YUGOSLAVIA 1983" BETWEEN"CONTINUITY" AND "CRISIS"

by Dennison I. Rusinow

At present, the best the economicand political meteorologists cando is to study current patterns ofdark clouds and silver linings,paying due regard for changes inthe prevailing winds in the widerworld economy and internationalrelations. Political courage.= andeconomic patience are halgmarks

of Yugoslavia, however, and todaythe tenor is still cautiously posi-tive.

The news media in most of the worldare notoriously as fickle and posses-sed of short attention spans as thepublics they believe they serve. Yugo-slavia, for example, was the object ofintense and sometimes inordinate at-tention from January to May 1980, theperiod of Josip Broz Tito’s prolongeddying, sometimes wild speculationabout what would happen when hewas gone, and the spectacular andmoving pageantry of his end-of-a-world-era funeral. Then, and for morethan two years, Yugoslavia virtuallydisappeared from the world media andeven those of neighboring states.

In recent months the Yugoslavshave found themselves once againand in large part unhappily "in thenews" beyond their borders, althoughso far largely on inside or businesspages and off-peak-hour "in depth"news broadcasting.

Such media fickleness has itslogic in what is considered "newsalthough that logic is often short-sighted because it makes it difficult toanticipate tomorrow’s news and tounderstand it when it happens. Theway Yugoslavia has disappeared andreappeared in history as recorded bythe world media during the past threeyears is again illustrative. It also en-

1983/No. 3Europe

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capsulates the ups and downs of thebeginning of the post-Tito era.

When Tito died on May 4, 1980, afew days short of his 88th birthday,drama-mongering by a number of ill-informed or headline-happy reportersand other instant (and not-so-instant)experts had led many Americans andWest Europeans to expect, a Soviet in-tervention or a domestic political crisisas soon as the man who had ruledYugoslavia for 35 years was in hisgrave. Instead, and as better-informedobservers had uniformly predicted,the Red Army did not come to the fun-eral (although Leonid Brezhnev did,unlike Jimmy Carter) and the im-mediate transition to after-Tito, facili-tated by a decade of institutional prep-aration and fourmonths of psycholog-ical conditioning and "dress rehear-sal" during Tito’s final illness, went offsmoothly and without incident.

For two years, precisely theperiod of grace anticipated by some ofthose who had predicted this un-dramatic initial transition, the rotating"collective leaderships" and complexinstitutional and procedural checksand balances of the post-Tito regimefunctioned better than most peoplehad expected and too well to attractmuch outside notice. In worseningeconomic conditions some hard andpotentially controversial choices weremade where such a system of consen-sus politics and mutual vetoes mighteasily have deadlocked. The burdenimposed by a deteriorating economyand austerity measures was acceptedalmost uncomplainingly by a popu-lace not usually noted for its patience.

Uninterested in such non-news,the reporters trooped off to Poland,which had become newsworthy with avengeance. (And where early-warningsignals of an impending crisis, inretrospect clear writing-on-the-wall at

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the Polish Party Congress in February1980, had been largely unreported andtherefore unnoticed because mostWestern correspondents resident oraccredited in Warsaw had been or-dered to Yugoslavia for the duration ofTito’s four-month deathwatch !) Yugo-slavia became a second Bulgaria infrequency of appearance as a datelinein the wider world.

The only exception was in thespring of 1981, when widespread andviolent demonstrations by thousandsof non-Slavic Albanians in the Au-tonomous Province of Kosovo, whereAlbanians are 78 percent of the popu-lation, led to the dispatch of police re-inforcements and Army units and astate of emergency throughout thedistrict, the first time such a thing hashappened in postwar Yugoslavia. Thisbrought a brief flurry of attention in theEuropean and some mention in theAmerican media. Some commentatorsinterpreted the Kosovo troubles as anomen, the beginning of the disintegra-tion of the multinational federation.Others thought it would prove a spe-cial and unique case, a YugoslavNorthern Ireland where spasmodicallyviolent irredentism would fester on butprove basically containable. Subse-quent developments have so fartended to support the second thesis,except as discussed below.

When Yugoslav datelines start-ed reappearing with greater frequencyafter the middle of 1982, the reportsthat came with them tended to rangefrom gloomy to alarming. Some sam-ple headlines in the Western pressfrom the period October 1982- March1983: "Yugoslavia seals the gaspumps- chaotic supplies let blackmarket bloom"; "Sinking living stan-dards for the Yugoslavs Belgrade’sremedy for the crisis: ’We must allwork harder’"; "Yugoslavs feel thepinch of economic curbs" and"Trieste hurt by Yugoslavs’ travel stric-tures" (these in The New York Times,November 7, 1982; the rest are fromWest European newspapers); "A na-tion sitting on the razor’s edge?";"Party attacks on Belgrade presscampaign by dogmatic function-aries"; "Prison for ’bad songs’ Yu-goslavia’s internal contradictionssharpening"; "Self-managementmeans mostly meetings: why Yugo-slavia does not change its catas-trophic economic system"; "Yugoslavself-managers at the end of the road";"Yugoslavia too will have to resched-ule"; "Is troubled Yugoslavia a Polandin the making ?"; or more simply, "The

Yugoslav crisis." One Austrian reportin October 1982, attempting to find asilver lining, was headlined: "Yugo-slavs not taking to the streets de-spite shortages and mistrust."

The content of such reports dif-fered little except in directness andstyle from what has been appearing inYugoslavia’s own once again increas-ingly open and critical press, which isin fact providing much of the materialused by the foreign correspondents.

In June 1982, with the economicstorm clouds darkening and some re-gime officials speaking bluntly of "acrisis of confidence" in "the system"as well as leaders and policies, theLeague of Communists of Yugoslavia(the LCY, or simply "the Party") heldits first Congress since Tito’s death.Although many delegates and evensenior functionaries warned that re-forms of some aspects of the eco-nomic and political systems and morenew faces in leading positions wereurgently needed, "continuity" was thepre-announced theme of the Con-gress and the tenor of the resolutionsand new "leading bodies" it endorsed.The "behavior" of Communists andothers, along with some economic in-struments and policies, must bechanged to bring them into line withthe requirements of economic"stabilization," the "laws" of a marketeconomy, and the ideals and norma-tive principles of self-management asdescribed and institutionalized in the1974 Constitution and 1976 Law onAssociated Labor (two of the world’slongest and most complex legaldocuments), but these latter were re-endorsed as still basically correct andappropriate. The message, paraphras-ing Bertolt Brecht, seemed to be: ifthings are going wrong because "thesystem" and the people aren’t workingtogether, one must change the people.

"Continuity" as the theme andprogram of the Party Congress wasunavoidable in June 1982, but it wasnot particularly helpful? It was unhelp-ful because discontinuity in "be-havior" is urgently needed, as theCongress itself had heard, while in-stitutions and rules are normally easierto change than people and, havingbeen changed, are more likely to affectundesirable behavior than are mereadmonitions or even, in the longerrun, administrative or physical coer-cion. Continuity was nevertheless un-avoidable for a number of currentlymore compelling reasons. Most werepolitically contingent, but one wasnot: a well-founded fear of what might

come out of Pandora’s box once it isopened in the name of institutional re-forms and at a time of widespreaddoubts concerning the efficacy of thethree basic domestic pillars of "Tito-ism." These are an extreme degree ofpolitical and economic decentraliza-tion to defuse the explosive potentialof national and regional differences incultures, values, and interests; "self-management" in all its complexity asputatively the best of both socialistand capitalist worlds and at least ahappier alternative to Soviet-style"real socialism"; and an unchallenge-able "guiding role"- an ultimatepolitical monopoly for a League ofCommunists whose function, apartfrom acting as an authoritarianideological tutor, is to hold the ring forwhat Yugoslav political parlance calls"a pluralism of self-managementinterests and their free expression"that might otherwise fly apart in anar-chy.., or be restrained by a return tonaked tyranny.

In principle it should be possibleto tamper with all of these institutions,through limited reforms that would notdilute the essence of any of them, inorder to make them more effective interms of economic and political out-put. But with pent-up frustrations andpressures at present levels, and an un-known number and quality of peoplewaiting in the wings in the hope ofdestroying rather than reforming oneor another or all of these pillars (andperhaps the fourth, the external one,which is Yugoslavia’s pugnaciouslynonaligned independence of bothEast and West), who can say how farsuch a process might go and where itwould end ?

We may soon start finding out.Developments since the Party Con-gress have tended to strengthen theargument that some reforms mustafter all be ventured, the sooner thebetter. They have also, however, pro-vided further evidence of the tenacityof resistance to change, serious dif-ferences about the direction reformsshould take if they cannot be avoided,and an inconclusive mixture of in-creasingly remarkable patience andgrowing exasperation (as usual ex-pressed primarily in the form of ethnicnationalist attitudes and "excesses")on the part of the populace.

The Price of "Stabilization"Some consumer goods and raw

materials had been in short supply,here and there and at times, for up totwo years before the Congress met. A

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popular joke first heard by this ob-server in Zagreb in January 1981 listedwhat were then the most commonitems. Yugoslavs, was told, were notworried about Poland, Afghanistan, orpolitical stability without Tito becausethey were too busy looking for Duko,who had disappeared. Otherwise acommon male name in Yugoslavia,this particular "Duko" consisted ofthe first letters of the Serbo-Croatianwords for detergent, cooking oil,sugar, coffee, "and other things" (de-terdent, ulje, eer, kava, ostalo).

