300 The Presidential Years
The following year Tito declared that there had been an additional in-
crease in industrial production when submitting the new Five-Year Plan on
26 December 1960 at the Federal Assembly. This success was due, he said, to
self-management, thanks to which, in the last three years, the GNP had risen
13 percent. Actually, this result was achieved thanks to modernization of the
factories, to Western financial aid, and to the comparably low starting point
of Yugoslav industry. But the press celebrated this as the world’s most signifi-
cant economic achievement, comparing it especially to the relative GNP in the
Soviet bloc, where no country could claim similar growth.^187 Tito grew bolder
in his aims and projects. He first spoke about the need to build a nuclear power
station, and then even fantasized about nuclear-powered ships, as he was cer-
tain that Yugoslavia was on the threshold of an economic and technological
boom. He saw it as a supplier of industrial and agricultural products to coun-
tries of the Soviet bloc and the Third World. In short, the general conditions of
the economy seemed favorable to the decentralization of the state’s role in the
distribution of income and investment funds. This policy was warmly supported
by the trade unions, headed by the dynamic and politically ambitious Svetozar
Vukmanović (Tempo), which tirelessly hoped for a renewal of social and eco-
nomic relations, asking for more self-management that too often existed only
on paper. They highlighted the need to address the material interests of work-
ers, because only in this way would it be possible to increase productivity. It
was in fact the case that workers were not particularly keen on working harder
or better, since the state took the greater part of their earnings from them in the
form of exorbitant taxes. As the Croatian historian Dušan Bilandžić wrote, the
system was structured so as to favor mediocre collectives, protecting them and
exploiting those who excelled.^188
Party leaders tried to react to discrepancies present in economic life by regu-
lating the relations between the state and the factories regarding the distri-
bution of income. In January 1960, the Federal Assembly issued a series of
decrees on this subject in a bid to control consumer prices and to revitalize the
banking and financial sector. A monetary reform plan was likewise launched,
which envisaged the abolition of different exchange rates for the Yugoslav
dinar, introducing a single rate for foreign trade and devaluating the currency.
All this was to be carried out with the help of the International Monetary
Fund, the United States, West Germany (with which economic relations had
resumed) and Great Britain.^189 The state renounced its control of factories and
commercial firms, granting them full economic autonomy, which, according to
critics, was a bit too capitalistic for comfort. Kardelj, however, was optimistic:
speaking with journalists he stressed that in the short run the reform would
probably worsen the standard of living, but would create the basis for healthy