Yugoslavia: Prospects for Stability

Yugoslavia has been wracked by the worst violence since World War II-bloody clashes, bombings and the storming of a military facility by a mob. Western reports have stressed the inevitability of escalating ethnic violence that has already left more than two dozen people dead. Some argue that Yugoslavia's continued existence is impossible. At this writing, the outlook is indeed uncertain-but there is reason for a less pessimistic conclusion.

In early May, faced with potential civil war in the republic of Croatia, Yugoslavia's eight-member federal collective presidency and the leaders of its six republics pulled the fragile federation from the brink. This attempt at crisis management was yet another indication of the Yugoslav leaders' commitment to a negotiated settlement of the country's dilemma. To be sure, there have been sporadic episodes of paralysis at the top, as in the constitutional crisis provoked by Serbia's veto of the normally automatic rotation of the federal president.

On the crucial issue of the future form and course of this troubled country of 24 million, however, there is still a sense among the country's leaders that only through an intensified process of bilateral and multilateral negotiations can the various nationalities find a lasting solution to the deep-seated frictions resulting from the collapse of Tito's "self-management" system.

Appeals to ethnic-nationalist sentiment, to the interest of the nation, have been used as a powerful political instrument by leaders in all of Yugoslavia's republics. But the way in which the interests of the various "nations" have been defined has shifted. Confrontational declarations on the absolute right of republics to secede have given way to a more sophisticated recognition that ethnic unrest and unilateral faits accomplis serve only to exacerbate existing political and economic crises.

After its break with Stalin in 1948, Yugoslavia was regarded in the West as a bold experiment in "market socialism," whose impressive economic growth rate and living standards were among the highest in eastern Europe. But this highly vaunted example of reform socialism is currently on the brink of economic and social collapse. The federal Communist Party has disintegrated and noncommunist governments have come to power in four of the six republics. None of the republics are paying their full share of tax revenues to the federal government. Four republics have declared their sovereignty takes precedence over the federation, and one, Slovenia, is threatening to proclaim de jure independence in June. The federal government has been reduced to a referee in the real battle over the future of Yugoslavia, which is unfolding among the republics. Despite these inauspicious circumstances, a new confederated form of Yugoslavia seems ready to emerge-much looser than the previous federation, but with continued economic, political and military links. This new confederation will be based on shared interest in economic recovery and political stability.

As a multinational country emerging from a state- and party-dominated economic and political system, Yugoslavia represents a test of whether transitions to democratic institutions and capitalism can foster stability and dampen the excesses of chauvinistic nationalism. To understand these developments, it is necessary to examine the roots of the present Yugoslav dilemma, including the rise of nationalism as an instrument of political struggle.

II

In the six years following Tito's death in 1980, two central issues defined the growing crisis within the country: Kosovo and the faltering economy. Both issues were the result of Tito's decentralized management system, whose weaknesses and contradictions had only been superficially glossed over by Tito's immense personal authority. Once the charismatic leader was gone, the system's fault lines became clear.

The province of Kosovo, the heart of the medieval Serbian kingdom, gained a large degree of autonomy in the 1970s. Tito hoped to use the province-Yugoslavia's least developed region, whose population is 85-90 percent ethnic Albanian-as a means of showing the superiority of Yugoslav socialism in overcoming nationalism and underdevelopment. But the autonomy of the province and the inflow of economic development funds did not produce the desired effects. Living standards remained much lower than those of the rest of Yugoslavia. And the Kosovo leadership, as in other republics, was instilling a sense of ethnic pride that came to undermine Tito's vision of a harmonious "community" of Yugoslav peoples. By March 1981 rising ethnic Albanian demands for self-determination and improved living standards erupted into demonstrations and violent riots, as well as calls for a fully autonomous Kosovo republic. These demands created fears among Serbs that Kosovo would seek to link itself with neighboring Albania.

Claiming they were being pressured to leave the province by ethnic Albanians seeking eventual unification with Tirana, the province's Slavic population-which had decreased by 35 percent between 1971 and 1981, according to the regional government-became increasingly vocal and directed its complaints at Belgrade.

The League of Communists of Yugoslavia (LCY), the all-union Communist Party, cracked down on ethnic Albanian nationalism. Yet the political opposition in Serbia, led by the Serbian intelligentsia, accused the regional Serbian communist leadership (LC SERBIA) of betraying the interests of Kosovo's Serbs. This regional opposition seized on Serbian nationalism to exploit popular dissatisfaction: it was used as a vehicle to question the party's monopoly of power and demand a liberal multiparty democracy in the republic. The issue of Kosovo thus took on a life of its own, gaining a much wider political significance.