In the months following theCongress the list of "other things" anthe constancy and ubiquity of "Dus--ko’s" disappearance all continued togrow rapidly. Scarce consumer itemsnow included gasoline and other pet-roleum derivatives (and so energy ingeneral), medicines, including essen-tials like antibiotics, margarine andbutter, citrus, and in some places meatand even flour. By late September longlines were forming around gas sta-tions that still had something to pump,as in the United States in 1975, andYugoslavs were making trips to Au-stria or Italy for automobile spareparts, a throwback to the early 1960s,as well as for coffee and medicine.Zagreb,ani were travelling to Ljubl-jana (160 kilometres) to buy butter andLjubljanCani to Zagreb to buy mar-garine; sanitary napkins and tamponswere unavailable in both cities.

In mid-October gasoline ration-ing was introduced countrywide, partof a new package of austerity mea-sures described below. The basic ra-tion for private automobiles was set at40 liters (about 10 gallons) per month.Local communities began issuingtheir own ration coupons, to their ownresidents and with local validity, for alist of other consumer goods that var-ied from place to place. Others, moresubtly, made certain goods availableonly on Saturdays when workers didnot commute in from surroundingareas. Challenged in the courts, localrationing was declared unconstitu-tional and was denounced by theParty, government, and trade union of-ficials as another impermissible blowagainst "a unified Yugoslav market forgoods and services" already frag-mented, for political and national rea-sons, into "eight closed and autarkicrepublican and provincial markets."The practice, however, continued andspread to nearly half the country’scommunities, including Belgrade, thefederal capital another clear exam-ple, incidentally, of how undisciplined

and far from a tightly controlled"Communist dictatorship" even for-mal political life and the behavior ofParty members are in decentralizedYugoslavia. Illegal or not, such ration-ing and less formal limits on howmuch each customer might buy whena consignment of a scarce item arrivedhad two advantages. Long lines infront of shops and the aggravationsthis induces, in one instance (in Mon-tenegro) leading to a brief riot, hadreportedly disappeared in most placesby early 1983; and nearly everyone, notmerely the lucky or most perservering,was getting a share when somethingwas available.

In industry analogous shortagesof raw materials, components, andspare parts were forcing a growing listof factories to go on short time or shutdown entirely, further threatening vitalexports as well as domestic supplies.By February 1983, according to onereport, 40 percent of all Yugoslavworkers were on short time "orworse." Industrial output in the firsttwo months of 1983, surprisingly, wasreported to be only 0.3 percent lessthan in the same period in 1982, and inMarch 1.0 percent less than in the pre-vious March, but 1982 had not been agood year either. Some sectors andregions were suffering more seriously.Montenegro, the smallest republic(pop. 583,000) suffered the biggestdrop in overall industrial output, 8.9percent lower in January-March than ayear earlier and 15 percent belowplanned production. In Serbia January1983 output figures, as a percentage ofaverage monthly output in 1982, in-cluded the following: iron industry 43percent, construction materials 61percent, transportation equipment 76percent, nonferrous metals 87 per-cent, and chemicals 89 percent. Thetextile industry throughout the coun-try was also hit hard, in large part be-cause of shortages of imported wool(which a mountainous country full ofsheep has been importing at a rate of$130 million per month!) as well as cot-ton (not grown in Yugoslavia, despiteor because of disastrous experimentsin Herzegovina in early postwar years),but also because of shortfalls indomestic production of syntheticfibres.

Living standards, already re-duced by at least (i.e., officially) 5 per-cent in each of the two precedingyears, were said to be acceleratingtheir downward plunge, as the au-thorities had warned they must. Infla-tion, down a little toward the end of

1982 with the help of a six-month pricefreeze imposed in July, took off againwhen the freeze ended. In the firstquarter of 1983 it was officially 30 per-cent, but other sources put the truefigure at 50 percent. With hundreds ofadditional requests for price risesranging from 50 to 90 percent (andsome for as much as 20 percent) still inthe pipeline, those approved in Marchalone included 27 percent for tobacco,17.3 percent for communal services,11.7 percent for processed meats, 8.7percent for newspapers and schoolsupplies, 8.7 percent for fish, and 6percent for clothing; gasoline andother petroleum derivatives went up afurther 25 percent a few days later.Personal incomes and economic in-vestments are at last failing to keeppace, which is what the policy-makersintended. Official projections are for afall in consumer purchasing power by7 percent and in investments by 20percent this year, but the differencebetween the current inflation rate andnominal rates of increase in personalincomes (at 26.3 percent in early 1983,down from 33.2 percent in 1982) andinvestment expenditures (at 16 per-cent in early 1983) may provide a moreaccurate measure of the real rate ofdecline in individual buying power andinvestments.

Rising prices were being fueled,apart from domestic factors, by a rapiddecline in the exchange value of thedinar, from 19.16 to the U.S. dollar in1979 and 41.82 in 1981 to 75.74 to thedollar in March 1983. Some of this de-cline came through formal devalua-tions, by 35 percent in June 1980 and30 percent in October 1982, and therest from letting the dinar slide be-tween devaluations and by a further 20percent in the first 90 days of 1983. Thegoal is to reach a "real" exchange ratein gradual stages, a dramatic changefrom the policy of a deliberately over-valued dinar that in the 1970s hadfacilitated rapid economic growth,with even more rapid growth offoreign trade and balance of paymentsdeficits and foreign debts.

With the notable exception ofthe inflation rate, which the regimehad naively expected to hold to 20percent in 1983, most of this bad newswas either a planned part or antici-pated as an unavoidable side-effect ofa program for "economic stabiliza-tion" thrashed out, with many andmostly unfortunate compromises andconcessions to sectoral and regionalinterests, during 1981-82. The Yugo-slavs, it was belatedly realized, had

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been "living beyond their means" (thephrase they themselves are using) forat least a decade, with the unearnedbut happily spent surplus quantified inbalance of payments deficits thatreached $3.7 billion in 1979 andforeign debts that totaled $19 billion,and perhaps more, by 1981.

The first and most urgent goal of"stabilization," as described in an ear-lier Report on the Party Congress ofJune 1982, was to bring the deficitdown to bearable levels and to paywhat was owed to foreign creditors in1982 and 1983, some $4.5 to $5 billionin principal and interest in each year.By 1981 the deficit on current accounthad indeed been reduced to $750 mil-lion, and payments on the foreign debtdue in 1982 were made with only a fewdelays by some Yugoslav banks in thecourse of the year. The price for theseimpressive accomplishments in-cluded the curtailed living standards,shortages, and other woes of austeritysuffered in 1980- 1982, and it now ap-pears that the price of simply not slip-ping backward will be more of thesame and for a prolonged period. Thelong-term costs of prolonged austerityare less certain, harder to calculate,and could be evaded if those who runthe Yugoslav economy (whoever theyare, which is part of the problem!)prove to be more successful thanusual in conceiving and executing ap-propriate reforms and a "restructur-ing" of industry and agriculture onhealthier and more competitive foun-dations.

For the moment the best the ec-onomic (and political) meteorologistscan do is to study current patterns ofdark clouds and silver linings, payingdue regard to changes in prevailingwinds in the wider world economy andinternational relations. Summarizingits main features, this is what the Yu-goslav economic weather map lookslike as the bleak winter of 1982-83shows only a few uncertain signs ofsummer days to come.

For those in search of silver lin-ings there is, first of all, the politicalcourage of the further austerity mea-sures adopted in late 1982 and earlysigns that they are having at leastsome short-term positive impact.

The "emergency" measuresproclaimed in mid-October 1982 andin subsequent weeks bear a close re-semblance to the austerity packageadopted by the French government inMarch 1983. If this seems surprising,given the differences in the twosocieties and their economic and polit-

ical systems, it in fact accurately re-flects the nearly universal nature ofboth current economic problemsaround the world and the only answersthat leaders almost everywhere haveseemed able to devise, regardless ofdifferent ideological persuasions. Inboth Yugoslavia and France the im-petus has come from balance of pay-ments and related problems, the mosturgent manifestations of other under-lying weaknesses. In both cases recentausterity measures have therefore fo-cused first of all on short-term reme-dial action in their section, but in formsthat the authorities hope will be con-ducive to a healthy longer-term re-structuring of the domestic economy.It is thus that foreign exchange mea-sures and others designed to cut im-ports and promote exports predomi-nate in both austerity programs.

The Yugoslav package includedthe dinar devaluation and gasoline ra-tioning that have already been men-tioned. Other forms of energy con-sumption were also subject toemergency restrictions: a ban onopen-air evening sporting events re-quiring illumination, except for inter-national events; television broadcast-ing to end at 10 P.M. except on week-ends and before holidays; reduction ofhousehold electricity by 5 percent; a19C (66F) ceiling on office anddomestic heating;introduction of day-light saving time in summer months(the next-to-last country in Europe todo so, Swiss cows and their ownershaving given in last year); and others.

