Yuso-Ja-iar Pro'cecis for Stnbilils and conomic Rcco-cr*
Note
paper.troipccis for stability and economic recovery over the next few scars. It capanc* an andthe mos: recent assessment of the YugoilavIntelligence
mi paper
five Years -After Tito. Like thil paper. iris one concludes that Yugoslavia will face icricus problems but remain fundamentally .tubjc for (be foreseeable future. Ho.vevcr. this parser ancrti tli.il Yugoslavia's highly dccenlr.ilizcd system it more durable than previouily anticipated, and that decentralization serves US policy interests by promoting stability,political pluralism, and offering the ben relative prospect for economic recovery and cood rc'atlont with Western creditors. This paper will be followed by studies of Be's-rade's economic relations with the IttjSR. in the Gorbachev era and prospects for Soviet-Yugoslav relation*
Mfmm MaaJ
Judgments
uly jttr
in Our view, ii In Ihe midstaltingin the Communistimporlam elements of Wcsicrn-Stylc polnical pluralism and. in someo'C liberal economic policies Wc believe thai continuation of ihit trend offer* the ben chance in the long run for Yugoslavia's inccmnl stub-lily and economic recovery. The country's current economic decline and fragmentation of political power, however, mean thai continued evolution it.oregone conclusion and that, under certain conditions.r.ig hi revertreaterarianism or collapse into instability.^^
country's political course is the subject of major controversy among Yugoslavs who are holy debating the lystcm bequeathed by Tito.gree that the current system, which grants the regions near-veto power over many national policies, is working poorly. Longstanding ethnic tensions persist, inflation and unemployment are at record highs, and powerful regional leaders are sharply divided over possible
The core dispute for the next several years will be over how much power the central government and party should have in comparison with their regional counterparts. The debate comprise* two inter twined dimensions*
Economic Centralization Veeiul Decentralization. ManyPremier Branko Mikulic and ofRciaii of the large, southern Republic ofthai some centralization oreeonomic policy making is essential in orderstablish strongerorientednecessary to rekindle economic growth. Others, generally from the wealthier northern legions of Slovenia and Croatia, and fast-developingierce govt na, insist on retaining economic authority at ihelevel. The latterwcrcccntraliaation wculd increase inefficiency and lessen Yugoslavia't economic potential.
Political Centralization Veeiat Decentralization. The advocates of economic recenirolixB licet arearallel battle to strengthen the central party apparatus and sovernmem. Northern leaders oppose these moves for fear of losing iheir political, economic, and cultural autonomy. Some, like Slovenia, believe receniralization wouldinimum end, and probably reverse, the process of political libcrsltiation that has taken pluce inseveral regions since Tito's death. We be'ieve they are probably
Sfprff*
1
The debate it inflamed and somewhat shadowy because :lic ten trailers' rhetoric of reform clonks their hidden agenda-.:
Scrbiu would like to use reccntrali/ntion lo re establish in doniir.-iiT-Ccnified Yugoslavia.
The poorer southern regions calculateore* powerful center would help them gain additional northern economic support.
Frustrated federal officials, such us Premier Mikulic. wjntiosircnsthcn (heirto force policies on the recalcitrant B
Wc believe the centralists wiil fail in their effort' to make major chances in YugOiltvin's politica: and economic systems in Ihe near future unless ihcy gain the pretext of more serious public unrest, which we consider possible but unlikely. Constitutionally, the regionalist*irtualver most key issues and can block or dilute policies with whieh they disagree. For Yugoslavia in the near term (his would mean;
nwicjetosis.
-mm
Policymaking in general willlow, grinding, frustrating process of consensus seeking.
The League of Communists of Yugoslavia (LCY) will be further eclipsed because government bodies and regional Communiil patties willshape policy
The regime will probably be unable tooherent economic reform programationwide baajfr although some regions will adopt more liberal economic poli
eijEj<jwe;
The resulting near gridlock in Belgrade's macrocconomic policy presents the United 5tates with the disquieting prospect Ihat the centralat best will continue to move glacially in resolving the country's economic problems, including servicing its SI9 billion foreign debt.thefederal authorities greater.power over (heprobably ptove even more damaging
The positive aspects of (his political stalemate, we believe, arc that, in the longer run, the Yugoslav*ood chance of managing their differences, coping with their economic morass, and evolving further from the Soviet model. At the same time, Yugoslavia mos! likely willurther modest, untidy evolution toward the political pluralism and region-by-region experimentation with more liberal economic policies advocaied by ihe regionnlisl faclion. Two other possibilities arc that Yugoslnvio will fall back toward someof stronger central control
und .iliIioi iuf lunism or lapse into increu'ingly open unte and chaos, possibly Icadinn to real fragmentation. Tljc accond ;nili Ik unlikely, in our even leu Ml MM%
We believe the moit likelydcccniraliui ion--offers Ihe besl chance forconomic rccrroj-
Moat foreseeable economic advance* will be thank* to the economically more dynamic advocates ofCroatia, andrcegovinn.
Slovenia, andeaner extent Croatia, ate the beat available model* to the other regions of the atility of more liberal economiciven the lackeal commitmentarket economy by the central authorities, emulation ii the moil plausible long-term hope for wider adoption of more liberal economic policies.
