What was yugoslavia

Croatia followed in May, and in August, the Yugoslav republic of Bosnia-Herzegovina also declared itself sovereign. Slovenia and Croatia began a concerted effort to transform Yugoslavia from a federal state to a confederation. With the administration of George H. Bush focused primarily on the Soviet Union, Germany, and the crisis in the Persian Gulf, Yugoslavia had lost the geostrategic importance it enjoyed during the Cold War. While Washington attempted during the summer of to marshal some limited coordination with its Western allies in case the Yugoslav crisis turned bloody, Western European governments maintained a wait-and-see attitude.

At the same time, inter-republic relations in Yugoslavia spiraled out of control. Slovenia overwhelmingly voted for independence in December A Croatian referendum in May also supported full independence. Secretary of State James Baker traveled to Belgrade to meet with Yugoslav leaders and urge a political solution to no avail. Slovenia and Croatia both declared formal independence on June 25, The Serb minority in Croatia declared its own independence from the republic and its desire to join Serbia, sparking violence between armed militias.

The JNA intervened in the conflict ostensibly to separate the combatants, but it became quickly apparent that it favored the Croatian-Serbs. In , Socialist Yugoslavia was formed, after the Partisans helped liberate it from the German forces. The kingdom was replaced by a federation of six equal republics. The largest among them is Serbia, while Montenegro is the smallest. Yugoslavia had a land area of , square kilometers and was the 9th largest country in Europe.

The terrain was varied, with fertile plains in the north, limestone ranges in the east, mountains and hills predominantly in the southeast and a seaside, mainly in Croatia and Montenegro, but also in Bosnia and Herzegovina and Slovenia. The languages were all South Slavic, so people from different areas could understand each other.

Most of the population spoke Serbo-Croatian — over 12 million people. The Constitution granted national minorities and ethnic groups the right to their own language. Around half a million people used Hungarian, mainly in the north, and Italian was spoken in parts of Croatia. Serbo-Croatian was made up of three dialects: Shtokavian, Kajkavian and Chakavian. Two alphabets were used in Yugoslavia — the Latin alphabet and the Cyrillic script. After , it became the official currency of three Yugoslav states.

It was subdivided into para. It circulated alongside the Serbian dinar until the s, one dinar being equal 4 kronen.

Each of the four republics then got their own currency Slovenian tolar, Croatian dinar, Macedonian denar and Bosnian dinar. After , during the severe hyperinflation, people started using foreign strong currency such as Deutschmarks, to mitigate the problem. The highest banknote then printed was billion dinars. However, it quickly became completely worthless. In , Montenegro decided that the Deutsche Mark would be an official currency alongside the Yugoslav dinar.

Latest News. Past Events. Prev Previous List of Victims. Next White Armband Day Next. Quick Links. Remembering Srebrenica. Self-management in Yugoslavia, however imperfect, provided workers with a system of economic democracy, which in combination with greater individual freedoms e. Also more recently in its successor states, self-management has sometimes been blamed for the remaining lack of discipline of workers, survival of collective principles of solidarity and slow acceptance of new norms of behaviour.

On the international scene, the radical changes in parts of Eastern Europe towards multiparty democracies and market economies, the end of the cold war, the disintegration of the USSR and the dismantling of the CMEA were unprecedented events of such historical importance that the political crisis in Yugoslavia seemed a secondary minor issue; thus the active involvement of the European Union offering major support to Yugoslavia in order to try and prevent its break-up came much too late.

Because of the firm determination to remain a socialist country based on a one-party political system, Yugoslav policymakers remained faithful to the key Marxist principles that were to prevent major inequalities within society, and thus retained the most important features of the socialist economic system, including non-private property.

Yet the desire to increase the efficiency of the economic system led to continuous economic reforms that introduced elements of the market mechanism, self-management, ample decentralisation and substantial transfer of responsibilities from the federal state to the single republics. However, these reforms contributed to deteriorating economic performance and economic instability. Already in the s, Yugoslavia experienced problems typical of the capitalist economy — including unemployment, inflation and cyclical instability — while it did not find the right solutions to resolve some of the key problems of the socialist economy deriving from inadequate microeconomic incentives.

The Yugoslav economic model thus produced problems present in both economic systems, capitalism and socialism. During the first three decades, the strategy produced impressive results in terms of rapid economic development: The Yugoslav economy registered very high rates of output growth and even higher rates of industrial output growth, which permitted a continuous increase in living standards.

Yugoslavia registered a remarkable increase in Gross Domestic Product GDP per capita, from to by more than five times, entering a period of stagnation only in the s followed by an extreme fall registered during the years of its break-up; see Figure 1.