Another and especially unpopu-lar measure to save foreign currencywas a precise analogue to the limitsthe French government was later toimpose on the number of francs(equivalent to ca. $410 per year) thatFrench citizens and foreigners resi-dent in France may now convert ortake with them for nonbusiness tripsoutside France a measure that hasbrought more vociferous objectionsthan any of Yugoslavia’s austeritymeasures and probably at least asmany simple and ingenious evasions.In the Yugoslav variant citizens (butnot foreign residents) travelingabroad, except on business or for cer-tain other stipulated purposes, mustdeposit a large sum by most Yugoslavstandards 5,000 dinars (ca. $80 inOctober 1982) for the first such trip,rising by 2,000 dinars for each sub-sequent trip in the same year--in spe-cial bank accounts where these depo-sits are blocked for one year withoutinterest. Other regulations armed with

severe penalties for violations forexample requiring that all foreign cur-rency earned by Yugoslav firms andresident citizens immediately be soldto or deposited in banks- were de-signed to curtail the black market andother "private" foreign currencytransactions that have been hiding asizable portion of Yugoslavia’s earn-ings from tourism and emigrant remit-tances under the mattress, where theydo not contribute to the beleagueredbalance of payments and are largelyused for private consumption of pri-vate imports.

An amended extension of "tem-porary" measures governing the dis-position of the country’s globalforeign currency earnings in 1982 wasagreed at the end of the year, but onlyafter desperation triumphed over theresistance of those whose exports andtourism earn most of it, and who preferthe principle that has supposedly gov-erned the Yugoslav foreign currencyregime since the early 1970s: to eachaccording to his earnings, in this caseof foreign currency. Again violatingthis principle, the "temporary" rulesadopted for 1983 require earners offoreign currency to sell up to one-thirdof it, for dinars, to higher governmen-tal and banking authorities: 5 percentfor "federal needs", 3 percent to theNational Bank’s reserves, 17 percentto the Federation for petroleum im-ports, and an additional amount (e.g.,8 percent in Croatia) for "the jointneeds" of the Republic of Provincewhere the exporter is based.

Positive trends at least partly at-tributable to these and related mea-sures include a first quarter 1983year-on-year increase in exports to theconvertible currency area by 18 per-cent, while imports from the same areadecreased by 27 percent with less im-mediate impact on import-dependentproduction than might have been ex-pected. During the first three and a halfmonths after the travel deposit regula-tion went into effect in mid-October1982, less than half as many Yugoslavcitizens crossed their country’s bor-ders as in the same months a year ear-lier: down from 4,870,000 to 2,233,960,of whom 94 percent were exempt frompaying the deposit (with 1,255,224 ofthe latter reportedly consisting of"Gastarbeiter," Yugoslavs workingabroad and their dependents, many ofwhom must have made several trips ifthis figure is to be believed). The con-tinued fall in "real" (inflation-dis-counted) personal incomes and in-vestments suggested that Yugoslavs

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were coming closer to "living withintheir means" and "on their own re-sources," the principal slogans and in-itial goals of "stabilization."

A second silver lining, perhapsin part reflecting light from the first,now appeared in the form of an inter-national "resource action" for Yugo-slavia. It had been the subject of com-plex and frequently interrupted ne-gotiations with and among Westernand international financial institutionsfor a full year before it was wrapped upin London in mid-March 1983, withfinal signatures expected by the sum-mer. On the best information currentlyavailable its core will consist of a $4billion basic package put together byWestern commercial banks with thehelp of a 15-bank coordinating com-mittee and consisting of the following:a $600 million medium-term (six-year)credit, $1.4 billion in medium-term re-scheduling, and between $1.8 and $2billion in (previously agreed?) short-term rescheduling. This "package" isexpected to open the door for the restof the "rescue action," which repor-tedly includes the following: $1.6 bil-lion in credits for imports and exportfinancing from the U.S. Export-ImportBank and equivalent governmentbanks in other countries (but withmore of this sum tied to imports ofindustrial equipment than suits theYugoslavs, more interested at thisstage in raw materials and compo-nents to keep their factories going andexporting); $600 million in new Inter-national Monetary Fund (IMF) drawingrights, some of which may already beflowing; $500 million from the Bank ofInternational Settlements in Basel(BIS), said to be an unprecedentedloan from that source; and $300 mil-lion from the World Bank for "restruc-turing and export-reorientation of theeconomy." A grand total, if it all comesoff, of $8 billion. Much of it, however,will never be seen by the Yugoslavs,since it will be repocketed by the lend-ers to pay principal and interest duefrom older debts in 1983.

It was the Western commercialbankers and particularly the Ameri-cans among them, these days oftenburnt-finally-shy around the world,who had dragged their feet for a yearand despite outside pressures onthem to be more accommodating. A"lecture" about the importance of astable nonaligned Yugoslavia forEuropean stability and Western inter-ests to a gathering of American bank-ers in April 1982 by Lawrence Eagle-burger, Undersecretary of State for

Political Affairs (and previously U.S.Ambassador to Yugoslavia), appearsto have annoyed the bankers, at leastaccording to The Wall Street Journal,Business Week, and European pressreports, Eagleburger’s attempt to behelpful, which apparently continuedand included a trip to Belgrade inJanuary 1983, was in fact merely themost public and publicized of re-peated efforts by a number of Westerngovernments to influence their bank-ers on Yugoslavia’s behalf and for thereasons Eagleburger had spelled out.What finally tipped the balance for themost skeptical bankers is conjectural,but the apparent determination andperformance of the Yugoslavs in re-cent months presumably helped.

What the Yugoslavs will do withtheir "breathing space and shot in thearm" (the mixed metaphor of oneAmerican banker) is another question.In an implicit criticism of the WorldBank for not tying more strings in theform of specific approved projects orat least priorities to its credit for "re-structuring and export-reorientation,"a leading Yugoslav newsmagazinewarned against the disastrous conse-quences of "using the new credits inthe old way," i.e., on the basis offundamentally political competitionamong regional and sectoral interestswith incompatible criteria and pri-orities and "national colors and tri-colors on their investment standards."In this "old way," the article notes, it isonly after the game starts that "dis-cussion begins over whether to playbasketball or hazard, whether it is bet-ter to do light athletics or heavy," andtherefore whether to favor "one whoplans to export or one who will pro-duce things that are now imported,one who will increase income faster orone who will create more new jobs,one who is on the high road or onewho is under great pressure ,,7

Even with the best of will, intelli-gence, and "new ways" of choosing,the dark clouds that remain the dom-inant feature of the Yugoslav eco-nomic scene are too many and variedto be dispersed at once and simply,while policies that may have a positiveimpact in one area can aggravateother problems in the same economiccomplex or outside it.

For example, the Yugoslav au-thorities have sound short-term rea-sons for wanting to use their new cred-its to import raw and semi-processedmaterials to fuel production in indus-tries with good export potential anddesperately underutilized capacities,

and not to use them to purchase addi-tional equipment and plants at thistime. On the other hand, new (foreign)technology and lines of productionmay be precisely what they will needmost in the longer run. Similarly, alower investment rate is clearly desir-able now, but another mortgage onthe future.

Dinar devaluations and a policyof bringing the exchange rate for thedinar into line with its "real" (foreignexchange market-clearing) value isgood for exports now and long over-due for important long-term reasons:Laura d’Andrea Tyson, the leadingU.S. specialist on the Yugoslaveconomy, has called an overvalueddinar and similarly improper pricing ofcapital and labor (the first below andthe second above its market-clearinglevel) the three basic reasons for therepeated recurrence of economic in-stability, At the same time, however,this otherwise praiseworthy policy in-creases the cost of imports, eitherfurther lowering the volume of these orraising the balance of trade deficit at asingularly inopportune time.

Other export incentives, bothcarrots and sticks, are splendid whenthey induce enterprises to make theextra effort necessary to sell to hard-currency areas instead of at home orto the soft-currency Soviet bloc, butmany current domestic shortages thatcan prove dangerous for the politicaland even physical health of the coun-try, as in the case of vital medicines,are a less desirable result. (Antibiotics,for example, have been missing or inshort supply in pharmacies and hospi-tals for two years because they arebeing exported, which is happeningbecause pharmaceutical companiesmust "earn" the foreign currency theyneed to import domestically unavail-able ingredients and licenses to pro-duce foreign-brand medicines). Im-port substitution strategies, investingin domestic production of currentlyimported goods, can save scarceforeign currency but run counter to asensible and currently 18-year-old pol-icy of "seeking our place in the inter-national division of labor" by concen-trating on sectors where Yugoslaviaenjoys actual or potential comparativeadvantages and liberalizing the importof other things. It is also simply impos-sible in present circumstances to fundmore production for both the domes-tic and Western export markets at thesame time.

Another example of how difficultit can be to do several things at once is

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provided by what happened to the bal-ance of payments deficit while atten-tion was concentrated on payingnearly $5 billion to foreign creditors in1982. By 1981, as already noted, thedeficit on current account had beenbrought down to $750 million from anunbearable $3.7 billion in 1979, an ac-complishment that helped to repairYugoslavia’s reputation with the IMF,World Bank, and Western commercialbanks. The goal for 1982 was a furtherreduction to $500 million, but the ac-tual deficit now appears to have been$1.4 billion. A major reason for thisdisappointment, in the view of onequalified observer of the Yugoslavbusiness scene, was the distraction ofthose who might have taken additionalmeasures to hold the growth of thedeficit down. Harassed by a multitudeof urgent demands on their time andenergy and perhaps a little compla-cent after the good performance inthis sector in 1980-81, he argues, theyfocused instead and in the end suc-cessfully on the enormous im-mediate problem of the foreign debtdue in 1982. They therefore failed totake adequate note of the impact ofreduced imports on what could beproduced for export, the rising cost ofimports because of the dinar’s down-ward slide, and the impact of reces-sion in Western Europe on their tour-ism and emigrant remittances, both ofwhich fell well below expectations.

