MILO DJUKANOVIC PRESIDENT OF THE REPUBLIC OF MONTENEGRO

Aware of the responsibility for the condition in which our citizens live today, and concerned about the destiny of Yugoslavia as a Federal State, as the President of the Republic of Montenegro I feel obliged to address the public, the Federal and Republic political and state authorities, with the initiative to enact a modern program of economic and social reforms in the Federal Republic of Yugoslavia.

It is a fact that our crisis has culminated to unimaginable proportions. We are threatened by an economic collapse, social unrest and political disintegration. The danger from internal conflicts becomes more and more realistic. The international community has announced new sanctions and new isolation measures. We are becoming a dark zone in Europe, a country which is being singled out. Therefore, I believe that government authorities and state officials, who hold the most responsible offices, do not have the right to quietly and indifferently watch all that is happening.

The culmination of the crisis is, first of all, a consequence of the long-term isolation of the Federal Republic of Yugoslavia from its natural European surroundings. An end to this isolation is not foreseeable in the near future. A consensus has still not been reached on the Federal government level for the need of urgent reintegration of Yugoslavia into the international community. All attempts to date, especially recent ones, to open a democratic dialogue on the current situation have hit a wall of silence and have been blocked by high officials of the Federal government. Hesitation on the level of the Federal state can only be interpreted as a dilemma in which the ruling political circle is obviously trapped: should Yugoslavia take the road towards Europe, or should it take some other road? Of course, we should be aware that we have reached the bottom and that we somehow have to start moving again.

Europe is our only possible choice. This country can only have a future if it follows that road. Our place is in Europe, both geographically and historically, we belong to the European civilization, and we have to remain a part of it, economically, politically and culturally.

Montenegro, as an equal Federal unit, has its share of responsibility for the current situation, as well as for the future of the country, the future of the current and future generations. Therefore, I have decided to initiate the preparation of fundamentals of a program with the popular name: "Strategic Initiatives of the Federal Republic of Yugoslavia - Fundamentals for a New Beginning". It is our ambition to show joint responsibility for the fate of the country to the extent of the mandate given to us by the people who have elected us.

There is more political nervousness and tension than ever before in the Yugoslav political arena. Due to the fact that we have been sinking without any prospects for a long time now, we have become suspicious and susceptible to disputes. Instead of searching ways to get out of the hell in which we have found ourselves, as soon as possible, we are inventing new domestic and foreign enemies. That is a well-established pattern. This country is not being threatened by Montenegrin, or any other separatism, this country is being threatened by a long-term economic and social neglect and hopelessness which has forced our youth to become economic immigrants all around the world.

If the current economic and social policies continue, if we continue to accept the fact that to survive is enough and that "the situation is acceptable, because it could be worse", we will remain a country living in its past, continuing to celebrate its past glories, heroic tales, legends and downfalls. We must sober up and wake up from fairy tales and historic dreams.

In order to be able to do this, we must be critical towards our reality and towards ourselves. We must turn the criticism which is now directed towards others, towards ourselves and our own results. Results are the only thing which remains, and which is remembered. Results decide whether the people will have a better or worse life. The latest measures of the Federal Government, pertaining to the monetary policy, must be a final warning to all of us.

This initiative comes from the deep concern about the daily deterioration of the standard of living and the further impoverishment of our people. The unemployment rate is growing constantly. It is really heartless to play with people’s patience. Social problems are multiplying. Doctors, educational workers, pensioners, soldiers, a large portion of the working class, are barely making ends meet. Why are our young people being denied to live the life their European friends are living? Don’t our pensioners, who have worked honorably in fulfilling their duties, deserve a carefree retirement? Why do they have to worry about having a piece of bread to eat or not? Doesn’t the army of unemployed deserve to have jobs? Don’t ambitious and educated people, who have a modern approach and work ethic deserve the right to successful careers? Who and for which reason divides people by religion and nationality and who and on whose behalf jeopardizes their basic security and equality?

