991 that the US could not recognize Croatia and Slovenia because recognition would expand the Yugoslav war into Bosnia and Herzegovina. The Republics are now recognized by more than 40 countries worldwide, and the war still has not expanded to Bosnia and Herzegovina. Were US National Security Council estimates guided by some special interest group?

In January, 1990, Eagleburger had a meeting with defense industry executives. A few months later, in July, he fired off a classified memo to all US embassies worldwide asking them to help the US defense industry in marketing its products. In times of fear of uncontrolled weapons proliferation, Eagleburger is asking US foreign representatives to act as weapons salespeople, as agents for weapons proliferation.
Eagleburger has a long time practice of ignoring the human rights abuses: he flew over to Washington DC from Belgrade in 1981 when US Congress voted on its first resolution on human rights abuses in Yugoslavia, committed by Serbian police in Kosova autonomous province. Eagleburger came to warn congressmen not to make a terrible mistake.
List of Eagleburger's allies includes Marc Rich, commodities trader headquartered in Zug, Switzerland, one of the richest men in the world, a man with operations in 48 countries, who is said to control the economies of twenty-three Third World nations (that might include Yugoslavia/Serbia, known for its rich resources of nickel and zinc in Serbia). Marc Rich is wanted in the U.S. to serve decades behind the bars on indictments for tax evasion, fraud, racketeering and trading with the enemy. Marc Rich traded with Iran during the hostage crisis, and with Iraq during the Desert Storm operation. Marc Rich, also, traded with South Africa, despite of U.N. embargo. His case is one of the largest tax-evasion cases in U.S. history. He was pardoned by Bill Clinton on the last day of his presidency....

As for Kissinger Associates the following article by Eric Margolis appeared in The World of Sunday, April 25, 1992 (this is added to this text later):

"Since the late 1970s, say Washington sources, Kissinger Associates channelled hundreds of millions of dollars in private U.S. investments into Yugoslavia. By sheer coincidence, most of it was made after Eagleburger served as American ambassador to Belgrade.
The potential here of a grave conflict of interest is clearly evident. Kissinger risked his reputation (read later about Eagleburger setting up Yugo-America and LBS venture in the U.S., and about Joe Macomber hiding Eximbank's files on Yugoslavia before Senate subcommittee) by advising clients to invest heavily in Yugoslavia where his connectiona were excellent. The threat of Yugoslavia's breakup, which would be inevitably followed by war and economic chaos, obviously imperiled Kissinger-directed investment. (MILOSEVIC KNEW FOR THOSE INVESTMENTS, BECAUSE HE WAS THE MAIN EAGLEBURGER'S LIAISON IN YUGOSLAVIA. BY KNOWING THAT HE FACTUALLY BLACKMAILED THE U.S. INTO WEAKHANDED REACTION TO SERBIA'S AGRESSION.)
Kissinger, Eagleburger and
Scowcroft may have done their utmost to shore up the crumbling Yugoslav state. When it did collapse, they apparently managed to delay U.S. recognition of the new nations that emerged from Yugoslavia. Kissinger Associates was certainly protecting its investors money - but not the interest of the United States or the peoples of ex-Yugoslavia."

It is really difficult to digest that so many of my poor friends should die to protect some rich guy's equity thousand miles away. As Eagleburger himself pointed it out at MAC NEIL/LEHRER Newshour on April 23, 1992:

"Unless the warring parties want to find the peaceful solution and unless the outside forces are prepared to put troops in themselves to try to enforce a peace, we are going to have to go through this process of continuing to try to find a peaceful solution, and it is going to be painful and it's going to take time.

They [the warring parties] don't want to solve problem peacefully... We are not prepared to send troops in; neither or the Europeans... It's going to be long and difficult process."

This is what so-called New World Order is all about? To bless stronger, larger, richer and more aggressive nations and to condemn weaker, smaller, poorer and more peaceful nations which would have then to subordinate to stronger, larger, richer and more aggressive.
Corporate sorceres do not care about lifes of the people, just about investments of their clients. They would allow even bigger and more bloddy conflict in order to protect those investments. THE WORLD further:

"If the regime of Serbian dictator Slobodan Milosevic falls, any hope that Kissinger's investors will ever see even a fraction of their money will be gone. So it seems that Kissinger is still using his influence in Washington to keep Serbia afloat - and avert the threat of drastic American economic sanctions or even military action.
Thanks to Kissinger's match-making, right-wing Israeli politicians have made an anti-Muslim alliance with Serbian extremists. Many Bosnians and Albanians are Muslims. Israel's Arab foes are also mainly Muslim. A Serbian-Israel Friendship Society just opened in Belgrade. Isolated Serbia is obviously looking for Israeli arms and support from the Israel lobby in Washington. Yugoslav government was pro-Arab. Serbia is now officially pro-Israel."