Figure 1. Despite such an impressive growth record, Yugoslavia started having problems of unemployment already from the mids. Yugoslavia was also facing increasing inflationary pressures, particularly after prices were further liberalised in the mids. The inadequate instruments of monetary control by the National Bank of Yugoslavia, particularly after , and the maintenance of low nominal interest rates which remained negative in real terms, contributed to excessive credit expansion at all levels.

In the s, the attempts of the government to implement a tighter monetary policy were largely ineffective. Enterprises tried to bypass the banking system by using alternative means of finance such as issuing promissory notes , which led to the uncontrolled growth in inter-enterprise credit and added further inflationary pressures.

The origins of the economic crisis of the s are to be sought in both internal and external imbalances which accumulated during the s and the s. From the early s, the development strategy increasingly relied on foreign loans and external borrowing. Yugoslavia did not react to the oil chock by lowering domestic spending, but continued with an unbalanced economic growth strategy, relying heavily on imports, external borrowing on international markets and World Bank loans.

The transfer of significant discretionary powers to the republics and autonomous regions, after the adoption of the constitution, enforced a form of economic nationalism which produced the tendency towards greater self-sufficiency. It is nevertheless worth noting that for all the Yugoslav republics inter-republican trade remained more important than trade with the outside world.

The level of economic interdependence among Yugoslav republics was greater than frequently sustained on the basis of purely political arguments. Yugoslavia registered a record trade and current account deficit in and was no longer able to service its external debt.

A stand-by arrangement was concluded with the IMF which required austerity packages implemented after , leading the Yugoslav economy into a profound and long recession — stagnating or declining output, negative rates of investment growth, rising unemployment and increasing inflation. There were also mounting social tensions, which led the government to relax income controls, which in turn further contributed to rising inflationary pressures.

The regional policies implemented in Yugoslavia aimed at bridging the gap between the more and the less developed parts of the country have not brought the expected results. The gap in economic development between Kosovo and Slovenia, of in , is confirmed by alternative statistics based on the standard concept of GDP see Figure 2.

The more developed republics — Slovenia and Croatia — felt exploited because of the obligatory transfer of resources to the Federal Development Fund which usually remained outside their direct control, or other policies to their disadvantage, like the retention of foreign currency earnings from exports and tourism. The debate on economic exploitation lasted for decades, without offering clear evidence which republics were actually more advantaged or disadvantaged Uvalic, There was a vivid revival of the debate in the second half of the s, when economic exploitation of Serbia was highlighted in a document prepared in by a group of intellectuals of the Serbian Academy of Sciences and Arts — the Memorandum on the position of Serbia in Yugoslavia.

The authors of the document lamented that Serbia was constantly discriminated against within Yugoslavia, both economically and politically — the type of economic policies implemented had intentionally plunged Serbia into economic backwardness, [16] while existing constitutional arrangements, which created autonomous regions within Serbia, had made it the only republic unable to exercise full sovereignty over its whole territory.

This Memorandum contributed to the new wave of nationalism in Serbia in the mids, which in turn triggered nationalistic sentiments in other parts of the country.

Widespread economic and political grievances in the second half to the s resulted in frequent strikes and demonstrations throughout the country, which were used to put pressure on local politicians to increase wages or to resign from office. In the meantime, a serious political crisis developed due to continuous conflicts between the republican governments over both political and economic issues, bringing the regional issues to the fore.

The Yugoslav system of self-managed market socialism produced apparently a number of contradictions. At the same time, the political regime based on a one-party political system could not be easily reconciled with increasing autonomy of the single republics in economic policy-making. However, decentralisation of economic competences was not accompanied by the introduction of an efficient mechanism of macroeconomic management that would have ensured consistent and coordinated policies at the level of the federation.

Particularly during the s, the ill-conceived social compacts concluded at the level of the republics were in no way able to substitute for an efficient system of macroeconomic governance. The Yugoslav model failed to invent alternative governance mechanisms that would have ensured major coordination of economic policies at the federal level, but in line with the different economic interests of its republics and regions.

A decisive shift from a socialist towards a capitalist economic system took place in Yugoslavia in These changes were influenced by similar developments in Eastern Europe in the late s, but they also came as a response to the deep economic crisis that started developing in Yugoslavia from the early s and rising awareness that the systemic features of the Yugoslav model had to be radically changed.

At that time, in , Yugoslavia had a number of advantages with respect to the Central East European countries. Thanks to market-oriented reforms applied in the past, the Yugoslav economy had already implemented many reforms required by the transition to market economy, including price liberalisation, foreign trade liberalisation, or reforms of the banking system. The economy was highly decentralised, especially since the Constitution transferred substantial economic powers to the single republics and local authorities.

