Yugoslavia: Breaking Up Is Hard

By Jesse Birnbaum

It was a measure of the degree of tension, not to say the depths of paranoia bedeviling the country. When they arrived at the federal parliament in Belgrade last week, two Croatian Deputies and their bodyguards were obliged to check their handguns at the door. The gun toters all went home later in one piece, but that was more than could be said for the state of the nation. As of last week, leaders of Yugoslavia's six contentious republics had held four fruitless rounds of talks in an effort to resolve a fateful drive toward secession, and the roiling crisis is tearing the country apart. The only question is whether the process of dismemberment can be achieved without civil war, and if so, how -- if at all -- the republics can survive as separate entities.

The threads that have stitched together an unwieldy federation of rivalrous ethnic groups since World War II have been unraveling for years. Since 1981, the 1.7 million Albanians in the Serbian-controlled province of Kosovo have been agitating for separate status. Last spring and summer the relatively prosperous northern republics of Slovenia and Croatia voted in free elections to install noncommunist, Western-oriented governments, while Serbia, the largest republic, chose to retain its communist government -- lately renamed socialist -- under hard-line President Slobodan Milosevic. Those divisive events were followed by a landslide referendum in which 88% of Slovenia's 2.1 million citizens voted for independence from Belgrade. Since then, the federal tax and monetary systems have all but broken down, and Slovenia stands ready to print its own currency.

Similar secessionist fever in Croatia, meanwhile, nearly erupted in war when Belgrade accused Croatian defense minister Martin Spegelj of fomenting an armed insurrection. Federal troops were called in, and a tense standoff was resolved only when Croatia agreed to demobilize -- but not disarm -- its police reservists. Unrepentant, Slaven Letica, an aide to Croatian president Franjo Tudjman, declared, "If it comes to civil war, Croatia is willing to fight and confident that it will prevail."

What is certain to prevail is the intractable conflict that has riven Yugoslavia's two major nationalities since the country was established. The Serbs, who threw off Turkish rule in the 19th century, are Christian Orthodox; the Croatians, who were subjugated by the Habsburg Empire, are Catholics. Their mutual hatred and distrust keep growing more virulent as nationalist ambitions seethe throughout Eastern Europe. Only the suzerainty of socialism imposed by Josip Broz Tito after World War II managed for a time to keep the rivalry in check.

Now that is crumbling. What else can hold the union together? And if Croatia (pop. 4.6 million) should secede, what would become of its 600,000 Serbian minority? "All Serbs," says Milosevic, "must have the right to live in one state." This implies that he would lay claim to a "greater Serbia" by annexing the Serbian regions not only of Croatia but of adjacent Bosnia and Herzegovina as well.

Such a move would also be an invitation to civil strife, as even Serbian nationalist politician Vuk Draskovic concedes. "Many parts of Bosnia and Croatia are like a leopard's skin," he says. "There is no magic solution that could peacefully redraw the borders." A greater Serbia, adds Croatian economics professor Zvonimir Baletic, "would include more than 2 million Croats, 2 million Muslims and 2 million Albanians. That's simply not a solution."

A secessionist Croatia might not be the solution either. But the Croats, along with the Slovenes, are determined to free themselves from the central government's yoke. They complain that Belgrade's policies have become more and more blatantly an instrument for Serbian hegemony. During the last quarter of 1990, they say, the National Bank of Serbia secretly handed out $1.8 billion in loans to the Serbian government, which it spent to keep failing local enterprises -- and itself -- afloat. They also charge that the National Bank of Yugoslavia, which coordinates monetary policy among the six republics, ignored the transgression, which only served to increase Yugoslavia's grotesque 600% inflation rate.

It happens that the country's inflation and high foreign-exchange rate for the dinar do more harm to the foreign trade-oriented regions of Slovenia and Croatia than to the command economy of Serbia. Though Slovenia, for example, accounts for only 9% of Yugoslavia's population, it produces more than 30% of its exports to the West; now, because of the overvalued dinar, Slovenia's prices are too high.

Equally distressing, Serbia has imposed confiscatory taxes on the local operations of Slovenian and Croatian businesses. In turn, Slovenia and Croatia have stopped paying the sales tax they collect to federal authorities. "Right now all we pay to Belgrade is customs duties," says Joze Mencinger, Slovenia's deputy prime minister for economic matters. "And we pay that because we recognize that an army that gets paid is less dangerous than one that doesn't. To some extent we're destroying the Yugoslav legal system, just like everyone else. But we see no alternative."

Now, having voted overwhelmingly for independence, the Slovenes, like the Croats, are pushing toward complete separation -- and, some say, possible disaster. This week the Slovenian parliament will begin introducing amendments to excise all mention of Yugoslavia from its constitution. Says Joze Pucnik, president of the Slovenian Social Democratic Party: "By the end of June at the latest, Slovenia will be a sovereign country." If so, the republic will only confront new problems, including a doubling of its unemployment rolls from the current 6.1% in a work force of 1 million and a drop in personal income of more than 30%.

The Croats won't have an easy time of secession either, though they persist in planning for a prosperous future. "From an economic point of view," says Croatia's Letica, "it is easy to envisage a sovereign territory. There are seven states in Europe smaller than an independent Croatia would be." One strong suit: Croatia earns 90% of Yugoslavia's tourism income, primarily in its summer resorts along the Adriatic coast.

Neither the Croats nor the Slovenes seem concerned about how Yugoslavia would pay its foreign debt in the event of a breakup. Of the $16.7 billion total, Croatia owes $3 billion, Slovenia $1.8 billion, and each is responsible for some portion of the $3.6 billion on the books as federal debt. Says Ante Cicin-Sain, governor of the National Bank of Croatia: "Paying it back shouldn't be a big problem as long as we don't destroy our debt-servicing capacity."

Such destruction, of course, is what would happen if civil war broke out -- a real possibility if Serbia remains determined to hold the federation together at any cost. But, says Peter Stanovik, director of Ljubljana's Institute for Economic Research, "politicians in every republic know that Europe is watching. War would immediately dry up the credit and foreign capital we so desperately need."

That alone is reason enough to keep Yugoslavia from violent disintegration. Perhaps the best that Belgrade can hope for is a compromise that would lessen its control over all of Yugoslavia's republics and replace the current system with some loose confederation of independent states. That might placate some secessionists, but probably not all of them. Compromise will be on the agenda once again late this week, when the contending parties are scheduled to meet in Sarajevo. It will not be lost on any of them that it was in Sarajevo in 1914 that World War I began with the assassination of Archduke Franz Ferdinand.

With reporting by James P. Fish/Belgrade and James L. Graff/Ljubljana