The facts are that Yugoslavia broke diplomatic ties with Israel 1967, that Yugoslav Army gave training to Lybian army officers, that Yugoslav defense contractors built Gaddaffi and Saddam Hussein power, that Yugoslav government gave safe heaven, weapons and trainig to world-class terrorists (Baader-Meinhoff, R.A.F.,etc.) and to P.L.O. people including their extremist dropouts like Abu Nidal. This is the same Yugoslav Army that runs now new Serbian Yugoslavia, which seeks friendship from Israel!

(The World:)"This is the logic of madman. The last thing bleeding ex-Yugoslavia needs is to be infected by the Arab-Israeli conflict. But it seems to be happening thanks to the nefarious influence of political sorcerer Henry Kissinger."

Maybe the war on Balkans is in fact convenient for American corporate interest scared by strong united European/German economic superpower. Instability in Europe, and political disagreements between EC members may be just what U.S. corporate buisines needs to preserve its monopoly on the markets.

The Yugoslav military-industrial complex bought licenses for sophisticated new weapons from the American military-industrial complex, paying above the market price, and US political consultants got paid for their help in such deals. Yugoslav workers engineers produced tons of such weapons using American know-how. Yugoslav workers and engineers were paid in highly inflated Yugoslav currency and with a few months delay. With 2000% inflation each year, labor costs in Yugoslavia were hundreds of times lower than in the US. Products were sold below market price to Iraq, Libya, Iran, Algeria, Sudan, Ethiopia, Somalia, Uganda, North Korea, and other nice third-world "democracies". Products were sold for dollars or for the oil. Dollars were kept by Beobanka, and oil was kept by Tehnogas (a major Serbian oil company).
Particularly interesting is the fact that Slobodan Milosevic was CEO of both Beobanka and Tehnogas. This is why Ante Markovic, the most recent Yugoslav prime minister, could not permanently stop inflation: the business of the most powerful Yugoslav corporation -- the Yugoslav Army -- is based on a high inflation rate, and they had no interest in lowering it. While the more sophisticated Yugoslav factories are in Slovenia and Croatia, the headquarters of the Yugoslav defense industry is in Serbia. No wonder Serbia started the war when Slovenia and Croatia declared independence.
More business-minded Slovenian government may have made war in Slovenia shorter by complying with Yugoslav defense industry busines requirements: telecommunications corporation Iskra (Kranj/Slovenia) is making half of its export money by selling the laser-measuring equipment for soviet types of tanks - Iskra continued this production regardless the war between Slovenia and Yugoslav Army; Zelezarne (steel factory from Ravne na Koroskem/Slovenia) also continued its deals with Yugoslav Army.

According to a recent report by the US-Yugoslav Economic Council (a Washington DC non-for-profit organization of American companies doing business with Yugoslavia) there are 270 American companies doing business with Yugoslavia. More than 20 of them are Yugoslav subsidiaries.

Some of the US companies doing business with Yugoslavia include: Raytheon, Lockheed Corp., California Helicopter International, Airco Precision Industries, Rockwell International Corp., Textron Inc., and Radiation Systems Inc. Those companies are not producing diapers.

Franjo Tudjman, the president of Croatia, Stipe Mesic, then president of Yugoslavia and Ante Markovic, then prime minister of Yugoslavia, were almost killed in the presidential palace in Zagreb, Croatia, when the Yugoslav Army fired a US made Maverick tv-guided missile on the presidential palace. This is the latest US defense industry product, which we remember from the "nintendo" War in the Gulf.

Yugoslavia ranked as the 30th country in the US's trading balance. In the first nine months of 1991, US exports to Yugoslavia fell 25% and US imports from Yugoslavia fell 14%. This was before the war.
It seems that America does not need democracy in third-world countries, but rather a stable dictatorship headed by a strongman capable of securing cheap labor for American business, and an obedient market for products "Made in USA". This was what the president of Serbia, Slobodan Milosevic, was promising. This is why he was gaining support.