The defender, of decentraliration on balance can beat constrain any premier tempted, ai Mikulie has been, to ufrjndcn market oriented measures in favor of itatc intervention.
Decentralization alsoiervei US strategic and political goal*:
cf tbe LCY
It tendi to promote politicalkey US concern forby allowing the many rival ethniceason not ley question their coexistence as pant Of one country and by keeping disgruntled workers divided enough to avoid national strikes.
Regionalism will continueromote elements of political pluralism. Lacing centrally mandated policy on ideological, cultural, and political reform, tomeSlovenia. Croatia, andcontinue lo foster increased freedoms of speech and press as well ax wider public participation in decisionmaking
Regionalism hat tended lo further strengthen Weatere-style institutions such a* the federal government cabinet and toe parliament at tbe expense
(tens for the United Slates
Ahead for Moscow
Pcsiibieto Authoritarianism
I
LikelySystemic Instntiility
Secasrf'
a- Prospects for Stability and Economic Rccotcr.vH|
Debating (he I'oK-Illo
Yugoslaviain the throcirenchingon prerotalk to mod ft itsm. Many of thene advcitiicdbui ihe coren oar view, iiYaccVxof bow aiMlcentral goicrnaveai and Cfiinitin Parlyof Commi-rn'i af Yhgoiilitia. otcac-eiw over tbe
eaoifoMihe ou learnt ofwill Oriermtne which ici will malethe ctpene of others, and ultimately"illighjeror Jooieipossibly even
Tbe debate it the laical rraitraiment of the lyiiom in line wiih Ihcac following ihe brcal with Stalin8 and ihe downfall of Security Chief AleaandarMS.one It faeled by ihrc* overlapping problem!:
The dccentraliied political system: hai hobbledpclky making.
Tens-oni between the rival ethnic group* pt and is some caici are"i
Despite tome erio-icil ncccs* at economic iiabibu-tea. ir.ltiiion itear, the foreignI* billion.arc taking place in recordnd*e_o. t* percent ii cne of the higher.!
Tbi* debate, like thoic before it, couldo char.gei in theoll ileal and economic course that would affect US and Sovieterious aggravation of political, economic, or ethnicevcr-preienllead toauthor it* rianitm. (late economic intervention, or even self-destructive Internal conflict. Overall, however, weh* Yugoalavia good
chance of manadlng their difTcrcncei. coning with their economic mariii. and cvolviag even furtherm the Soviet ' H
The debate over lb* system's cvolmiaa and degree of centralis* now has (wticd two looseK kNi groat* a/ leaden agnailcr. Thep-orweini ofleaden from ihr more industrialized. protr*crout northern Republic* of Slovenia and Croatia, and from fait-dcvelopinfl Doinia-HcrcegOrini. The main proponents of ccnirilirii'on include:
leadership of tie large, southern Republic of
Serbia.
Premier for the rwat three years, arinka Mikvfce.
- Tbe federal bareincraey and thehich arc hea*ilr staled by Serbs.
of the three underdevelopedn southern Yugoslavia:utonomous Prcvir.ee of Kosovo, and the Republic! oT Macedonia and MontcnaBBBBTBaaa a
Tbe Ceoirstlati' Motives
The cenirilou aiiert that stronger federal authority ewer economic mailers iimplement fun-dame" 1 mrkct oriented reforms. Theyaregional tuionomy hai produced economic diiterliec* andyin*ol* na tiara' capital, labor, and reoduci ma-'lea. These eScali irgu* thaiFederal luihoritie* mint break the powee of reimti-al leaden, nhu arc resitting markcl meiaure* that wouldtheir power, before systemicrcfotrn can produce integrated national markets.Tinno* simply refuie to implement federal legislation, and the federation lark* the power to force implementation.
f
Western government.-cicrt macruevtMioimc umiii) through li-caland nior'.et.iry authority now Incline in Delerudo
We believe each of these iKEumcnli |ia. merit but that thecentralists all have hidden agendasbeyond ccaniKtiic reform thai suggest sscccssful recentien wouldmaginghe economy
SrrSian Leaden
Serbia's Iradciship arguo that iu goal is lothe unity of the countrycentrifugal forces ". lie nineear ii apart. We believe. however, that ii ii trying lo uie ihe reform debateeestablish the dominance over the fiderction that Serbia cxcreiicd bet-vecn lite Iwo worldven if the Serbians had no ulterior motives, other Yugoslavs woujd still dii-ti.it their plana bceauic of longstanding fears of Serbian ethnicimpression theleadership has done liitle to overcome:
Serbia wants greater political centralization in order to gain greater power for iuelL most immediately to iratlOCite economic wealth produced by theregions.
Its professed commitment to market-orientedis particularly suspect because the repualic has failed to implement the economic reforms it
Sella and other Yugoslavs have good reasonquate greater centralization and power for Belgrade with increased Serbian influence:
Belgrade is the Serbian a* "ell as the national capital.
