Yugoslavia

WHEN Lyndon Johnson made his proposal for unconditional peace talks on Vietnam it was nowhere more warmly welcomed than in Yugoslavia. Tito’s government had played the biggest part in organizing the seventeen “nonaligned nations’ appeal for a cessation of fighting in Indochina and the holding of a peace conference. Following President Johnson’s statement, the Yugoslav government threw out hints that it would be prepared to play a constructive mediatory role if asked to do so, and might be able to sponsor the establishment of a new international control commission in Indochina.

This attitude was in line with Yugoslavia’s philosophy of foreign policy, which contains two features of particular interest. The first is the creation of the bloc of nonaligned countries, which may themselves be concerned in local conflicts (the U.A.R.’s campaign against Israel is the most obvious example) but which will produce a “third-force” view over world problems, designed essentially to promote the maintenance of peace.

The second interesting feature is the demand that détente in Europe must be constructive rather than passive. Yugoslavia’s Foreign Minister, Koca Popovic, and his deputy, Dusan Kveder, are exponents of the view that East-Vest relations in Europe must be progressively improved if they are not to remain vulnerable to every minor change in the world’s political climate and to problems which may center on areas thousands of miles away from Europe. Better East-West relations, Tito’s ministers believe, can be achieved by more consultations among governments, more personal contacts, more trade, and a freer exchange of views. It is significant that American and British newspapers, periodicals, and books are sold freely in Belgrade and other Yugoslav cities.

Nonalignment means a policy of good-neighborliness. Yugoslavia has a virtually open frontier with Italy, in spite of the Italian wartime occupation of much of the country and the temporary annexation of part of the Dalmatian littoral, and in spite of Yugoslavia’s own annexation of Istria up to the doors of Trieste after the war. Trade between the two countries has been liberalized, and Italy is now Yugoslavia’s chief trade partner. Relations with Austria, too, are excellent, and Yugoslavia relishes the thought of a neutral buffer on its northern frontier. Friendship with Greece was proclaimed when Prime Minister George Papandreou visited Belgrade in the spring.

Relations with the countries of the Communist bloc have been less easy, owing to memories of the breach with the Soviet Union in 1948 and the slavish preoccupation of Moscow’s satellites with the Soviet Union’s foreign political interests. But the Rumanian revolt against toeing the Moscow line may have helped to bring about the trade pact between the two countries which was signed this year, even though Yugoslavia has improved its relations with the Soviet Union at the same time. President Tito has been invited to Bulgaria, and the old animosities over rival claims to Macedonia have at last been decently buried. Finally, nonalignment has in no way interfered with the friendly relations which have been established with the United States, Britain, and other major powers while it has made Yugoslavia a discreet champion of Afro-Asian interests.

Hostilities and hatreds

There are two exceptions to this tale of good relations: Albania and West Germany. The Yugoslav-Albanian frontier is tightly shut, and there is no trade and no other contact between the two countries. The small clique of “Peking Communists” which controls Albania regards Tito as a traitor to Communism and a semicapitalist. The Albanians keep an eye on the Albanian (Shiptar) minority in Yugoslavia, which numbers three quarters of a million but which has shown no vestige of interest in subversive propaganda for a Greater Albania.

Of much more importance is Yugoslavia’s feeling of hostility toward West Germany. This is based only partially on the country’s terrible sufferings under Nazi occupation. Nearly 2,000,000 people, or one in nine of the population, died during the war. Losses in action were 305,000, the highest of any European country except the Soviet Union. More than a million and a half Yugoslavs were imprisoned or mobilized for slave labor. One house in every six in the country was destroyed. So was 50 percent of the forests. The capital, Belgrade, was reduced to rubble. War damage was assessed at $38 billion, a staggering amount for a poor country.

Yet Yugoslavia was among the first countries to establish diplomatic. relations with West Germany after the Federal Republic was formed in 1949. These relations were broken off, on German initiative, after President Tito decided to accord equal recognition to the East German regime. They have i never been re-established, although there has been talk of setting up I economic missions, and Dr. Rolf Lahr, Undersecretary of the West German Foreign Ministry, was sent to Belgrade for talks last year.

The issue of Yugoslavia’s relations with West Germany has been further complicated by the Federal Republic’s refusal to pay reparations for at least some of the damage done by Hitler’s armies. The claims still outstanding total $800 million — in Belgrade’s opinion a modest sum in view of the mass extermination of Yugoslavia’s Jews and gypsies, the shooting of up to 100 Yugoslavs for every German killed by partisans, the murder of thousands of old people and children, and the deportation of more than 50,000 people to concentration camps in Germany and Poland, The German case, that reparations can be paid only to countries which recognize the Federal Republic as the sole legal representative of the whole German people, is a weak one.

Production up, wages too

Payment of reparations would make a useful difference to Yugoslavia’s economic problems. For a variety of reasons these are causing concern. The country has few natural resources. Its communications are complex — it takes, for instance, twelve hours to travel the 200 miles from Belgrade to the Adriatic coast by road, and fifteen by train. Even before their war losses the Yugoslavs bad a low standard of living. The pre-war average wage in Macedonia, one of the poorest provinces, was around $16 a month. It requires a united nation to build a unified economy, and the Karageorgevich monarchy, which ruled until 1941, manifestly failed to unite the Croats, Slovenes, Bosnians, Montenegrins, and the other groups, which were administered by a small Serbian ruling clique. Set up as a composite state after World War I, Yugoslavia had failed to develop either politically or economically by the time World War II broke out.

In the circumstances, what Titoist Yugoslavia has achieved in the economic sphere, and is still achieving, is remarkable. In ten years, industrial production has been raised by 350 percent, and agricultural by 55 percent. Real wages have multiplied 2.2 times. The number of children at school is up from 2.1 million to 3.6 million, although an alarmingly high percentage of the people in some districts are still illiterate. The number of doctors has doubled.