Lawrence Eagleburger was on the Board of Directors of Yugo America Inc. Yugo America Inc. was owned by Global Motors Inc., and Global Motors Inc. was owned by Zavodi Crvena Zastava of Serbia. Global Motors was also a client of Kissinger Associates.
Zavodi Crvena Zastava is an old Serbian weapons factory, and about 60% of its production is defense products. Its main customers (70% of exports) are Iraq and Libya. Zavodi Crvena Zastava supplied weapons to both Iraq and Iran during the Iraq-Iran war, showing that Yugoslavia's non-alignment policy was just doublespeak.

Yugo America Inc. sold Yugo cars in the US for $3999 -- half of the Yugoslav price, and well bellow the price of production. The rest was paid by the Yugoslav worker, who received a slavish wage; by the Yugoslav buyer, who paid double the American price; and by weapons exports. Yugo America Inc. filed for Chapter 11 in 1989, but it was bailed out by generous loans from its parent, Zavodi Crvena Zastava, and from Genex, the Belgrade based major Yugoslav export-import company. Yugo America Inc. is still alive and kicking in Upper Saddle River, New Jersey. Nobody knows what they are doing. Yugo did not participate in this year's car-show in Detroit.

Jack Anderson on February 21, 1989 reported that the Yugo automobile was "built by a division of the huge conglomerate which is the backbone of the Yugoslavian arms industry. Among its clients are Iraq, Libya and East European countries." This account was repeated in a memorandum by Dave Keaney and Bob Friedlander to all members of the Senate Committee on Foreign Relations on March 13, 1989.

Eagleburger was then on the Board of Directors of LBS Bank, a wholly owned subsidiary of Ljubljanska Banka, Slovenia (after Beobanka, the second largest bank of Yugoslavia). In 1989 Ljubljanska Banka declared its inability to return to Yugoslav people outside of Slovenia their foreign currency deposits. (There is no FDIC in Yugoslavia.) People in Croatia who had a foreign currency account in Ljubljanska Banka virtually lost their money. Ljubljanska Banka owes about 600 million dollars to those people. In 1988 Ljubljanska Banka invested $12 million in its US subsidiary LBS. This money was later re-invested in third countries. Ljubljanska Banka was also a main financial institution involved in the greatest financial scandal in Yugoslavia, "Agrocomerc," which was a communist example of the junk-bonds idea. There is a case pending in New York State since 1988 against LBS because of suspected money-laundering for drug-smugglers. 20-25% of LBS's business came from Banca Nazionale Del Lavoro (BNL) of US in Atlanta. While Eagleburger was president of Kissinger Associates and a member on the Board of Directors of LBS, Henry Kissinger was the head of the international department and Renato Guadagnini was a general manager at BNL in Atlanta. BNL of US gave an illicit loan of $4 billion to Saddam Hussein, while Guadagnini was general manager. After Eagleburger assumed his position at the State Department, his seat on the board of LBS was given to Guadagnini. What a coincidence! The reader may get even more information on connections between BNL and LBS by getting the Congressional Record (House, Thursday, April 25, 1991, 102nd Cong. 1st Sess., 137 Cong Rec H 2547; Vol. 137 No. 62, BNL Subpoena Renewal).

On January 25, 1992, the Croatian Community in New York organized a fundraiser for the re-election campaign of Senator Alfonse D'Amato. D'Amato told the public: "Eagleburger has to remember that he is not representing Serbia any more, but that he has to serve the interests of American people."

However, Lawrence Eagleburger was not the only American ambassador to Yugoslavia bought by Belgrade. John Scanlan, a US ambassador to Yugoslavia (1985-1989) is today on the board of ICN Galenika. ICN Galenika is 25% owned by Galenika from Zemun/Serbia/Yugoslavia, and 75% owned by SPI Inc. SPI Inc. is wholly owned by ICN Pharmaceuticals Inc., a long time partner of the Serbian-Yugoslavian pharmaceutical industry. Besides Scanlan, the board of ICN Galenika includes Velimir Brankovic, a vice-president of the Serbian Democratic Party for America. ICN Galenika contributed to election campaigns for US Senator John Breaux (D-LA), US Representative Phil Sharp (D-2-IN) and US Representative Jill Long (D-4-IN). The Serbian Cultural Society "J. Ducic" is registered in Indiana. The head of this society, Stevo Dobrijevic, organized in 1990 a tour in the US for Jovan Raskovic, then a leader of Serbian insurgency in Croatia. Democratic presidential candidate Jerry Brown accepted ICN Biomedicals Inc directorship in 1987 while its major owner, ICN Pharmaceuticals Inc. was trying to promote ribavirin as an AIDS treatment. Both firms are headed by Milan Panic, a Yugoslavian/Serbian-born businessman who has been a major supporter of Brown over the past 20 years. Brown intervened on behalf of ICN calling Rep. Henry Waxman, D-Calif. who chairs a House Energy and Commerce subcommittee which oversees the Food and Drug Administration. Panic hosted fundraising events and his company spent 180,000 dollars at Brown's law firm, although Brown did no legal work on its behalf. However, FDA never approved ribavirin, and ICN Pharmaceuticals Inc. agreed last May to pay 600,000 dollars to settle civil charges that it violated federal laws against promoting ribavirin as a treatment for the AIDS virus. Brown resigned from the ICN Biomedicals Inc. board Dec. 17, 1991.