III

The deteriorating economy provided another source of discontent. By 1980 the economic system was in need of serious reform, saddled with an $18-billion foreign debt, an annual rate of inflation approaching 40 percent and a jobless rate of 12 percent. The 1974 constitution had sought to dampen political nationalism by ceding de facto economic autonomy to the six republics and the two provinces, Kosovo and Vojvodina. But the primacy of politics over economics remained. Instead of the center running the entire economy, there were eight centers running eight economies. The leadership of each tended to carry out autarkic policies meant to reinforce its political position within the republic. Meanwhile managers were appointed by local and republican party organizations on the basis of political loyalty rather than expertise. Despite the impression that workers actually ran factories, these political managers operated the country's autonomous enterprises. Such policies contributed to Yugoslavia's economic stagnation.

There was little reason for loyalty to the center, and indeed a central party apparatus was virtually nonexistent. So as each republic pursued its own interests, the interests of the federation as a whole had few representatives, and those who sought to advance those interests had few instruments with which to do so, apart from appeals to party unity. The debate on economic reform following Tito's death therefore became a drawn-out ideological and political battle.

Finally, a long-term economic reform program was adopted in 1983. Its main components were a united Yugoslav market, production based on performance criteria and increased reliance on small private enterprises to generate jobs. Yet this reform collided with the interests of the republic and provincial party organizations, whose grassroots support came from those with the most to lose from changing the existing system.

The result was stalemate. The central party's inability to deal with the deteriorating economy triggered calls from within and outside the party for democratization, pluralism and respect for human rights. Rather than cede any control, the party cracked down on internal dissent, threatening purges to reduce the power of republican and provincial officials blamed for blocking the reform. The response outside the party, especially in Croatia and Serbia, was to arrest and harass the opposition. Thus, as the LCY was attempting to implement a liberalizing economic reform, it also came to rely on more authoritarian measures to quell internal and external criticism.

The failure of this strategy was evident by mid-1985, when the sharp power struggle within the party broke into the open at a meeting of the central committee. By the end of the year, Kiro Gligorov, one of the architects of the reforms, declared that they had totally failed. Unemployment was above 15 percent, inflation was approaching 100 percent, the growth rate was down to 1 percent and strikes were increasing, a situation described by then Prime Minister Milka Planinc as "explosive."

The 13th Party Congress in June 1986 failed to overcome the LCY's disunity. Meanwhile, as the economic situation worsened and as the party proved increasingly paralyzed by its disunity, opposition groups stepped up their attacks. Especially in Serbia-the country's most populous republic-such attacks focused on the party's alleged disregard of the Serbian national interest. It was this use of nationalism as a political issue that effectively broke the stalemate over economic policy reform.

IV

One of the most significant groups to use nationalism against the party was the Serbian Academy of Arts and Sciences. The academy condemned "incompetent" leaders for the economic and political crisis, attacked the party as having worked against Serbian interests for the previous 45 years and decried the "economic subjugation" of Serbs as due to the "anti-Serbian coalition in Yugoslavia." Meanwhile, Kosovo Serbs continued to rally in Belgrade to condemn the party's policy in the province. On the eve of the June 1987 meeting of the party central committee, noted Serbian writer Dobrica Cosic and Tito biographer and party veteran Vladimir Dedijer openly blamed the Serbian party leadership for the situation in the province.1 At the same time two economic laws, one freezing wages and the other on enterprise bankruptcy, provoked a rash of strikes over falling wages, exacerbating political tensions.

Faced with these challenges, Serbian regional party chief Slobodan Miloševic seized on the Kosovo issue in September 1987 to consolidate his control over the Serbian party organization. Miloševic ousted the faction that followed the official party line and had warned against nationalist excesses, including outbreaks of Serbian nationalism. By making the party the defender of the Serbs in Kosovo, Miloševic was able to restore the authority and legitimacy of the Serbian party in the eyes of many in the republic.

Miloševic proceeded to take a hard line within Serbia, cracking down on opposition groups and journalists critical of his leadership.2 Indeed, he continued to exploit nationalist issues. He appealed to a populist, chauvinistic version of Serbian nationalism. He stressed that Serbs had been ill-served by the existing political system, and he portrayed Serbia as threatened from all sides. At the same time the Serbian party began pushing hard for a recentralization of the LCY in order to weaken the regional party organizations.

