Yugoslavia: A History of its Demise - Indymedia

WESTERN YUGOSLAVIA REACTS 99
immediately issued warnings that they would not accept new centralized
measures. 8 These warnings were directed also at the IMF.
Slovenia and Croatia abandoned the accord in May 1988 with the demand that
the Yugoslav parliament take a vote of confidence concerning the work of the
Mikulić government. In this they remained in the minority; but they did succeed
in bringing it home to Mikulić that he should review his own basic approach visà-vis
the western republics. 9
Although it was rejected in parliament, the vote of no confidence shook the
foundations of the Mikulić government. The accord with the IMF could not be
put into force on 15 May 1988 as had been intended. Mikulić now had to be in
command against the expressed wishes of the two economically most important
republics. Because of low agricultural prices, Vojvodina also gave its partial
support to Croatia and Slovenia. Even the LCY Central Committee criticized
Mikulić without contributing any suggestions for economic policy on its own
part. 10 The attitude of Croatia and especially Slovenia cannot be viewed except
in conjunction with other developments, which were then unfolding in
Yugoslavia, such as the army leadership’s threats against Slovenia and the
pressure to consent to centralize changes to the constitution. Before Milošević’s
coup, voices for economic reform had been relatively strong in Serbia. Even in
April 1988, a reform proposal presented by the party leadership in Serbia
demanded, inter alia, the repeal of the restrictive 1986 law on enterprises
concerning “associated labor”, one of the holy cows of the system. 11
At the end of May 1988, shortly before a national party conference and under
the double pressure from the IMF and internal factors, the Mikulić government
finally decided to switch to a path of reform. The prime minister announced a
series of almost surprising measures, which corresponded to the spirit of the
demands of both the IMF and the western Yugoslav republics. Sixty per cent of
all prices and 40 per cent of imports were liberalized; wages could fluctuate
within a margin of 15 per cent of price hikes; the dinar was devalued and the
currency law revised. To be sure, hard currency proceeds would still have to be
surrendered, but now as a sale to a currency exchange; here, in future, the rate of
exchange was supposed to be allowed to float. 12 After a period of transition, the
system functioned—in the beginning through the interventions of the National
Bank, later above all because the eastern parts of the country increasingly lacked
money to buy hard currency.
This so-called macroeconomic reform was exclusively a matter for the
government. The highest party organs hardly concerned themselves with it.
Many commentators, nevertheless, held at the time that Yugoslavia was making
its first serious effort at reform. 13 Skeptical questions, none the less, also
emerged at the beginning. Would the government be in a position to withstand
the social pressure which its measures would have to incite Would
macroeconomic reforms, which would leave the system as such undisturbed, be
sufficient