Economic, Political Unrest: Vicious Cycle in Yugoslavia

Black-bordered remembrance cards tacked to bare linden trees and crumbling buildings herald the grief and depression gripping this Serbian coal-mining town, buffeted by disaster upon disaster.

Rusted buckets hang from idle cables that extend from boarded-up entrances to the hard-coal pits. The broken windows of the 150-year-old mine’s brick headquarters add to the atmosphere of a ghost town.

The mine that was the livelihood for most of Aleksinac’s 4,000 citizens has ground to a virtual standstill, a victim of the inefficiency and backwardness that was covered up for decades by subsidies from the Communist government.

The economic blow dealt by the mine closure has been staggering, coming on the heels of a tragic accident 18 months ago that killed 90 miners in the Aleksinac pits.

Between the layoffs and the accident that deprived hundreds of families of a wage-earner, most of the Aleksinac residents are surviving on irregular welfare checks and dwindling hopes.

The federal government’s economic restructuring program is intended to encourage the modernization of dangerously backward enterprises like the Aleksinac mine. But the program has foundered amid Yugoslavia’s political turmoil, dealing many communities a crippling one-two punch: Jobs disappeared after subsidies were withdrawn. The private sector that was to have absorbed surplus workers has failed to take root.

And government coffers, at both the federal and republic levels, have been emptied by the costly transition that has put 20% of Yugoslav workers out of their jobs. Another 15% are widely regarded as redundant but are kept on out of fear that closing their unprofitable state factories would prompt riots.

Aggravating the present disaster and mortgaging any hope for improvement in the future is the destructive squabbling among rival republics. They have killed the Yugoslav economy with inter-republic trade boycotts and refusal to pay debts.

And in a festering cycle, the economic unrest contributes to political instability, which further damages the economy.

Slovenia and Croatia, the most affluent of Yugoslavia’s six republics, have despaired of resolving the various political and economic crises and have begun the process of secession as independent states.

The Serbian republic’s Communist leadership, headed by nationalist hard-liner Slobodan Milosevic, secretly issued itself $1.4 billion in new currency from the Yugoslav National Bank late last year, blowing apart what was already shaky conformity to the federal economic recovery plan.

Angered by Serbia’s action and federal army threats to intervene to prevent secession, Slovenia and Croatia stopped paying their full shares of federal government expenses. They refuse to support the federal system in Belgrade, which they blame for allowing Serbia to sabotage the reform program that other republics had adhered to at considerable expense.

The federal government last year made the dinar convertible at an unrealistically high 7-to-1 rate against the West German mark, or about 10 dinars to the dollar.

Convertibility was popular with Yugoslavs, whose money had long been a joke due to hyper-inflation that reached 3,000% in 1989. But it made Yugoslav products too expensive to compete on foreign markets. Slovenian and Croatian exports tumbled, cutting per capita income and boosting unemployment at a time when both republics were trying to implement broad market-based reforms.

The conversion rate was eased in December, but the chief exporters claim that the relief came too late.

Serbia had been in arrears on its federal payments and took out billions of dollars in domestic credits so the ruling Communists could boost wages and secure reelection before December’s multi-party vote. The Milosevic leadership in January covered part of its debts with the illegal money it had printed in December.

Yugoslavia’s other republics--Montenegro, Macedonia and Bosnia-Hercegovina--have also fallen behind on their federal contributions, primarily because they cannot pay.

The result is a bankrupt federal government, unable to ease the suffering of the bankrupt republics, and corrosive resentment among poorer southerners of the northerners, who have tired of sharing their relative wealth. Inflation is again running at more than 100% a year, and the foreign debt has climbed beyond $18 billion.

After two weeks of political chaos and Belgrade rioting in which two people were killed, the federal government of Prime Minister Ante Markovic has repeated its cries in the wilderness for logic and compromise. “The problems we are facing can only be resolved through reforms and in a democratic way without the use of force,” a government statement said a week ago, when many feared that Yugoslavia was on the brink of civil war.

In an atmosphere of political brinkmanship, human suffering such as that in Aleksinac abounds.