Also the economy is becoming better balanced. Ten years ago 61 percent of the population lived and worked on the land. Today the farm population has been brought down to just under 50 percent. Thriving new industries have been established in what were previously purely rural districts, such as Bosnia and Macedonia. These underdeveloped areas are being brought into line with the more highly developed Croatia, Slovenia, and northern Serbia. There has been some criticism of Tito’s policy in this respect, for it is obvious that new industries would be most profitably run by the more sophisticated races in the north and west of Yugoslavia. But a heavy concentration of industry there would have caused immense ill feeling.

Tito’s policy of spreading the wealth and allowing no component part of Yugoslavia to remain a distressed area may be expensive for the short term. Given the necessary skill in planning and utilizing investment, it should justify itself in the long run.

But the achievements of Titoist socialism should not conceal for a moment the fact that 1965 is going to be a critical year economically.

Yugoslavia is underpopulated, underhoused, underfed. The government has very naturally determined to maintain a high rate of capital investment. Last year investment in capital goods bounded up by an unprecedented 58 percent. Too much capacity was being created which could not be brought into early production. Industrial plant was being installed ahead of its time. But as a parallel and totally unconnected process, nominal personal incomes were allowed to rise in a single year by 42 percent in order to give workers a higher standard of living. (Workers in industry often earn as little as $45 to $50 a month.) At the same time, the cost of living rose by 16 percent. And major investment projects in housing, electrical power, roads, railways, and industrial plant loomed ahead. This all meant one thing — inflation.

In a Communist state inflation is unknown, or at least undeclared. But Yugoslavia is a Communist state with a difference. Its industrial firms and its agricultural cooperatives are surprisingly independent and self-governing. Their profits are partly plowed back and partly distributed. This system of “local socialism” has produced excellent morale. The Yugoslav regime respects the Yugoslav workers. Paradoxically, this has made inflation more possible, for the government has been determined to increase consumption and purchasing power. In two years the cost of living rose by nearly one third. Restaurant prices went up by 25 percent, which could have an adverse effect on a tourist industry which brings in $90 million a year. Rents for flats and houses have more than doubled since 1962. Prices of most consumer goods have risen to something like Western European levels, but wages are only one third as high.

Squeeze and freeze

Last September the government decided to take action. In October it announced that no new building of offices would be authorized for the time being. Office buildings already under construction would be completed only if 25 percent of the costs were covered by advance payments. Early in 1965 the banks were instructed to increase their obligatory reserves and restrict credits. But in January and February the rate of investment in capital goods rose by a further 15 percent.

In March a major credit squeeze was applied. Prices were frozen by government edict. The budget was cut by 5 percent, and this amount remains temporarily blocked. A target was set for reducing the production of capital goods by 3 percent from the 1964 level. This may look modest, but the 1965 target for the national income is an increase of 10 percent. Thus the proportion of capital goods will fall from 32 percent to 26 percent.

At the same time, more productive capacity will be devoted to satisfying the needs of the consumer, and personal incomes are expected to rise by 9 percent this year. Some believe that the government is adopting a wise and courageous policy, and that it will succeed. But hovering in the immediate background will be the fear of devaluation of the dinar (800 to the dollar) and of a possible currency reform which will reduce the immense amount of paper money in circulation.

No right to dissent

The Yugoslavs are tough, confident people, and it is improbable that they will be seriously held up by their economic difficulties. Possibly a more worrying problem for them is that of their personal liberties, which have grown in recent years but now seem to have suffered a significant setback. On April 30 a young writer, Mihajlo Mihajlov, was sentenced to nine months’ imprisonment for slandering the Soviet Union and distributing banned writings. Mihajlov was arrested early in March, after two articles had appeared in the Belgrade literary periodical Delo describing his “Moscow Summer, 1964.” The first article was highly critical of the Soviet system, but no more than that. The second article, of 20,000 words, described the atrocities committed in the Russian forced-labor camps in the 1920s and pointed out that Hitler was not the first man to organize genocide.

President Tito ordered the suspension of Delo and instructed a Belgrade weekly, Nin, to launch a literary counterattack on Mihajlov. Even this did not daunt the thirtyone-year-old writer, who might have been well advised to lie low at this stage. He wrote a spirited reply to the Nin article, and knowing that it would not be printed, sent copies to 290 Yugoslav papers and one additional copy to an Italian editor.

Tito’s view was that if the articles had gone unchallenged, the Soviet government would have assumed that he endorsed them officially. Relations with the Soviet Union, which have improved during the last two years, would have suffered a bad setback. As for the dispatch of Mihajlov’s letter to an Italian, this was regarded by the government as an unpatriotic and undisciplined act which justified a second set of charges being brought.

President Tito also accused the Yugoslav press of countenancing “Djilasism” by printing dangerous ideas and endangering their country’s foreign relations. This was a reference to the apostasy of Milovan Djilas, who has been in jail since 1962 for allegedly writing offensively about the Soviet Union. Djilas, it may be recalled, was expelled from the Yugoslav politburo eleven years ago for demanding greater democratic liberties and the abandonment of Stalinist totalitarian doctrine.

The Mihajlov case is an unhappy reminder that political freedom is still circumscribed in Yugoslavia. Yet for a Communist state, a surprising measure of freedom is tolerated. Even though they must be careful about the printed word, Yugoslavs speak their mind without inhibition. Four fifths of the land is still farmed by private landholders. Freedom of thought is encouraged in the self-governing bodies in the factories and agricultural cooperatives. There is no persecution of religion, and churches were full for the Easter services. On the whole, Titoism is popular, and it appears to work.