BELGRADE, Yugoslavia -- Federal Prime Minister Ante Markovic, buoyed by new expressions of Western support, Tuesday vowed to persevere with stalled free market reforms despite moves by maverick republics that threaten to push Yugoslavia into financial collapse.
Markovic, however, declined to say whether he would resign if the republics, working through their delegates in the federal Parliament, refuse to implement proposals he is expected to unveil at a special legislative session Friday aimed at repairing and reinvigorating the moribund program.
The 65-year-old reformer has come under mounting pressure from the leaders of the republics of Croatia, Slovenia and Serbia to resign because of his strict monetary policy. The policy, implemented to end punishing inflation, has left the governments of the reform-resistant republics with severe cash shortages, threatening their grip on power.
Speaking at a news conference, Markovic brushed aside charges that he had reduced the money supply too much, and vowed to forge ahead with his reforms.
'The federal government has no dilemmas as to whether it should continue with the reforms,' Markovic said. 'With the support we have been given from the developed world, we have even less reason to abandon our program.'
Markovic held the news conference hours after a pre-dawn return from London, where he attended the foundation ceremonies for the European Bank for Reconstruction and Development, formed to help the former socialist countries restructure their economies.
In London, Markovic held bilateral talks with European leaders, including British Prime Minister John Major and French President Francois Mitterrand, and U.S. Treasury Secretary Nicholas Brady on the ethnic, political and economic disputes tearing at the Yugoslav federation of 23 million people.
He said every Western official he spoke to expressed new support for the transformation of Yugoslavia into a Western-style democracy and opposed the disintegration of the country into independent states as demanded by the nationalist regimes of Slovenia and Croatia.
Markovic quoted Mitterrand as saying that 'the disintegration of Yugoslavia would mean the bursting of Europe at the seams and that is something that Europe cannot allow and will not allow.'
A dispute over the future shape of Yugoslavia mainly pits pro- disintegration Croatia and Slovenia against communist-ruled Serbia, which favors maintaining a socialism-based federation. The conflict is pushing the country toward civil strife and has led to only partial implementation of Markovic's reforms, which he launched in January 1990.
'There has been a halt in the reform program,' he acknowleged, and warned anew that without the changes, Yugoslavia faced economic catastrophe.
In their efforts to retain power bases built on their abilities to direct their economies, the leaders of the three republics have refused to accept centralization of the debt-ridden banking system and tax structures, ignored freezes on spending, paid only a small portion of their contributions to the federal budget and resisted privatization.
Croatia and Serbia, which are believed to be virtually bankrupt, have violated the federal monetary system, diverting large amounts of central bank funds into their own coffers.
The republics' conduct has jeopardized a $1 billion stand-by loan from the International Monetary Fund that Yugoslavia requires to qualify for other foreign loans. The credit is needed to avoid the collapse of its banking system and restructure and privatize inefficient and cash- strapped state-owned enterprises.