Potentially far more damagingover the longer haul is the effect of theforeign currency regulations intro-duced in the fall of 1982 on thoseemigrant remittances and individualhard-currency savings accounts inYugoslav banks. The amounts in-volved are far from small and are, inci-dentally, also a sign of the confidenceYugoslav emigrant workers and Yu-goslavs at home had had in their coun-try’s stability and that of its banks. Atthe end of 1982 foreign currency sav-ings accounts owned by individualcitizens in Yugoslav banks containedabout $8 billion in various hard cur-rencies (e.g., 60% denominated inDeutschmarks and 16%- about $700million in U.S. dollars). Interest onthese accounts, credited in the sameforeign currencies, currently rangesfrom 7.5% for ordinary savings (cf.4.5% in West German and Austrianbanks) to 12.5% for 3-year certificatesof deposit. Yugoslav citizens repor-tedly own an additional $11 billion insavings accounts in West Europeanbanks, which Yugoslav banks havebeen trying, with some success until

the fall of 1982, to lure home throughhigher interest rates and other bene-fits? The total of all these hard-cur-rency savings accounts, at home andabroad, equals Yugoslavia’s totalforeign debt, but what is in Yugoslavbanks is what counts.

Responding to the foreign cur-rency restrictions imposed on them bythe government’s austerity measuresof October 1982, Yugoslavia’s com-mercial banks immediately and jointlylimited withdrawals from individualcitizens’ foreign currency accounts to$250 or equivalent per month. In oneblow rumors and fears that these ac-counts might be totally frozen or evenconfiscated seemed to be confirmed,and depositors have begun to flee asbest they can. Many are reported to bewithdrawing their permitted $250 eachmonth to put under the mattress. En-tire accounts are being moved to theWest with the connivance of at leastsome Yugoslav banks in various"laundering" devices, some of ques-tionable legality. Meanwhile, remit-tances into Yugoslav foreign currencyaccounts from abroad were reportedto be at 50 percent of the previousyear’s level in December 1982, thefourth consecutive month of decline.

Of all the stupidities at variouslevels that have marred the Yugoslavs’often intelligent attempts to deal withtheir economic problems, this oneprobably takes the prize. The conse-quences were so predictable anddamaging that this observer, talking toa group of American bankers in theU.S. at the very time it was happening,rashly assured them it could not hap-pen "because they are not thatstupid!"

A final example of a policy withpositive effects in one area and nega-tive effects in another, this time non-economic, is provided by those depo-sits required of Yugoslavs travelingabroad. This measure has clearlysaved some foreign currency: see thefigures on reduced border crossingscited earlier and listen to the com-plaints of shopkeepers in Trieste,Gorizia, Graz, and Klagenfurt whoselivelihood depended on massive pur-chasing by Yugoslavs, abruptly endedin October 1982. However, as high-level official requests from Sloveniahave pointed out in asking the Federalgovernment to reconsider, the savingis surely not enough to justify the so-cial and public relations costs of sucha measure. (Bordering on Italy and Au-stria, richest, and most "Western,"Slovenia is on all these counts most

affected.) Costs are not limited to thedeprivation and irritation of directly af-fected parties, both in and outside Yu-goslavia. As the Slovene appealspointedly emphasize, they also in-clude the damage done to Yugosla-via’s proud and useful reputation as an"open country" whose citizens, unlikethose of other Communist-ruledstates, were heretofore generally asfree to travel anywhere as citizens of"Western democracies."

The Slovene appeal and Yugo-slav press comments making the samepoint have tactfully refrained fromadding that this reputation is impor-tant at home as well as abroad. Unre-stricted freedom to travel is singularlyvalued by Yugoslavs of all classes, in-cluding those who do not travel. It hasprovided both symbolic and real evi-dence that they are not captives;noncaptives are by definition free(perhaps not a logical definition, butfor most Yugoslavs a psychological/emotional one) and Iy extensionmembers of a free and voluntary soci-ety. Put more simply: that Yugoslavshave generally stayed home more con-tentedly and granted their regimemore legitimacy than the citizens ofany other East European countryunder Communist rule is in part, andsuspect in large part, because theyhave known they could leave, and re-turn and leave again, quite freely. Thatfeeling of freedom is no longer quiteintact, and it does not help to point outto them that the French, of all people,now have their freedom to travel simi-larly restricted.

Perhaps the authorities are notfully conscious of such subtleties. Asin France, intellectuals and politiciansdecry and express possibly honestdisdain at the small-mindedness ofpeople who make a big fuss overminor inconveniences like temporarytravel restrictions and limits on with-drawals from bank accounts (there isagain a French equivalent, the "com-pulsory savings" imposed by the Mit-terand government) when big mattersare at stake, such as the country’s andso their own future economic health.This only proves once again how di-vorced from the real world of ordinaryconcerns and values politicians andintellectuals can become.

This "episode" is related in de-tail for its obvious importance. (1) perse and as an indicator of unstable or atleast uneasy relations at the Partysummit; (2) in leading one to wonderhow many other unrevealed "epi-sodes" and soured relations there may

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have been since, or whether thatmonth of secret and therefore cer-tainly frank confrontation Ribi(i( men-tioned and his public revelation andwarning have had the desired sober-ing effect; and (3) as a further drama-tic reminder that relations among therepublics and the nations for whichthey stand are always the most sensi-tive and potentially explosive issues inYugoslavia. The current status of per-sonal and internationality relations atthe Party summit is unclear. Nervous-ness there, particularly over national-ism in the country at large, is veryclear.

And in Suva Reka...In late March 1983 the BBC’s

Central Europe correspondent, MarkBrayne, visited a small town calledSuva Reka while touring the Au-tonomous Province of Kosovo for alook at the situation on the second an-niversary of the massive Albaniannationalist and irredentist demonstra-tions mentioned earlier in this Report.What he saw and heard at the "Bal-kan" rubber factory that dominatesSuva Reka’s economy (Yugoslavia’ssole producer of rubber conveyor andfan belts, it has 1,300 workers and anannual turnover of $4.3 billion in 1979)caught my attention as an apt exampleof the impact of "stabilization" thathas particular poignancy for me andperhaps also for regular readers ofUFSI Reports with long memories.This is because Suva Reka and "Bal-kan" figured prominantly in two 1980Reports from Kosovo (based on visitsin October-November 1979)in whichdescribed them glowingly as "a singu-larly successful if woefully exceptionalattack on poverty.., and traditionalmismanagement" in Yugoslavia’spoorest and most backward region.TM

The tale then was of genial lead-ership that had turned a backyardplant, founded in 1961 to make rubbersoles and employ a handful ofKosovo’s rapidly growing and unskil-led Albanian population, into a large,singularly prosperous and well-managed modern industry with am-bitious but apparently realistic plansfor the future. These last included newplants to be built by 1983 under jointventure agreements with the GatesCompany of Denver and Dunlop ofGreat Britain, which would purchaselarge parts of the output. Meanwhile"Balkan" had already had an impor-tant positive social as well as eco-nomic impact on all of southernMetohija and on the self-confidence of

Yugoslavia’s Albanian minority. It wasin every respect Kosovo’s "model fac-tory," as was repeatedly told.

Today, Mark Brayne discovered,"Balkan" is in trouble that is typical formuch of Yugoslavia’s industry. Itstechnology is largely from the West(Britain, France, West Germany),bought with Western credits. Produc-tion depends mainly on imported rub-ber, fibers, and chemicals that must bepurchased with hard currency, butapart from Algeria and Morocco "Bal-kan’s" exports, although 30 percent ofoutput (my 1979 in.formation), arelargely to soft-currency markets: Bul-garia, Romania, and the U.S.S.R. "As aresult," Brayne found, "it’s beencaught right in the scissors of Yugo-slavia’s current liquidity crisis.., hav-ing to fight tooth and nail for hard cur-rency allocations and for new credit."

Production fell last year by 7-8percent, a sad c6ntrast to the growthrate of 30 percent per annum in the1970s that reported in 1980. The newplant being built in conjunction withDunlop (to produce an initial 500,000heavy-duty tires a year) is nearly com-plete, but because of problems withforeign currency for equipment, etc.,the target date for opening has slippedfrom the end of 1982 to the end of1984. Planning officials in Pritina, theKosovo capital, told Brayne theydoubted that even this revised targetcould be met. Meanwhile, creepingdevaluation of the dinar since 1979 hasalready added 50 percent to the pro-jected cost of the project.

Personal incomes of the work-ers, proudly cited in 1979 as being 68percent higher than Kosovo and 54percent higher than Yugoslav aver-ages, have presumably slipped ac-cordingly, although Brayne does nothave this information. As for the in-crease from 1,300 workers to 3,000 by1983 that was in the firm’s plans in1979... the additional 1,700 have notbeen subtracted from Kosovo’s 30percent official unemployed, the high-est level in Yugoslavia.

A New Debate, an Unbridled Press andOther Portents

Economic problems and pol-icies have been the major preoccupa-tion of this Report because they havebeen the major preoccupation of theYugoslav authorities and populace,and with reason:they constitute a crit-ical situation that many call a crisis,they profoundly affect everyday life,and they are (in a non-Marxist sense)the real base on which the fate of polit-

ical and social "superstructures" restsat this time. The regime and its presentinstitutions may cope with these prob-lems to an adequate extent by "mud-dling through" a little better and sosurvive without major change. Theymay fail (or agree that they are failing)to cope, then reform themselves anddo so, and survive in somewhat differ-ent form, either with enhanced par-ticipation and legitimacy or with asadly more authoritarian system. Orthey may fail to cope, resist reform,and so precipitate the serious politicalcrisis that has been predicted so oftenthat it begins to be crying wolf. Thefirst of these possible outcomes so farseems unlikely, although it may beearly days for such an impatient judg-ment. The experts, and Yugoslav pub-lic opinion as far as it can be ascer-tained, are divided over whether thesecond or the third would then consti-tute the likelier second act in thedrama.