Today, we find to have boarded the wrong train, a train running at breakneck speed into a wall which will shatter it, if we don’t stop and turn it immediately in another direction. Instead of having done this at the beginning, or even at the numerous stations along the way, we are stubbornly moving from train car to train car. Unfortunately, today we have found ourselves in the last train car. The direction we must take is towards Europe. Towards the developed world.

The creators of economic policy should not be too proud of its success which is based on relatively stable prices and a production growth. We need both a production growth and stable prices, but this is not enough. It is really comic to hear the boastfulness of the highest officials of the Federal Government, especially in the current situation, that we have the highest growth rates in Europe. This is nothing else but denial and demagogic deception of the people. Neither the stability of prices, nor the production growth can hide the serious crisis in our economy. It is even less possible to spread the illusion that economic recovery can occur in the current system, that better days are already here, and that we could resolve all our problems only if the world would leave us alone to resolve our own internal problems.

The existing growth is anaemic and does not lead to structural changes in enterprises and the economy. Growth in itself does not lead to development, because development is a change in structure, a change in quality. In today’s information age, the essence of the development process is much more subtle than its expression in numerous quantitative standards. The importance of information is growing daily. We have to accept development as a process of exchanging information with others, which means: development is not possible in a closed system. This is a civilization fact and not an abstraction. Each closed system is agreeable to those who control the monopoly. Development cannot occur in a monopoly. The only thing that does occur in a monopoly is that the ones who hold the monopoly get wealthy.

Even if the production growth would be 6%, in which the Federal authorities are trying to convince us, we would need almost fifteen years to bring our economy back to the level it reached at the end of the eighties. When everyone in the world will be living their life in 2010, the life of the new millennium, we will still be living on the economic level of 1989. If such a rate of changes in the economy would be sustained, children born today will be no better off than their parents were at their age when they start high school.

We are spending much more than we are producing today. And what does this mean to our country? It means that our "household" has no future and will deteriorate, as every good host could tell you.

The losses of our economy, and of all Yugoslav enterprises respectively, amount to more than 10 billion dinars, and this sum is on the increase each year. The state, or the state authorities, have incurred a loss of 5 billion, which is felt by all those who depend upon the state for their income, especially pensioners. Furthermore, the public debt is growing, and the danger of a new monetary disaster, such as the one that occurred in 1993, is ever present. If that should happen again, a new wave of inflation would completely disable and destroy us.

FR Yugoslavia’s foreign debt is around 9 billion US Dollars. Along with that, the savings of the population, amounting to around 4 billion US Dollars, have been spent, and those savings need to be paid back. Unemployment is rising at an accelerated rate. The employment rate in our country today is about 400,000 employees less than in 1989. Today we have about 800,000 unemployed, or for every four employed persons, one is unemployed.

All this information concerning our deficits shows us that our total capital is being destroyed and decreased. The real value of that capital is estimated at only 20 billion US Dollars, which is little more than one third of the value of the estimated capital at the end of the eighties. Almost two thirds of our capital has disappeared during the period when we were enslaved to the idea of stoic tolerance. The gross national income is around 1000 US Dollars per capita, which is two times less than it was 8 years ago. That is seven times less than in Slovenia. Until the latest devaluation, the average salary was about 200 DM, which is less than in any other former Yugoslav republic. The relatively good supply of imported goods on our market is financed by a deficit in the foreign trade balance - about 2 billion US Dollars more is spent for foreign goods than is coming in from the sales of our products abroad. The solution is not to decrease import, which is insufficient for an effective production and civilized life of the common citizen, but to increase the export level and establish a balance between the two.

All of the above, as well as many other issues, are the consequence of being enslaved to prejudices and illusions, the consequence of delaying economic and social reforms. Yugoslavia does not have a future without radical changes, and peace cannot be maintained in the region without a transformation of the economy and a political, democratic dialogue.

Even such a strategy will not bring about a happier future overnight. It does not exclude a post-reform recession and incurs great social and economic costs during the adjustment period, until the economy is put back on a steady growth course. This was the experience of all the Eastern European countries as well as all countries in transition. The costs were even higher in countries where the reform process was delayed by indecisiveness and unwillingness to start the reforms. However, the fact that reforms bring with them problems is not a reason to delay them. The greatest risk is not to implement any changes at all. If nothing is changed, the only changes that will occur will be for the worse.