Serbs dominate the federal bureaucracy and they hsve disproportionate influence in the national Army
S-intbera Fellow Travelers
TheetterosovoZ-Support lhefar economicven more thansouthern leaderstrongerbecause they anticipate that it wouldresources from the wealthier north to common-
TinetTTor example, compiatn ihat northern regions no- delay or dcbIcCI mandatory aid payments la
poorer rv-iu-i>f weak lcder.il uiciiiglil.
llabltwurd.nd Muisu-ncgro ate the ntoii luppordvv. Serbia'* ju'.onoiiiiiuiof Kosovo, lite nation's poorest region, .'mors greiitcr economic iiuihurny because it tiiiu anticipates bcnulitinc from this broader redistribution Kososo's supiort is muted. how aver, becausefitly ethnic-Albanian leadership is even more concerned to block continuing Serbian efforts to reassert control over Kosovo. We believe aha. nil three of these southern regions oppose real markrl reform becauseouldaiiful restructurings of their highlyi.
Federal Officials
Federal Cflicials. to the eslcnl tliey arc independent of the regional government that appoint them,entralisation out of frustration over their inability to implement policies that they believe are needed lo draw Yugoslavia out of its economic morass. Some probablytronger federal government would move the countryore market-basedBuirc simply tired of being blimcd for the economy's troubles with no proipcct of putting recovery plans into effect. Federal ollieialsfavor market reform probably believe that, if the central government had greater power, it wouldsome reforms, noewithstanding the goals of those who wjnt only greater power for Serbia or economic redistribution^
The nonrcforrncrs appear to hold most of the levers of power. Premierpowernd now the dominant nationalfroma region whose leadership has long resisted surrendering control over the economy to the market. Since taking office, he has all butmarkct-orienicd policies in favor of central administrative measures, which he usually presents as emergency stopgaps. Regional resistance loandof these policies appears to have onlyt den re to expand central authority. In recent speeches. Mikulic has even hinted at the need to removeials for refusing to implement his government's policies. flHBfj
lyiiem ihni is now so hoilys imrv-ducerl in nates by Tito before his death in /MO. While rliii iyur.it liasa nn/iv andmore pluralistic during the nan seven seen. It hot kepi almost all ns basic features, including:
Collective Leadership. To keen Ihe country liable. Tito chosetitcatluce collective leadership btxliet rather than riskingle suetestar. who probably would have been unacceptableome faction or ethnic group. These collective bodies arc competed of representatives of each of the eight regions, generally accordingtrict formula. The nine-man Siate Presidency includes tin official from each region plus Ibe LCY chief. Theembf' Parly Presidium arid the lot-memberCommittee also allot seats proportionally and include designated positions for the military. The stale and parly chiefs rotate annually. By contrast, the government head tpremierl In pranlce It ihalen by the Siaie Presidency andour-year term, while seats on tbe cabinet are choseness rigid nationality formula.
Cemeamnl Dieitlaamakiag. Unanimous ag'er-
Bttnt of the eight regions Is aerded In the national
assemblydopt any laws effecting regionalOther national leadership bodtrt thai do not requireas the Communist Party Central Committee andme it In preetice. thus giving eachirtual veto over national policy.
constitutionally rceoenlied political party, itgeneral policy guidance and intervenes onlyn ipeii/iiinHauee. what gawenirimt bodies have hecome grid/acted. Party bodiesore assertive rote In some regions, hoofer, particularly Montenegro and llosnto.
Regional S'vtrrigaly. Tito devolved considerable
powerhe regions during hisrend thai continued afitr his death. Under the Ian constitution, approvedhe regions have ultimate authority aver matters luclVducation.
cultural pobey. and refbriemrnl of most federal
laws.
l.eonomy Tito also transformed thecommand iconomyybrid, combining elements of market forces and state inicrveatton. His main Innovation wai introducing "workers'
trlf-nienagrniirU uieialiim."by which workershave deciitomnaking authority over their enterprises. In practice, her-wer. regional and local officials continue towield strong influence over basinets decisions. *
Tito left htsoreign policy of nonalignmem. his main Justification forfrom the Soviet Bloc. Most Yugoslavsthis poiHion. even if they disagree On many aspects of domeitie pOi MbaS
Indirect Party Rule. In breaking from Ihe Stalinist model. Tito ended direct party control overpolicies While the LCY is suit ihe only
mat'cn. supcori thi id jyihorii'. The
m* Prciidci iHiomi (Horn to heavily slaflvd by. ould rsldeneyine leaders in the uioiulbase
MI-l* Of hii
Tlx
The regional its arc circledlb* carctl lamarketheyavor lb* waimIncreasing Belgrade's authority.r|,rThc>regions haveiuc-
fu! by Yugoslav standards because ihey have been relatively Tree fiorn feileral euairol.
Economic reform can only be inirndiiaed fiam ihe bottom up. not through political (nuifcrcitcc fromihe center.