The new Serbian leadership's nationalistic appeals, hardline policy in Kosovo and successful attempts in late 1988 to subvert the leadership of the republic of Montenegro and the province of Vojvodina were radicalizing the policies of the other republics.3 Even the conservative Croatian party was calling for an abandonment of its political monopoly. But the strongest opposition to continued monopoly of the party erupted in Slovenia, and included important elements within the LC SLOVENIA. Slovenia, to be sure, had also heard unofficial calls for the abolition of the Yugoslav army.

In May 1988 an event crucial to the fate of Yugoslavia occurred: two Slovenian journalists uncovered an alleged plot by the Yugoslav People's Army (JNA) to arrest 200 Slovenian officials, intellectuals and journalists, and if necessary to use armed intervention to put down massive protests. This report electrified the northwestern region, the most prosperous and ethnically homogenous of Yugoslavia's republics. Independent parties were formed, and by January 1989 even the LC SLOVENIA leadership admitted the need to abolish its regional monopoly. By May an informal vote was held in the republic on Slovenia's sovereignty, its right to secession, free multiparty elections and private property.

Soon Serbian pressure against Slovenia increased. When plans for a "meeting of truth" by 100,000 Serbs in December 1989 in Ljubljana-the Slovenian capital-were blocked by Slovenian security forces, the Serbian leadership declared a total boycott of Slovenian goods and a severing of cultural relations.

The final showdown came at the extraordinary 14th Party Congress in January 1990, when the Slovenian delegation walked out, destroying any hope for a unified LCY. Convened at Serbia's request with the apparent goal of recentralizing the party, the special session was meant to change the rules-to abolish the autonomy of the republican party organizations. But the Slovenes rejected this approach, proposing instead that the league be turned into a formal confederation of independent parties. When this proposal was rejected-along with a Slovenian document calling for general free elections, separation of party and state, and respect for human rights in Kosovo-the Slovenian delegation quit the congress. Though such a departure could have given the Serbian party the chance to adopt its positions, the Croatian and Bosnia-Herzegovinan parties declared they would not continue without the Slovenes. Indeed, all three delegations saw a common threat in the attempt to institutionalize resurgent Serbian nationalism. The result was stalemate and indefinite adjournment of the congress.

V

The Serbian strategy of using party unity to recentralize the country had failed and indeed pushed other republics to accept multiparty elections. Although the simultaneous collapse of communist governments in the rest of eastern Europe was cheered by most Yugoslavs, it was not the main cause of Yugoslav pluralism since the push toward multiparty democracy in Yugoslavia had begun by the mid-1980s. If anything, these events merely hastened an already inexorable development.

Elections were held in Slovenia and Croatia in April and May of 1990. Communist parties lost at the polls. In Slovenia, where all parties made appeals to Slovenian national interests, LC SLOVENIA ceded power to a center-right coalition, the Democratic United Opposition of Slovenia, DEMOS.

The issue of nationalism proved an important factor in LC CROATIA's unexpected loss of power to the nationalist Croatian Democratic Union (HDZ), a party founded by former partisan General Franjo Tudjman. (Tudjman was among those Croatian party officials purged for nationalist excesses in the early 1970s.) The HDZ's election program included calls for Croatian independence, a "greater Croatia" absorbing parts of Bosnia-Herzegovina and condemnations of "greater Serbian hegemony."

Faced with the victory of nationalist opposition groups in the two northwest republics, Serbian leader Miloševic increased his own nationalist rhetoric, denouncing those elections as illegal. He proclaimed that Serbia also could go its own way, though only with major changes in "administrative borders" of the existing republics such that all Serbs would live within one Serbian state. This was a thinly veiled threat of annexation and civil war, as 30 percent of all Serbs live outside Serbia. In line with this stance, LC SERBIA in June renamed itself the Socialist Party of Serbia (SPS), with a "democratic, left, socialist orientation," and it accepted a multiparty system.4

During the summer and fall of 1990 election campaigns took place in Serbia, Montenegro, Macedonia and Bosnia-Herzegovina. The Serbian election was dominated by Miloševic, who ran for president of the republic. As in the other republics, the ruling party was attacked from the right by a nationalist anticommunist party-in this case, the Serbian Renewal Movement, led by writer Vuk Draškovic. The liberal and democratic parties also had anticommunist platforms, blaming the economic and political crisis in the republic on the communist party leadership. (Tanjug, the state news-agency, reported just before the election that one-third of the total number of collectives in Serbia had negative balances, and that the losses were skyrocketing, ten times greater than in the same period the previous year.)5 Given the state of the economy, such positions, which had been the key to victory for nationalists in Slovenia and Croatia, would seem to have a good chance of success. But Miloševic-with his virtual monopoly on the Serbian media-already staked out the nationalist issue and, importantly, combined this with appeals to those who had the greatest interest in maintaining the command economy. Miloševic opposed a true economic reform because he knew such a market-oriented overhaul would result in the closure of thousands of inefficient factories in the state-owned industrial sector. The closure of the factories-as required under the large-scale privatization called for by Federal Prime Minister Ante Markovic-would exacerbate the republic's already dire unemployment. Miloševic blamed the poor state of the Serbian economy on federal policies.