There were rumors that Crossocean Shipping, a wholly owned subsidiary of the Yugoslav shipping corporation Jugolinija, which had a Serbian majority on the international board of directors, had decided to change its principal harbor in the US from Norfolk (VA) to Baltimore (MD), merely to please Maryland Congresswoman Helen Delich-Bentley, a great supporter of the Serbian cause in Congress. (those rumors were later dispelled for me by the CEO of Croatia Lines, the succesor to Jugolinija, which kept with Norfolk because of lower costs)
Late in 1989, Narodna Banka Jugoslavije (a Yugoslav counterpart of the Federal Reserve Bank) lent $71 million to Drexel Burnham Lambert, just a few months before their bankruptcy. The loss of $71 million is the equivalent of 1 percent of the annual Yugoslav national budget, and 45% of the nation's annual budget for social programs. Today, Yugoslavia is suing Drexel, its subsidiaries and individuals employed by them. Yugoslavia is represented by Richard Levy, a lawyer in Chicago. It is highly probable that some of the Narodna Banka Jugoslavije employees received generous bonuses (or, more accurately, bribes) from Drexel for acting against the interest of their country. There were examples in the past of many Yugoslav business executives who engaged in business harming their companies and their country if that would benefit them personally.


Despite the war in Yugoslavia, for the last six months the Yugoslav debt has sold on the world market at 30 cents per dollar without major fluctuations in price. Narodna Banka Jugoslavije, located in Belgrade/Serbia, regularly paid its obligations, creating the illusion that Yugoslavia is still functioning as a country, and that ten thousand killed and a million displaced persons is not really a major problem.
However, soon Yugoslavia would exhaust its federal reserves. The total former Yugoslav debt is $16.7 billion. Yugoslavia owes $4.5 billion of this debt to commercial banks in the West. The steering committee of banks who are lenders to Yugoslavia is led by Manufacturers Hanover. Yugoslavia is servicing debt semiannually with a 7 and 13/16 percent interest rate. Of the total of $16.7 billion debt, Serbia owes $4.2 billion, Croatia $3.9 billion and Slovenia $2.5 billion. The rest is divided between the remaining republics. Federal reserves placed in Belgrade/Serbia amount to $2.4 billion. Croatia and Slovenia have their own reserves of $500 million, and other republics have their regional reserves of $500 million. (please, be advised that I wrote this in 1992)

Croatia and Slovenia, with 25% of the Yugoslav population, produced 45% of the Yugoslav GNP each year. Therefore Croatia and Slovenia should be entitled to 45% of $2.4 billion in federal reserves. However, after the resignation of Yugoslav prime minister Ante Markovic, and the recognition of Croatia and Slovenia by the EC countries, Narodna Banka Jugoslavije decided not to pay the obligations for Croatia and Slovenia during the last payment on January 21, 1992. Manufacturers Hanover, a bank registered in the US (which has not recognized the sovereignty of Croatia and Slovenia), asked Croatia and Slovenia to pay by January 28 $900 million and $600 million, respectively. Matjaz Jevnisek of Ljubljanska Banka (Slovenia) told Reuters that Slovenia paid its obligations amounting to $447.87 million on January 24 and suggest that Yugoslav federal reserves should also be divided among the republics, as the debt was. There were no reports from Croatia's Privredna Banka.
What if war-torn Croatia, with its money on hold in Belgrade, became unable to meet its debt servicing obligations? Commercial loans to foreign countries are secured by Eximbank. Eximbank and the US government will pay Croatian debt to Manufacturers Hanover, thus experiencing the consequences of their own policy. The president of Eximbank, John Macomber, a good friend of Lawrence Eagleburger, never allowed the research team of the US senate committee to access the risk-analysis of investing in Yugoslavia. Eximbank never released any data on Yugoslavia (even after it declared Yugoslavia as an undesirable destination for lenders). Yet Eximbank did release such data on Iraq, for example.

