‘Dispirited Mood’ Toward Solving Problems : Yugoslavia Gripped by Economic Crisis

The businessmen lunching in the downtown bistro watch attentively as the waiter fillets the fish on the table side trolley, his hands as deft as a surgeon’s. The wine steward approaches with another bottle of Montenegran white and offers the label for inspection.

As the wine is poured, the conversation resumes, led by the senior executive at the table.

“So you see,” he said, savoring the bouquet of his authority as much as the wine in his glass, “what we have here now is a crisis, the gravest crisis since the death of Tito. It is a crisis of economics, politics and, I think you can say, psychology.”

It was significant that, in the midst of Yugoslavia’s threefold crisis, it was still possible for such men to discuss the situation over two bottles of wine and a lingering lunch and for them to part with the prospect of similar meetings, and no doubt similar discussions, in the days ahead. It is, after all, the topic of the moment in Belgrade, if not all of Yugoslavia. Crisis or not, there is always time for lunch, and a little more talk.

The businessman’s comment that the crisis of Yugoslavia is economic, political and psychological is widespread here--almost a kind of litany. The psychological element, many say, has taken the form of paralysis.

“We talk,” said a Yugoslav journalist. “We make oceans of talk, mountains of words, but we actually do nothing.”

The journalist was referring specifically to a round of economic measures adopted recently by the Yugoslav Parliament, which, with obvious reluctance, enacted a watered-down package of price increases and price ceilings that the government of Premier Branko Mikulic hopes will placate Yugoslavia’s doubtful foreign creditors and curtail an inflation rate now running at 150%.

Price Hikes

The price increases included a jump in telephone and postal rates of 33%; electricity, 69%; coal, 62%; rail transport, 61%; petroleum products, 52%; sugar, 62%; cooking oil, 50%; bread, 30%, and milk, 90%. Prices of other goods are to remain frozen at their Oct. 1 levels.

Foreign economic analysts, as well as domestic critics, say the plan will do little to further either of the government’s primary goals.

“This is not going to impress anyone,” one Western diplomat commented. Foreign creditors in the West, who believe that fundamental changes are needed if Yugoslavia is to make headway on a $20-billion overseas debt, will be disappointed in a recovery package that does not contain a single measure indicating movement toward a market-oriented economy, the diplomat said.

“All of these measures are simply administrative, bureaucratic controls,” the diplomat said, “which indicates that the government isn’t willing, or hasn’t figured out how, to surrender anything.”

On Nov. 18, more street protests broke out in Skopje, the capital of Macedonia, Yugoslavia’s poorest region. According to witnesses, about 1,000 aluminum plant workers marched on the regional Parliament and met with plant authorities, demanding a pay increase similar to one granted to steel foundry workers after they demonstrated. Official sources later said the aluminium workers won substantial raises.

Belgrade newspapers said at least five more strikes were staged in Macedonia and Montenegro and at coal mines in Yugoslavia’s richest republic, Slovenia. Some papers said 650 workers at the Navip soft drink factory in Zemun, a Belgrade suburb, went on strike demanding wage increases and the dismissal of management.

Many of the government’s critics--and they are plentiful here these days--believe that the real problem is that the government has not figured out how to make the changes. Given the fractured system of authority in the country, the problem is understandably difficult.

Yugoslavia, a nation of nearly 20 million, is made up of six independent republics and two autonomous provinces, any one of which can veto legislative action. It is a socialist system dominated by the Communist Party in which the richest republics, such as Slovenia and Croatia in the north, have little in common with the poorest of the south, such as Montenegro or the province of Kosovo, where the annual per capita income (about $450) is less than a tenth that of Slovenia’s.

It was Josip Broz Tito, founder of the modern Yugoslav state, who held the country together, as many say, “by sheer force of personality” until his death in 1980. It was also Tito who devised the present political system, with its cumbersome Federal Executive Council and rotating presidency. Although Tito’s invention did succeed in preventing domination by any one region or nationality, it has also rendered the country especially resistant to change. Tito’s legacy also virtually ensured that no single strong leader could emerge from the morass of Balkan politics to provide a cohesive vision in times of crisis.

It is this perceived lack of vision that leaves many Yugoslavs talking about the psychological crisis that seems to have settled in with the autumnal fogs over Belgrade.

Little Debate

The parliamentary response to Premier Mikulic’s economic package seemed to offer, according to some observers, a case in point. The plan was unveiled by Mikulic on Oct. 19 and was supposed to evoke a month of “public debate.” Virtually none occurred, however. As the time drew near for the Parliament to adopt the package, it became obvious that the delegations from Slovenia and Croatia, particularly, regarded it as weak and full of generalities.

The respected Zagreb weekly magazine Danas summed up Slovenian feelings on the parliamentary action.

“With the current anti-inflation program, the Mikulic government only enforced the status quo,” the magazine said, “but did nothing toward solving the problem.”

Referring to the dispirited mood that prevailed in Parliament, the journal said, “The tiring game with all the documents is only an expression that this society is not ready to tackle more serious economic, social and political changes.” In the end, it said, the program satisfied no one, “not even its principal creators.”

An economist here predicted that one result of the new economic plan would be an almost immediate devaluation of the Yugoslav currency, the dinar. He also predicted an increase in black market activity.

“You go in to buy a widget,” he said, “and the storekeeper says he’s out of widgets--but perhaps you’d like to talk to his brother in the back room. The brother in the back room finds you the widget at double the official price.”

In the not-too-distant future, the economist suggested, is the prospect of a Yugoslav economy operating more consistently “in the gray,” where businessmen fall into habits of over-invoicing and double-entry bookkeeping and where daily economic life for ordinary citizens becomes increasingly capricious and uncertain.