The assignment of responsibility to the federal government clearly appealed to those workers whose jobs would be threatened if the economy were run only with regard to efficiency and productivity, as the federal reform foresaw. Miloševic's party, unlike the communist parties in Slovenia and Croatia, thus managed to remain in power by coupling a defense of the statist economic system with appeals to nationalism.

Yet the Serbian electorate, with its Belgrade-based intelligentsia, contained a significant liberal sector. (The Serbian party in the early 1970s had been a center of liberalism.) To ensure an overwhelming victory, Miloševic had to reassure this group that Serbia was to be part of Europe, that he supported progress, peace and economic prosperity. Miloševic received 65 percent of the vote for Serbian president (against Draškovic's 16 percent), and his party won 194 of 248 seats in parliament (the next largest party was Draškovic's, with 19 seats). The united opposition holds 56 seats.

VI

After elections, as the economy deteriorated, Miloševic employed a tactic that seemed to have abetted his political standing in the past: defining the interest of the Serbian nation in terms of threats from abroad and charging that Serbia was encircled by enemies. This included allegations that the U.S. ambassador, Warren Zimmerman, was a CIA agent.6 The Serbian ruling party also alleged that the Austrians, Hungarians, along with Slovenes and Croatians, sought to reestablish the historic enemy of Serbia, the Austro-Hungarian Empire; that the Croatians were conspiring with Sofia to give Macedonia to Bulgaria; that an anti-Serbian plot including international capitalism, the Vatican and the Comintern were all out to destroy the republic. Another key part of this strategy was portraying Serbs in the rest of the country, especially in Croatia, as threatened with extermination. Such desperate accusations were obviously attempts to use chauvinistic nationalism to overcome rising Serbian discontent over the increasingly poor state of the economy and the continued suppression of basic democratic rights.

The elections in Bosnia-Herzegovina and Macedonia confirmed the Serbian leadership's political isolation within Yugoslavia. In Bosnia-Herzegovina a coalition government was formed by Muslim, Croatian and Serbian nationalist parties, which won on anticommunist platforms. In Macedonia a tripartite coalition government was formed between the Macedonian nationalist party, the mainly ethnic Albanian Party of Democratic Prosperity and the liberal-reformist Macedonian League of Communists, despite harsh polemics among them during the campaign. A key reason these parties agreed to work together was the perception of a threat to Macedonian autonomy from the Serbian party leadership.

Thus Serbia, along with Montenegro (where the communists won 83 of 125 seats in parliament), remained the only parts of Yugoslavia committed to a "socialist" economy, against wide-scale privatization and for continuation of "administrative" methods of economic management. The other major supporter of such a position was the Yugoslav People's Army, whose officer corps is dominated by Serbs. Though it dissolved the LCY organization within its ranks, for fear that other parties would be allowed to establish cells within the army, the JNA refused to give up what it saw as its important political role in the country. To that end, a group of retired army officers set up the "League of Communists-Movement for Yugoslavia" as the successor to the old LCY.

The LC-MY, formed in November 1990, with a hardline, orthodox platform that calls for the defense of socialism, condemns the Croatian and Slovenian governments as puppets of international capitalism and describes Hungary as the main front of Western activities against Yugoslavia. The party's stated goal is to rally all leftist forces in the country and become "the main political force in Yugoslavia." That goal was described as the only way to ensure the continued existence of Yugoslavia as a federal state.7

Such a situation seemed to augur poorly for the continued existence, in any form, of Yugoslavia. Indeed, as the economic situation in Serbia continued to deteriorate, the Serbian leadership intensified its attacks on the leadership of other republics and reiterated that any disintegration of Yugoslavia would mean a total redrawing of borders. Miloševic encouraged Serbs in Croatia in their proclamation of an autonomous region (which itself includes significant numbers of Croatians) and then in their declaration of separation from Croatia. He apparently also encouraged situations involving armed clashes in Croatia to serve as provocations for JNA intervention. Yet as before, this growing challenge to the integrity and security of Croatia boomeranged.