The Yugoslav government also had more experience with macroeconomic stabilisation policies, given that it had to address problems of rising unemployment and high inflation already starting from the mids. Major openness towards the outside world and privileged relations with the European Economic Community brought a number of benefits to the Yugoslav economy, including increasing trade with Western Europe.

All this implied that Yugoslavia in had a shorter reform agenda than the Central East European countries. Yugoslavia in also exhibited certain disadvantages. The ambiguous system of social property posed concrete problems in the design of privatisation. Who was to take the decision on privatisation? Would it be workers themselves in line with the system of self-management and the belief that workers were the real owners of their firms, or the state as the effective owner of social capital?

And given the ambiguous system of property rights in Yugoslavia to whom would the proceeds of privatisation go — to the enterprise being privatised, to its workers, or to the state? But the most serious disadvantage of Yugoslavia in was the latent political crisis that intensified particularly in the s, leading progressively towards the disintegration of the Yugoslav federation. Starting from November , the government adopted thirty-nine amendments to the Federal Constitution and over twenty new laws which aimed at radically changing of the economic system.

Among the announced changes were the removal of existing limits on private property, incentives for the development of the small-scale private sector and the encouragement of entrepreneurial activities through favourable provisions regarding duty-free imports of inputs and technology. Three laws in introduced major changes in the banking system: the banking law transformed banks from non-profit institutions into joint-stock and limited liability banks; the law on securities introduced for the first time equity shares in the Yugoslav legal system; and the Law on the money and capital markets officially sanctioned the creation of a capital market.

Important systemic changes were introduced by a new Company law adopted in December The law diversified property forms, adding mixed property — a combination of private and socially-owned capital — to the already existing types of property social, private and cooperative.

This law also introduced the commercialisation of enterprises and diversified the legal forms of enterprise, to include joint-stock companies, limited liability companies, limited partnerships, public enterprises in sectors of public interest such as transport, energy, telecommunications, postal services and other standard forms.

The law had important implications for self-management, with the intention of replacing collective responsibility of workers by individual responsibility of managers and new capital owners. An enterprise in private property was to be managed by its founder, while workers were to realise their self-management rights in conformity with collective agreements.

All organisations of associated labour had the obligation to organise themselves in conformity with the new provisions of the Company law by 31 December The economic reforms also called for the privatisation of the dominant social sector of the economy.

The law envisaged the sale of social capital at public tenders to national or foreign legal and physical persons, while the decision to start privatisation was to be taken by the Workers councils. Proceeds from sales were to go to Development Funds to be established by the republics and autonomous regions as public enterprises, though part of the proceeds could also be given to employed workers in the form of shares, up to a maximum value of six-months wages.

The Federal privatisation law had to be revised in order to offer major incentives to enterprises to start privatisation. The part of social capital not subscribed through share issues to insiders was to be offered for sale to domestic and foreign firms or individuals through public auctions. However, already in the second half of the , the stabilisation programme was undermined by a series of negative developments. Under the pressure from the republican governments, there was deviation from originally stipulated policies.

The relaxation of tight monetary policy led to new inflationary pressures. The fixed exchange rate could not be sustained due to rising inflation, foreign exchange reserves declined due to increasing withdrawals of foreign currency from banks, by autumn the black market premium had reemerged and resident convertibility was effectively suspended. The positive course taken in was interrupted by a series of disputes between the republics, due to both economic and political reasons.

A major problem in the late s was the lack of consensus on the future organisation of the Yugoslav federation. The lack of willingness to find a compromise between these diverging views contributed to the effective dissolution of the Central Committee of the LCY on January , when the Slovenian delegation walked out of the 14 th Extraordinary Congress of the LCY. The first multiparty elections in Yugoslavia were held exclusively at the level of the single republics, all organised from April to December — first in Slovenia April , followed by Croatia April-May , next in most other republics autumn , and last in Serbia December — leading to the introduction of multiparty political systems.

The Yugoslav federal government sought to organise multiparty elections for the Yugoslav parliament at the end of , but these elections were never held. By that time, the political crisis had drifted out of control, leading to the effective break-up of the Yugoslav federation soon after. Slovenia and Croatia proclaimed political independence in June , but were asked by the European Community to postpone it until October The other republics followed, obtaining international recognition soon after or during the first half of The break-up of the Yugoslav federation was accompanied by military conflicts — initially in Croatia , Slovenia and Bosnia and Herzegovina ; and later in FR Yugoslavia and Macedonia The s was a decade of high political and economic instability, which proved to be extremely costly for most countries.

The foundations of the socialist economic and political system started being dismantled in Yugoslavia before the country disintegrated, in , with the common objective of introducing a political system based on multi-party democracy and an economic system based prevalently on the market mechanism and private property.

