Yugoslavia Opens Way for Economic Changes

Yugoslavia’s Parliament on Friday adopted amendments to the federal constitution designed to pave the way for radical economic changes and to streamline the country’s Communist political system.

The 34 amendments changed 135 articles, or about one-third of the current Yugoslav constitution, passed in 1974 during the rule of the country’s founder, Josip Broz Tito.

The 1974 constitution granted wide autonomy to the country’s six republics and two semi-autonomous provinces. It is generally blamed for the country’s current political and economic crisis, because it created eight virtually self-ruling states that must reach consensus when passing any important new laws.

As a result, key decisions often are watered down to muddled compromises that keep the federal government weak and do nothing to control spiraling inflation and foreign debt.

The amendments adopted Friday were proposed by Yugoslavia’s presidency and accepted unanimously by the republics and provinces after 21 months of strained negotiations.

They reveal an emerging consensus that Yugoslavia should gear its economy to an open market to overcome a $21-billion foreign debt, inflation hovering at over 240% and a 15% unemployment rate.

One of the amendments opens up a possibility of full foreign ownership of Yugoslav companies and banks operating in the country’s several free-trade zones.

Previous constitutional provisions allowed only a 49% ownership share by foreign capital, which in practice meant foreigners could not run joint venture firms or transfer profits out of the country.

Foreigners will now be allowed to manage, control and even lay off workers from joint venture companies in which they have a majority share.

The amendments also increase maximum private ownership of land from 25 to 74 acres and abolish several limits on private business and real estate ownership.

The constitutional changes are scheduled to be codified into economic laws by the end of this year so the country can introduce a market-oriented economy at the start of 1989.