VII

Throughout February and March 1991 the leaderships of the other republics effectively worked together to contain what they saw as a hegemonic threat from Miloševic's policies. Despite the international attention given to its purchase of Hungarian weapons to equip its territorial defense force as an army, the Croatian leadership moderated its more extreme demands and recognized that there were important reasons for Croatia to remain within some confederalized form of Yugoslavia. Some within the Slovenian leadership also recognized that unilateral and immediate secession was not in their interest.

The reasons for these shifts were both internal and external. Externally, both the Croatian and Slovenian governments were elected on the platform of bringing their republics into the European integration process. But the European Community (EC) and the European Free Trade Association made it quite clear that they would want to include Yugoslavia only as a single market, not as six individual republics.8 Likewise the International Monetary Fund stated that continued cooperation would be forthcoming only with a united Yugoslavia.9 And without IMF approval, western credit markets will remain inaccessible.

Internally there are also strong reasons for the two republics to seek a continuation of some sort of Yugoslavia. First is the economic factor: for both Slovenia and Croatia the biggest market for their products is Yugoslavia. Secondly, as recent events showed, the specter of ethnic violence is serious. Given the extent to which the populations of Croatia and Bosnia-Herzegovina are mixed (11.6 percent of Croatia's population is Serbian, for example), any unilateral move to divide Yugoslavia into de jure independent states could degenerate into uncontrollable violence. With that in mind the Croatian leadership toned down its rhetoric. Though still seeking to realize the rights and sovereignty of the Croatian people, it recognized the rights of Serbs and other nationalities within the republic, foreswore immediate and unilateral secession and continued to participate in political negotiations on the future of Yugoslavia.10 Though Tudjman was harshly criticized by the right wing of his party for such conciliation, his authority is sufficient to carry it out.

Miloševic's coercive strategy by comparison has also made the Slovenian and Croatian leaderships seem moderate and reasonable. Indeed, in the several major cases of armed confrontation during the first quarter of 1991 in Croatia-Knin, Pakrac and Plitvice-the Croatian government acted in a relatively restrained manner, accepting the presence of the JNA as a means of preventing escalation.

Even in Slovenia, where a popular vote in December 1990 on independence won overwhelming approval, there exists within the leadership and parliament disagreement on how to proceed and how far to go. For example, Janez Drnovšek, Slovenia's representative in the federal presidency, has argued that Slovenian independence cannot be achieved by unilateral declaration.11 Also, due in part to the request of the Croatian government, the Slovenes slowed their moves toward full independence in order to take part in the talks on the future of Yugoslavia. This shift is significant especially since the Serbian leadership had stated its willingness to countenance Slovenian secession.

The positions of Bosnia-Herzegovina and Macedonia are more difficult. Until January both republics had claimed that they wanted to maintain Yugoslavia as a federation. For Bosnia-Herzegovina the presence of a significant number of Serbs (32 percent of the population) was sufficient motivation. For Macedonia, the fact that none of its neighbors recognize the existence of a separate Macedonian people would mean that few would protest a Serbian attempt to reabsorb what before the Second World War were called "South Serbs" into a greater Serbia. But as Miloševic's rhetoric and strategy became increasingly confrontational, these republics also shifted their positions. In February Alija Izetbegovic, president of Bosnia-Herzegovina, declared the republic's sovereignty, contradicting one of his election pledges. And both Bosnia-Herzegovina and Macedonia have stated that they would not remain in a Yugoslavia that did not include Croatia and Slovenia.

VIII

The willingness of other republics to compromise and continue negotiations undermined Miloševic's strategy of confrontation. As a result Serbia became isolated within the federation. This was significant because the federal presidency, the one legitimate all-federation decision-making body and commander of the JNA, reaches decisions by majority vote with each republic and province enjoying one vote. Serbia controls the votes of Kosovo and Vojvodina and has the support of Montenegro. But even with this alignment Serbia has only 50 percent of the total and thus is unable to achieve its goals within the presidential council.

Miloševic's position was further weakened in March of this year by anti-government demonstrations in Belgrade-the capital of the country and the republic of Serbia. Begun initially by an opposition party's protest of the SPS's monopoly on the media, the demonstrations quickly expanded to tens of thousands of people denouncing all of Miloševic's policies. Miloševic's subsequent attempts to call in the army to quash the demonstrations failed when the presidency refused to approve Serbia's request.