Economic and social reforms must, in my opinion, rely on five basic principles:

1.Internationalization of the economic and social life; 1.Economic reforms, privatization and entrepreneurship; 1.Rule of law; 1.Democratization of the political sphere; 1.Social justice and security.

Yugoslavia’s firm orientation towards urgent reintegration into the international community is of absolute priority to this country today, as without this presumption, economic and social reforms could not be implemented. Immediate consensus among political forces in the country must be reached concerning this matter. Through a democratic dialogue, we must reach a strategy on how to quickly and painless fulfil our already existing obligations without which there is no return to international political and financial organizations. Yugoslav Parliament is the place where such a strategy must be immediately adopted. There is no further reason to remain mute and hide from the public what the world is demanding in order to accept us as a partner. Almost all of us know these conditions by now, and especially those who already accepted them, agreed and put their signature on them. The nation must clearly hear about that price and decide whether we are going to pay it and if we can afford not to pay it. The theses on national pride, proven by self-isolation, are false and evil. We have already discovered what pride looks like with a $5 income per capita, which we certainly do not want to happen again.

Sometimes, the individual who uses spite as a tool at one’s own expense, can even be considered charming. But when someone uses spite against the world, at the expense of 10 million people, it is illogical, detrimental and destructive. For this reason it is urgently necessary to push forward with many international initiatives. The world is not in a hurry. It hardly feels our economic plunge and social hopelessness. We are the ones who have to be in a hurry. First of all, an initiative is needed towards the European Union which is, without any alternative, the most important strategic partner of the Federal Republic of Yugoslavia.

It is the long-term interest of the FR Yugoslavia to actively and more ambitiously formulate its strategy towards the entire process of integration into Europe. This calls for the redefinition of our position towards three sub-regional courses in Europe: a) the Mediterranean Partnership; b) the Central European Free Trade Zone (CEFTA), c) and especially towards the ambitious US Regional Project SECI - South European Cooperation Initiative.

In the program that needs to be enacted by the Federal Parliament, it is necessary to include a charter of intent towards the European Union. After this, an initiative addressing the European Union should be undertaken to conclude agreements on partnership and cooperation in three areas: a) the establishment of autonomous measures through preferences, b) access to the PHARE program, with the objective to gain financial assistance for FR Yugoslavia to prepare for negotiations with the WTO, IMF and the World Bank, as well as c) support of the European Union for FR Yugoslavia’s membership in the Council of Europe and the OSCE. Along with these activities, it is necessary to start joint European Union and FRY consultations on a platform, criteria and procedures for the beginning of negotiations for FRY’s membership to the European Union.

If there is political will in our country, all these goals can be accomplished this year. Should this take place, it would be possible to start negotiations and reach agreements on joint membership of the type that already exist within the European Union (so-called European Agreements).

Prior to this, it is necessary to reestablish relations with all countries of the former Yugoslavia, with the aim of internationalizing and Europeanizing our society. This is logical. First we need to settle relations with our neighbors and then with others. The liberalization of trade and business relations with our "new" neighbors is a precondition for the economic revival and stabilization of the FR Yugoslavia. Moreover, we must strengthen our efforts towards the establishment of a free trade zone between the states in the region of the former Yugoslavia. It is understood that the problems of succession must be resolved more efficiently, which needs a more cooperative approach by our delegation.

This should all be in the function of returning FR Yugoslavia to the international capital market, a visa which is granted by the IMF. Saying that we do not necessarily need to regulate our status with the IMF is quite irresponsible, if not insane. Regarding the Yugoslav membership in the IMF, apart from the economic parameters with which all nations must comply, we are obliged to fulfill additional conditions, such as membership to the UN, including the outer wall of sanctions conditions.

