YUGOSLAVIA: POWER TO THE CENTER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001100160033-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 13
• Document Creation Date: December 20, 2016
• Document Release Date: April 3, 2006
• Sequence Number: 33
• Publication Date: February 8, 1973
• Content Type: IM

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DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
Yugoslavia: Power to the Center
CIA
DOCUMENT SERVICES
File CaPY
Confidential t
,LLL'
Confidential
8 February 1973
Nc. 1625/73
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CONFIDENTIAL
CI:NTI'' '1L INTELLIGENCE AGENCY
!)iiectorate of Intelligence
8 February 1973
INTELLIGENCE MEMORANDUM
Yugoslavia: Power to the Center
Summary
Tito's purge of prominent liberals is part of a comprehensive program
to tighten controls in Yugoslavia. Tito, at 80, is ('eeply disappointed by the
party's failure to exercise decisive
-Aft ~ ,mss.,.
leadership and is making an eleventh-
hour effort to strengthen the party's
internal discipline and to expand its
role in all sectors of Yugoslav life. He
is attempting to pass on to his succes-
sors his personal creed-that prag-
matism, toughness, an(! a strong sense
of direction will see them through
future troubles. His problem is to in-
still these qualities in an organization
that, up to now, has displayed laxity,
indecision, and truculence.
In the time remaining for him to
prepare the country to carry on after
he departs, Tito will make further
changes in the -1 ....... r
ti
f
a
on o
be increased, economic belt tightening will be forcefully pursued, and
dismissal of the over-liberal will continue for some time. Tito will, however,
stop short of Unleashing an anti-intellectual, anti-technocrat witch hunt. He
will stress that no man or institution, no liberal or conservative, is above the
party.
Tito is obviously trying to establish a set of political tenets by which his
successors can govern. He wants to hold back Yugoslav proclivities toward
Note, This meii,orandutn was prepared by the Office of Current Intelligence and co-
ordinated within C/A.
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regionalism while strengthening self-management at home and non-alignment
abroad. In the wrong hands, however, the new instruments of control could
be abused. The party could fail to adapt to Tito's injunctions; further
instability, or even disintegration, could result. From Tito's point of view,
these are gambles that must be taken in view of his age and the party's
failure to instill public confidence in Yugoslav unity. With luck, Tito will live
long enough to oversee the first test of his new system.
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Background
Throughout Most of Yugoslavia's post-war history, the federation
muddled along with a highly centralized but inefficient political and eco-
nomic structure. Until the slid-11960s, Belgrade called the shots for the rest
of the country. The fact that Serbs controlled most of the levers of power in
Yugoslavia inevitably created discord among the other 60 percent of the
population. The secret police and the party made certain that the irritations
were contained, but the process left a legacy of suspicion of central power
that has yet to be dispelled.
The longest crack in this centralized edifice was its inability to organize
and direct the economy efficiently. The ill-effects of cronyism in manage-
mert and the allocation of resources on purely political grounds were in the
long run impossible to hide or ignore. In July 1965, the regime introduced a
program of economic reform. Departing from the practice of Communist
states, Tito decentralized economic decision-making authority, introduced
something called "market socialism," and began to replace party hacks with
professional managers.
From this beginning, reformists, through good fortune and dedication,
went on to dismantle many other features of the centralized system. Their
opponents blundered into political errors, most of the leaders were purged,
and the programs they advocated became anathema. The reformers' hand
was strengthened by the Warsaw Pact invasion of Czechoslovakia in 1968,
which united most Yugoslavs in the belief that concentration of power in
Belgrade left the country vulnerable to Soviet intimidation. Decentralization
thus rained the status of a strategic goal, and virtually every state activity
began to devolve to the regional centers. In March 1969, the party itself took
its first steps toward less centralism.
In late 1970, the Yugoslavs introduced sweeping constitutional changes
that transformed the country into a decentralized federal state, unique in the
Communist world. The new system was billed as the way to provide a
smooth transition to a post-Tito government. In substance, the reform
represented a bold effort to come to grips with Yugoslavia's omnipresent
nationalities problem by allowing a maxinll1111 01' regional autonomy without
endangering the integrity of' the Yugoslav state. Yugoslav intellectuals and
party officials waxed euphoric over the plan, they applauded the expansion
of democratic trends and lived what other East Europeans came to sec as a
Yugoslav donee vita.