In the wake of the March events, and with the failure of his attempt to build support by again citing threats to Serbia, Miloševic was forced to moderate his policies. A new modest effort at economic reform was proposed by the Serbian government. During talks in Slovenia in April with other republican presidents Miloševic seemed to step back from confrontation and compromised on several key issues, including republic sovereignty and acceptance of what-de facto-was a confederal approach to the future governance of Yugoslavia. But as Miloševic's position in Serbia weakened ethnic violence flared anew.

Recent interethnic conflicts in Croatia between Eastern Orthodox Serbs and Roman Catholic Croats are the result of the HDZ's nationalist appeals, as well as of provocations by Serb extremists from outside the republic. During communist rule the Croatian Serbs were heavily represented in the LC CROATIA and in the republic's police force. But, with the rise to power of the HDZ, the Communist Party was displaced and Tudjman set about purging Serbs from the government and police apparatus. The HDZ's policy of recentralization of the Croatian economy also threatened the republic's Serbian population since it placed the previously autonomous enterprises of the Serbian-dominated regions under centralized HDZ control; indeed some Serbs have been fired solely on the basis of nationality.

Serb extremists seized on these policies-and the creation by Tudjman of a Croatian national army-for their own political advantage. Playing on these fears, and evoking the massacres of Serbs that occurred under the Nazi-controlled fascist "Independent State of Croatia" during World War II, these local Serb extremists-with Miloševic's support-managed by early 1991 to consolidate power within the Serbian communities of southern and eastern Croatia and to declare a "Serbian Autonomous Region of Krajina."

By late April, with Miloševic's standing in danger, the Serbian leader sought to exacerbate the situation in Croatia in hope of provoking a violent Croatian response: thereby giving the federal army a reason to occupy the republic. The Croatian Serbs declared that they would unite their autonomous region with the Serbian republic. And Miloševic encouraged, or at least allowed, extremist Serbian nationalist groups from Serbia to infiltrate predominately Serbian regions of Croatia. These groups openly called for annexation of Croatia and Bosnia-Herzegovina and for revenge for the World War II massacres. Allied with native extremists, they set about to destabilize the region by inciting violent clashes. They ambushed Croatian police-killing 12 officers in one incident-and terrorized both Croatian and Serbian residents of the region. The result was what seemed to be the beginning of spiralling violence and perhaps civil war. Yet the federal presidency and the republic's leaders again managed to avert escalation and indeed reached agreement on May 9 that seemed to set the stage for peaceful resolution.

Given this situation, is there hope for the continued existence of even a loose form of Yugoslavia? The key question in the short term is the ethnic conflict in Croatia. Here the May 9 agreement provided a temporary solution: Serbian acceptance of the existing republic borders and recognition of the legitimacy of Croatian authorities; Croatian pledges to negotiate with its Serbian population on all disputed issues; recognition by Croatia of the role of federal institutions, especially the JNA, in preventing further violence; and disarming by the JNA of groups and individuals in the restive parts of Croatia.

This settlement is a key step toward dampening ethnic clashes. Indeed relations between Serbs and Croatians in the region are not inevitably hostile. Not all Serbs living in Croatia are extremists; over the past few months groups of moderate Croatian Serbs have held talks with Tudjman on all issues of concern to their community. From a historical perspective, this area experienced little ethnic violence prior to the twentieth century and never witnessed the vicious religious wars seen in western Europe. During World War II Nazi collaborationist leaders used chauvinistic nationalist appeals, resulting in bloody massacres. But it was just such behavior by extremists that led to wide support for Tito's partisans, who ultimately united these ethnically mixed regions of the country. In today's Yugoslavia, an acute awareness of the dangers of ethnic extremism and spiralling violence provide ample motivation-among ruling and opposition parties alike-to seek a compromise settlement.

Even if it quickly overcomes ethnic unrest Yugoslavia must still resolve the other key question: the future political shape of the country. As noted, the country's leaders have acknowledged strong foreign policy and trade reasons to preserve some modified form of Yugoslavia.

Since January the leaders of the six republics have agreed to seek an outcome that respects democratic processes, recognizes the legitimacy of federal institutions and renounces violence.12 All republics have agreed to acknowledge certain basic functions of the federal government until some lasting solution is found. These include the dinar as the single Yugoslav currency, a single monetary policy, responsibility for foreign and security affairs and further restructuring of ownership.13 The May 9 agreement also recognizes the important role of the Yugoslav army in ensuring stability, and it increases the role of federal authorities.

