(4 of 4)
Invisible Assets. To a large degree, the success of Tito's latest experiment depends on Yugoslavia's continuing prosperity. After enjoying a miniboom for nearly a decade, the economy, which manages to combine capitalistic profit incentives within a Communist frame- work, has run into a severe inflationary problem. Despite a partial price and wage freeze last December, the cost of living is now rising at an annual rate of about 14%. A 20% devaluation of the dinar early this year failed to quench the thirst for foreign goods or boost Yugoslav exports. As a consequence, Yugoslavia has a trade deficit of $1.2 billion, with a gross national product of only $14 billion. Two large invisible assets, however, help close the actual payments gap. Foreign tourists bring Yugoslavia some $400 million, while the 800,000 or so Yugoslavs who work in West Germany and elsewhere send home another $400 million.
Even if the economy does retain its rosy glow, however, a more serious prob-lem remains. Milovan Djilas, author of The New Class and former right-hand man to Tito, urged a diminution of centralized rule and greater personal freedoms as long ago as the 1950s. For his pains, Djilas spent nine years in Tito's prisons. Now he is worried that a 23-man presidency might go too far toward de-centralization and do more harm than good. "A 'collective presidency' instead of a president," he wrote last fall, "will aggravate rather than lessen the inefficiency of the administration and the bickering of the already dissociated chiefs." Still, from his booklined study on a shaded Belgrade street, he pronounces himself pleased with the divorce of the Communist Party from everyday government affairs and the liberation of the economy from bureaucratic party controls. "You see," he told TIME Correspondent David Tinnin, "in Yugoslavia, the problem was that bureaucracy was in conflict with life, and in the end life prevailed."