WORLD

A NATION DIVIDED

AN ECONOMIC CRISIS AND DEEP ETHNIC RIVALRIES THREATEN TO RIP APART THE YUGOSLAV REPUBLIC

ANDREW PHILLIPS February 13 1989
WORLD

A NATION DIVIDED

AN ECONOMIC CRISIS AND DEEP ETHNIC RIVALRIES THREATEN TO RIP APART THE YUGOSLAV REPUBLIC

ANDREW PHILLIPS February 13 1989

Along Belgrade’s stylish Knez Mihailova pedestrian thoroughfare last week, window-shoppers eyed tempting displays of fur coats, Japanese-made stereo equipment and elegant shoes. Many paused at the Terazjucka fountain—a small granite wishing well installed in December as the finishing touch to a face-lift of the area. But instead of tossing coins into the fountain for good luck, passers-by sprinkled colorful paper money on the foaming water. With inflation in Yugoslavia raging at 251 per cent, 100- and even 500-dinar bills have become almost worthless. And instead of becoming a symbol of the renewal of the capital’s grimy, polluted downtown core, the fountain has quickly become a monument to the economic disaster that is engulfing Yugoslavia.

The country’s economic woes are complicated by growing rivalries between Yugoslavia’s mutually suspicious ethnic groups—and by the sharpest divisions among the leaders of its ruling Communist party in decades. For three days last week, Yugoslavs watched on television as members of the party’s 130-member policymaking Central Committee openly bickered, traded insults and failed to resolve their differences. On two occasions, senior military leaders issued strong warnings to the squabbling politicians that the armed forces would not stand idly by while Yugoslavia was pushed “toward the rocks of catastrophe.” Admiral Petar Simic, political chief of the military, told the Central Committee that “if somebody has declared a battle for Yugoslavia, it will not be fought without the Yugoslav People’s Army and millions of working people who have Yugoslavia more at heart than certain blinded and bureaucratically numbed individuals.”

While the Yugoslav army has no tradition of intervening in domestic politics, the admiral’s unusually strong statement underlined the civilian leaders’ inability to take united action. On Feb. 1, the Central Committee finally voted to hold a full party congress before the end of 1989—at least six months ahead of schedule—to tackle Yugoslavia’s mounting problems. But, at the same time, party president Stipe Suvar made a poignant admission. “At the moment, we are incapable of taking historic decisions,” said Suvar, who fought off calls for his resignation. “All we do is grope in the dark.”

For Yugoslavia’s 23 million citizens, the current crisis is the most severe in their postwar history. And for the rest of communist Eastern Europe, it may offer a depressing sign of things to come. Long before other communist countries began reforming their societies, Yugoslavia liberalized its economy, relaxed political controls—and was widely seen as a more attractive socialist alternative to the stern, monolithic Soviet system. But that early promise has long disappeared in a chaotic brew of political paralysis and social unrest. Even senior party officials last week described their country’s plight as a crisis. And for ordinary Yugoslavs, there were daily reminders that life is getting worse, not better. Last week alone, the government announced dozens of new price increases—including a 48-per-cent rise in electricity rates and a 25-per-cent increase for baby food.

For Mirjana Kovic, a young mother who was passing by the Terazjucka fountain one day last week with her two sons, rampant inflation means a constant struggle to feed her family. “We aren’t eating as well now as we did before,” she said. “Sometimes I don’t buy meat—it’s just too much.” The worst villains, said Kovic, are shopkeepers who hide goods until new prices are announced—and then put the old products on their shelves at the higher prices. “They just take advantage,” she said angrily. “You can argue, but what can you do? Someone else will come along and buy it anyway.”

Other signs of falling living standards are evident throughout Belgrade. Western diplomats say that they notice increasing numbers of people rummaging through garbage cans and waste bins at outdoor markets for scraps of food. Long lines form early in the morning for “people’s bread”—a type of coarse black bread that the government requires bakers to produce at one-third the price of the more widely preferred white bread. And middle-class Yugoslavs complain that travelling abroad has become prohibitively expensive. Just one year ago, for example, it took 982 Yugoslav dinars to buy a Canadian dollar; last week, the rate jumped to 5,076 dinars per dollar. The average monthly wage in Belgrade is about 600,000 dinars—now less than $120.

Those economic tensions have fuelled growing ethnic unrest. Since last year, the country’s eight million Serbs, by far the largest ethnic group, have experienced an awakening of national pride that has challenged Yugoslavia’s complex federal structure. The focus of their outrage is alleged discrimination by ethnic Albanians against Serbs in the southern province of Kosovo. That underdeveloped province, the historical birthplace of Serbian culture, is now 90 per cent Albanian. And Serbs loudly proclaim that the 200,000 Serbs remaining there are being forced out by harassment, arson—and even rape. There are few numbers to support that claim. But Kosovo has become a charged emotional issue for Serbs that cuts across class and ideological lines. “There is virtual unanimity over Kosovo,” said Kosta Cavoski, a human rights activist in Belgrade. “The Serbian soul has been wounded.”