In this situation the politicalscene and the media are full of possi-bly portentous thunder and lightning.Much of it is in the form of largelymeaningless Party meetings andwords- always a Slavic Marxist spe-cialty in which, if nowhere else, there isconstant overproduction, but latelyshowing a growth rate that wouldsolve most problems if it were in theproduction of something salable.From "basic organizations" in neigh-borhoods and subunits of enterprisesto Central Committees and Presi-dencies of the Federal and regionalParty organizations, meetings arepiled on meetings and words onwords, with agendas ranging from crit-ical reviews of "stabilization" and anallegedly threatening resurgence ofethnic nationalism to culture-and-the-Party and the "ethnical profile" ofthe Party itself.

Meanwhile, however, a seriousdebate has developed around thefringes of this feverish show of activity,where rhetoric and resolutions seemto be a pathetic cover for lack of policyand firm positions, except on short-term emergency measures mislead-ingly called "stabilization." The de-bate is happening in a significantlyrambunctious but frequently thought-ful press, at scholarly and other sym-posia and professional meetings, inthe federal and republican parlia-ments and governments (which havebeen getting on rather well with theiragendas while the Party examines itsown and the country’s navels), 11 andsometimes even in those Party meet-

8/DIR-1-’83

ings and speeches, if antepenultimateparagraphs are read carefully.

Separating the wheat from thechaff, there seem to be at least fiveschools of thought (and correspond-ing factions?) within the political es-tablishment concerning the directionYugoslavia should take if and whenreforms come. The count includesviews that can only be inferred fromattacks on unidentified persons andgroups said to be advocating particu-larly "unacceptable" positions as wellas those openly if sometimes obliquelyexpressed and therefore with identifi-able advocates.

Probably the most frequentlymentioned and publicly denounced

is a dismantling of many aspects of"self-management" that manifestlycomplicate and disintegrate economicdecision-making and frequently addfurther distortions to already badly dis-torted "market mechanisms." Somewould apparently like to give a freerhand to "management organs,"otherwise pejoratively known as"techno-managerial elites," to get onwith the job of building socialism bymaking profits and investing themsensibly, which was the name of thegame (not actually a very successfulone) in the 1966-1972 period. It wouldtake place in something more like areal market economy because state aswell as self-management interventionswould again be reduced. This might incaricature be termed the Reaganite-or in Europe the Thatcherite- solu-tion. Others, comprising a secondsub-school of this view, would appar-ently like something resembling thepresent (and relatively successful)Hungarian approach: a decentralizedplanned economy mitigated by a lot ofmarket mechanisms and incentives.This might in similar caricature betermed the neo-"real socialist" orwhat-the-Russians-would-do-if-they-were-smart solution.

A more extreme version of thesecond of these, different enough tobe called a separate school, is theneo-Stalinist solution: a return to agenuine centralized planned economyand political system. Whatever itswell-known defects, this is a system inwhich someone, with luck equally wellendowed with intelligence, integrity,and love of the Party, would finally beable to make and implement the sounddecisions for a reunified Yugoslavmarket and policy that cannot now bemade because a hideously distortedmarket is sending misleading signalsand no one is in charge anyway.

The third school has more sub-divisions and nuances. It might becalled the genuine self-managementschool, although the label is not en-tirely or universally accurate. Its advo-cates would take a razor to the accre-tions of institutions and proceduresthat have cluttered the present systemalmost to the point of freezing-up orincoherence, but would keep the basicframework of a "planned marketeconomy," autonomous market-ori-ented enterprises, and self-manage-ment organs with ultimate power overmanagement ones. Most of its advo-cates would further reduce or totallyeliminate Party interference in eco-nomic matters, leaving what must bedone to parliamentary and their execu-tive organs, where the unwieldy and(contrary to its theory) undemocratic"system of delegations and dele-gates" should also be reformed.

What should probably be con-sidered another subdivision of thisthird school has recently thrown anovel and un-Yugoslav idea into thedebate: stop talking about macro-reforms of macro-systems and focuson examining and reforming the bitsand pieces of subsystems that arecausing the trouble. Some econ-omists, for example, are suggestingthat the right place to begin is with themechanisms and organs that con-stantly reproduce the improper pric-ing of capital, labor, and foreign ex-change that Professor Tyson, amongothers, blames for recurrent economicinstability. Some politicians and politi-cal scientists (in Yugoslavia frequentlythe same thing, which may of coursebe part of the problem) are suggestinga critical look at two of the late EdvardKardelj’s last imaginative innovationsthat seemed better in blueprint thanthey proved in practice. These are the"system of delegates and delega-tions" already mentioned above andthe "self-management communities ofinterest" (SIZovi in Serbo-Croatianacronym) that have begun to look andbehave like still larger, more expen-sive, and equally inefficient and unre-sponsive new versions of the state bu-reaucracies they replaced in the hopeof "de-statifying" (de-#tatizacija) so-cial and public services and to performother coordinating functions.TM

There is also the nationalist orbuilding-socialism-in-one-republic so-lution. It appeals to those who thinkthat they can do it but the other Yugo-slavs cannot, as well as to traditionalnationalists, regional leaders hungryfor more power, and people who be-

lieve some other nation is running Yu-goslavia and infringing their own na-tion’s interests or culture. In the eco-nomic sphere these "republicanetatists" usually appear to advocateeither the first or the second of thesolutions have ascribed to the first"school": the managerial free enter-prise or the Hungarian. In the politicalsphere they range from neo-Stalinistor authoritarian Communist to nearly"bou rgeois-democratic."

The most unspeakable solution(literally!) for the past thirty years, andtherefore with neo-Stalinism in thecategory of almost wholly anonymousadvocacy, is the reintroduction ofpolitical pluralism, usually taken tomean a multiparty system. It is clear tomost people that open promotion ofthis idea would have all current andaspiring Party power-holders on thebarricades immediately, armed with allthe formidable weapons they still pos-sess and determined to crush it at anyprice. It is therefore surprising that itseems to be circulating in establish-ment as well as dissident circles againand for only the third time, so far asknow, since the Party came to powerat the end of World War II. TM But this iswhat some recent reiterations of its"total unacceptability" and a few po-sitive references to the virtues of"political pluralism" for "socialist de-velopment" by establishment philos-ophers would seem to imply.

Finally, if it counts as a school ofthought, there are those who are ap-parently terrified of touching anything.These are people with power or priv-ileges they fear would be threatenedby any change. They are also, how-ever, those who would like somechanges but are frightened, in theterms used at the beginning of the Re-port, that the wrong things may comeout if Pandora’s box is opened. To-gether these two group may stillcomprise an effective majority that willprevent meaninful reforms until theycan come about only after a major andpossibly violent political crisis.

It is notable that almost all ofthese "solutions," except most vari-ants of the "neo-Stalinist" one, makelittle or only negative reference to theParty and its role. Party leaders havethemselves spoken of a "crisis of con-fidence" and "lack of credibility"when speaking about the CommunistParty and League of Communists thathas been the center of power fornearly 40 years. For the moment, atleast, the Party and Karl Marx, thecentenary of whose death the Party is

DIR-1-’83/9

this spring commemorating with duesolemnity and praise, seem at bestequally irrelevant and at worst equallydespised.

Perhaps this is why the Party isemitting so much sound and fury,anathematizing enemies of Yugoslavsocialism on all sides, in its own ranks,and in culture and mass media largelyrun by Communists. The list ofenemies is not new: nationalists of var-ious colors and tricolors, liberals,dogmatists, petit-bourgeois elements,all the familiar pantheon of devils. Allare still said to be few in number andwithout wide popular support, butmore active and dangerous as they at-tempt to exploit the country’s currentproblems for various "anti-self-man-agement-socialist" purposes.

The Party itself is clearly alsoseriously divided on these and otherquestions, and at the highest levels.The first public hint that the consensusthat apparently reigned within thepost-Tito leadership for two years afterh is death was breaking down, and thatpapering over differences might notlast long, came only a few weeks afterthe Party’s "continuity" Congress inJune 1982. The source and the way itwas done endowed the hint with spe-cial and wider significance.

On September 13 Mitja Ribicic,currently the formal head of the Partyas President (by rotation and for aone-year term) of its Central Commit-tee’s 23-member "collective" Presi-dency, delivered the special lecturethat marks the opening of a new aca-demic year at the "Josip Broz TitoPolitical School of the LCY," a kind ofParty war college located in Kum-rovec, the village where Tito was born.Although the Twelfth Congress was"the most critical" of all postwar Partycongresses in its evaluation, Ribi6isaid, it had ended "in full unity andwith unanimous verification of boththe report on the work of the CentralCommittee and in voting for the newCentral Committee." Immediatelyafterward, however, an "episode" be-hind closed doors at the Party summithad exposed the fraudulent nature ofthat unity, so that "for a month wewere busy settling our internal mat-ters, dealing with questions in ourmutual relations within the LC and notwith carrying out the Congress Res-olutions."