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Decentralization, in practice, unleashed regional rivalries that had been
more or less quiescent. By April 1971, Tito was bothered enough to convene
the party presidium to discuss Croat nationalists, who had seized on decen-
tralization as a means of extricating Croatia from its inferior position vis-a-vis
Serbia. Emotions ran high throughout 1971, and the Croats' separatist
rhetoric alarmed many Yugoslavs. By late November, Croat mitionalism,
highlighted by a strike of Zagreb University students over an economic issue,
had exceeded Tito's tolerance.
Backed by the military, he ordered a purge. A team ci functionaries
was sent in to take over in Croatia. Over 61)0 party members were dis-
charged, and the principal non-party leaders of the Croatian movement were
tried, convicted, and imprisoned. In the process, a gulf was created between
the republic regime and the Croat people, and that gulf is yet to be bridged.
The events in Croatia apparently convinced Tito that the League of
Communists of Yugoslavia had degenerated into an ineffectual factor in the
pursuit of Yugoslav unity. Moreover, having turned to the military as his
main support for the action in Croatia, Tito faced the disquieting prospect
that the military would emerge as the sole force capable of ensuring unity in
a post.-Tito Yugoslavia.
Tito, therefore, moved to stiffen and recentralize the Federal Party. In
so doing, lie ran into a number of objections from the regional party barons.
These individuals, essentially of a reformist cast, had been flourishing under
the decentralization. Even after the Croat affair, the other regional leaders of
the party, jealously guarding the power and influence that had fallen into
their hands, more or less ignored Tito's demands that they line Up behind his
drive for a disciplined response to the party's center.
While this was going on, economic difficulties were becoming more
obvious. Some of the economy's deficiencies, such as a relatively under-
developed industrial base and uneven regional development, were inherited
from pre-war Yugoslavia. In the post-war years poor planning, regional
squabbling over investment funds, and inefficient management have added a
number of new problems. The regime's approach to then: shortcomings on
the economic side have followed twists and turns similar to those in Tito's
political program.
The decentralization reforms of 1965 were intended to bolster the
economy by compelling the many factories and enterprises spawned by the
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government's forced growth policy of the 1950s to become more efficient or
to perish. Even as the 1965 reforms took hold, regional and local pressures
for protection from their full effect forced the federal government to make
exception after exception. The 1965 reforms not only failed to push inef-
ficient firms out of business, but it also failed to control investment spending
and check excessive wage increases. As a result, inflation skyrocketed to the
current rate of 15-20 percent per year and the economy was burdened by a
perennial balance-of-payments deficit.
Particularly disturbing to Tito-and to economic decision-makers-has
been the incessant battle among the six republics over the allocation of
investment and foreign exchange. Tito himself has at times seemed powerless
to curb the republics' insatiable demands for st':el mills, chemical combines,
and petroleum refineries. Excessive imports and the construction of
uneconomical and duplicative smaller scale facilities have resulted.
Tito lived with these problems for a long time before he acted. In
mid-1971, as the Croat issue was fermenting, the regime took measures to
choke off imports. In November 1971, a stabilization package, including a
price freeze and investment restrictions, went into effect. The package
improved the foreign trade picture, but did little to solve domestic economic
problems.
For political reasons, the regime did not impose effective wage restric-
tions, and this omission turned out to be the weak spot in the stabilization
program. Workers' councils continued to vote themselves ever larger wages,
even when their enterprises were losing money. The insolvent enterprises,
kept afloaL by local and republic governments, failed to pay debts owed to
other firms. This meant that even efficient firms were dragged down into
insolvency. Banks that served as middlemen in the repayment of foreign
leans had difficulty obtaining payments from insolvent enterprises. The
potential damage to Yugoslavia's already shaky foreign credit rating, coupled
with the increasing disruption to the domestic economy brought about by
widespread insolvency, finally led Tito to blow the whistle.
By the time 1972 roll'd around, Tito faced a balky party apparatus,
clamorous regional interests, and insolvency in the domestic economy so
widespread as to threaten Yugoslavia's already shaky foreign credit rating.
Tit-) decided to take another turn of the screw.
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In January, he moved against the regional bosses by cutting the number
of political and provincial members on the powerful Party Executive Bureau
from 14 to 8. To revitalize and redirect the bureau, he brought in a number
of younger and more dynamic men, charging them to supervise party
operations down to the very lowest level. He then called a party conference
and forced through a resolution demanding that the regional leaders co-
operate with the central authorities in finding new solutions to chronic
economic problems.
