Bush Hopes Aid Will Promote Yugoslav Unity

WITH Yugoslavia on the brink of disintegration, the US government is wondering how to keep the tinderbox of Europe from once again exploding in flames. If Yugoslavia breaks up, it could be a little bang setting a bad precedent for a possible bigger bang - dissolution of the Soviet Union. Instability could spread into neighboring states, such as Bulgaria.

But US officials aren't sure that the West can prevent a messy parting of Yugoslavia's republics.

``We have been urging the Yugoslavs to deal with their problems peacefully, and to be mindful of the benefits of integration,'' says a senior administration official. ``But it's a situation so mired in virulent nationalism it's hard for anyone else to influence.''

Tensions between Croatia and Serbia, Yugoslavia's two largest republics and the main players in the crisis, have risen to near the breaking point in recent weeks. Serbia, run by a nationalist old-style communist government, favors a strong central government. Croatia, governed by an equally nationalist center-right government, favors a looser confederation of republics - as does its ally republic, Slovenia.

Both Croatia and Slovenia have announced plans to secede from the Yugoslav federation by the end of June if talks on the country's future remain deadlocked. They were infuriated when in mid-May Serbia blocked a Croat, Stipe Mesic, from taking up his anticipated post of chairman, for one year, of Yugoslavia's eight-member presidency. (See related story, Page 6.)

By keeping the presidential chairman seat empty Serbia ``just ignored the Constitution,'' complained Franjo Golem, foreign minister of Croatia, during a recent trip to Washington.

A peaceful dissolve may now be Yugoslavia's best hope, according to Mr. Golem. ``Disintegration of Yugoslavia doesn't mean something awful,'' he said. Spontaneous Serb-Croat violence continues in areas of the country.

Slovenia has begun swearing in recruits for its own armed forces. The republics of Bosnia-Herzegovina and Macedonia have offered a compromise plan that would leave national defense in the hands of a central government and would allow a joint parliament, but would give republics great freedom in domestic and foreign affairs. Not recognizing the sovereignty of republics ``could lead to the definite disintegration of the country,'' said a document outlining the plan.

The United States has few levers with which to influence the Yugoslavs toward unity. Money is one of them - and the Bush administration is quietly trying to channel aid in a manner that supports democratic forces and shuts out the perceived obstacle to a peaceful outcome, Serbia.

All US aid to Yugoslavia, which totals a relatively small $5 million annually, was suspended for 20 days in May. The cutoff was the result of an amendment to last year's foreign aid bill which stipulated that unless Serbia ended its oppression of ethnic Albanians on its territory, US money for Yugoslavia would end.

The amendment also required the US to block all World Bank and International Monetary Fund loans to Yugoslavia. This was far more serious, as the country desperately needs such credits to bolster its economy.

US State Department officials felt that by cutting off aid and loans, the US was hurting Yugoslavs in favor of free-market reform and democracy, perhaps further inflaming nationalist passions. The White House announced May 24 that President Bush had decided to resume aid. But all aid to Yugoslavia would be on a ``selective'' basis, holding out the prospect of money still being withheld from Serbia.

A State Department official says ``we're reviewing all the projects'' in Yugoslavia funded by US money, to make sure none benefit antidemocratic forces. The government's Overseas Private Investment Corporation (OPIC) will no longer provide risk insurance for American businesses that want to invest in Serbia. The impact of this move is minimal. ``Investors aren't lined up to do business in Yugoslavia,'' says an OPIC official.

US officials say the point of US policy to Yugoslavia is promotion of democracy, along with promotion of unity. The problem may be these goals are contradictory.

Promotion of democracy in the Yugoslav republics has helped loose nationalistic fervor, notes F. Stephen Larrabee, a RAND Corporation Eastern Europe expert. The Croat republic government, freely elected, is highly nationalistic. So is the democratic opposition to Serbia's current Marxist rulers.

Yugoslavia might stay together, notes Mr. Larrabee, but not without difficulty. The key will be whether Serbia has decided on a collision course or a compromise.

The weak central government might order the Yugoslav military to try and hold the country together. But it's unclear whether the conscript ranks, from all republics, will follow the largely Serbian officer corps.

``The intervention of the military would be no solution,'' says Larrabee.