The Federal Bureau of Statistics of Yugoslavia declared a fall of 20% in the Yugoslav GNP in 1991. The biggest fall is in Croatia where the war is being fought: 28.2%. Meanwhile, Serbia suffered a fall of just 17.6%. That means that Serbia by waging war against Croatia actually acquired a better standing in the Yugoslav GNP in 1991: Croatia produced 25% of the Yugoslav GNP, and now produces 22-23%; Serbia produced 21% of Yugoslav GNP, and now produces 22-23%. But they still both produce 20% less than before. People are now earning $100-$150 a month.
After recognition of Slovenia and Croatia by the EC, the Slovenian and Croatian monetary systems were physically separated from the rest of Yugoslavia: Slovenia and Croatia each printed their own money. Ten days later the Yugoslav currency (which was no longer accepted in Slovenia and Croatia) was devaluated 80%. One dollar in Belgrade was officially equal to 25 YU-dinars. Now one dollar in Belgrade is officially equal to 105 YU-dinars, but on the black-market one dollar gets 140 YU-dinars because salespeople anticipate a 25% monthly inflation rate.
Retail prices in Serbia are going up approximately 60% a month, but the official inflation rate is still 25% a month. Long distance companies in Serbia, which already have the highest rates in Europe, waited for devaluation to announce another 33% increase in charges (with devaluation and inflation, it amounts to an actual increase of 150%). Slobodan Milosevic is very aware of how communication with the outside world might be harmful to his iron-fisted rule in Serbia, so he takes care to physically disable any communication. However, some commodities in Serbia are getting cheaper: grenades cost $120 each at the beginning of the war, and they are now just $3 each.

Visitors to Croatia, Slovenia and Yugoslavia who are charging their accommodations, car rentals and restaurant costs to their credit cards should be aware that credit card companies will probably calculate their expenses using the "official" Yugoslav dollar-dinar rate set up in Belgrade/Serbia, even if they spend all of their time in Croatia or Slovenia. Slovenia's currency -- the Tolar -- was also recently devaluated 15%. The monthly inflation rate in Slovenia is 10.2%. All current currencies on the teritory of former Yugoslav federation devaluated repeatedly several times in past tree months (Slovenian Tollar, Croatian Dinar and Yugoslav Dinar). One Slovenian Tollar will buy usually 1.5 Croatian Dinars, and 1 Croatian Dinar would buy 1.5 Yugoslav Dinars. Yugoslav Dinars are not convertible to either Slovenian or Croatian currency. All parties are eager to welcome 14,000 hard-currency strong United Nations peacekeepers. Healthy competition between tourist industry in different countries/republics of Yugoslavia developed due to expected arrival of UN forces (hotels in Serbia, Croatia and Bosnia are slashing their prices).

In the remnants of Yugoslavia, 83% of the federal budget was allocated to the Yugoslav Army. So the Army will still get paid. Gita Zbavitelova reported in the Czecho-Slovak newspaper Respect that there is a copy of a $1.5 billion contract between Czecho-Slovakia and Yugoslavia for the export of weapons to Yugoslavia in the beginning of June 1991 -- just one month before the war started. The Army prepared for the war.
And the Army is still buying weapons. Just recently the Yugoslav Army tried to buy (despite the UN embargo) captured Iraqi weapons from Kuwait. The Yugoslav Army placed an order for missiles, tanks, cannons and 200,000 mines. Mines have been very useful in this war, making Croatia a land of the disabled. Reportedly Kuwait's Defense Minister sheik Ali Sabah Al-Salem Al-Sabah refused to supply the Yugoslav Army. He might remember that Iraqi telecommunications equipment was partially made in Yugoslavia under the Rockwell license.

Paul Beaver of London's Janes' Defense Weekly reports that the Yugoslav Army has about one hundred Frog-7 (Luna-M) short range surface-to-surface missiles, and 16 mobile launchers for them. These old soviet-made, highly inaccurate missiles have a 30 mile range and were brought to the outskirts of Zagreb, Croatia's capital (a city with a population of 1 million) with the intention of causing panic there.