Movement on both political and economic fronts was slow. In the fall
of 1972, Tito launched a series of angry attacks on the lack of revolutionary
spirit in the party and on the faltering economy. He threatened to purge
200,000 party members if he had to, but lie wanted the party restored as the
main force for unity in Yugoslavia. He promised to confiscate th? goods of
Yugoslavs whose sole goal in life had become the piling up of luxuries. He
condemned the breakdown of ideological standards in the conduct of state
affairs, criticized independent judges who insisted on strict legalisms, and
lashed out at critics in the universities and the press for obstructing the
development of the revolution.
Tito had made threats before, and nothing had come of them. This
time, however, Tito forced his subordinates to act. He first turned to the
Party Executive Bureau. Its major domo, Stane Dolaric, joined Tito in
signing a letter to all party organizations and demanding that they immedi-
ately begin earnest discussions of the country's problems and Tito's
proposed remedies. Dolanc sent party officials to local organizations to
determine how forcefully the demand was being carried out. This was, in
fact, the executive bureau's first decisive move to undercut the regional
party barons. Tito had, in effect, gone around them seeking rank-and-file
support, and it worked. Tito's demand for the re-establishment of an
action-oriented party and a reversal in elitist socio-economic trends struck a
responsive chord throughtout the Yugoslav party.
Thus strengthened, Tito next sought to eliminate key personalities
opposing his program. The first major victim was Serb party leader Marko
Nikezic, who in the heat of the Croat purge had warned against throwing
overboard the reforms and returning to a tightly centralized Communist
system. The removal of a well-entrenched man like Nikezic was not easy.
The top leaders of the Serb Party reportedly rejected Tito's request that
Nikezic be dismissed by a vote of 38 to 9, so Tito took his case to the full
Serbian Central Committee for action. By this time, Nikezic and his immedi-
ate lieutenants could see the handwriting on the wall and resigned. This was
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* Koca Popovic-Member, collective presidency and national defense council
* Mirko Tepavac-Federal secretary of foreign affairs
? Marko Nikezic-Serb party president, presidium member
? Latinka Perovic-Serb party secretary, presidium member
? Bora Pavlovic-Belgrade party president, presidium member
? Mirko Canadanovic-Vojvodina party president, presidium member
? Slavko Miloslavlevski-Macedonian party secretary, presidium member
? Stane Kavcic-Slovene premier, presidium member
? Slobodan Glumac-Chief editor of liorba
? Gavro Altman-Chief editor of Konrnnnrist
? Frane Barbieri-Chief editor of N/N
? Aleksandr Nenadovic-Chief editor of Politika
*Resigned in Prolest
? Resigned Under Fire
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only the beginning. Party conservatives seized the opening provided by Tito's
drive against regionalism to force out Stane Kavcic, the Slovene premier who
had a reputation for regional economic nationalism, and Slavko Milosavlev-
ski, second-ranking man in the Macedonian party and a strong proponent of
regional party autonomy.
The purge then reached the media and judiciary. Prominent editors
were sacked, and liberal jurists were forced out. Study commissions at the
local levels were encouraged to look into the "origins of wealth" of party
and non-party members. These tactics all but broke the back of the liberal
resistance in the regions to Tito's new program. Tito reinforced the no-back-
talk atmosphere by appointing obscure conformists to the vacated leadership
posts.
Backing Away From the Brink
Tito's tactics gave rise to fears that he was off on a general anti-
technocratic, anti-liberal witch hu:it. Perceiviq that this could have a dis-
astrous effect on the economy and the government, Tito in early November
1972 began criticizing factional and personal vendettas as distortions of his
desires. His intervention brought a degree of restraint to the situation,
although some conservatives, notably among the military and republic party
leaders in Bosnia-Hercegovina, have not given up easily.
There were other complications. Protest resignations by two prominent
Serbs-Koca Popovic, a highly esteemed fixture in prominent federal posts,
and Foreign Minister Mirko Tepavac-bared divisions in the ruling elite and
aggravated morale problems. Furthermore, the authorities began to seize
"illegally acquired wealth," and this caused several bank runs. Tito reassured
workers that their hard-earned savings and the fruits of their labor would not
be affected, but he did not deviate from his policy of expropriating the
wealth of profiteers.
Tito recognizes that the proteges of Nikezic and other liberals, in-
cluding technocrats, are still strong in the ;:public regimes. Should they in
any way try to subvert his policies, Tito will doubtless order more purges.
