Premier, Entire Cabinet Resign in Yugoslavia

Premier Branko Mikulic and his entire Cabinet stepped down Friday in the first resignation by a federal government since the Communist Party took power after World War II.

Mikulic told Parliament he stepped down because it refused on Wednesday to pass an economic law needed to ensure continued support from the International Monetary Fund for the debt-ridden country.

The resignation could signal further liberalization of Yugoslavia’s one-party system as the ethnically divided country struggles to solve unprecedented social and economic woes.

Mikulic represented a hard-line faction within the party, and his resignation indicated that more reform-oriented forces are gaining the upper hand in the party leadership.

Attempt to Shift Blame

But the resignations also represent an attempt to shift blame for the crisis away from the Communist Party to the premier and his 31-member Cabinet.

Parliament and the nine-member federal presidency now will likely consult on who will form a new government.

In his speech, broadcast live on Belgrade television, Mikulic refused to accept blame for the country’s economic problems, including a $21-billion foreign debt, 15% unemployment and annual inflation of 250%.

After the 35-minute speech, Parliament refused to take up an option to discuss the resignation, in effect accepting it.

Mikulic said that Yugoslavia’s economic problems were inherited “from past decades” and that it was unrealistic for his government “to resolve them in only 2 1/2 years.”

Mikulic began a four-year term after succeeding Milka Planinc as premier in May, 1986. “It is more honorable for the government to resign than to be blamed for all of the country’s ills,” Mikulic said.

In recent days, leading politicians criticized the government’s economic policies, and state-run dailies had called for Mikulic’s immediate replacement.

“Poisonous arrows are being aimed at the government,” Mikulic said.

Cabinet Resigns

He said the Cabinet decided to resign after Parliament on Wednesday refused to pass a law that would have imposed curbs on public spending. Mikulic said the law was needed to ensure continued support from the International Monetary Fund.

He told Parliament on Wednesday that the IMF insisted on austerity measures limiting public spending before agreeing in June to grant Yugoslavia a one-year standby credit of $416 million. About $260 million of that credit has been used, according to official estimates.

The loan was crucial to help Yugoslavia meet payments on its foreign debt and reach separate agreements for loan rescheduling with other Western banks and governments.

The Communist Party daily Borba on Thursday quoted an unidentified Cabinet minister as saying Parliament’s refusal to pass the law “destroys the standby arrangement with the IMF. . . . “

New Law Adopted

In a bid to overcome the deteriorating situation, Parliament adopted a new law Thursday to stimulate private enterprise, liberalizing rules for establishing private businesses. The law was adopted “for the first step toward market economy,” the state news agency said.

Yugoslavia has had a record number of strikes this year, with workers protesting low wages and declining living standards.

Mikulic survived a potential vote of confidence in May, when deputies from the liberal northern republic of Slovenia and from Croatia failed to gather support from the other four Yugoslav republics to vote out the government.

Mikulic’s reputation has been tarnished further by a corruption scandal involving hundreds of officials in his native republic of Bosnia-Hercegovina.

Ethnic Unrest

Yugoslavia also has been beset by unrest among its various ethnic groups.

Mikulic is an economist who served as a presiding member of the Yugoslav Communist Party in 1978 and 1979 under the late leader Josip Broz Tito.

Although he rejected blame for Yugoslavia’s economic problems, observers said his decision to step down was at least partly intended to placate Yugoslavia’s 23 million citizens, who are increasingly angered by falling living standards.

Although Mikulic has been accused of incompetence, Yugoslavia’s complex federal system also has hindered a solution to its economic problems.

The need for unanimity by the country’s six constituent republics and two autonomous provinces on all federal matters means that key decisions are often watered down to ineffective compromises.