This war can last a very long time. If world will allow that. US Secretary of State James Baker stated on March 9 that he is willing to discuss recognition of Yugoslav republics with EC. Super-Tuesday made Baker even rush with recognition of Croatia (1/3 of all Croatians are living in the U.S.) and Slovenia. That would probably lead to the US recognition and pave the way for Slovenian and Croatian access to UN, IMF and World Bank. Serbs had enough of war and Slobodan Milosevic began to have accidents. The latest one was a car accident that resulted in concussion. Taking in account the price of grenades on Belgrade black market ($3), his fatal accident may not be too far. The best kept secret is that Eagleburger announced a new US ally in the Balkans, Bulgaria, just three days before the change in American policy toward Yugoslavia occurred. Bulgaria will have the most-favored-nation trade status that Yugoslavia has had for years, and those businesses that were oriented on Serbia, will re-orient on Bulgaria. So, America found the escape from possibility of loosing influence in the region. Eagleburger found it amazing how Bulgaria changed from a Stalinist ruled KGB "protectorate", often called 16th Soviet Republic, in the STEADY AND STABLE DEMOCRACY, in less than two years. In March 1992, for the first time, neon signs were being erected in the capital's central business square to advertise Johnny Walker whiskey and Panasonic electronic goods. It is really amazing how former KGB officers found a way of doing business with America so fast. I wouldn't be surprised to see Eagleburger on the board of directors of few Bulgarian subsidiaries in the US, after he quit his State Department job. Eagleburger was the one who promoted "sit back and relax" (this is an actual quote of what he had told Slovenian foreign secretary in winter 1991) US policy toward war in Croatia/Yugoslavia that left thousands of death and millions homeless. It should never be forgotten.

So, when the U.S. will finally recognize separatist republics and what impact will that recognition have on the peace in former Yugoslav federation? On April 7, EC is making decision about recognizing Bosnia and Herzegovina, and Macedonia, the other two republics that declared independence. James Baker, US Secretary of State signed a paper in Brussels saying that US will recognize Croatia and Slovenia beforehand, and will do the same with Bosnia and Macedonia that EC will do. There is a notable coincidence in presidential campaign schedule: beginning of April primary is in North-East region again, in the area where there are headquarters of the most important and powerful Croatian organizations and lobbying groups (New York, Washington DC, and particularly Pennsylvania with the headquarters of the Croatian Fraternal Union). So, the well timed decision will add some votes to Bush campaign.
So, it happened as I thought would happen. U.S. recognized Croatia, Slovenia and Bosnia & Hercegovina on April 7th. State Department gave a justification (Wall Street Journal, Apr 7): they said they did it to stop the war to spread further. It is most interesting that State Department four months ago did not want to go along with Germany, when Germany first time called for recognition, saying that recognition of separate republics would EXPAND the war.

Consistency, obviously, isn't the strongest point of American foreign policy.

Recognition itself will not help create peace in the region, as well as the not-recognition would not help, and did not help create peace till today. U.N. peace-keeping force, standing as toy-soldiers between two better armed groups that developed outstanding hatred one against another, will, also, not contribute much to the development of peace-process. However, hopes are that recognition, together with UNPROFOR (UN protection forces) will develop an environment for beginning of such a process, by creating an atmosphere of "the world care about you, so, please stop slaughtering each other". The peace-process itself is in the hands of local peace-loving Croats and peace-loving Serbs. But there is not a lot of them, and they are far from political power, and they are poor and disaffected, and they are viewed as traitors of their nationhood in public..., THEY will need all the help the west can offer.

However, they shall not be able to do anything untill Yugoslav Army will not be removed from ALL of ex-Yugoslavia (not only from Croatia and Bosnia, but also from Kosova, MonteNegro, Vojvodina and mainland Serbia).
Later in May 1992, Slovenia, Croatia and Bosnia and Hercegovina have been admitted to the U.N., as 176th, 177th and 178th member countries. European countries, U.S. and a lot of Muslim countries cut diplomatic relationship with new Serbian Yugoslavia. U.S. revoked landing rights to Yugoslav Airlines. Fierce economic boycott, and assets-freezing is to be imposed on new Yugoslavia soon - if Yugoslav Army do not retreat from Croatia and Bosnia. Still, war is going on. It was as late as May 23rd when my friend was wounded near Vinkovci with a very real Yugoslav Army bullet. He might have trouble walking in the future. It seems as the (Yugoslav) Army would not going to understand any language but its own, and that is: VIOLENCE.