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Recent conflicts in the Balkans have been portrayed largely in terms of ethnic and religious divisions, with Western military and diplomatic intervention seen as essential to securing a positive outcome. However, these divisions are the consequence of a deeper process of economic and political fracturing. The re-structuring of the former Yugoslav economy, and the policies of the international financial institutions, have not been sufficiently emphasised. However, the author contends that, far from being the basis for social and economic reconstruction, the application of free-market policies in former Yugoslavia favoured the dismantling of social-welfare structures and contributed to the rapid decline in national economic capacity. The terms of the 1995 Dayton Peace Accords suggest that a similar future is in store for the successor states of Bosnia-Herzegovina, Croatia, Macedonia, and Slovenia.

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