There is less agreement, however, on economic reform. The program of Prime Minister Markovic, adopted in early 1990 with the blessing of the IMF, called for radical privatization and succeeded in lowering the once astronomical inflation rate (2,660 percent at the end of 1989) to less than one percent in June 1990. But by the end of 1990 the political stalemate all but paralyzed the reform. At present, the IMF and the EC have promised a combined $2 billion in credits to support Markovic's reform efforts. This may strengthen the premier's position.

Markovic himself stresses that ensuring the dominance of private property is a "necessary precondition to establish a new political and social order" and to stabilize the situation in Yugoslavia, since this would create common interests cutting across republic and nationality lines.14 This transformation of property relations is perhaps the largest hurdle. Miloševic is clearly opposed to such transformation. But even in the northwestern republics, where the governments won elections on the platform of private property rights, the entrenched interests pose serious obstacles to a true restructuring.

The first obstacle is the continued insistence of the republics on economic sovereignty. There is also the question of existing interests that would be negatively affected by privatization. Slovenia has gone furthest in overcoming this resistance. But in Croatia a contentious debate over privatization is unfolding. The Croatian Assembly in February transformed "social property" into state property rather than privatizing, thus increasing state control over the economy. Such moves show that even where a government is elected on a commitment to promote private ownership, the obstacles are enormous.

IX

The main obstacle to a new form of Yugoslavia-based on the principles of market forces, multiparty democracy and private ownership-has been the Serbian leadership, which has consistently stirred up ethnic conflict to its own ends and is the most resistant to a looser form of unity. But the Belgrade street demonstrations in March of this year showed that the economic and political situation in Serbia has reached a critical point, and the Serbian opposition, which during the election campaign in November seemed to be at opposite ends of the political spectrum, has now accepted the need for the above-mentioned principles.

Even Draškovic, who during the election campaign was among the most aggressive advocates of Serbian nationalism, has moderated how he defines that interest. Most notably, he has denounced the use of force to resolve conflicts among nationalities and republics.15 Draškovic has described Croatia's leaders as "sensible men," in contrast to Miloševic's characterization of the Croatian chiefs as "fascists."

Other Serbian democratic opposition parties have long called for a peaceful resolution of the crisis and have rejected Miloševic's attempt to rally all Serbian parties around the issue of threats to Croatia's Serbs. There are growing indications that the united opposition can rally enough support from dissatisfied Serbs to call new parliamentary elections and thereby topple Miloševic's government.16 The increasing discontent with Miloševic's policies was evident in recent strikes of 700,000 industrial workers in Serbia. The Serbian press also has harshly criticized Miloševic's policies, and recent polls show that SPS support among the electorate is plummeting.17 And there is a growing split within Miloševic's own party as moderates gain dominance. Indeed, an important issue was that Miloševic had been promoting civil war. Given the degree to which defense of the Serbian people has become the defining issue in Serbian politics, nationalism will undoubtedly remain salient and divisive. What is clear is that the issue's resolution does not require violence or great-power intervention.

X

During this crisis the Soviets have been noticeably quiet. The Soviet-Yugoslav relationship in the early 1980s remained cool. After 1985 Gorbachev's "de-ideologization" of relations did much to improve ties with Belgrade. But economic ties remained problematic, as the Soviets built up a trade deficit of $2 billion by 1990-in effect, an interest-free Yugoslav loan to Moscow that had negative effects on the Yugoslav economy. Finally in November 1990 Moscow agreed to clear its significant debt with Belgrade.

But as conservative forces gained dominance in Moscow, Yugoslav views of the Soviet Union have split. On the one hand, Croatia and Slovenia have criticized Moscow's hardline policies and accused the Soviets of aiding Miloševic. Serbia, meanwhile, has portrayed Russia as its historic friend. Indeed, a great deal of Yugoslav exports to the Soviet Union are produced in Serbia. Though placards at some of the Serbian street rallies have called for "Russian intervention," the Soviets have enough problems at home. In addition, although the Soviets have expressed their strong desire that Yugoslavia remain a united country, the fact that they did not intervene over the fall of communism in east European countries of much more strategic and ideological importance makes it highly unlikely that they would become involved in attempting to maintain or restore socialism in Yugoslavia. To be sure, the Soviet leadership's chief concern is maintaining the unity of its own charge: the U.S.S.R.