The "episode" occurred, Ribi(itold the Kumrovec students, at the firstsession of the new Central Committee,which takes place immediately after aCongress adjourns to conduct routine

business- particularly the "election"of a new Presidency whose 23 mem-bers have actually already beenselected by the Party organizations inthe eight Republics and Provinces andthe People’s Army and "whicheveryone thought would be of a moreor less formal nature, as it had alwaysbeen." This time, however, "it wasdemonstrated that a lot that is un-Communist and unprincipled had ac-cumulated in the leadership of the LCduring the latest period. There againemerged these old tendencies thatwere characteristic of the situation inYugoslavia before the 21 st Session ofthe LCY Presidency in December1971"-- a dramatic meeting in whichTito, confronting the most seriouspolitical crisis in postwar Yugoslavhistory, precipitated a purge that even-tually decapitated the Party in four ofthe country’s six republics--"with thedifference that the illnesses anddeaths of Comrade Kardelj and thenPresident Tito have [this time] beenadditional factors of increased hesita-tion and disorientation." This was anominous analogy and a startlingly un-usual revelation, by Yugoslav stan-dards, of open conflict at a closedParty meeting.14

The trouble at the Central Com-mittee began, we eventually learnedfrom an unexpurgated version of thetext, during voting for the new PartyPresidency, for the first time (under anamendment to the Party Statuteadopted by the Congress a few hoursearlier) by secret ballot. One of Ser-bia’s three candidates for that Repub-lic’s three places in the Presidency,Drama Markovi(, failed to obtain thetwo-thirds majority required by the sta-tute a snub to the Serbian Party, arejection of its will, and unpre-cedented in the 15 years since FederalCongresses and organs began merely"confirming" elections to federal of-fices by regional Parties. Many mem-bers of the Central Committee fromother republics, it would seem, weredriving home a point that had beencommon knowledge for some time:that Markovi( is popular in Serbia andits Party but unpopular in the rest ofthe country, in both cases primarilybecause he is viewed as something ofa Serbian nationalist or a sharp politi-cal operator willing and ble to play onSerbian national sentiments; and thatother regional Party organizationswould have preferred another Serbianpolitician, the highly regarded formerYugoslav Foreign Minister MiloMini, who had been shunted aside by

the Serbian Party, allegedly the vic-tim of factional in-fighting won byMarkovi(’s faction. (The CroatianParty had had a similar experience atthe same time, but there the loserwas unpopular countrywide: JakovBlaevi(, an old Party warhorse and"dogmatic" lately obsessively en-gaged in vendettas against his old per-sonal enemies, the Catholic Church inparticular.) Ribi(i described whathappened next:

Comrades from Serbia ex-plained what that meant for relationsin their Republic and relations be-tween Serbia and the others. Theyeven warned about the possibility ofcalling an extraordinary congress [ofthe Serbian Party, in order, presum-ably, to renominate or select a re-placement for Markovi]. We were allaware that this would create a situa-tion in which we would have to wagewar with our own selves for a longtime. The Committee on Personnelmet while the [Central Committee]meeting was going on and with theagreement of the candidate requesteda new vote on his candidacy. In a newsecret ballot Dra_a Markovi# receivedthe required majority.

The Party TriesIn recent months a marathon

series of plenary sessions of regionaland Federal central committees andpresidencies has been dedicated to analleged resurgence of dangerous eth-nic nationalism, what is happening inthe media and culture, and the fitnessof the Party and its members for thetasks confronting them.

Judging by the speeches madeat these meetings, nationalist preju-dices and suspicions and the numberof "nationalist excesses" are at theirworst level since 1970-71, when theyalarmed Tito into initiating the politicalcoup and purges of "nationalists" and"liberals" that Ribii( referred to in hisKumrovec lecture. This may or maynot be true.

Most outside observers with suf-ficiently long firsthand experience tocompare the present atmosphere withthat of 1970-71 and earlier, includingthis reporter, have been unable to col-lect sufficient evidence to justify thedegree of preoccupation and alarmdisplayed in these speeches and somepress reports. Moreover, many of the"nationalist excesses" that are beingcited turn out on closer examination tohave been extraordinarily trivial. Oneof the most notorious, for example,occurred at the midnight end of an

10/DIR-1-’83

alcoholic birthday party in a ZagrebUniversity student hostel last October.Some Croatian students began sing-ing popular Croatian songs with lyricsthat at least one Serb student from aneighboring dorm considered nation-alistic. On the following day the of-fended Serb told the woman whosebirthday it had been that he would de-nounce the singing of such songs tothe hostel’s Party organization (or, insome versions, the police). For this hewas later hauled from his room androughed up by two of her friends. Theincident was still being intensively dis-cussed at Party meetings and in thepress five months later. Many foundominous paraJlels to the situation in1971, when nationalist students at thesame university called a strike that fi-nally precipitated Tito’s action. Only afew, while also agreeing that the songsin question were nationalistic, pleadedagainst exaggerating the significanceof a banal scuffle and some old lyricswith the "wrong" words (namely,"Zrinski-Fankopani’’m 16th centuryCroatian heroes and "the name ofJesus" in place of the revised and ac-ceptable version’s "forward Parti-sans" and "the name of Tito" in thepatriotic song "Marjane, Marjane!").*

On the other hand, the escala-tion of ethnic nationalism that led tothe 1971-72 crisis also began withbanal incidents that were initially tol-erated. Then Croatian nationalism wasthe most vociferous and the principalchallenge, presumably one reasonwhy the present Croatian Party leader-ship (in general the same people Titoimposed in place of purged "na-tionalist" Party leaders in Decem-ber 1971) is currently hypersensitiveand inclined to err on the side of exag-gerating the significance of evenminor incidents and others with ques-tionable nationalist content. This time,however, there is general agreementthat if ethnic nationalism is indeedthreatening stability again, the gravestchallenge will come from the Serbs, aparticularly alarming prospect be-

*In April 1983, after this Report wascompleted, the students who roughedup their Serb colleague were tried by aZagreb court and sentenced, respec-tively, to 4 and 21/2 years in prison forassault and "nationalistic behavior

that incites national and religioushatred, dissension among the nationsand nationalities, and injury to revolu-tionary sentiments" (the charges ascited in Danas, April 19, 1983).

cause they are the largest nation (39%of total population) and the mostwidely dispersed outside the bordersof their own republic. Serbian nationalsentiment has suffered many injuriesrecently, the most severe and hurtfulfrom the events in Kosovo, which haveincluded a massive further exodus byfrightened members of the residualSerb minority from the province thatwas the heart of medieval Serbdomand the site of most of Serbia’s mostrevered historical monuments andevents. A Serbian nationalist "back-lash" has been predictable and pre-dicted, and there are signs that it istaking shape. Its dimensions and con-sequences are still unclear, but it ishere that those who interpreted theKosovar Albanian nationalist and ir-redentist outburst in 1981 as an omenof countrywide crisis and notmerely a containable Yugoslav North-ern Ireland may yet be proven right.

Meanwhile, the debate on thissubject has included references to re-cent "attitude surveys" taken amongyouth across the country and purport-ing to show that nationalist values andprejudices are still widespread anddeeply rooted in another new genera-tion supposedly indoctrinated with the"brotherhood and unity" of the Yugo-slav nations and nationalities. A sepa-rate survey found that the proportionof youth "positively disposed" towardthe "self-managing system" has fallenfrom about two-thirds in the mid-1970sto 53 percent in 1982. (More specif-ically, those surveyed tend to acceptself-management as a value but to beincreasingly skeptical of actual prac-tice.) The corresponding 1982 figurefor workers was 44 percent. It is rea-sonable to assume a linkage of kindsbetween the findings of the two sets ofsurveys, and between both and thestartlingly blunt views expressed in theUniversity of Belgrade student news-paper by a Professor Lazar Trifunovi("

Wherever they turn, young peo-ple see they are being tricked and de-ceived. From their childhood theyhave been instructed and "brain-washed" [to believe that] they are liv-ing in the freest, most democratic, andmost revolutionary system, in which allpeople have equally been guaranteedand have secured the basic humanrights. On growing up they im-mediately grasp that none of theserights can be realized; they move awayfrom them and never return, disap-pearing in a sea of phrases, resolu-tions, self-management agreements,laws, regulations and instructions,

which are mercilessly and almostpathologically being produced by thebureaucrats in an attempt to hide thereal picture about us. Having under-stood that the words of the resolutionshave nothing in common with reality,young people cannot avoid clearlyrecognizing that they have been livingin a society run by old people whocrave for power, although they sufferfrom sclerosis, unable to suggest any-thing new and creative; instead, thesesenile poeple are very radical in de-fending their privileges and their rightto govern and manage people. TM

The Yugoslav press in general,while not often as extreme and polem-ical in tone as this citation, has beenextraordinarily uninhibited in the pastcouple of years. Daily newspapers,weekly newsmagazines, and popularmonthlies (some in the style of Play-boy) are full of critical comment onpolicies and their consequences writ-ten by their own staffs and in the formof interviews with and contributions byprominent or aspiring political figuresand intellectuals. Firstclass "investi-gative reporting" exposes corruption,incompetence, and dirty politics in ex-pected and unexpected places. It hasbeen like this before, in the later 1960s,but not in the 1973-1980 period, wheneditors and reporters who had daredtoo much were demoted, sometimesfired, or could write only inoffensivelyand with a pseudonym or no byline.TM

Growing Party annoyance,fanned by the wrath and vengefulnessof individual "victims" of investigativereporting or press criticism, was firstexpressed at "comradely" meetingswith fellow-Communists in the Partyorganizations of the offending publi-cations. (A reported 9,000 of Yugosla-via’s 11,000 working journalists areParty members; several of them, in-cluding some principal editors of themost uninhibited papers, are mem-bers of higher Party organs, includingcentral committees.) Nothing notice-able happened The next step was ahierarchy of plenary meetings, begin-ning with the Party committees inwards and then cities where offendingpublications are housed, then at therepublic level, and finally by the all-Yugoslav Central Committee (at itsSixth Plenum on March 14), toexamine the role of the press and cul-ture in the difficult circumstances con-fronting the country.