The Seibian program uliimatrly -ould iteeriomv backighily controlled command modelf
The iciianaliiu aUeeiled aienda.ne
more Openly itaied lean thai ofni-il.ui (bey
"am to protec! the relative success of theirfrom federally managed raid) anBerond tab one anifyiag irte-te. Dmdo netommon agenda, but raiherdivergent socially and poiitieally. Lit*allica in Yugoslavia, they coopciaie at i rathererma-
potiiicat b'oc^HHL
i Inltrnal Reform Wlrfaouf Fadiial Central The Stovenei. Yuioilavia'i men economicallyethnic group, appear genuinely committed to eapcrimelting with liberal economic policies. Theyfederal power atlaidUoc* and the
aekcr-nomy. They arg-ac that eceoeraicfederalhotId Cartel tbe cceusomy. They have goo*. the rest of (he federation in gj-rlng free rain to market forees and privateed their foreign trade ii oriented heavily to th* WuiMB
t.tonamit
The Republics of Slovenia.nd Bosnia-llemgmiam wield tomiderahie economicclout thai Oildl to their already ifong pnlittettl influence:
- They gror-o'e niWI of theiliciml hard
currency rarn-ngi.S. the hut yeari.h
mnIVilaotieading
expaeteeitotaled in ihrie.-j. Lan rnv. toieaa alto led
expon getrwtk.S-petceai uaetcast looapareJ
a nauomal average atercent.
Slovenia and Croatla account forercent co-national aotfloi while having onlyercent of thr population. The figurn far BouUa are II percent end IS percent reiptcilvely.
' Each republicritical economic .error. Bomla comatm most of the country', dtfeme In-duuriet. Stemema leads In high-tech Industrie,
Such ol electronic! and communications. Coeila ll
the main player In ihe petrolemm Industry end lo-rism. the most importem domestic tourer of nei hard eiirreacy earrUngt
eneny. lenllty con-niim in the Una
isi:rw:s
tinuc to faceajority
nes also believe thai grr.ter federal authority wouldheir We turn-oriented culturr. FoeSlovenia *ai pan of the Austrian Empire,its evolution more closely paralleled Catholic Central Europe than the Oitomin-dominated Bai-
d
This isolation bai helped S'c-ene leaders eajairJ (be usual bouodi of aceepubC* Yugoslavehavior. Stove ru* has in* cawitry's bestights record and freestmaie. vbich i: SorretL-ne) Bauats to lhe dismay af more oribodoi YuiOalavs and lhe military:
ia tolcr.im and zt times encourages, jn atmaii Western degree of public discussion aid press freedom. Unlike elsewhere in Yugoslavia, tbe regional authorities jail virtually no citijcat for ami regime political statements.
It lisi allowed large pablie gathering*outhful, iconoclastic Grccns-stylc "Alternative Movement"uclear power. compulsory military service, and the training of foreign military ttudcnti.
Iiole lit the political syitcm by groups no: under the direct control of the local Communist Parly, such at the busineii community, the regional legislature, and the regional "front" organiiation (the Socialist Alliance of Workinghichide spectrum of non-Communists,and special interest iroorTt.s^
Croatia: Follonlng (be Slorene Road Croatian views on central authority increasinglythose Of Ihe Slovenes because of growing similar-it its between the two regions' economic and political interests. Perhaps even more than the Slovenes,Catholic Croatian) have their own cultural distrust and fear of Laatcrn Orthodox Serbia andand Croat! killed each other byhousandsrisly civil war conducted during the World War II resistance to the Ge
ajor turnover in leadership lastyoung Turk" grouping largelyand ofofficials who had run the republic since1 liberal-nationalisthis new leadership is now publicly committed to cautious implementationlovene-style, more liberal economic program. Like the Slovenes, it too views federal authorityoadblock and is exploiting decentralisation tothe political environment, albeit more slowly than in Slovenia:
The republic bis led tbe country In experimenting with democratic procedures, such n* requiring secret balloting and multiple candidates In bothand party elections.
The ptftt and radio have become somewhat more openj
eceiving milderagreb mutt this year lundid downnivrwc on Dobroitav Paraga. an outspoken critic of prisonf!
rest in the
Croatian leaders prubably alio are resisting federal economic author its brcausr tlic> fear Belgrade would lack Zagrebeauuout approach to closing Croatia's rn.vny unprofitable firms. Dcip-ic Croatia's being the second-wealthiest region per capita (behind Skwenial. it is saddledits many -inn gicfitisnu- in tccsori men as pcirocaem.-alt. met atei king, power genera-lion.ct the ratals TW newly intiaBcdleaders fasor more rational economic practices, bat they aha want la retain eamrol over aay ccononac rest rue tarmg.nion tnea and threats to their key political eonsiiiuticBCses Officials say. for example, they are prepartd to face the problem0OC workers who will be fired in the first round of ptaat closings under new bankruptcy legislation. Al th* same time, howeier. they want to try lo move workers loepublic now cxperienciiig labor short* t
Bosnia;ut at Republic Lent
Seniore *htl* sympathy for liberalpolicies, but ihey fear federal authority over iheir rcpabtkC'a tightly eeevtroilcd economy. TheypUnniag and control by the republic leadcikp i* ihe beat too! for tcenomic develewmeat. accorCuig to many sources, and that th* rtpabtic'a eccoonsie prrctritics abould uka precedence over those of (be federation. At th* same lime, inyears they hive allowed relatively eatrnslva small-scale privaie
Bosnian leaders also apparently favor theof power in the republic became they believe (heir cliquish control has kept Bosnia stable. In contrast to all the other regions, none of Bosnias ethnic groups (Croats. Serbs, and the oflieially rceeg-nlicd "Muslim" nationality)ajority.
