Republic of Serbian Krajina - Decline

Decline

The partial implementation of the Vance Plan drove a wedge between the governments of the RSK and Serbia, the RSK's principal backer and supplier of fuel, arms and money. Milan Babić strongly opposed the Vance Plan but was overruled by the RSK's assembly.

On 26 February 1992, Babić was deposed and replaced as President of the RSK by Goran Hadžić, a Milošević loyalist. Babić remained involved in RSK politics but as a considerably weaker figure.

The position of the RSK eroded steadily over the following three years. On the surface, the RSK had all the trappings of a state: army, parliament, president, government and ministries, currency and stamps. However its economy was wholly dependent on support from the rump Yugoslavia, which had the effect of importing that country's hyperinflation.

The economic situation soon became disastrous. By 1994, only 36,000 of the RSK's 430,000 citizens were employed. The war had severed the RSK's trade links with the rest of Croatia, leaving its few industries idle. With few natural resources of its own it had to import most of the goods and fuel it required. Agriculture was devastated, and operated at little more than a subsistence level. Professionals went to Serbia or elsewhere to escape the republic's economic hardships. To make matters worse, the RSK's government was grossly corrupt and the region became a haven for black marketeering and other criminal activity. It was clear by the mid-1990s that without a peace deal or support from Yugoslavia the RSK was not economically viable. This was especially evident in Belgrade, where the RSK had become an unwanted economic and political burden for Milošević. Much to his frustration, the rebel Croatian Serbs rebuffed his government's demands to settle the conflict. In July 1992 the RSK issued its own currency, the Krajina dinar (HRKR), in parallel with the Yugoslav dinar. This was followed by the "October dinar" (HRKO), first issued on 1 October 1993 and equal to 1,000,000 Reformed Dinar, and the "1994 dinar", first issued on 1 January 1994, and equal to 1,000,000,000 October dinar. The RSK's weakness also adversely affected its armed forces, the Vojska Srpske Krajine (VSK). Since the 1992 ceasefire agreement, Croatia had spent heavily on importing weapons and training its armed forces with assistance from American contractors. In contrast, the VSK had grown steadily weaker, with its soldiers poorly motivated, trained and equipped. There were only about 55,000 of them to cover a front of some 600 km in Croatia plus 100 km along the border with the Bihać pocket in Bosnia. With 16,000 stationed in eastern Slavonia, only about 39,000 were left to defend the main part of the RSK. Overall, only 30,000 were capable of full mobilization, yet they faced a far stronger Croatian army. Also, political divisions between Hadžić and Babić occasionally led to physical and sometimes even armed confrontations between their supporters; Babić himself was assaulted and beaten in an incident in Benkovac.

In January 1993 the revitalized Croatian army attacked the Serbian positions around Maslenica in southern Croatia which curtailed their access to the sea via Novigrad. In a second offensive in September 1993 the Croatian army overran the Medak pocket in the southern Krajina in a push to regain Serb-held Croatian territory. This action was halted by international diplomacy but although the rebel Croatian Serbs brought reinforcements forward fairly quickly, the strength of the Croatian forces proved superior. Hadžić sent an urgent request to Belgrade for reinforcements, arms and equipment. In response, around 4,000 paramilitaries under the command of Vojislav Šešelj (the White Eagles) and "Arkan" (the Serb Volunteer Guard) arrived to bolster the VSK. They found the RSK government and military in a chaotic state.