These meetings invariably re-peated that the Yugoslav press is ofcourse free and not subject to Partydictation, but must also be "responsi-

DIR-1-’83/11

ble" and supportive of self-manage-ment, education and mobilization ofthe populace for "stabilization," andbrotherhood-and-unity, not local andnational interests. The press in generalwas said to be fulfilling these criteria,but there were woeful exceptions,especially in "destructive" rather than"constructive" criticism and scan-dal-mondering that undermine moralein already difficult times and in somearticles and literary works that pro-voke tensions among the nations andnationalities. Thus, for an example ofthe style and what some Party leadersfind annoying, Dim,e Belovski’s key-note speech to the Sixth Plenum de-plored individual journalists "whooften assume the role of investigatorsinto the activities of enterprises andbecome hounders’ of mistakes andshortcomings instead of construc-tively participating in the responsibletask of keeping the public informed."

Two publishing houses werepicked out for particularly frequent,explicit, and sometimes vitriolic criti-cism: the one in Belgrade that pub-lished Yugoslavia’s most respecteddaily, Politika, and weekly newsmaga-zine, NIN; and the one in Zagreb thatpublishes the Croatian leading daily,Vjesnik, and NIN’s new equally out-spoken competitor, Danas. In goingthrough the motions of "self-crit-icism" in reporting what had been saidabout them, each of these periodicalsboldly rebutted the essence of it.Readers are now busy debatingwhether more recent issues have "to-ned down" 10 percent, 20 percent ornot at all.

In the face of this kind of "cam-paign," in the past often followed bysanctions, the press’s stubborn hold-ing to course with only a little trimmingof sails here and there is a comment onthe quality, courage, and journalisticand political values of a large numberof Yugoslav journalists. It alsosuggests that those of them who setthe tone, seasoned and often scarredveterans of the art of the possible inYugoslav journalism, have reckonedthat they enjoy enough protection invarious appropriate quarters of a dis-united Party to get away with it pro-tection, that is, from powerful Com-rades who share their view of the roleof the press or whose particular inter-ests, preferred policies, or factions aparticular newspaper is serving.

Meanwhile, one journalist hasgone to prison because of her inves-tigative reporting but has appealed hersentence and is expected to win re-

lease. She is Ranka (iak, a Bel-grade-based Vjesnik reporter who un-covered a swindle involving pigs,peasants, and currupt politicians in avillage near the capital (the story washeadlined "The Pig Mafia"). After re-ported telephone threats on her lifewere unavailing, she was charged with"hostile propaganda," the most infa-mous paragraph in the Yugoslav crim-inal code, and sentenced by a districtcourt to two and a half years for al-legedly having said, in the hearing ofsome of the villagers she was expos-ing, that after 1945 Tito had "main-tained relations" with CardinalStepinac, a later imprisoned Arch-bishop of Zagreb, and "had squan-dered money on his travels (the phras-ing, here and elsewhere full of sardon-icism, is from Vjesnik’s report of thetrial). The case raised a furor of nega-tive comment in the press, and seniorofficials hastily noted that "justice"will certainly be done when her appealis heard.

Other recent plenary meetingsof various Party organizations, againincluding the Central Committee, havesimilarly concerned themselves withalleged instances of nationalism, de-valuation of the Partisan War andsocialist revolution, and other "anti-socialist" positions and incitements inliterature, the theater, and historiog-raphy. The picture is again confused,and even Party judgments on single"cases" have varied from person toperson and place to place.

A new drama by a young play-wright entitled "Golubnjaca" ("Pi-geon Cave"), a stark portrayal of war-time national hatred and massacres inthe bleak Dalmatian hinterland andmindless echoes of these amongpresent day local youth has beenthe most discussed case. Denouncedin some forums and banned in NoviSad in the Vojvodina (but only afterplaying for some time to packedhouses), it has played to public andParty acclaim elsewhere, and wasawarded a prize in Slovenia, as a goodand honest’ portrayal whose moral isthe horrible absurdity of thenationalistic intolerance and hatredsthat led to the wartime Pigeon Cavemassacre and its theatrical re-enact-ment by today’s children.

In another notorious case theexecutive editor and the director of apublishing house in Croatian Rijekalost their jobs, and the former his Partymembership, after their firm publisheda controversial book of essays andspeeches by Dobrica Cosi(, Serbia’s

most famous living writer, and a vet-eran Communist (with the Partisansfrom the beginning in 1941) and aformer member of the Serbian PartyCentral Committee. In an escalation ofepithets the book has been described,inter alia, as "a Bible for Serbiannationalists," a hyperbole that smacksof witchhunting. Its real "crime" is itsauthor’s challengeable reputation as aSerbian nationalist and one chapter:the text of a speech to the SerbianCentral Committee in 1968 that wasdenounced at the same meeting asunacceptable and nationalistic, mak-ing him indeed a national as well asliterary hero, although it cost him hisplace on the Central Committee andhis political career. Ironically, the "un-acceptable" but unforgotten focus ofthe speech, which also contained anoverlooked denunciation of waxingSerbian nationalism, was a propheticearly warning and denunciation of arising tide of Albanian nationalism andanti-Serbianism in Kosovo. Banningthe book, incidentally, can merelyforestall reprinting: the first edition of10,000 copies sold out within days ofpublication in January 1983.

The list goes on,17 another clearsign of the jitters. For a balanced pic-ture, however, it should also be notedthat book publishers, theaters, andfilmmakers, as well as the press, areproducing a myriad of things thatwould have been impossible only afew years ago. Particularly noteworthyis the work of serious academic histor-iansTM of the Partisan and youngergenerations, whose meticulous andnotably objective revision of wartimeand early postwar history is producinga healthy "de-mystification"--not, assome are charging, an ill-intentionedand destructive devaluation of thePartisan struggle and the regime’sfounding.

The final focus of all this freneticParty activity has been the Party itself:its fitness and that of its members forpresent and future tasks. While lash-ing out at its purportedly manifold"enemies" with an apparent impo-tence that seems to indicate thatpower has faded as well as respect, theLeague of Communists is preparingfor a domestic housecleaning to riditself of dead (called "passive" and"opportunistic") as well as ideolog-ically and morally diseased wood. Thename of this game, recently called"differentiation" and earlier "cleans-ing" or "purge," is now "cadre docu-mentation and evaluation" (kadrovskaevidentiranje ocjenjivanje).

12/DIR-1-’83

Party membership figures andsocial structure have historically fluc-tuated under the influence of events(with spasms of rapid growth in theyears 1948-1972 coinciding signif-icantly with periods of bad Yugoslav-Soviet relations or domestic reforms)and with fluctuations in the officialview of what the Party should be(membership "campaigns" when amore democratic mass party was thegoal; "cleansing" and stricter criteriafor joining when the goal was to returnto a Leninist "cadre party"). From theend of the last period of shrinkage in1973 until this year the "mass party"philosophy prevailed, with relaxedcriteria and special emphasis on at-tracting workers, youth, and women toan aging and predominantly male or-ganization in which the working classwas embarrassingly under- and pro-fessional classes embarrassinglyover-represented. 1973 to about 1978was also a period of renewed em-phasis on Party membership as a pro-fessional or job qualification. Mem-bership consequently doubled in thenine years 1973-1981, from just overone million (one for every 14 Yugo-slavs) to 2.1 million (one out of sevenor 9.5% of the population). "In manyenvironments," a semi-official com-mentary on membership trends notescandidly, "LC membership was iden-tified with moral and political fitness,so that a number of young and otherpeople joined the League to obtain ajob or to be promoted to responsibleand managerial posts more easily.TM

So a "quiet purge" will now be-gin. On past performance it will strikemost heavily at those membershipsectors where the Party has lately beenso proud of rising numbers: workersand youth. A few token heads will fallamong the Party professionals andsomewhat more among the over-rep-resented "techno-managerial elite"and other upper social strata. The"ethical profile of the party" may re-ceive some cosmetic improvement,but the party will not thereby be fitterfor its tasks. This, to reiterate, is anexpectation based on past perfor-mance; those who are initiating the"cadre evidencing and evaluation" aredeclaring that it will be done better andacross the board this time.

The Patience of the YugoslavsIn a long address opening the

Fifth Plenum of the LCY CentralCommittee on February 28, 1983,Presidency member Kiro Hadi-vasilevspoke in detail about "a critical phase

in the development of our society andsystem" and then paid tribute to theunderstanding ("high level con-sciousness") and patience with whichYugoslavs in general were acceptingand responding to the sacrifices askedof them:

Precisely this consciousnessand attitude of the working class andworking people explains their be-havior in present circumstances. Andthat behavior seems to some foreigncircles strange, incomprehensible,and perverse. In the foreign press theysometimes wonder how it can be thatour workers and citizens take a con-siderable fall in living standards andshortages and deprivations so calmlyand patiently. We could add to that yetanother exceptionally important in-dicative and instructive fact: preciselyin the period when our poblems haveworsened most and a fall in standardsis being registered, from 1980 to now,the number of strikes in our country,the number of participants in strikesand lost work hours, has been cut byhalf- although even earlier they wereincomparably less than in many othercountries.

