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Reform in the 1980s

In 1982 the new Yugoslav government was faced with a serious economic crisis that included rising unemployment, prices, and national debt. In 1983 the national sense of crisis was strong enough that the Federal Assembly passed austerity measures that temporarily curbed spending and controlled inflation (see Managing the Crisis of the 1980s , ch. 3). In 1983 the Long-Term Economic Stabilization Program (also known as the Krajgher Commission Report) was issued, after two years of debate, as the official blueprint for economic reform.

The Krajgher Report was evidence that even in 1983 most Yugoslav politicians agreed in theory that development of a market economy was necessary to restimulate growth throughout the country. But in practice this would have meant a drastic reduction in the policy--making role of the LCY, hence a total repudiation of the Tito legacy. Free enterprise also would mean that government agencies at all levels would lose their control of economic affairs. For these reasons, market reform met strong institutional resistance. The alternative reform, a return to Stalinist central planning, had few Yugoslav advocates in the mid-1980s and was totally discredited by the fall of central planning governments across Eastern Europe in the late 1980s.

While the government debated reform, the self-management system further dispersed control over economic and financial resources vital to the national economy. In the 1960s and 1970s, individual enterprises had formed alliances with local party machines, protecting uneconomical industries by giving them disproportionate influence on policy making, and eroding regional support for price and wage controls. Many of the short-term austerity measures of 1983 were relaxed by the national government even before their expiration dates. The national political system then drifted into inaction, ignoring the need for fundamental economic reform that had been obvious since 1980.

The Thirteenth Party Congress briefly rekindled activism in 1986 by restating the conclusions of the Long-Term Economic Stabilization Program, and by officially recognizing serious economic defects such as insufficient support for the relatively profitable private enterprise sector and unwise investment of foreign capital. The next years produced many official lists of resolutions and targets, all politically unpopular and aimed at imposing short-term austerity in order to effect long-term economic reform. Beginning in 1987, austerity wage freezes and plant closings were met by industrial strikes of increasing magnitude, and for the next two years government policy wavered between hard-line measures (such as threats to use the army to break strikes) and accommodation (such as replacement of unpopular party and state figures in Montenegro). Strikes contributed the 1988 fall of Prime Minister Branko Mikulic, and they threatened to topple Mikulic's successor, Ante Markovic, in 1989.

The 1980s also brought many proposals for political reform, some of which were drastic. Suggestions included abolishing all political parties and running the system through citizens' associations; holding multiple-candidate elections within the party; and introducing a full multiple-party system that would have meant electoral competition for the LCY. Once the pattern of intraparty debate was established at the Twelfth Congress of the League of Communists, variations on all these themes appeared in official and unofficial forums throughout the decade. After the 1982 Party Congress, Najdan Pasic, a Serbian member of the LCY Central Committee, wrote a letter summarizing Serbian reform demands to alleviate the stalemate of Tito's government by consensus. The working group that grew from these demands took three years to produce its "Critical Analysis of the Functioning of the Political System of Socialist Self-Management," to which over 200 individuals contributed. The final report was so nebulous that both sides of the centralization issue claimed it as a victory. In 1984 the Serbian League of Communists officially demanded repeal of autonomy in Kosovo and Vojvodina, plus reinforced federal government power, liberalized control of economic enterprises, and democratization of the electoral system. The main result of this proposal was angry dissent in Kosovo and Vojvodina. In 1986 a lengthy memorandum by the Serbian Academy of Sciences attacked the 1974 Constitution for blocking Serbian control of its provinces, and criticized the party for failure to implement the program of the Krajgher Commission. The memorandum brought polemical responses from Kosovo and Vojvodina, as well as official censure of the academy by the party.

At the Thirteenth Party Congress in 1986, advocates of strong central government gained wide support among all delegations except the Slovenian. There was general agreement that decentralization had led to a dangerous proliferation of narrow, technocratic local interests, beyond the control of the LCY. Centralist forces won a victory when a new party statute transferred election of party Central Committee members from the republic parties to the LCY Congress, and gave the national party the right to curb deviation by republican parties. In a massive transition of party power, only 38 of the party's 165-member Central Committee were re-elected at the Thirteenth Congress.

The Thirteenth Congress also formed a commission to write a new series of constitutional amendments. Amendments proposed in 1987 sought to reduce the obstructive influence of decentralized government. The federal planning system was to be strengthened and the relations of the republics and provinces to the federal government redefined. Several aspects of economic reform were addressed, but the main impetus behind the amendments was the Serbian drive to regain control over its provinces. After twentytwo months of heated regional debate, the amendments were approved by the Federal Assembly. Because of their broad application in economics, government, and the party, they were expected to form the basis for yet another completely new Yugoslav constitution in the early 1990s. The idea of a new constitution was supported most strongly by the Serbs, who saw it as a vehicle to officially ratify their control of Kosovo and Vojvodina and achieve at least parity with the other republics (which had no such problematic semi-autonomous provinces). An estimated six million people took part in public debate on what finally emerged in 1988 as thirty-nine amendments.

Data as of December 1990

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