By Dusan Stojanovic
Associated Press Writer
Saturday, February 28, 1998; 11:04 a.m. EST

BELGRADE, Yugoslavia (AP) -- While its former Yugoslav neighbors are beginning to see
flickers of hope after devastating war, the country that started it all is sunk deep in political,
economic and social trouble.
     Long festering, problems are worsening dangerously:
Kosovo province wants to secede; the smaller of Yugoslavia's two remaining republics
seeks a separate path; the economy is crumbling.
     Crime is rising, and half the work force is unemployed. Living standards -- at the
European average in the 1980s -- have dropped to among the lowest on the continent.
     Meanwhile, President Slobodan Milosevic rules alone, like former dictator Josip Broz
Tito, and is determined to keep power at all costs. He has pushed Yugoslavia, now made
up only of dominant Serbia and small Montenegro, deep into international isolation.
     Doomsayers have predicted the worst about Yugoslavia and Milosevic many times.
The country has been on the edge of major turmoil since 1991, when Milosevic's Serb-
leaning policies triggered civil war and the bloody breakup of the old Yugoslav federation.
     But Milosevic has always managed to stay in control and to avoid instability at home,
often by using the state media and police to suppress public protests. A fractured
opposition, despite having a majority in Serbia's parliament, has been unable to unite
against him.
     Preventing Serbia's Kosovo province, with its ethnic Albanian population, from
exploding into war may prove his toughest challenge yet.
     Two million Albanians, one-fifth of Yugoslavia's population, are determined to split the
province from the federation. Over the past year in Kosovo, more than 100 people have
died in terrorist attacks or clashes with police.
     "Kosovo will not be a part of Yugoslavia. It will be an independent country -- with arms
or peacefully," said Adem Demaci, a leader of the province's Albanians.

The Kosovo problem threatens Balkan stability.

     Any clashes could trigger intervention by neighboring Albania or even Bosnia, where
support is strong for Muslim brethren in Kosovo.
     Fighting likely would spread to the former Yugoslav state of Macedonia, where a third of
the population is Albanian, and that could tempt Macedonia's rivals, Greece and Bulgaria,
to step in.
     The conflict also could widen if Milosevic called on Serbs in Bosnia and Croatia for
military assistance.

Yugoslavia's woes lie elsewhere, too.

     Montenegro is frustrated by Milosevic's reluctance to introduce any meaningful
economic or political reforms. Its newly elected pro-Western president, Milo Djukanovic,
has pledged to start his own reforms if Milosevic's doesn't make changes. Any such
moves are seen as likely to bring armed intervention by federal forces.
     While most Yugoslavs live in virtual poverty, struggling to get by on earnings averaging
about $150 a month, Milosevic and the ruling elite have amassed enormous wealth. They
build palaces in luxurious districts of Belgrade, drive bulletproof Mercedes and Audis and
vacation in foreign ski and sea resorts.
     "They don't want reforms because they will lose privileges and sources of personal
profit," opposition leader Zoran Djindjic said of Milosevic and his allies.
     "They like the communist model, not because they are anti-capitalists but because of
the repression, monopoly and total control," he said.
     Because of Milosevic's opposition to economic and political reforms and to talks with
Kosovo's Albanians, the United States has blocked Yugoslavia from access to foreign
credit.
     Without an influx of money, Yugoslavia has no chance to revive its economy. Outside a
few hotels run by international chains, there is virtually no foreign investment.
     Most banks are bankrupt, the gross national product is half what it was in 1987, more
than half the factories are idle, and foreign debt stands at about $8 billion.
     Pensioners -- as well as workers -- get paid months late and the state still owes them
billions of dollars in back wages.
     Hospital patients must supply their own medicines, bed linens and food and bribe
doctors for any serious attention.
     Murders and bomb attacks are on the upswing. Assassins, mostly young people
seeking drugs or alcohol, can be hired for as little as $100.
     Public transport in big cities is collapsing. The rail company is bankrupt. Yugoslav
Airlines has an aging fleet that urgently needs replacement.

Serbians are clearly unhappy.

     Some 60,000 workers at Belgrade's 14 heavy industry plants, previously considered
the pillar of Milosevic's rule, are demanding "bread and work" and threatening strikes.
     But no one can say for sure whether Yugoslavia and all its problems have finally
reached the breaking point.
     "Here, the boundaries between real and surreal have been erased a long time ago,"
said Stojan Cerovic, chief commentator for the independent weekly Vreme.

_ Copyright 1998 The Associated Press