Financial Aspects of State Succession: The Case of Yugoslavia

This paper analyses the Yugoslav case of financial state succession. The paper examines the issues raised in the succession negotiations between the five successor states of the SFRY and details the agreements reached by certain successor states with third parties including the International Monetary Fund, the World Bank and the London and Paris Clubs. The latter part of the paper distils from the SFRY succession negotiations considerations which are relevant to the shaping of the international law of state succession. The dramatic, foreseeable and violent disintegration of the Socialist Federal Republic of Yugoslavia (SFRY) raises many issues of international law, of which state succession is an important one. Its significance extends beyond the interest of the successor states and public international law. The legal and practical consequences of state succession are far-reaching as they affect the rights of third states and international organizations as well as private entities like commercial banks. State succession occurs 'when there is a definitive replacement of one state by another in respect of sovereignty over a given territory in conformity with international law'. 1 The replacement of sovereignty raises issues of the transmission of rights and obligations. This essay focuses exclusively on state succession in so far as it affects financial rights and obligations. Part 1 of the paper examines the negotiations between the five successor states to the SFRY regarding the apportionment of the SFRY's net assets and details the agreements reached by certain successor states directly with third parties. The second part of the paper endeavours to distil from these negotiations considerations relevant to the shaping of international law of state succession.