A significant increase in police controls is another possibility. Colonel
General Ivan Miskovic, a Croat who joined the inner circle as Tito's internal
security adviser just before the Croat purge, advocates strengthening the
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internal security organs, which were decentralized and greatly weakened
after the Rankovic purge in 1966. There have been threats to Yugoslav
security that could holster his case. During 1971, Croat nationalism took on
separatist overtones, and Croat emigres actually conducted guerrilla raids in
Bosnia in June 1972. Miskovic first proved his loyalty to Tito by helping
oust Rankovic and later by clearing Rankovic's men from the then all-
powerful security apparatus. Should Tito find it necessary to implement
"revolutionary" methods against the opposition, Miskovic stands ready at
hand.
Tito has not disclosed what he intends to do in the economic sector. He
has disarmed many of his critics and has successfully appealed for worker
and mass party support. Nevertheless, plans are afoot for a belt-tightening
that will not fall exclusively on the wealthier class. At least a million
Yugoslav workers face wage reductions of kip to ten percent under a federal
law thatwent into effect last month. It is unlikely that the law, which would
hit hardest in the poorest regions, will be fully applied. Instead, it probably
will be used selectively to force greater discipline on self-managing workers
who demand pay hikes while their factories are losing money. On the books
at least, factory managers in unprofitable industries face sharp reductions in
investment funds and penalties for failure to meet standing debts.
In the political realm, Tito intends to proceed with institutional
gs,arantees to prevent any loss of party control over Yugoslav society. He has
already ordered party organizations to take part in the deliberations of
government and mass organizations such as trade unions, youth groups, and
the socialist alliance. He has also ordered a special party group to develop
propaganda guidelines for the press. These arrangements are intended to be
permanent.
Despite Tito's complaints about the corrosive effect of liberalism on
discipline, he appears willing to let decentralization of the federal govern-
ment proceed. This is less than half a loaf for the liberal reforms since the
regions will receive greater party ;,upervision arid, in some cases, will be
directly controlled by the party.
Tito's views on the government decentralization issue will be more fully
spelled oi;t next fall. when a second round of constitutional reforms is due
to be implemented. The new regulations are expected to extend decentraliza-
tion to local governments and provide a better balance in the triangle of
federal, republic, and local policy-making relationships. Party watchdogs will
be on hand at all levels. The party will prevail in any frontal confrontation,
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but adjudicating competing local, regional, and federal interests will be no
easy job. The system appeals designed to cut short major confrontations at
their source, but it could also stifle initiative in the state sector and once
again make tha party the target of criticism for all I'ailur'es.
Increased ideological orthodoxy on the domestic scene will affect the
conduct of Yugoslavia's foreign relations. Tito's public accusation that
Austria's handling of its Slovene minority has neo-Nazi overtones and his
decision to whip up anti-Vietnam demonstrations last December sound an
already harsher note.
Although occasional bitter exchanges with the West can be expected,
Yugoslavia will not abandon its policy of independence from Moscow. The
recent rapprochement with Moscow and the cessation of polemics have,
from Belgrade's point of view, been primarily based on Soviet flexibility
toward Yugoslavia. Furthermore, Yugoslavia has not tempered its demands
for recognition of the rights of small countries during preliminary talks on
European security in Helsinki. In fact, Belgrade is plowing ahead with plans
for a meeting of non-aligned Mediterranean nations to discuss the impact of
European security on their interests. Yugoslavs have forgotten neither the
Soviet-led invasion of Czechoslovakia four years ago nor their own bad
experiences at the hands of the Russians. Moreover, they are by nature wary
of any foreign subversion.
Nevertheless, a still-uncompleted Soviet credit deal (which may amount
to as much as one billion dollars) will, if it is fully carried out, give the
Soviets greater leverage in Belgrade and in the regional capitals.
Tito's attempt to energize the mechanisms of control is a key part of
his preparations to preserve Yugoslav unity when he has gone. He has not
abandoned the basic policy commitment to an independent brand of
Marxism and to nonalignment, which he believes is central to Yugoslavia's
survival as a nation state. Tito, even at 80, adjusts more quickly and
objectively to stresses than any of his likely successors. At best, he will live
long enough to watch over a testing period with the new system. At worst,
he will (lie before the system can be tested and leave to lesser men the
difficult job of balancing restraints and incentives in leading a country with
strong centrifugal tendencies.
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