Belgrade Aims to Beat Inflation
YUGOSLAVIA'S ECONOMIC CRISIS
LIVING in Yugoslavia lately has been something like the scene in Lewis Carroll's ``Through the Looking Glass,'' where Alice has to run faster and faster and faster, just to keep up. ``Sometimes you get to the supermarket and see that the clerk is changing the prices,'' says Belgrade housewife Nada. ``You know that you have to rush to buy the goods right away, because if you go around the aisles once, everything will be higher.''
Inflation of 2,000 percent a year has been matched by the devaluation of the dinar at about the same rate.
A year ago, for example, $1 was worth about 5,000 dinars. Last week it was worth more than 100,000 dinars. A year ago in the northern city of Ljubljana, a liter of milk cost 873 dinars; two weeks ago, it cost 52,325. A can of tuna cost 122,200 dinars, compared with 5,300 last year. Canned vegetables cost 110,000 dinars, compared with 3,310.
Add this to an unemployment rate of more than 15 percent and a foreign debt topping $17 billion, and it's not hard to understand why nearly a million workers in various parts of the country staged half-hour strikes this week demanding an end to the economic chaos.
``Psychologically, the economic crisis is destroying everything, destroying personalities,'' says Milovan Djilas, Yugoslavia's most prominent dissident. ``The impact of inflation is depressing, especially for people on low or fixed incomes, such as pensioners. It's very tragic.''
Convoluted financial bureaucracy has been another sore point. A simple transaction last week - buying American Express traveler's checks with a credit card or a personal American check - took a full hour as seven different forms (one of them in 11 copies) had to be filled out in two separate offices in a process requiring five people's input.
The ambitious economic reform plan proposed this week by Yugoslav Prime Minister Ante Markovic is aimed at slashing inflation from 2,000 percent to 13 percent by the end of 1990 and making the economy more efficient and market-oriented.
Four points in the plan include pegging the dinar to West Germany's deutsche mark, making it a freely convertible currency, and slashing four zeros off the current rate, thus making what is now 10,000 dinars equal one dinar.
Wages, according to the plan, will be virtually frozen for six months beginning Jan. 1, while prices of most goods and interest rates will be allowed to form freely as part of the more market-oriented system. Certain prices, including those of various raw materials and energy, will be frozen.
Mr. Markovich admitted that there could be hardships in the short term, but he received the green light on his program from seven out of Yugoslavia's eight constituent political units (six republics and two provinces).
Only Serbia, the most populous and most aggressively nationalist republic, and its province of Vojvodina, put up loud resistance.
Economic, political, and ethnic rivalry among the republics and provinces - and particularly between Serbia and highly developed Slovenia in the north - are at the heart of the complex crisis that has left Yugoslavia at the brink of ruin. The economic collapse in itself is a key factor in the turmoil.
``I think political rights and organizations are not as important as the economy,'' said political scientists Edita Stojic of Belgrade's Institute of International Politics and Economics.
``If people can live better, and have stimulation to work, they are not as interested in politics. Everything now is politicized, because people are dissatisfied because of the economy.''
Markovic's reforms freeze prices on raw materials and allow prices of industrial goods to fluctuate.
Serbian Deputy Prime Minister Filip Grodic, predicting the reform plan would end up harming the poorest people, said it was ``economically and morally untenable that sacrifices should be demanded from the neediest part of the population.''
Ironically, the very poorest parts of Yugoslavia - Macedonia and Montenegro republics and Serbia's Kosovo province, whose economic development ratio is 1 to 7 or 1 to 8 compared with Slovenia - supported Markovic's plan.