It is particularly necessary to direct our activities towards the establishment of relations with the World Trade Organization (WTO). Is it possible for us to be outside the main institution of the universal trade system which encompasses 90% of trade in the world? Only by accepting the basic principles of the World Trade Organization we could secure the national treatment of foreigners, protection of intellectual rights, the establishment of effective customs policy, etc.

It must be understood that neither one serious current problem nor systematically effective solution can be reached without including our country in all relevant institutions of the international community. The previous consequences of development and macro-economic isolation are deadly. Thus, from a country that once was the leader of reforms in Eastern Europe, we have today distanced ourselves from those who looked up to us as their future. The unemployment rate in FRY is 2.5 times higher than in Hungary, 7 times higher than Czechia, while our export per inhabitant is 7.5 times lower than in Hungary, and 10 times lower than in Czechia. While Czechia and Hungary have reached 90% of the gross national product from 1989, Yugoslavia is at a 50% level, which means a constant ten year level of retardation in comparison to these two countries.

Economic reforms, privatization and private ownership are key instruments in our economic and political transformation. The establishment of private and shareholder ownership will create a basis for not only economic but political freedoms too. Any further lingering over implementing privatization of the present state and socially-owned capital, leads to its dissipation and devastation. Instead of spontaneous, wild privatization, a rapid, entrepreneurial motivated and socially just privatization should be implemented. Moreover, privatization should be in the function of changing our economic system, but never by disseminating widespread fear from it, causing a standstill to privatization, and prevention of sale of large enterprises in order to gain funds necessary for the existence and maintenance of the present system. The right to participation in the privatization process must be secured for all citizens of this country.

Entrepreneurship is the dynamism to development! It is our significant development resource. Our people have, in these times, shown that they are creative, strong and energetic. Thousands of new firms have been constituted and they are functioning. The grey market economy, in which, unfortunately, many are involved, is the proof of this energy; these people should not be accused or judged, since the state and system have pushed them in this direction. Income from privatization should primarily be directed towards entrepreneurs, people who possess the know-how, ideas, and courage to start businesses, people who are creating a new, market oriented, economic structure.

The reform of our economic system should be comprehensive. It must be based on liberalization and deregulation of economy and its openness by way of stimulating taxes, low customs charges, fewer limitations and wider freedoms. The system should provide the basic code of behavior, but not prescribe final solutions and dictate how enterprises and entrepreneurs should work. The system should protect the private interests of all, but not impose torture in the form of higher quasi-social goals, actually the social objectives of a small circle of people in power. The system should function actively in providing increase of income to all who work and contribute to it, its prevalent activity should not be concentrated on gathering income to maintain an expensive administration and an ineffective state. It is necessary to build economy and a market economy system in which the state will be amply separated from the economy and business, but at the same time, much more involved in the activities of economy and business than it has been up to now.

The present institutions, or actually the managing mechanisms, require radical changes in the context of a new economic system. The Federal institutions are now places where no initiatives are taken rather than serious and effective mechanisms for realizing economic policies. There are few countries in the world in which, like in ours, the monetary system can be entered quite easily; where verbal decisions of certain officials are more important than passed laws; a system in which the issuing of licences and contingencies is a prestigious business, and where the purchase of foreign currency from the National Bank of Yugoslavia is the path towards the realization of the "American dream". In Yugoslavia today, each bank can every day impede the monetary and financial system, customs income of a few billion can, according to someone’s personal will, be redirected from the Federal budget, the federal police has been neglected for years and is on the streets, the army has also been placed at the most degrading economic level, serving as a reserve to enormously accumulated bodies of Republic police forces. The Federal judicial system serves only for the settlement of political clashes between the ruling circles and "disobedient" members of society. The Yugoslav diplomatic service is more of a haven for the worn-out and outdated than a representative state body to the world. Today, this is the sad picture of our Federal state.

Therefore, the rule of law is unconditional for any kind of reforms. Order is necessary for any changes within a state. Consistent implementation of the Federal Constitution and coordination of the Republic Constitutions with the highest Legal Act of the country is an urgent task. Accountability for this falls on all Republic and Federal authorities and most responsible individuals.

