A Booming Yugoslav Republic Wants to Secede : Slovenia: An economic gap is wearing on the country’s fragile federation of states.

By the soft glow of art deco lamps illuminating polished mahogany bars and linen-draped tables, young Slovenes in designer suits and Italian shoes smoke and gossip over cappuccino before heading off for a six-hour workday.

The 2 million residents of Yugoslavia’s prosperous, northernmost republic have long enjoyed a dramatically higher standard of living than their countrymen in the impoverished south.

But as the gap widens between the have and have-not republics, ethnic tensions are escalating, fueling a drive by Slovenia to break away from what it sees as a drag on its promising future.

Secession has been the rallying cry in Slovenia’s first multi-party elections, which begin Sunday, and the move for independence threatens a new round of “Balkanization”--a breaking up of Yugoslavia’s fragile federation into the small and turbulent states that existed before World War II.

Slovenes see their push for independence as a logical consequence of a changing Europe, where democratic revolutions have raised long-suppressed questions about national relations and historic borders.

In Soviet Lithuania, a declaration of sovereignty brought in troops and provoked a volatile standoff, but Slovenes say they are patient and powerful enough to avoid a confrontation with the federal government in Belgrade.

“From the outside, secession always looks illogical, unnecessary and detrimental,” said Andrej Novak, a publishing executive and former foreign editor of Slovenia’s leading newspaper, Delo. “The problem here is that the Slovenian people are still convinced that the Lithuanians will get away with it.”

Slovenes and neighboring Croats, who have undertaken an independence movement of their own, are outraged at the lack of Western support for Lithuania’s defiance of Soviet domination. But they have shown no sign of curbing their nationalist aspirations, despite the official U.S. view that Europe’s current configuration is preferable to opening a Pandora’s box of border disputes.

Pre-election polls suggest that Slovenes are widely in favor of independence, with 20% favoring outright secession and 58% calling for autonomy within a confederate Yugoslavia.

Even the newly reorganized Communist Party says Yugoslavia in its current form cannot survive.

“Yugoslavia cannot function as a federal system when its republics have such differing systems of government,” said Peter Bekes, a Communist member of Slovenia’s ruling Presidium.

While Slovenia and Croatia have moved to multi-party systems, Serbia continues to adhere to a hard-line Communist leadership, and Yugoslavia’s three other republics and two autonomous regions are also far behind in the switch to democracy.

Slovenian Communists and Socialists are expected to get as much as 25% of the vote Sunday, but an alliance of seven opposition groups is expected to lead the 17-party pack in the run for the 240 seats in the republic’s three-chamber Parliament.

The pro-secession coalition, known as Demos, has argued that Slovenia is wealthy enough to go it alone in the drive for integration with Western Europe and that independence is the only means of divorcing a stable republic from the ethnic turmoil in the south.

Slovenes account for only 8% of Yugoslavia’s 24 million people, but they contribute 20% of the gross national product and produce 30% of its hard-currency exports.

Per-capita income for the tiny republic wedged between Italy and Austria is $5,700 a year, compared to a national average of $2,500 and only $750 in troubled Kosovo province.

With such markedly higher living standards, and good Western markets for the household appliances, furniture and clothing they produce, Slovenes feel that they would be better off without their poor relations.

Tomaz Kosir, vice president of Slovenia’s Chamber of Economy, said his republic recognizes the need to subsidize underdeveloped regions like Kosovo, where unemployment is as high as 50%. But Slovenia, he said, wants to know that its contributions to the federal budget are being used wisely.

Serbian President Slobodan Milosevic’s drive to restore control over Kosovo has fanned nationalist feelings among the 9 million Serbs, and violent outbreaks over the past year have claimed dozens of lives.

“The Serbs want to build new homes to relocate Serbian families in Kosovo, to dilute the 90% Albanian population,” Kosir said. “Who can guarantee that our money won’t be used for such a crazy idea, to colonize Serbia?”

Slovenia has stirred the pot of ethnic unrest by refusing to pay about half of its obligation to fund federal development projects. This was done in retaliation for a Serbian boycott of Slovenian goods that began Dec. 1 and continues.

Serbs are angry with Slovenes for rewriting their constitution to include the right of secession and for the Slovenian Communist Party’s decision to break off from the Yugoslav League of Communists, which continues to impose one-party rule in Serbia and the other republics.

Surprisingly, Communist domination over the past 45 years has figured little in the election campaigns in Slovenia or in Croatia, where voters will go to the polls April 22.

Communist Party reformers in East Germany and Hungary were given little credit for nurturing the democratic changes in their countries, but Slovenes have been less inclined to punish everyone associated with the past.

Milan Kucan, leader of the reconstituted Communist Party of Slovenia, is credited with instigating the free-market reforms that have allowed his republic to sprint ahead of the rest of the nation.

Kucan could win the presidential election on the first ballot, according to both the Communists and the opposition coalition. Kucan’s top challenger is a charismatic former dissident who has raised the specter of an independent Slovenia before an electorate eager for change.

“What we need is the courage and the logic to say that we are not united now,” Demos’ presidential candidate, Joze Pucnik, said of the fragile federation.

Pucnik says a vote for his coalition is tantamount to a vote for secession, though Demos advocates confederation of the Balkan states to improve trade and economic cooperation.

Much of Slovenia’s dissatisfaction with the current Yugoslav federation stems from what is seen in the northern regions as Serbian dominance of the federal government in Belgrade.

Slovenes are also dismayed by some of the side effects from Prime Minister Ante Markovic’s economic reforms, which have given Yugoslavs a convertible currency virtually overnight and have tamed the hyper-inflation that reached an annual rate of 1,600% last year.

Markovic’s anti-inflation measures include tight control of the money supply, which has hurt export-oriented regions like Slovenia the most. Even successful manufacturers have trouble borrowing the money they need to produce goods for exports.

Slovenes contend that they are the only ones adhering to the rigorous measures aimed at stabilizing the economy, laboring under foreign debts of $16 billion and rising unemployment.

Serbia raised its workers’ wages by 40% after the reforms, which are to freeze wages and prices, and Croatia followed this week with a 20% increase.

A slowly evolving split of Slovenia and Croatia from the southern republics is described by many as the likely outcome of what is expected to be a turbulent period throughout the Balkan region.

SLOVENIA: RESTLESS REPUBLIC

Snuggled against Austria and Italy in Yugoslavia’s northwest corner, Slovenia is the nation’s most prosperous republic.

While Slovenes account for only 8% of the nation’s 24 million people, they contribute 20% of the gross national product and produce 30% of its hard-currency exports while turning out household appliances, furniture and clothing. Slovenia is also more agriculturally developed than the rest of the nation despite its rugged topography.

Per capita income is $5,700 a year--more than double the national average of $2,500.