Yugoslav Leader Says Regime Is Secure : Eastern Europe: The Communist Party is badly split. Prime Minister Markovic proposes constitutional reforms.

Attempting to avert a leadership crisis after a split in Yugoslavia’s ruling Communist Party, Prime Minister Ante Markovic assured the people Tuesday that his government will continue to function “with or without the Communist Party.”

The government announced, after a Cabinet meeting, proposals for changes in the constitution that would strip the Communists of their guaranteed monopoly on power. The changes are to be considered by the National Assembly on Friday.

These developments came hours after a party congress broke up in disarray when delegates from the republic of Slovenia walked out in protest against Serbian-based, hard-line factions in the party.

The walkout was the first major split in Yugoslavia’s Communist leadership in 45 years of continuous rule that began under Marshal Josip Broz Tito.

In one of the few positive notes to come out of the contentious congress, party members agreed to renounce the party’s leading role in government. This paved the way for Markovic’s proposed constitutional reforms.

Many observers feel that the split in the party marks the end of central Communist authority in Yugoslavia.

If, as is considered likely, the party splinters into independent regional parties, it would be the first time in the wave of radical changes sweeping East Europe that a Communist party has disintegrated because of regional differences.

The main differences at the party congress were between reform-minded members from the western republics of Slovenia and Croatia and advocates, from Serbia, of traditional, centralized rule. Some observers saw in this a danger of Yugoslavia itself breaking up in favor of the old system of independent republics caught up in shifting, volatile alliances that characterized the region when it was known as the “tinderbox of Europe.”

Regional-ethnic tensions were accentuated Tuesday, according to the state news agency Tanjug, when 2,000 ethnic Albanians demonstrated in the capital of Kosovo province and demanded a halt to what they say are human rights abuses by Serbian authorities there. Kosovo is one of two autonomous provinces in the Serbian republic.

By assuring the Yugoslav people that the federal government will continue to function despite the party collapse, Markovic strived to fill a potential power vacuum. Traditionally under the Communists, the federal government and the National Assembly have been weak and subservient to the party. But in recent months, the Markovic government has attempted to strengthen its position by instituting a series of economic reforms.

In December, for example, Yugoslavia became the first East Bloc country to introduce currency convertibility, pegging the dinar to the West German mark.

The economic moves, which also include a wage freeze and inducements for foreign investment, won Markovic support in all the republics.

Markovic is far from being the universally popular figure Tito was, but Western diplomats say he and his economic reforms offer the best hope for leading Yugoslavia out of Communist domination into some kind of democratic federation.

“Unlike all the rest of Eastern Europe,” one diplomat said, “the primary agent of change in Yugoslavia will be economic reform.”

One early success of Markovic’s economic program, formulated by Harvard University economist Jeffrey Sachs, has been a decline in inflation, which had been running at an annual rate of more than 2,000%.

The inflation had produced nightmarish problems. Simply counting money had become difficult: the million-dinar note is now worth $1. People count their money by holding a finger over the long rows of zeros on bank notes.

Inflation has been reduced to 13% a year under the reforms of Markovic, a member of the reform wing of the Communist Party who built his reputation as a successful manager of a state-run industry in Zagreb, the capital of Croatia. In addition, despite a foreign debt of $18 billion, the government has been able to increase its foreign reserves by $800 million.