IE
Vjtceel
kadni are so concerned lo ceoirol latent ethnic tensions lint they mete oui some of the country'sunishmails for even mildc! nationalism orniiittcnt.
mediaii^coi of sCicralni->rlsoniitem for outspokeneaders and dissidents.
dissident Milovan Djilas recently called tlosnia an exception to lhe country's generally iiit-prosing Human rights rlimatc.
Notwithstanding their difference* withre loath lo criticize him publicly because of hit local.
Lively Battleground!
The centralists and regionalists will continue over the rest several years to sharplyalf dozen cc more key national issues bearing on centralis*lion versus decentralization. In the economic arena, they will argue about the appropriate degree of federal control over foreign exchange, pricing, and tax policy. Politically, they will debate whether to rctern to the national government and LCY scene of the power thai has devolved to lhe regions since the late IvSOs. How ihe game Is played and the outcome of ihese debates will determine the degree of Yugoslavia's stability, Ihe balance of forces between Belgrade and the regions, and Ihe prospects for further political liberal-iia'.Lon and the. introduction cf mere market-oriented
:ion andthe ir
I oKowmg arc swiie oi tliciuhivv issuesikely be debated during the next few years. On most isiuc.t. the centralists art prc.itoiing itopgap.miniiveot the marks!-oriented reforms needed to restructure the economy and promote anhe regionalists arc trying lo block or watcrdoun measures that would strengthen federal control over economic activity inepublic
Carina! (iterehanee Yugoslavia's system
for apportioning foreign exchange is likul)olitically hot issue, thanks in pari lo misconceived "reforms" pushed through by centralist* nearly two yean ago. The distribution ofongstanding controversy between northern regionalists and southern Centralists. The northerly cipotilng regions jealously guurd access lo hardwhile the Hiutherncrs believe it should be more evenly distributed.1 Croatian nationalists look to the streets partly to protest central controls over iae republic's foreign exchange earning
The issue reappearedSi when the federation, led by Serbia and it; southern allies, sought to require Arm) lo turn over Ihcir foreign exchange earnings lo the eentlal authorities. Exporters up to then could keen roughly half of their hard Currency earnings. InJ the federal government took control over all foreign exchange earned by Yugoslav Arms, despite vigorous opposition in parliament and the party from the northern rep-.bsi<
"Reform"
and federal
Yugoslavsrown increasingly gloom) about their country*') economic prosiicci* since the early I when an era of fast growth and improving living standards fueled by foreign borrowing ended abruptly.ith Western support andBelgrade adopted an economic stabilisation program lhal calls for greater use of incentives, real interest rales, and profitability. Bui, like earlierat economic liberalisation, this latest program has been only partly implemented, owing lo regional itarky and federal official) suspicious of market
The southern regions and eer.tralisu may have won a
PyrrhiC victory. The system, at leait initially, has
depressed exports by weakening incentives for the major hard curreacy earners in the north while falling lo generate enough hard currency to help the poorer aouth.
criticize i-
oveeia and Croatia continue to aws.
l
Sps-fo*[*
soutlsemcrs have mainijincd tl public silence, but debate between the region probably ii ifiMng un behind the scenes and may intensify.
Premier Mikulic lasi year said the government would consider unspecified chaifct If ncceianry.
the foreigncmims potentially the mutt disruptive inu,-facing the leadership became of deep iiaii anelief among^many actor* thai unusual riik taking It unified,
Friti CemreU. Conflict over federal price policies will probably sharpen if. ai we expect.continue! lo broaden national controls in aclforl to item inflation. The government ha* steadily expanded in power over price* duringpail year by moving more products and product types Inta controlled categories, extending the lime they arc controlled, and lengthcninj_noiififation periods re-Quircd for price rises. |
Slovene and Croatian Olnciali have publiclyforprice policies. They charge thatroll distort the market and promote greaterBut their concern in part alsoearthan the republicihe sci*cncy of local enterprises.have
that they oppoie federal price authority almost luiively for this reason^
The southern regions, by contrast, support Mikulic'* move* to aggressively control prices. Faced with icoard-leie! buiincii Imscs in their economics,leaders hope federal price controls willcelinc in living standards and ease pressure for wage Increases. They probably also fear that anrcstraincd price riies work id ihe advantage of nonhcrnwhich have more influence on the market than those in the
Ftleral Ti Authority. Federal moves to standardize andai system are also galvanizing rcg vnalist resistance. The national governmentthis yearreater share of the sales tax
collct-icd:icccni. a* canifurcdercent previously. Sirtiii it novi agitating for even greatertax authority ut ih*-of the regions.
