NID: YUGOSLAVIA: SINKING DEEPER INTO POLITICAL QUAGMIRE

• Document Type: SPECIALCOLLECTION
• Collection: The Collapse of Communism in Eastern Europe: A 30-Year Legacy
• Document Number (FOIA) /ESDN (CREST): 06826816
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 2
• Document Creation Date: November 26, 2019
• Document Release Date: December 10, 2019
• Publication Date: December 9, 1989

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Special Analysis
YUGOSLAVIA: Sinking Deeper Into Political Quagmire
The postwar political consensus among Yugoslaria's ethnic groups is
breaking down after a decade of economic deterioration and government
mismanagement. Political tensions probably will increase nest year,
undermining the implementation of sorely needed economic and
political reforms and further weikening the country's stability.
Tensions in Yugoslavia, already at a postwar high. rose again last
week after bitter exchanges between Serbian and Slovene officials
over a planned demonstration in Slovenia by as many as 40,000
ethnic Serbs. The demonstration was canceled after Slovene leaders
termed it a Serbian provocation and threatened to use police to
prevent it. Serbian officials are calling for a retaliatory economic
boycott of Slovenia.
The national leadership has been seriously weakened by the
increasing polarization of regional disputes and has been unable to
mediate effectively. The eight-member State Presidency, which
reportedly often splits evenly on key domestic issues, gave the
Slovene leadership only weak support during the latest dispute with
Serbia. The party's Central Committee is also deadlocked; the latest
furor prompted party leaders to cancel a plenum that was to have
prepared for next month's national party congress.
Yugoslav leaders are unlikely to forge a new agreement on ethnic
powerSharing in the coming year. Preparations for the national party
congress are exposing sharp regional differences over reforms and
regional autonomy that republic party congresses to be held this
month will reinforce. Slovenia, and to a lesser extent Croatia,
probably will advocate a multiparty parliamentary system and greater
regional autonomy. Serbia, the largest republic, and its allies in
Vojvodina and Montenegro will support a stronger central
government and the retention of the Communist Party's political
monopoly. In the near term Slovenia probably will procced with its
plan for its own de facto multiparty system and with pians for open
elections next spring. Few changes are likely in Serbia and its
provinces.
Despite the deepening political divisions, Yugoslav leaders probably
can muddle through for at least another vear, but the outlook
thereafter seems increasingly bleak
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TCS 2985/89
9 December 1989
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Weak Economy Aggravating Regional Disputes in Yugoslavia
Serious economic deterioration over the past decade has compounded Yugoslavia's ethnic
and political problems.
� The annualized inflation rate exceeded 16,000 percent in October 1989 and has been
greater than 100 percent sioce 1986.
�The gross social product, which has declined since 1986, probably will fall by more
than 2.5 percent this year.
� Real net income per worker has fallen almost every year since 1978, according to the
IMF. The decline last year was about 8 percent and probably will be about the same
this year.
The decline has soured the atmosphere for economic reforms. The recent Serbian-Slovene
conflict has endangered Premier Markovic's economic reform package by prompting
renewed Serbian calls for his ouster. Interrepublic bickering last month stymied Markovic's
attempt to push major reform legislation through the National Assembly.
� Slovenia, the wealthiest republic, opposed a draft tax law because Slovene
authorities feared that the imposition of corporate profit and income taxes would
disproportionally fall on local industries and increase subsidies Slovenia provides
other republics.
� Serbia blocked a draft foreign exchange law calling for a fully convertible dinar
because it would reduce the advantages Serbian firms gain from unique financing
arrangements for trade with the USSR.
� Croatia rejected a draft law that would have made petroleum prices subject to market
forces because the law would have hurt Croatia's large oil industry.
TCS 2985/89
9 December 1989
Approved for Release: 2019/10/29 C06826816