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GUEST COMMENTARY - The United States Agency for International Development (USAID) played a pivotal role in shaping a legal system in post-socialist Yugoslavia (later Serbia) which exacerbated homelessness and enabled large corporations, banks, state agencies and public institutions to seize people’s only homes and burden the residents of the war-torn Balkan country with overwhelming debt, public sources reveal. While evidence that the US intended to impoverish and displace the people of Serbia is limited, a rare testimony from a former telecommunications minister offers invaluable insight into Washington’s thinking.
NASCENT NEOLIBERALISM
Beginning in 1992, the Socialist Federative Republic of Yugoslavia (SFRY) had privatized its housing fund, enabling most citizens to purchase apartments at low cost that were previously ‘socially’ owned — a distinct form of ownership pioneered by the Yugoslav socialist experiment. This led to high homeownership rates across all the former Yugoslav republics, similar to other post-socialist states like Russia and current socialist countries such as China and Vietnam.
In 1999, the National Democratic Institute (NDI), an American regime change instrument operating under the auspices of the national-security state, financed and critically advised a coalition of 19 Serbian opposition organizations (the Democratic Opposition of Serbia – DOS) on the only viable way they could overthrow the bloc around Slobodan Milošević. The US, along with the European Union, has ever since ’’aided’’ pliable governments in implementing gutting neoliberal reforms, with the purported aim of ’’economic stabilization“ , ’’democratic development’’ and other such fanciful catchwords.
A decade of war, sanctions and an illegal NATO bombing campaign preceded the ’’revolution’’ in 2000, in which pro-Western, decidedly neoliberal parties won the elections by a very narrow margin. In the first decade of ’’democratic“ rule private monopolies were formed, social safety nets were shredded and democratic institutions inherited from socialism pulverized, with estimates of people who lost their jobs in Serbia alone reaching hundreds of thousands.
The end goal of this first phase of neoliberalizing the economy (and more broadly, the whole of society) was the wanton destruction of domestic industry through the privatization of socially owned enterprises (SSOEs), which were worker-operated businesses, another staple of Yugoslav socialism. Financially solvent SSOEs were declared bankrupt and sold off for less than the value of their bankruptcy estates, with the bankruptcy process marred by irregularities and corruption. The domestic bourgeoisie would later make billions by consolidating privatized firms into oligopolies and selling them off to foreign capital.
After this came the next phase of “development”– introducing austerity, expanding the debt-based economy and allowing (foreign) capital to pilfer what wealth was left–natural resources and peoples’ homes. This pivot from privatization and deindustrialization to introducing debt slavery and soaring prices of commodities in Serbia coincided with a passing of the torch from the old political elite (DOS), at this point widely hated for it’s overwhelming corruption and haughtiness, to the ruling manager of neoliberalism in Serbia, Aleksandar Vučić and his “Progressive” party. Unlike his predecessors who failed to meet IMF requirements and thus forfeited the help from their “friends” in Washington, Vučić took in every third-rate huckster from the previous regime and disciplined them, centralized political power and provided a “stable investment climate”.
HOMES AS FINANCIAL “INFRASTRUCTURE”
A former Minister of Telecommunications in the short-lived government of 2007-2008, Aleksandra Smiljanić, explainedin an interview with the Party of the Radical Left (PRL) how a representative from a US financial consulting firm foresaw that real estate would act as a means of payment and that frequent evictions would become common judicial practice years before this catastrophe fully materialized.
The American consultant was to advise the ministry on how to sell off the public telecommunications company and the meeting had been arranged by Mlađan Dinkić, the minister of economy at the time. The “advice” was that, after privatizing it, “Telecom” should increase the cost of its services tenfold, so that it could “attract more foreign investors”. Smiljanić was dumbfounded by the suggestion and asked the consultant if he was aware that a lot of her fellow citizens wouldn’t be able to pay such exorbitant prices, especially the elderly.
The reply was that the people of Serbia have “infrastructure” that would act as a means of payment, but Smiljanić, still surprised, insisted on a straight answer. The explanation she got was as sincere as it was brazen – “Well, your country has a lot of homeowners”. Years later, legislative changes would make this a grim reality – families frequently losing their only home because of piled-up bills.
Was this calculation a result of pure professional acumen garnered through years of corporate expertise, or did the consultant know something that the minister didn’t, about the bleak future Serbia was barreling towards?
JUSTICE IS SERVED…DIGITALLY
On March 6th 2001, just a couple of months after the “revolution” in 2000, the governments of Yugoslavia and the US signed an Agreement “concerning economic, technical and related assistance”. This paved the way for USAID to get intimately involved with Serbian statecraft – “helping” with legislative changes, the reconstruction of public institutions, the economy, etc. One of the agency’s first endeavors was “digitalization” – USAID donated a mountain of old computers to Serbian institutions, especially courts and public prosecutors’ offices. Money was also allocated for the renewal of some court buildings and even the website of parliament bears a USAID stamp at the bottom.
This fits the MO, as has been exhaustively documented in other cases and in different countries, in which the US provides some technical support or funds humanitarian groups, in order to obscure the other nefarious developments they put into play. The good will that this charity temporarily ensured with the general public paved the way for another Memorandum of Understanding (MoU) between the Serbian Ministry of Justice and the US government in 2006 regarding the reformation of the Bankruptcy and Enforcement systems. These processes, which resulted in the new Law on bankruptcy (2009) and Law on Enforcement and Security Interest (2011), were vital. Both legislative changes outsourced public authority and judicial power to private entrepreneurs. The former ensured that what was left of SSOEs was privatized with virtually no transparency, while the latter destroyed basic human rights for poor debtors within the enforcement system.