The issue also contributed to the meteoric rise of Yugoslavia’s most controversial political figure: the Serbian Communist leader Slobodan Milosevic. Popularly known as “Slobo,” Milosevic rode the wave of Serbian national feeling, orchestrating a series of mass rallies that aroused fear among other ethnic groups. Critics charged that he was acting like a demagogue. Rallies organized by Milosevic’s followers forced the top Communist officials in the Serbian province of Vojvodina to resign in October. And three weeks ago, similar demonstrations toppled the entire political establishment in the neighboring republic of Montenegro.

Milosevic’s grip on Serbia contrasts sharply with the virtual political vacuum at the centre of the country. Yugoslavia’s constitution gives all six of the country’s republics veto power over almost all federal legislation—including the budget. Designed by Josip Tito, the father of modern Yugoslavia, to ensure a balance among the two dozen ethnic and religious groups, the system worked while Tito remained alive to arbitrate disputes. But when he died in 1980, he was followed by a succession of nondescript leaders without the power needed to pull the country together. Even the Communist party, which once bridged national divisions, has effectively devolved along regional lines. “There really is no Yugoslav Communist party,” said Branko Prebicivic, a political scientist at Belgrade University. “There are six or eight parties and they don’t agree on much at all.” Added Prebicivic: “We are divided among so many national groups and have wide economic differences. There is no such heterogeneous society in Europe—maybe even the world. How can you develop a system that suits everybody?”

The disarray at the federal level exists alongside a degree of political openness that is remarkable for a country still nominally run by Communists. A Serbo-Croatian translation of Soviet exile Alexander Solzhenitsyn’s Gulag Archipelago is on sale in Belgrade bookstores—as is a wide array of locally produced soft-core pornography. More daring elements of the Yugoslav press, including the Slovenian magazine Mladina (youth), publish exposés of government corruption. And independent political groups that may develop into full-fledged parties are springing up in Slovenia, the country’s most liberal republic, which borders Italy and Austria.

Even Yugoslavia’s most notorious dissident, 77-year-old Milovan Djilas, has been able to express his heretical views in interviews with Yugoslav magazines. Djilas was Tito’s closest associate in the Communist leadership immediately after the party took power in 1944. But he was purged in 1954 and was imprisoned for nine years as a traitor. His most widely read book, The New Class, was a landmark study in how communism breeds a bureaucratic dictatorship—and has still not been published in Yugoslavia.

Now, Djilas lives with his wife in a third-floor apartment in a nondescript building just a few hundred metres from Yugoslavia’s parliament buildings in central Belgrade, where the Central Committee held its three-day meeting last week. “Communism as a whole is in crisis from Belgrade to Peking,” he said last week in his study, lined from floor to ceiling with hundreds of books in several languages. “And Yugoslavia is in some ways a laboratory of this crisis. It is the most advanced country in experiencing the crisis; the kind of things you see here will happen in other socialist countries.”

For Djilas, the key to reforming the system is to end the political monopoly of the Communist party and allow other parties to compete for votes. “The roots of the crisis are political,” he said. “The system we have now cannot function and will not survive. Even now, we don’t have a truly communist country in the classical sense—just different sorts of authoritarian regimes in different parts of the country.” In a reflective mood, the dissident recalled: “When I was young, before we took power, it was absolutely clear what socialism was. But when we took power, it was no longer so clear. Now nobody can tell you, honestly and clearly, what is socialism.”

Even Yugoslav government officials echo Djilas’s message that it is futile to argue over the differences between socialism and capitalism. Dragoje Zarcovic, a professor and adviser on economic reform to the new administration in Vojvodina province, said that the only worthwhile test of a policy is “whether it works.” “Socialism has been successful in only two fields—sports and the production of weapons,” he said with a smile. “Now, we have to find out what will really make people’s lives better and get us out of this crisis.”

Following last week’s Central Committee session, many Yugoslavs were looking toward the country’s newly appointed prime minister, 64-year-old Ante Markovic, as their best hope. The previous prime minister, Branko Mikulic, resigned on Dec. 30 after his policies failed to arrest the country’s decline. Western diplomats describe Markovic, who ran one of Yugoslavia’s most successful heavy-machinery plants before entering politics, as a pragmatist and economic liberal. “He’s a smooth operator,” said one diplomat. And Stanislas Marinkovic, editor of the Belgrade-based daily Borba (struggle), said that “Markovic is the first prime minister we have had since the war who comes from business. He speaks like an American—very pragmatic, not ideological.”

Markovic impressed many observers on Jan. 28—two days before the start of the Central Committee meeting—in his first major speech since his appointment. He went further than any previous Yugoslav leader in calling for a fully market-driven economy, foreign investment and political pluralism. In a televised address, Markovic declared bluntly, “Everywhere in the world, socialism has so far failed to produce efficiency and political democracy.”

But Markovic will not take office until at least late February—and he will have his work cut out for him. Yugoslavia’s foreign debt is estimated at $25 billion, and inflation shows no signs of slowing down. In just the first three weeks of 1989, prices soared by an average of 18 per cent. And although any lasting improvement in the economy depends largely on attracting foreign investment, continuing unrest will almost certainly scare potential investors away. For Yugoslavs, however, the hope was that their incoming leader could beat the odds —and break their seemingly relentless cycle of chaos and decline.