Thus, apart from the new economic system, Yugoslavia must become a country where the rule of law and democratization of the political sphere are established. Instead of rules which increasingly lead to establishment of personal oligarchy in the country, the rule of law is necessary, as well as lawful security for the citizens.

The democratization of society should provide the creation of a political atmosphere indispensable for all these changes. Without huge changes in the political sphere, first of all in the sphere of democratization, it will be impossible to implement changes in the economy or any other field. The political system must enable each individual to take care of his well-being and happiness, whilst the task of the state is to create conditions in which he will be able to realize this, in a productive, ethically founded, and respectable manner. The direction of strategic changes lies in the extension of personal freedoms, but at the same time in the strengthening of personal accountability. Democracy is not anarchy. Democracy means freedom, but also responsibility.

Without democratization of society there is no solution for the acute problem of Kosovo. Seeking a solution within the borders of Serbia and Yugoslavia is possible only under conditions of general democratization within the country. Playing on the emotions of citizens and stirring nationalistic feelings by inviting the people to a general referendum on the topic whether the international community should help in seeking a solution for Kosovo, is just looking for trouble, by a well-known, proven method of underrating the world decision-making centers. That could easily lead to a tragedy.

The request for overall, primarily economic, reforms is motivated by the idea of prosperity in the social sphere. All these changes make sense only if the citizens of our country are guaranteed a better life, a higher standard of living for every family, and more political freedoms, not on a long-term basis, but in the near future. The citizens of Yugoslavia have, more than many others, heard enough promises about a wonderful far future. Understandably, institutions in the social sphere must also face serious changes: the labour market, the educational, health and pension systems. Change in these fields must increase social security for all citizens. Until the new system is realized, the state is obliged to create even larger social funds with a view to financing citizens from the layers of society that are mostly affected by the reform. Thus, it is necessary that employed and unemployed citizens are provided with parts of unused property and equipment belonging to the present enterprises so that they could start new businesses, that funds for retraining facilities are provided, that a part of the privatization funds is allocated for the provision of social security to the poorest citizens in the country. Poor people are also part of this society and the state must invest significant resources in the resolution of their problems. Of course, this must be based on the platform that all who are capable of working have to be trained to do so in order to be active and productive citizens, but that the state must create conditions for this. A developmentally oriented social policy must be conducted. Otherwise, the citizens of our society who are poor now, will never get a chance to improve their situation. The economic development policy should be conducted in a manner that would decrease the numbers of the poorest, but create more citizens capable of living normally and qualitatively. The majority of citizens qualifying for social aid do not wish to receive money, but conditions to earn their money. No one receiving social aid today wishes his child to inherit the same destiny. All this means that the state must conduct a policy that guarantees social justice in society.

Understandably, this initiative is not a plea for some new society, but for a society which already functions effectively among happy and rational nations. To build such a society we do not only need a fundamental change of institutions, but also a change in the current determination of values, a change in the behavior pattern, a transformation of culture and overall social conscience. That is a long-term process of learning and adjusting, a series of changes that cannot be achieved overnight. But we should start the process of long-term economic, political and social-psychological transformation instead of looking for final solutions and answers to all questions, which will come up during the implementation of reforms, at the very start of transformation.

This initiative is a way of seeking response to the question: what are so-called higher national interests and do such interests really exist only in this country and no other country in Europe, where so much material ruin, moral degradation, spiritual and cultural humiliation and social retardation have prevailed for ten years, but could also go on for centuries for the citizens and youth of Yugoslavia? And, if such interests do exist, for whom do they exist? Certainly not for the benefit of the enormous majority of the people of this country.

By its approach, this document has no ambition to prescribe a final solution. It is an offer to all democratic forces of the country, an attempt to find a solution for the current state of affairs in economy and politics, a challenge and a warning to the state authorities that it is the last hour for them to take responsibility for the destiny of their people and state. That is why this document remains open to all improvements, to all modern views and suggestions, and to the participation of all.

In Podgorica, April 3rd, 1998