New Yugoslav Leaders Facing Huge Debts, Inflation, Ethnic Animosity

Times Staff Writer

"Some of us think Tito never died, because he keeps hopping out of his grave to mess things up," a university professor grumbled in the course of trying to explain the bewildering, indecisive system of government that is the late dictator's political legacy.

The occasion was the formal seating of a new president, Yugoslavia's eighth since Marshal Josip Broz Tito died in 1980. Like the earlier heirs of Tito, President Sinan Hasani, a 64-year-old ethnic Albanian writer from the southern region of Kosovo, is virtually unknown to most Yugoslavs. And few expect him to leave much of a personal imprint on the office.

Tito, by contrast, wielded total power. He skillfully held together an argumentative, mutually suspicious federation of eight widely divergent Balkan republics and provinces.

8-Man Presidency

Before his death, Tito effectively rid himself of possible rivals and framed a constitution that virtually outlawed power struggles among the country's ethnically diverse and quarrelsome regional Communist parties. His device for diffusing power was an eight-man presidency, consisting of a representative of each of the six republics and two autonomous provinces, with the office of president-of-the-presidency rotated every May 16.

"It's a merry-go-round system that leaves us with the constant feeling we don't know who is in charge, who's running the show," the editor of a Belgrade magazine complained.

But this year there was a twist in the changing of the guard, which took place on May 16, and it has aroused both hope and fear among Yugoslavs that the fragmented federal government may soon begin to speak and act with new force and authority.

The twist was not the routine change in the power center, the presidency, but the swearing in, for a four-year-term, of an apparently forceful new premier, who some people think is shrewd enough and tough enough to get a grip on Yugoslavia's declining economy and faltering political system.

The new premier, who stepped down voluntarily from the more prestigious group presidency, is 57-year-old Branko Mikulic, a business-trained veteran of party and government posts in the ethnically diverse but heavily Muslim republic of Bosnia-Hercegovina in central Yugoslavia.

Operated Winter Games

Unlike most contemporary Yugoslav leaders, Mikulic is known abroad, at least to sports fans. He operated the successful Winter Olympics in 1984 at Sarajevo with businesslike efficiency, a rare quality in post-Tito Yugoslavia.

But by comparison to what he faces in his new job, the Sarajevo Games were just that--games.

According to leaders in and out of government, and to Western diplomats here, Mikulic faces a dismaying array of problems, the chief of which is an out-of-kilter economy distinguished by one of the world's highest rates of inflation--at present at about 120% a year.

Despite four years of austerity budgets under the "enhanced monitoring" of the International Monetary Fund, the country is still straining just to make interest payments on its $19.8-billion foreign debt.

"Uncontrolled borrowing (in the 1970s) made Yugoslavia one of the eight most indebted countries in the world," said Radovan Makic, governor of the National Bank of Yugoslavia. "Some of our banks didn't even know how much or to whom they owed."

15% Unemployment

Domestic unemployment, the highest in Europe, averages 15% nationwide and runs as high as 52% in impoverished Kosovo, the southern autonomous province where poverty and ethnic Albanian separatism have in the past boiled over into public crises requiring police intervention.

Bankruptcy among state-owned industrial enterprises is increasing, according to Western diplomats, and low pay, the erosion of personal buying power and slipshod management have led to growing corruption and a rising incidence of embezzlement by officials of state firms.

Experts blame the industrial disorder on Tito's second major legacy: the country's worker self-management scheme. The late dictator conceived it as a bold Communist experiment in industrial power-sharing that would put factories and other enterprises in the hands of employee committees under the guidance of political leaders.

But with a few noteworthy exceptions, such as the giant Podravka food and pharmaceutical company in Croatia, and the Genex (General Export) company of Belgrade, the scheme has proved to be a breeder of inefficiency and unprofitability, according to Yugoslav business specialists.

"My company has had two chairmen in the past 30 years," a Genex executive said, "while the federal government has had eight presidents in six years and the leadership of many state enterprises has been in constant flux."

Overstaffing Cited

A Western economist in Belgrade said the practice of distributing jobs in state enterprises as political patronage has led to overstaffing by 50% and more in many of them. "Coupled with low pay and low worker productivity, worker self-management has been a recipe for disaster," he said.

A Belgrade journalist said that although his basic salary of about $350 a month is far higher than most, his purchasing power has declined sharply over the past decade, and this helps to explain the problem of low productivity.

"In 1976, I earned the equivalent of $1,000 a month," he said, "and in the context of those times, my family and I lived extremely well. The buying power that I had then has been eroded to almost nothing today, and each day it gets worse. Now I am very poor, with good prospects of becoming even poorer. Can you blame workers who earn far less than I do, who have virtually no incentive, for not producing efficiently?"

The new premier's task is further complicated by the one constant in Yugoslav political and social life--ethnic rivalry and in some cases downright hostility, aggravated by a huge gap in the standard of living between the northern and southern regions.

In deeply depressed Kosovo, for example, the majority ethnic Albanians have put extreme pressure on minority Serbians to abandon their farms and jobs and migrate to the north. There have been numerous cases of Serbian cattle being blinded or even slaughtered to force farmers out.

Even the relatively prosperous northern republics show the strains of ethnic and regional hostility.

Premier Was Admired

The retiring premier, Milka Planinc, a Croatian, was widely admired during her four-year term for risking unpopularity by steering the country into agreement with the International Monetary Fund on a long-term plan for confronting the country's massive debt burden. She also directed as much national investment as she could toward the undeveloped south.

Her reward, when she left office and sought nomination to the Yugoslav Communist Party Presidium, was a rude rebuff by her own Croatian comrades in Zagreb. The Croatian Communist Party Congress reportedly rejected her candidacy because her comrades thought she had been too kind to the other republics and not kind enough to Croatia.

Despite these seemingly insurmountable problems, some Westerners here give Mikulic a good chance of arresting Yugoslavia's decline and even turning it around.

"He will be more determined and disciplined, and he will bring more discipline to the running of the government, because that's the kind of man he is," said a Western diplomat who has served here for a number of years and knows the new prime minister.

Another diplomat said: "By force of his strong personality, and the fortunate coincidence of a more assertive Federal Assembly (Parliament), I think we will see Mikulic take some of the power into his new job that until now has rested exclusively in the presidency. If he can do that, he stands a good chance of accomplishing something in the next four years."

Little Room to Maneuver

But another cautioned that the need to focus virtually all his energy initially on bringing inflation under control, while at the same time creating jobs and hope for disillusioned young Yugoslavs, will leave little room to maneuver against the country's other problems.

"The shock absorbers in this country are losing their resilience," an editor said. "Without a complete reform of government, which the Communist party will never allow, there is not much Mikulic can do that hasn't been tried before."

A diplomat commented: "The trouble with Yugoslavia's system of government is that it looks disarmingly like Switzerland's, with diverse language groups and regions joined in a kind of fede1918987369Swiss, don't know how to make Swiss chocolate, cuckoo clocks and rich banks."

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