The Slovene niiensuiy Ian Sovcinbcr charged that tho fediraiion nitcmpiini to exceed It*authority.nhlle lh* leading Slovene newsjuper Drlo hit said that she republic tnuii hold onto this key tuuiee of revenue! in order to keep Belgrade dependent on regionalroatian ontcialihave advocated better regional coordination rather than increased federal authority. Bonis alio seems to be dialing it* feet!osnian party
ununBBBBBBTLJ'1
federal partyme turponeet gvioggreater tax autbarii)
Ponricalp-
Debate proftablr will alio sharpen in the nest severalr poispecially since many ccmralisu argue that greater central political author-it) is needed to overcome economicheargets will mast likely continue to be the key document! mutating political authority in theConiiiiunon,TI itattics, and the Associated laborthai gavorni Yutoslivia's unique "worker*1system cfeconomic decision
thihe ctniralins williheir etTeru to change4 Conitit-tim. the last of four pal fo'th under Tito, became it allow* each of the eight rcgioii political rights that make strengontrol leiallyJPB(P
ratal I* hav* alreadyend menu That would greatly restrict Ihe effective veto on federal policy trial each region now hold* in the Assembly. Theye proposedew assembly house, withontrolled by enterprises lather than by regions. They show ao sign* of giving up their egortLdeipite numerous setbacks in the last two pufl
#
from ia* naxihcra rcrobfk. arc aga-m*Mawte of ihe luu of power they; -Mid surfer. Thev lug pubbcl. rujccicd Jrtv but decorative imcndnK'nivll be debated, ai> the Constitution, tn ihe federal and regional assemblies ewer the neii yearM
nother key prop*hat
beiosystem. MM*fter theS andby Tito* ihcomt Kardctj in the lengthy Aooeuud La bet Law ofu If. management givei worker* ihe right, in theoryd, to makell decision* in their enterprises. In practice, workers have more parllctpallon than in the Soviet Bloc but leu than the ii- provides.lnm manager! end local politician* centiniH lo mike moil key decisions
xakM-ituwjI part, arparaiai.coetgrcs* in luae Haft, humm
Tin dispute could bei and ncatcd if debaic befure the Ion conetcis ii any gaietc. In that iniianic. Serbia >pcnrrive lo rcecntrjlire auilioril) b- rutin, such as iraniferring icleciion of Central Censmiiiee mem ben from the regiooi to ihe aai-mal party congress The aa-shtrn regiaaaU
U-c* ike
party into aWhile ibe
Ijjvc^bji
isonheracnhangec>*d'dawn version of ike pmoaul to elect Central Commilleche) lucce eded in retaining broad regional parlynd the centralists hive been unable to exploit the few galni they made.l" "
MiWhe.acked by Serbia,ntihe liber law that -mule reduce the independence of enterprises on matter* inch-age policy. Bern Mikulic and Serbia undoubtedly icek io uic such changesarrow ihe authority of tool official
Tbe northern republics sironili Oppoic chineci that would increase lederal sdmiaistraiivc authority over
Ciyrpruti
to mi.ci tel Croatia, ceax"republic's
Proipeet*
We Believe tbaiannateost rxsjeeor iM* near term. OVer the ktngerYugailavij ii likely tetoward Weitern polincil andWeeturn to autheirinit ability ire possible, but
The regioaalisti for no- probably will be abletne centralism on vinually all the aby icaaitiiig to theirveio enTaoa* meaiore* that the, do-iJ
hanges in the ir ideological groundii
mraditional uncomfortableith miro'lystem, partly on
Kmerimf CmrraJ Parly Authority; the
parlyate as tne ncai parly cngresi. mifO.Centralists probably will cooterd that tha federal party rmii: be given greater means toegional partiesomply with agreed positions ard dirtetivei. Their concerni may
Policymaking willlow. grinding proeeii ofcaniemui lacking that willmanyeager forcnitaliiti will continue io eiploit thii frustration to puih their agenda, and the debate will ebb and flow
The LCY.oherent .ileal leautataen. wflt coeriaae tti ilide >Mo ihe backg.-ourd whiled regional Comenuaisi partes*
HfpttY
rOlK'K.is. make.
IKVi' ddfch kv. po.au- (Mtfl
epctw.es. Mi
The regime -ill be unableaaaHtM economic reformationwide hnaia. even inunlikely event thai the Mikulic govern-mem thlfu toarket-oriented pohowi. Seme rcgir-m. however. -HI Continue le capcrimcni -lib rBtasul
Oaren longer rmwiih ibe near ccrisMiiv thai BCiradv -ij face ol" eeenanvc ptobUmtt. tcaoeau farcgn irgaidity. labor discontent, cibnicandio righisoscow, moreover. "HI Aod ample opportunity io meddle while it remains aruiou* aboutttome for lu interest) in ihe Yugoslav ccur.c.
p-arall.iMoil LikelyWeugc*Ia..aeaeea bad, locs-tiaucevelop rnodeu etc meetse.iern ii,seystemo-iog haltingly aga] on an ad hoe. reglon-by region basis towardeconomic tiberaliialion. Thii prcgneiiillui:
neonlinueave off ihr broad
thrusi of ccntraliti ad. ances. even iferound on some issues.