The work group that drafted the new law on enforcement was composed of lawyers, economists, but also (and very tellingly) – bankers. But before the establishment of the work group, the ministry formed an “expert group” that set the parameters of the new law, which the work group would adopt. Naturally, this group of experts worked closelywith USAID, the forerunner of judicial reform in Serbia.
The seemingly carefully crafted framing in the years leading up to the law on enforcement being changed in 2011 was that it would protect “the little creditor”, the masses of people who’ve lost their jobs during privatization, and were owed severance pay and/or dozens of monthly wages. People were led to believe that private entrepreneurship will help speed up the still sluggish court system. This was the prevailing narrative, in no small part thanks to liberal media outlets, which led the charge in bolstering the voices of “professionals” and ignoring dissenting voices, which were too few.
In sharp contrast to what was publicly promised, the new enforcement process heavily favored those who could pay for it, the big, giant and gargantuan creditors. In 2024 alone, thousands of workers from Niš and Prokuplje protested, because they are still owed millions of euros in backpay, despite having positive verdicts from the Constitutional court, the highest judicial body in the country, confirming the validity of their claims (and these are only the people we know about through media reports).
WHAT’S THE DIFFERENCE BETWEEN A BAILIFF, AN ENFORCER AND A RACKETEER?
With parliament officially adopting it in 2011, the new law uprooted the “traditional method” of enforcing court decisions. Whereas enforcers, or bailiffs, were previously directly accountable to the courts which employed them, after 2011 they became self-employed private entrepreneurs working for profit. This policy effectively privatized a part of the judicial system, with bailiffs now being under the vague control of the Ministry of Justice and their own chamber. Bailiffs now get paid for enforcing each legal writ separately, with an untransparent “reward” system for expedient enforcement.
The changes also brought a cruel penalty for poor people – if you can’t pay your debt, a bailiff will sell your property or seize your earnings, and you have to pay them for doing so. These are known as “enforcement costs” and can vary wildly, with some going up to 10,000 euros for trying to enforce a single eviction attempt. These new astronomical fees bloated every transaction, so that the enforcement industry made at least two for every euro transferred from debtor to creditor. Bailiffs are now known to make a million euros in sheer profit annually, in a country where the median monthly wage is around 500 euros.
In actuality, what was created was a “mafia”, cartel, a “state within a state” as attested by a significant portion of the Serbian populace. High-profile debacles involving bailiffs abound, with both sides of the polarized major media machine (government sponsored and western-backed opposition oriented) running stories on bailiffs every month or so. Introducing the profit motive in enforcing court documents opened up the broadest avenues for legalized corruption, with money being the ultimate accelerant of the final part of the judicial process. The more money you had, the more “justice” you could afford.
Forced evictions became commonplace, with homes being sold for meager debts and often auctioned off for 20-30% market value. The opaque “reward” system meant that bailiffs were paid in proportion to the disputed value between debtor and creditor. This meant that enforcing documents pertaining to immovables became a lucrative business model, which in turn meant a surge of forced evictions, often while the evictees were still in a legal battle against the decision which led to their dislodgement.
IF IT AIN’T BROKE…
In 2017, USAID produced an analysis of the price list of the enforcement industry. Their own conclusion was that the system they created might be “unsustainable”, if not for an influx of new cases. The American agency also organized workshops for bailiffs, in which they were taught the art of rhetoric and PR competence, a much needed skill in the industry. USAID even did a public opinion poll asking banks how satisfied they are with the new enforcement process. This should more than suffice as evidence of what the US cares about developing in Serbia – an enforcement system that favor, most of all, banks.
Even with the extensive power and ample autonomy the enforcement industry was entrusted with thanks to the USAID sponsored law, there are plenty of instances in which bailiffs were accused of forgery, embezzlement, bribery and so on. Working hand in glove with banks, huge construction firms, investors and public utility companies, meant that it pays to break the law sometimes. Conveniently, for violations other than criminal offenses, the only place to file a complaint is the chamber of bailiffs and ministry. However, the endless stream of scandals and strong public outrage forced the government to change the law in 2019, again with the help of USAID.
This legislative change was presented as a crackdown on bailiff corruption by government controlled media, but in reality it only made the state of affairs worse for everyone except them. Despite their sheer unpopularity, impunity and rampant rapacity, the government gave them more authority over the police in eviction processes, for example. Bailiffs couldn’t sell property they seize to their friends and relatives anymore, but they still can trade in devalued dwellings, just through thuggish third parties, as has been reported from the ground by activist and citizen journalists. The new regulations also allowed for homes to be auctioned off online, without the “occupants” having a real choice in the matter. This too was portrayed as “greater transparency”.
From a broader perspective, it’s worth pointing out that this kind of brutal enforcement system with privatized entrepreneurial “agents” was established and had major consequences in other European countries, particularly Spain, where hundreds of thousands were forcibly evicted and displaced, with banks repossessing a huge swath of real estate after the crash of 2008 drowned a lot of ordinary people in debt. This in turn gave rise to social movements resisting and blocking eviction attempts all across Europe, including in Serbia, where privatizing a part of the judiciary was one of the preconditions to EU accession.
(Jovan Milovanović is a journalist living in Serbia. This article was first published in CounterPunch.org.)
