Sean Gervasi, Yugoslavia, South Africa<3.0.1.32.19990401102512.00d06160@pop

(From my friend Patrick Bond, a South African economist)

Louis goes way back, 15 years, to remind us of the pressures 
associated with economic decentralisation. And he recently mentioned 
a good comrade, the late Sean Gervasi, whom I once worked with in 
Washington and whose paper on this topic I saw about 6 years ago. 
Sean blamed the Germans and Yankees. In South Africa at the time, 
we were wrestling with the same dilemma, given the viciously 
ethnicised apartheid decentralisation inheritance. For a column in 
the main Zimbabwe business newspaper, I penned this, in case anyone's 
interested in how far-reaching may be the implications of all of this 
chaos:

22 March, 1993
SA on the Yugoslav road?

The most vexing constitutional question for SA, by all
accounts, is how to divvy up regional power. Will it be
a redistributive model in which a strong central state
levels out vastly uneven development between, say, the
Pretoria-Witwatersrand-Vaal industrial complex and the
impoverished Eastern Cape?
        Or will the post-apartheid regional system tend
towards decentralized power-blocs in which economically-
strong areas like the PWV or Cape Town metropolis simply
get stronger, and regional home-boys hand out goodies to
maintain local control over the wretched hinterlands?
        One can argue that Zimbabwe initially tried the
former route, but that World Bank advice in a 1983
"Urban Sector Review" eventually won out: "Although
there is a desire on the part of some Government
officials to create new towns in the communal lands,
this is unnecessary and undesirable." And indeed the
"growth point" strategy -- which was actually pioneered
by Rhodesian planners in a 1974 White Paper -- never
really amounted to much. Why not?
        In an interesting paper in the 1991 book Limits to
Decentralization in Zimbabwe, UZ Planning Professor K.
Wekwete blames "the prevailing economic crisis" for the
failure to decentralize commerce, manufacturing and
other economic activity. "In most cases, pronouncements
in the form of laws and directives are rarely effective
because there are few resources made available to make
decentralization effective."
        As a result, regional baronies seem to have emerged
instead. According to Harare-based journalist Richard
Saunders, Zimbabwe now faces "divisive, clientelist-cum-
tribalist politics of regional `chefs' in the party
leadership" -- such as Eddison Zvobgo (the "King of
Masvingo"), Nathan Shamuyarira (the "Chef of Chinhoyi"),
Didymus Mutasa and Kumbirai Kangai (the "monarchy of
Manicaland") and Joshua Nkomo (the "proprietor" of
Matabeleland).
        Is this the unfortunate route SA will take -- or is
there an even worse precedent in Yugoslavia to consider?
It would seem so, and many South African policy-makers
also draw such parallels. During his series of nightly
interviews last month, shortly after what has been
termed the "UDI" plan for "kwaNatal" was announced by 
Mangosuthu Buthelezi, BBC interviewer Sir David Frost
questioned President FW de Klerk on Inkatha. If they
don't play a role, answered Mr de Klerk, "we are looking
for trouble in South Africa. We don't want to go the
Yugoslavian way."
        But what way is that? It is well-known that post-war
stability in Yugoslavia (under the Tito hybrid-socialist
regime) was achieved thanks to a regional equalisation
policy which was perhaps more effective than any other,
East or West. Dr Sean Gervasi, a research professor at
the Institute of International Politics and Economics in
Belgrade, sums up how that policy was ruined in a recent
paper entitled "Germany, the US and the Yugoslav
Crisis." Again, it seems to boil down to the prevailing
economic crisis.
        Yugoslavia was hammered by oil shocks and a harsh
late 1970s IMF programme, and economic decline
characterised the 1980s. As the Berlin Wall fell in
1989, 650,000 Serbian workers were staging protests
against IMF austerity measures such as a wage freeze,
devaluation, the closure of many state enterprises, and
drastic cuts in governments spending. According to Dr
Gervasi, this austerity heightened latent ethnic
tensions, especially in the northern republics. "A pro-
Western, pro-`reform' camp consolidated and pushed for
separatism as the only possible way to realize
nationalist aims."
        Then, says Dr Gervasi, three other factors emerged:
"Yugoslavia began to suspend its market-oriented
`reforms.' The Cold War ended and Yugoslavia was no
longer so useful. And a newly united Germany, staking
out a larger role for itself in Europe, demanded that
the Bush administration adopt the German policy of
working for the `dissociation,' that is, the dismantling
of Yugoslavia."
        According to Dr Gervasi, this policy reflected the
thinking of Germany's East Committee, which proclaimed
Yugoslavia "our natural market... In the end this market
will perhaps bring us to the same position we were in
before World War I. Why not?"
        As a result, the German recognition of Slovenia and
Croatia "set off a violent chain reaction. The US and
other nations faced a fait accompli and accepted
Germany's demands that the West support German
policies." That, says Dr Gervasi, ended any prospect for
spreading the economic pain sensibly throughout the
regions of the former Yugoslavia.
        In SA, where regional warfare looms at the political
level, there is no question but that ESAP will be
applied throughout the 1990s to make the country's
stagnant manufacturing base more internationally
competitive. This means very little scope for
distributing wealth to poorer areas. It may leave SA
with constitutionally-entrenched regions which are
politically-strong but economically-weak.
        An ANC conference on regional policy last weekend
began to address the problem, and ten new regional
boundaries were agreed upon as units of political
control by the two hundred delegates. The salient point,
however, was that final and binding decisions on the
powers and functions of regions will be decided by a
constitution-making body, which will begin deliberations
following the first elections (likely by this time next
year). The ANC will probably win over 50% of the
constituent assembly seats, so it is important to trace
their thinking on the vital issue of regional
decentralization.
        There remains an uneasy tension within the ANC. On
the one hand the ANC has conceded the logic of World
Bank-style regional policy: "Micro and macroeconomic
distortions could arise if business and the wealthy in
some parts of the country are forced to bear a greater
responsibility for dealing with the country's poverty
and inequality than in other parts... Fiscal
decentralization should guard against allowing too many
distortions to be introduced into the economy which
prevent resources from flowing to best use."
        On the other hand the ANC truly want to be a
national movement, and they rightly worry that
decentralization will strengthen the National Party's
hand. "Pretoria is really interested in creating
disguised NP-dominated homelands, even if this means
wrecking the economy and even if it results in promoting
population movements so as to concentrate potential
voting support in regions of potential NP hegemony."
        Therein lies the dilemma. Professor Wekwete paints a
sad scenario of bogus regional populist appeals (to
which the ANC may well succumb): "In the case of
Zimbabwe there is a commitment to provincial and
district planning, but mechanisms for strengthening
resource allocation and transfer to territorial levels
are limited. In many countries this has become a vicious
circle of decentralized poverty."
        For Yugoslavia and other countries facing regional
and ethnic strife, decentralized poverty is not the only
outcome. Chronic violence appears to include three
ingredients: increasing regional decentralization of
political power; a dire but unmet need for regional
economic equality; and macroeconomic conditions of
crisis and austerity. Will SA slide down this slippery
slope? And for that matter, is Zimbabwe sliding as well?

Patrick Bond
email:  pbond@wn.apc.org * phone:  2711-614-8088
51 Somerset Road, Kensington 2094 South Africa
work:  University of the Witwatersrand
Graduate School of Public and Development Management
PO Box 601, Wits 2050, South Africa
email:  bondp@zeus.mgmt.wits.ac.za
phone:  2711-488-5917 * fax:  2711-484-2729


Louis Proyect
(http://www.panix.com/~lnp3/marxism.html)