economy swaddlesoet neadeteriorate
- Eibaac laauieau,l ai containable i
Under this aeenarto. we would eipeet (heSlewenia. Croaiia. ane Bosmiontinue ihcir relative economic progressia the other rcBioni and prevent an even moreslick In tbe national economy and eiternaJ financialre-iag disparity in per capita income bei-aea north and sowik >ill probably add io pes-ileal teniicau. bat northern leaden prabablr "illeto caw the problem ikrough moderateaid through the caiiiiag national
laaaaft
loaeaia. and la..teal Croatia, -dl aUo cuaiiawv hisih aaave bberal exoeoa. ien ik,ederal hmd tappori fa* real ruitonal reforms,at ihe beat available rote -nodelsflkiab in
Macedonia and Slonteneiro. foe inttsnee. already are lentjilvely followine the Slo-cne emmnle byl rciiiietiani on private enirrpriaecirvraic bid lo reduce uiwnsrtlo>mcni and mcrcaic output. Bui any procci. of emu'-aiionprobably be slow, andnd the southern legions -ill tec the north aatwe at "anoilua
On the peiiiical aide. too. Mg-onaUvn. -ill probably promote at lean ac.eiuiion toward greater pluralum. openness, and individualn the absence of centrally mandated Ideological, cultural, and other policies, someSlovenia. Croatia, and eveaist-mindedprsba-bl> -ill farther improve their human rights rcceud. aad gasnt.-uc to libcealoc laeir peJiiical system Wehai moderaiei, aircagei io Mo.have not and probablytahi> irend. Cor tactic. 'a emplaaiit anu.nythmi. will malic medcratia feel even leuin promoting further demneraiiaalion.
Nailonally.eipcci the parliament and governmentecome monger at the openie of ihe LCY, evenominally onc-pariy iiaie retniina in piece for yeanom* Debate ewer national laiuea probablyitw rapaad so inciudc more prenovury tabooiaeladiFg ten. cj.cyThe premier, -lib bet term, ii likdy to further cmc'g*he mem identifiable and inffaeatial nation, albreak -ith ihe practice of the Titoj and of almost all other Communist Hat
Dcccniraliuiion will be accompanied by many signs ofus strikes ind publicthey will leprcsententing of political anddcmandi than genuine tbrcaishe syv tera. Deemralitatietnore likely to ewauin sa>ch srtocki thanwhMh -emld lead to
ic mutualbvilt into Yugoslavia* ay .tent contribute: strongly to stability. While sporadic repression* and abuses remain likely an the lae.il level. deeemrahM-ticn willdeologue* with major hurdles shook" they try to imposenjiunuin right* or rr.irr.pOic Communis; orthodoxy.
Implication! fit Ihe Hailed .Vroies. This scenario catails costs Tor the Unitcc! States, but on balance ihe benefits seem more significant. On the negative side.uneven progress with economic reform* promises more demands for greater Western financial support bs Yugoslavia. We believe these problems would, persist underreaUstic alternative^. ei
On the positive side, further Yugoslav decentca-tian probably often tie best long-term chance to promote USoth political and economic:
our view, seen an evolution represents Belgrade's only plausible path to improved economic perfor-manee. Theath offer* little hopetheir hidden agendas premise an end to progress toward market reform should theyMoreover, returnentrally plannedone modeled on the relativelyt Germanprobably be unworkable given Yugoslavia's societal diversity, rirrnlr established political decentralization, and the absence in most region*ork ethic like that In East Germanykey differenec between Eastand the less luceetsfu'. majority of Bloc countries).
- Decent ralieatior serves tbe lonsstandini key. US iatereat in promoting political stability by localizing discontent, granting maiimum iclf-rulc to hostile ethnic groups.not allowing the domination of one major ethnic group by another.
iiowth i> politicalmore open acecptaaee of competing interest groups, broader political participation, and expansion of ifldividuolt*er differentiatesfrom ;he Warsaw Pact countries and strengths its ideological oriental ion toward the West 4M
Cvneerm Abendoscow prohibit will become even mure tUBCerncd than ii i. now if.ancel. Ihehold Ifci-ir ground. Moscow bctics- ito lose cr-nMdrrsbiy more than il could gain fromalting Yugoilav evolution toward Western nonr the Soviett highly critical of the declining viper and role of the national Yugoslav party and licighicned Western influence inconomic poliej mj ling:
Sen-id chief Gorbachev Ian December privately
attseked visiting Yugoslav party head .Milanko
r BclaracVs internal fO^-ir>(jPBsawi^
Yugoslavia's systemailure and the pari}*'* lastly i* lo blame.
- Soviet mediatrcis the need for greater Yugoilav patty unity and insinuate that Belgrade has become too dependent on tho West.
Moscow's ability to influence Yugoslavia's course is limited, ho-ever:
- Moil Yugoslavncluding theistrust Sect motive*.
The frocmented political *ysiem complicates Soviet effort* to recruit pivotal cUndeslinc agents ofin Belgrade.
The Yugoslavs elevate considerable effort loSoviet activities in Yugoslavia)
Moscow probably -ill rely increasingly oae*dy close economic relations with Belgrade in pursuingnd may have some success givenweak economic prospects.mple. despite continuing diiagrcements over trade terms. Moscow will mott likely continue to aeeept Yugoslav goods below Western standards in caehange for petroleum and other ra* materials to demonstrate it i* aeconomic partnerime when Belgrade is having problems with Western creditors. Theeanwhile, will continue tohe Yugoslav* to purchase manufactured good* anelrmlilary hardware ta increase the economic linkage.fl|H
10
po-nkai:..ffj0 rfav on the kr^-iedge
.hai Belgradeelation .kip wilh iheII lean no. overt,critical iu Yugoil.i. MCurityo. cow probably will liter cite Current ctTurii lo co-opt regional power broker* b> cultivating formal lie-betweenugo.lt> region. Mngejeturn capk-it regional ete.eiopmer.iat dillcrcneet by granting greater cconoriUc eoneitiion.he poorerot" by enlliraungnd Vonlenegro in pancaamhwc. Ihellheir iradnioa nf laagh ulk -iitijrMr YugoiU. oeUeiali duringraJ,
A Possible Alteram*-Return to Authoritarianism
A temporary or even long-term relurnome variant of incrcaied ccntraliim and authoritarianismbut only under tome combination of theinC conditions, which we bel.ee it unlikely:
Major labor or ethnie violence strengthens the hand of Cenlral.it-mir.ded party hardliners, backed by the Army and inieraal scourervices.