Although the number of strikeshas reportedly increased since the be-ginning of the year, the "strange, in-comprehensible, and perverse" pa-tience of the Yugoslavs is to date stilllargely intact and has been registered,often indeed wonderingly, by foreignobservers watchful for signs of abreaking popular storm.

The reasons are by their naturelargely speculative. One plausible keyis provided by the ubiquity with whichthis and other observers have heardordinary Yugoslavs say: "we’ve beenliving beyond our means for years, thishad to come. There’s nothing for it butto tighten our belts and learn to work."A great deal of criticism of the regime,its past follies and current sins ofomission and commission, may fol-low, but that "we" seems crucial.Rightly or wrongly there seems to be awidespread feeling that everyone is inpart responsible, we and as well asthey. This attitude is in turn certainlyrelated to and reinforced by a crucialdifference between the Yugoslav sys-tem and that of other European Com-munist states. In those others a small,easily identifiable group the Party-state apparatus- is clearly in chargeof all or most economic as well as polit-ical decision-making; everyone knowswhom to blame and anger can be fo-cused. In Yugoslavia such decision-making is widely diffused and the

economy and polity are to a consider-able degree autonomous of oneanother; "responsibility" is corre-spondingly diffused, both in fact andin the eyes of the beholders, and with itblame and anger. As in Western coun-tries suffering analogous if less ex-treme problems and declining stan-dards, one is not quite sure whether tobe madder (or maddest) at the gov-ernment, decision-makers in busi-ness, the trade unions, or perhapseven our own work habits and values.Such diffusion of anger, while it doesnot explain why there are not morestrikes and demonstrations, if only outof simple frustration (cf. many Westerncountries), is obviously less threaten-ing to the government or the regime.

This explanation is still inade-quate and remains so even when otherlikely factors are added in compari-sons with the plight of people in othercountries, including some neighbors,that make the Yugoslav plight seemless bad or at least more bearable; alively awareness that instability or col-lapse in Yugoslavia is certain to beexploited by others, undermining ordestroying the country’s treasured in-dependence and ability to chart itsown course; a "phase" in public con-sciousness and social psychology, fedup with Yugo-Marxist cant, in whichthe simplistic solutions based on ide-ology that more easily turn men on andout are antipathetic; a residual touchof Near-Eastern fatalism; et al. The ex-planation, however, is for the momentless important than the fact.

That "fact" of long-suffering pa-tience and tolerance (for which furtherevidence could be advanced if spacepermitted) can cease to be one, possi-bly quite suddenly. If that day comes itwill answer a final and for the momentunanswerable question: are appar-ently frantic officials and dramaticforeign and domestic press reportstoo alarmist, or are most of the Yugo-slavs and some of the "experts" toocalm and hopeful?

(April 1983)

DIR-1-’83/13

A NOTE ON SOURCES

Apart from personal observa-tion, conversations, and other sourcescited in the text, this Report is basedon selective reading of the Yugoslavpress and West European presscoverage of Yugoslavia during themonths since the Twelfth Congress ofthe LCY (June 1982). To avoid anenormous clutter of footnotes specificcitations have generally been omitted(even in the case of direct quotes fromspeeches by senior officials, which areusually printed in full in all major Yu-goslav dailies). Responsibility for er-rors of fact, particularly likely in provi-sional or estimated statistics some-times merely thrown in to illustrate apoint by a Yugoslav journalist and thenre-used in this Report, must thereforefall more heavily than otherwise on thepresent writer, who picked the wrongsource and did not share the blame byciting it.

Political decentralization, differ-ing regional and national interests andviews, and a press sufficiently free,skilled, and locally protected to ex-press these and other differencesmake it necessary or at least advisableto cast a wider net than is normallyneeded in other Communist-ruledEuropean countries, except for thoseinterested in local affairs. Dailies andweeklies that should be read regularlyinclude Politika and NIN (Belgrade),which are generally regarded as Yu-goslavia’s best, Danas and Vjesnik(Zagreb, the former a new weekly suc-cessfully competing with NIN as amust-be-read newsmagazine), Komu-nist (technically the only "official"Party newspaper, a weekly publishedin various languages and editionsthroughout the country), and Borba(Belgrade and Zagreb, widely dis-dained as "official" and dull but a use-ful newspaper-of-record with full texts

of resolutions, less importantspeeches, etc.).

Where time, energy, and in somecases language competence permit,one should also see the leading dailiesin other republican and provincial cap-itals (particularly Delo in Ljubljana andlately- if one happens to read Alba-nian!- Rilindja in Pritina) and a fewother cities (e.g., Slobodna Dalmacijain Split provides occasional remindersthat Dalmatians are different). Thesame applies to several "popular" or"soft-porn" magazines like Start (Zag-reb), which have emulated Playboy byincluding "serious" and political jour-nalism and controversial interviewswith leading personalities, and at leastsome of the specialized weeklies andjournals focusing on business, ideol-ogy, and so on. My own reading in thissecond category in the period coveredby this Report has been spasmodic atbest.

NOTES

1. See D.I Rusinow, "After Tito..."AUFS Reports, No. 34, 1980, for a descrip-tion oi the funeral, the transition, and prob-lems confronting Tito’s successors insummer 1980.

2. See "A Note on Sources" at the end ofthis Report.

3. For a fuller discussion, see D.I.Rusinow, "Yugoslaia’s First Post-Tito Con-gress," UFSI Reports, Nos. 39, 40, 1982, towhich thisReport constitutes an "up-date."

4. Statistics from Vjesnik/7Dana (Zagreb),Feb. 26, and Politika (Belgrade), Feb. 25,1983.

5 Reports differ wildly and over time onsums involved, participation, and terms,details offered here may also be inaccurateon some points.

6. See The Wall Street Journal, April 23and May 7, and Business Week, May 101982. For one Yugoslav report and com-mentary, see Vjesnik/Sedam dana (Zagreb),May 22, 1982.

7 "Prokletstvo Pandorine kutije"--"TheCurse of Pandora’s Box," a reference tonew foreign credits reopening the questionof investment priorities that has lately beensealed by lack of funds- in Danas (Zag-reb), Feb 15, 1983, which puts the size ofthe World Bank credit at $750 millionspread over 3 years (cf. $300 m.in toto in mybest information available).

8. See her contribution to a seminar on"Yugoslavia After Tito" at the Kennan Insti-tute for Advance Russian Studies, The Wil-son Center, Washington, D C, in October1981, published as a Kennan Institute Oc-casional Paper (no 157, n.d.).

9 For more detailed figures and assess-ment, see Danas, March 15, 1983.

10. "The Other Albanians Kosovo 1979,"AUFS Reports, Nos. 6 and 7, 1980, written insadly accurate anticipation of the troublesthat erupted in the spring of 1981. Brayne’saccount, which he repeated for me on hisreturn to Vienna, was broadcast by the BBC("Outlook" and World Service) on March24, 1983

11. In a recent letter about a London sym-posium on Yugoslavia Sir Terence Garvey,a wise former British Ambassador to Bel-grade and Moscow, wondered whether thisdevelopment, if it continues, might not leadto real control over policy by governmentsand parliaments rather than the Partywithout a conscious decision to do so.

12. The UFSI Reports cited in footnote 3provide background and general informa-tion, not repeated here, on this and otherissues involved in the current debate andthe positions of the various "schools"

13. The first time was in 1953, until haltedby the Djilas crisis The second, less welldocumented, was on the fringes of theParty debate about further "democratiza-tion" at the end of the 1960s

14. Some of what Ribi(i, had to say wasso sensitive and unusual by Yugoslav polit-ical norms that it was left out of reports in

the mass media until after it was publishedin Komunist, the Party’s own weekly. Eventhere, curiously, the most sensitive revela-tion of all the naming of Markovi( wascarried only in Komunist’s Slovene-lan-guage Ljubljana edition, where it was over-looked by the Belgrade and Zagreb pressuntil the end of the month!

15. From Student, Feb. 23, 1983, asquoted by Slobodan Stankovi, "YugoslavWorkers Demand Changes," in Radio FreeEurope Research, RAD/79 dated April 12,1983.

16. There is no prior censorship in Yugo-slavia. The law requires that the first copy ofevery printed publication be sent to thepublic prosecutor of the locale in which it ispublished. The prosecutor may temporarilyban further circulation and printing pend-ing a judgment by a relevant court, whichmay, but does not always uphold the banGrounds for banning a publication arestipulated in the law, but are sufficientlyloose and general to be liable to variousinterpretations and abuse What cannot bepublished is therefore largely a matter ofself-censorship by dutiful or cautious writ-ers and publishers, backed up (but onlyafter circulation has usually begun) by theprocedure described here and ex post factosanctions against writers and publishers

17. For those interested in more detailsand cases, Radio Free Europe’s "Back-ground Reports" (its RAD series) have beenfollowing press and cultural developmentswith particular thoroughness in recentmonths.

18. Because his enormous three-volumeNovi prilozi.., has attracted much atten-tion and comment in the West as well as in

Yugoslavia, it is important to note that Vla-dimir Dedijer is not in this category

19. "Membership in the League of Com-munists of Yugoslavia," in Yugoslav SurveyXXlII, 4 (November 1982), with many otheruseful statistics on social, sex, and agecomposition and distribution by republicsand provinces.