For the United States, Yugoslavia's importance in the postwar era was a direct function of the Cold War. Though a socialist country, Yugoslavia remained outside the Warsaw Pact and thus denied Moscow access to the Adriatic coast. This geostrategic importance caused the Carter administration to warn Moscow against threatening Yugoslav independence. Although Yugoslavia may have been so during the Cold War, it is no longer a possible catalyst for East-West confrontation.

Rather, Yugoslavia represents a test of the possibility of overcoming hatreds of the past and the causes of violent conflict by relying on political pluralism and appealing to broad economic interests. If democracy and economic development succeed in overcoming the nationalist passions recently stirred in Yugoslavia-a country that has struggled with interethnic rivalries throughout its 73-year history-then the long-term stability of Europe seems more plausible.

XI

What should the West do with regard to Yugoslavia? Yugoslav leaders realize that continued violent interethnic strife would not be in their interest and, in this, their interest coincides with all of Europe's. Miloševic may again seek to undermine agreement through a manufactured crisis. This would test the determination of Serbian moderates and leaders of other republics to continue constructive dialogue. The policy of the West should be to reinforce those committed to political negotiation. To this end the Europeans have much greater ability and direct interest in influencing events in the region. Foreign concern played a significant role in the May 9 agreement. Statements and actions by the EC to date-stressing the desire to see some continued links between the individual republics, such that Yugoslavia would at a minimum become a united market-have played an important role in dampening escalation of the crisis.

The United States, however, is considering cutting off all aid to Yugoslavia due to Serbia's actions-citing a violation of human rights in Kosovo. This could end IMF loans. Such a move would seem to be counterproductive since the prospect of IMF funding has been a vital factor in continued commitment to a negotiated outcome of the Yugoslav crisis. Indeed, economic stabilization is the key. The West should direct technical, managerial, and, where appropriate, financial aid to those republics that make sincere efforts to find a common political solution and are committed to true economic reforms.

One of the thorniest problems for the West regarding Yugoslavia remains Kosovo. In the summer of 1990 Miloševic stripped Kosovo of its last vestige of autonomy by abolishing the province's parliament. Since then the region has been under virtual military occupation. The situation in the province has become intolerable, which unfortunately will only serve to heighten ethnic Albanian nationalism in the region. Kosovo's ethnic Albanian political parties have forged links with politicians and other officials outside Serbia, and they continue to insist on an autonomous Kosovo republic within Yugoslavia. Obviously any solution to the crisis will need to involve goodwill and a readiness to negotiate on the part of ethnic Albanians and the Serbian government, which maintains firm but uneasy control over the province.

Given the degree to which Miloševic has inflamed the problem and made Kosovo the defining political issue of any Serb, this will be a difficult task. Here the West will be able to offer assistance. One of the reasons for Kosovo's troubled past was the combination of autarky, underdevelopment and a politicized economic system where rewards were made on the basis of nationality. Where a true market economy open to the rest of Europe existed, Kosovo would have the advantage of a relatively well-educated work force with relatively low labor costs. The solution to Kosovo's situation may indeed be development, as Tito saw, but development as part of a broader Europe, rather than along autarkic lines.

The future of Yugoslavia is by no means certain. But it is also by no means doomed to violence and anarchy. There exist strong internal and external motivations for a peaceful and democratic resolution of the current Yugoslav crisis. The United States and western Europe can best achieve their goals of a stable and democratic Europe by encouraging those processes.

1 Knji?evne novine, June 1, 1987; Dnevnik, June 15, 1987, cited in Radio Free Europe Research (Yugoslavia Situation Report, no. 87), June 29, 1987.

2 The Serbian Writers Association in March 1988 attacked the Serbian leadership as repressive and called for immediate institution of a multiparty system, direct popular election of officials and wide-scale private enterprise.

3 On the use of mass street rallies to topple the Vojvodina and Montenegrin leaderships, see Radio Free Europe Reports (Yugoslavia: Situation Reports no. 8 and 9), Sept. 23 and Oct. 11, 1988.

4 Politika, June 9, 1990.

5 Tanjug, Nov. 12, 1990.

6 Politika Ekspres, Feb. 18, 1991.

7 Borba, Feb. 1, 1991.

8 Tanjug, Feb. 5, 1991; Frankfurter Allgemeine Zeitung, May 14, 1991.

9 Tanjug, Feb. 4, 1991.

10 Vjesnik, Dec. 23, 1990.

12 Oslobodjenje, Jan. 14, 1991.

13 Tanjug, Jan. 24, 1991.

14 Borba, Nov. 1, 1990.

15 Oslobodjenje, Feb. 27, 1991.

16 Danas, April 9, 1991, p. 26.