The eeonom. iper.icui*i'rnd ln>ngrec-piiaiclyand the population and regooal c'itc react ay demanding lougS federalbe Sertaian campapid decliney to eo-mce the Ng-ortaibti It is serious aboal market reform and tain support for at lean temporary rccentratiution.
- Over ihe hug tun. continued problems begin toational cttrutnsui that more central control of Ihe economy Ii the only lolution.eoald reinforce the trend ihould he luccced inali ling theiem and thereby strength-en ihe legitimacy of more traditional Communist ccoro.-ic policies in ihe eyes ofugoslavs.
imnorny fiction* inn an.uuaii-i. theminSiac- iVaaWgliq could cwiclvehorii. to bapourn of ii.ariiat law. In either ease, tw "wild eipcct link- real move, iticnt toward eeunotitic recover, while vu.ll ii.ca.urci were inorn teaon would leave the counts-.underlying economicll. stia.kclMoreover, we believe iheie-ntime aravMe.ert aut againoredebate and faeironaliean. a.sulo-iag pcriodi of iighi.ncd conirah imr-or-cd I
Under iN. we.jtso. the Uaiied sia< nets aluaosla.u't ese toward dem- form. Ai in some panthe Croaiian upheaval,or uiamplewould perceive US and other vVeaiem cr-nciim of lueh iCIion ai an attack on lit nationalhe Wen probably would have link choice but to wait out the criiii and hope for an eventual "nor ma lira lion. 1
Mo.co-d nerd to gam lome ground undere.naria. particularly If Belgrade could proem wide-spread cml .areicbably -cudore Cent rallied rrglSetighiciorirad over ih* rceawmyenaeavitrationhi. leeamr skied CeT.tv-.iiL regioMn contra* -ai.fi probable Weiieen diipleaiure. Ihe Soviet, would view de.etopmenu la Yagailavia at .md-raiing the correctnessov.ei ti)te regime and eeonomy for ather Communiii Matci and .mild ntoit likely offer publicherobably would lake advantageonfrontation between Belgrade and Wrnernover eueniive baekilickng on economic reform. pOtaibly by offering naw favorable irade tcrmi. and by teeking to tie Yugoslavia closer to the USSR
In ibis acesurie. regionalld agree, er be forced, to give ap icon aenrng.i)nreal and keep enherof ikentact.aunimuin. th* federal ao-eramcM would seek to irnpoacmeasures, potsl-bly by invokiag ipecial comto
Sjsieft
I Mil LikelySystemic Instability The Im.ii likely scenario, in our vien. i> that tltc growing debate inltimately -ill null the federation apart. We believe that onlyombination offlhc following liifihly improbablewould pmh Yugoslavia toward such eltaoir
Tbe Army leadership, traditionally united in ihe face of unrest or ami retime activity, fragments along ethnic tines and refuses to back the naiional political leadership in keeping restive workers or ethnic groups in check.
Leaders In several regions, such as Slovenia or Kosovo, go well beyond their current levels of asscriivenets and demand secession, or at least the formal creationur. fedora lion system.
Antircgimcpar.Hi and forms links across regional lines,
A global economic downturn or domestic economic mismanagement creates such widespread shortages and disruptionsoalition of Army generals, federal bureaucrats, regional leaders, and thrattempt to overthrow the leadership
Ethnic confrontation flares between Slavicrather than bclween Slavs and Albanians, as is now thenational leaders side with theirniC group rather than defend Yugoslav unity.
US ir.tcroc* would sulfer lite mostcenario of collapse. Washington would have little influence un theeaders, the Army command, (tic internal security services, and party hardliners. Modi-rule leaders -ould lose influence or be purgeduccessful imposition cf order by (he military and security services, and human rights would probably be widely abused. At (he nameebt moratorium probably would be declared and new Wciiern uid would be soughtot the country moving, again. In the worstsocial disorders, civil uir, or even (he country's actualcould face Moscowonfrontation as Ihe (wo sides sirugjlc to eiect influence and protect ihcir Interests.
^rugj^c
Systemic cotlnpic would threaten Moscow's interests ai well. The Soviets would be at least ns concerned as lhe West tbout losing inlucnce in Yugoslavia and would try to use whatever levers it had to gain what it could. The Soviets would be deeply concerned that they could lose their rcma.ning influence and that turmoil could spilt over into neighboring Warsaw Pact countries. The Soviets probably would try to influence the Yugoslav Army and security forces by publicly backing (he imposition of tough measures aimed at rcimposlng order. Failing that, Moscow wouldIry to formaliic links to several regional leader' ships to advancejts ir.tcrests among the federation's rem nan
Original document.
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