“The children don’t understand. They keep asking us for things that we can’t buy them,” said Spasa Milanov, 28, a frantic mother of three.

Her husband’s private trucking business is on the verge of collapse. His clients, suffering their own cash flow problems, haven’t paid him for hauling their goods. The regional government in the city of Nis is demanding 20,000 dinars, about $1,500, to register his truck and threatening to jail him if he drives without registration.

“Where would we get 20,000 dinars?” Milanov asked in disbelief, pacing the infested two-room hovel she calls home. “We have no savings. We can barely buy bread and milk for the children.”

In memory of their loved ones, the residents of Aleksinac have papered tree trunks and store fronts with obituary cards bearing pictures of the departed.

Widows, still wearing mourning for the loss of their husbands in the 1989 accident, loiter in the scruffy courtyards of the shantytown abutting the silent mines. Power has been cut off to half of the crude huts that serve as housing because residents have been unable to pay bills. A middle-aged woman picks through garbage along the roadside while two toddlers in rags listlessly watch her search for something worth salvaging.

Some of the unemployed men work as migrant farmers, sending home paltry wages when they can. Others, morose and glassy-eyed, stare from the sooty windows of their houses, a bottle of the cheapest viniak at their side.

At a private corner grocery store owned by Zoran Djordjovic, 28, the portrait of a serenely confident Milosevic gazes from behind the cash register. “Vuk Draskovic is responsible for the political crisis we are suffering,” the shop owner insisted, referring to the anti-Communist opposition leader who has spearheaded a drive to oust Milosevic from power.

“For the economic crisis, we blame Tito. It’s not Slobo’s fault,” the young entrepreneur said in defense of the Serbian president. “If the elections were held again tomorrow, he would still win.”

Djordjovic confirmed that times are desperate in his hometown, where only a few dozen people have work in local administrative offices or carrying mail. In the hope of better days to come, Djordjovic extends credit to local townspeople and still accepts food coupons issued to pensioners, even though the republic government is 200,000 dinars, or $15,000, behind with his redemptions.

“People have to eat to survive. They are really suffering here,” the shopkeeper said, but “90% of those who buy on credit pay me back when they can.”

Groceries and services, while of a lower quality, cost far more in Yugoslavia than in Western Europe or the United States. Even low-grade meat, for example, costs the equivalent of several dollars a pound for Yugoslavs, who in rural areas like Aleksinac seldom make more than $300 a month.

On deeper reflection, Djordjovic decides that maybe Milosevic has let the people down. Most of the young people of Aleksinac support the staunchly nationalist Serbian Renewal Movement headed by Draskovic, according to Djordjovic, who is doubtful that more political tumult is the answer to such severe economic woes.

Milosevic counted on strong backing from factory workers and laborers in proletarian strongholds like Aleksinac. But the disintegrating economy and late paychecks are quickly eroding the foundation of his support.

Labor unrest has begun to rock the industrial heartland and threatens to spread as the economy declines. About 15,000 workers at Yugoslavia’s largest steel mill, in the Bosnian town of Zenica, have been on strike since mid-March demanding higher wages and reliable payment.

Western assistance and solving the ethnic and political crises are the only hopes for improvement, and few of Yugoslavia’s 24 million people are optimistic that either rescue will come soon.

The International Monetary Fund has suspended negotiations on a $1-billion standby loan until the infighting eases, and another $2.5 billion from private banks awaits an IMF go-ahead. Cutoff of foreign aid could allow Yugoslavia’s higher living standards to even fall behind those of Eastern Europe.

Towns like Aleksinac are now the worst-case exceptions, but they may become the rule.

Kristina Rangelova, a 70-year-old mining widow, was barely scraping by on her 2,000-dinar monthly benefits check before the current crisis. Now her son has lost his job and moved into her humble home with a wife and three children. Her pension money, worth about $150, was reduced by half last month and hasn’t arrived at all for March.

“In the summer, we can harvest corn to earn some daily wages,” the pensioner said as she pulled out two long needles and a spool of black yarn. “But during the winter, I have nothing to live on but my knitting.”