223. Telegram From the Embassy in Yugoslavia to the Department of State1

474. Subject: Yugoslav Succession: Trends and Conjectures.

This message signals a number of guesses. I believe there is a strong possibility that Titoʼs succession planning has run into serious problems. I think these will almost certainly affect the timing and very probably the design of his arrangements.
In sum, I expect:
The new collective Presidium will not be approved by mid-April and will be delayed well beyond the end of Titoʼs fourth term May 17, 1971. Tito will remain on as sole President, perhaps until September or longer.
The new constitutional amendments intended to produce a much decentralized Federation will similarly not be enacted by mid-April. Their passage will be deferred for some months, and their substance will be much diluted.
Before the powers of the new Federation and its institutions are decided, the GOY will apply to the IMF, the US, and Western Europe for additional credits and stand-by assistance, including very possibly some re-scheduling of external debt. It could do so before the end of April when present wage and price controls expire. If it does, its requests will be substantial.
These are largely intuitive readings. They rest on internal assessments and bits and pieces in the wind. They may well be mistaken. I have tried to test them in a series of long conversations this past week with Marko Nikezic, President of the Serbian Communist League; Marko Bulc of the FEC (Cabinet); Foreign Secretary Tepavac; and Alex Bebler, Council of the Federation. These normally responsive seniors were unusually reticent. What they did not say in our talks was perhaps more significant than what they did.
The probability of delay well beyond the April/May schedules seems clearest. The mechanics of delay would not be difficult. GOY might announce, for example, more time needed for public discussion and national debate before new constitutional amendments approved. During this period Tito would remain on as President, either reelected under existing rules in mid-April; or extended in office by a special amendment until new Presidium appears.
There are, I think, three main reasons for delay:
Political overload in this complex and cumbersome Party/government structure. The leadership has tried to deal simultaneously with (a) Presidential succession for which no precedent in post-war Yugoslavia exists; (b) Restructuring of its federal system, bound to embroil regional rivalries and ethnic animosities; (c) An uncontrolled inflationary spiral and a continuing stabilization crisis. It is obviously behind in its work, and, according to Nikezic, has not yet begun amendment drafts affecting Republicʼs assemblies, customs regime, or defense responsibilities and support.
Design of the new arrangements seems far from settled. While there is general agreement that a looser Federation may be necessary for the survival of Titoism without Tito, doubts seem increasing about the control of economic policy if federal budgetary and extrabudgetary operations are too sharply diminished. There seems to me a significant drive to slow the pace and reduce the extent of dismantling federal revenue and investment authority. New impulses appear to be at work to retain federal management of major inter-republic projects and central supervision of the wide range of internal subsidies and subventions. At political levels I think a recent undercurrent of preoccupation is to be sensed about the risks that excessive decentralization will pose in reviving regional strains and providing new openings for a hostile East. The institutional reflection of these propositions is a reconsideration of the roles the new Presidium and the new Federal Executive Council (FEC). There well may not be room in the system for both as originally envisioned. My guess would be that the new FEC will emerge, much reduced, less of a Cabinet, more of a management arm of the Presidium.
Desire to explore external economic assistance before the new decentralizing decisions are taken. We have had no direct approach on [Page 556] the possibility of US capital or credit assistance, and have no present basis for estimating the sums the GOY may have in mind. We understand there is pending application for a new IMF stand-by arrangement, and that Governor Persisin of the National Bank recently discussed new credit lines in the US. We hear there have been recent probes in Germany and Italy, and some quiet explorations of debt structures. The state of reserves, continuing trade imbalances and the investments required for the new five-year plan argue that the GOY will make a very thorough probe of international assistance possibilities.
The net of these estimates is that prospects now seem clearly to favor delay, dilution of the original proposals for a drastically decentralized Federation, and an outcome with a significant retention of central economic authority.
We would appreciate any information Department has confirming or correcting these conjectures.
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 733, Country Files—Europe, Yugoslavia, Vol. II Aug 70–Aug 71. Secret; Priority; Exdis.