The radical changes announced in Yugoslavia in the late s marked the beginning of the political and economic transition that would eliminate the main features of both the socialist economic system — party control of the economy, planning and social property — and the system of self-management, although some of these processes were not immediate.

Communist party control of the economy was eliminated with the passage from a one-party to a multiparty political system, following the first multi-party elections held in all Yugoslav republics during Planning and other non-market mechanisms of resource allocation and policy coordination, such as medium term five-year plans or social compacts, had already lost relevance in Yugoslavia by the late s. Other institutional features of the socialist economic system were also being changed through a series of new laws adopted in , as described earlier.

Property transformation, aimed at replacing social property with mixed or fully private property in the bulk of the economy, also started from mid onwards according to the provisions of the Federal privatisation law. The free market ideology was to replace the socialist ideology in all countries, but the actual changes were implemented at very different times and with many distinct features. The progressive differentiation in the transition paths of the Yugoslav successor states took place due to major differences in the timing, speed and contents of systemic changes.

An interesting question raised by Bartlett is to which extent do the experiences of the newly created states support the institutional theories of path dependency? Namely, are the emerging capitalisms rooted in the self-management experience, or do they represent a radical rupture with the past? The timing and speed of implementation of transition-related economic reforms varied considerably across the successor states of Yugoslavia, to a great extent determined by the very different political conditions in each country in the early s.

Slovenia proceeded faster than the other countries. Although Slovenia was also affected by the loss of a common market and the disruption of trade flows, the effects were relatively quickly absorbed. In most other Yugoslav successor states, on the contrary, involvement in the military conflicts of the s had lasted longer and has had much deeper economic consequences.

It was the most export-oriented Yugoslav republic, already well placed on foreign markets with specific products e. Slovenia was also the most developed country in Central Eastern Europe, so it did not have to rely on support of the IMF, nor did it need foreign advice although Jeffrey Sachs did consult the government on privatisation.

The other successor states of Yugoslavia implemented transition-related economic reforms somewhat later, primarily due to major political instability. Specific national priorities of governments often gave political issues precedence over the economic ones, even if such choices contributed to military conflicts — in Croatia, Bosnia and Herzegovina, FR Yugoslavia — and implied extreme economic costs, including the loss of many human lives.

The unfavourable political environment during the s also influenced the lack of more substantial EU support to this group of countries which came only after , determining their slower integration with the EU economy and later arrival of foreign investors. Due to somewhat less complex political problems, Croatia and Macedonia were able to address certain economic reforms earlier than the other countries.

Macroeconomic stabilisation was achieved fairly soon, with inflation reduced to one-digit figures in Croatia in and in Macedonia in Various transition-related economic reforms had also been implemented relatively quickly, so by these countries had, in most areas, higher EBRD transition indicator scores than the other two countries see EBRD, Macedonia remains an EU candidate, since the dispute with Greece over its name has for years blocked the opening of accession negotiations.

In Bosnia and Herzegovina, transition-related economic reforms were initially delayed by the four-year war The Dayton Peace Accords signed in December brought peace, but not immediate progress with economic reforms. The UN appointed High Representative was given wide powers to oversee the implementation of the peace agreement and intervene in political and economic matters.

Since most economic policies are decentralised to the two entities, while within the Federation they are further decentralised to the ten cantons, Bosnia and Herzegovina remains in many respects a dysfunctional state. Monetary stability was secured after the end of the war through the introduction of a currency board, but most areas of reform started late and have been slow, including privatisation. More than twenty years after the end of the military conflict, the country is still facing extraordinary institutional and constitutional problems.

Bosnia and Herzegovina is currently only a potential candidate for EU membership. Transition was also greatly delayed in FR Yugoslavia, created by Serbia and Montenegro in April , due to particularly unfavourable conditions throughout the s. FR Yugoslavia was under severe UN sanctions throughout most of the s because of its involvement in the Balkan wars — 96 and its policies in Kosovo , which also led to the week NATO bombing in Although Montenegro and Serbia were part of the same country until , their economic policies were quite independent and different already during the s e.

Montenegro created its own central bank and introduced the German mark, first as a parallel currency and after 3 November as the official legal tender, which in early was replaced by the euro. By distancing itself from Serbia, Montenegro hoped to implement transition-related economic reforms faster see more in Uvalic, FR Yugoslavia has also faced further political instability.

The complex relationship between Serbia and Montenegro was finally resolved through their separation in Montenegro and Serbia have initiated accession negotiations with the EU and hope to become members in , but Kosovo is only a potential EU candidate. In addition to the variable timing and speed of the transition, the contents of economic reforms have also been very different, leading to varieties of capitalism in the Yugoslav successor states.