Yesterday, with a tenuous peace settling over Slovenia, the exchange panicked. Slovenia bonds slumped. No one touched the stocks. The foreign exchange rights went begging. "There is a certain logic to this," says Drasko Veselinovic, the exchange's chief executive. "Slovenes are now beginning to see the costs of independence more clearly than when we were at war." The two million people of this picturesque Alpine republic are waking up from their two-week nightmare sobered by the implications of their intoxicating declaration of secession from Yugoslavia on June 25. Their bravado is undiminished, reflected in the almost unanimous feeling that there can be no going back now that blood has been spilled in defense of independence. But there is also a growing unease about going forward, because no one knows where Slovenia is headed. For the moment, the Slovenes are feeling lonely, unrecognized by the nations of the world. Their considerable trade with the rest of Yugoslavia, which helped make them the country's richest people, is vanishing. Their identity is being turned upside down; once known as Yugoslavia's "developed north," Slovenia will now be lumped together with Western Europe's "underdeveloped south." Nationalism overshadows pragmatism, a quality that once distinguished Slovenia from the rest of the often bewildering Balkans. "We've decided to be our own country," says Mr. Veselinovic, "but we really don't know how we will execute it." The Balkanization of this Balkan country has also become Europe's worst nightmare. Almost every country on the continent has its own disenchanted minorities, from the Soviet Baltics to French Corsica, that could be encouraged by the independence declarations of Slovenia and the neighboring republic of Croatia. Soviet leader Mikhail Gorbachev has held up recent events here -- the Yugoslav army assault on Slovenia and the bitter ethnic clashes between Croats and Serbs -- as a warning to his land of what can happen when nationalism fractures a country. While the European Community is counting on the peace plan it brokered to defuse tensions (it calls for a three-month period of negotiations in Yugoslavia), most governments concede that the country's breakup is inevitable. But the West Europeans also are wary of moving toward recognition of the various pieces. "We have every sympathy for small peoples who aspire to affirm their national identity by democratic methods," the Swiss foreign minister reportedly told a European conference on national minorities. "But that doesn't mean we can accept the unilateral alteration of frontiers." This shunning by Western Europe, and the U.S., is particularly disillusioning for a people who enjoy their BMWs, Peugeots and Fiats, their shopping trips to Munich and Venice and their vacation chalets in the Alps. The Slovenes, from their days in the Austro-Hungarian empire, have always considered themselves to be Westerners. Nestled between the Alps and the Adriatic, Slovenia became the most prosperous patch of communist Europe. The per capita annual income of nearly $7,000 is 10 times that of the southern regions of Yugoslavia. But as Slovenes measure themselves with Western Europe, it is they who are the poorer cousins. Joze Mencinger, an economist and former finance minister of Slovenia, illustrates the republic's economic resilience by noting that while Yugoslavia's industrial output fell 18% so far this year, Slovenia's declined only 10%. When reminded by a visitor that Austria, in contrast, is posting robust growth, he grows somber. "Okay, we must realize that we will be the less-developed part of Europe," he says. "Unfortunately, in times of transition like this, people's expectations are often wrong. Everybody expected that we could become Austria and Switzerland overnight." Over a decade might even be too soon. Slovenia's exports of assembled cars, pharmaceuticals, refrigerators and furniture account for a third of the total value of the goods and services it produces. But Slovene economists reckon that exports would have to double to match the performance of other small European countries. Slovenia is counting on expanding its already extensive ties with Austria (a joint venture between Austrian and Slovene companies recently completed a high-tech Alpine tunnel opening another border crossing) as well as courting more business with its other old Austro-Hungarian partners, Czechoslovakia and Hungary. But what Slovenes dream of is one day being admitted to the EC. "It's not size that makes a country successful," says Josip Skoberne, head of the international division of the Slovene Chamber of Economy, citing EC-member Luxembourg, far smaller in population and area than Slovenia. "It's your ability to engage in international trade that makes you viable." Finding new markets in the West is all the more urgent with the certain decline in Slovenia's trade with the rest of Yugoslavia. A quarter of all goods produced in Slovenia are purchased by other Yugoslavs, and Slovene leaders counted on maintaining these ties even after declaring independence. But the recent fighting, they believe, ended all hope of economic union. "Unbelievable," scoffs Mr. Skoberne as he reads a letter telefaxed from the council of Banja Luka, a town with a large Serbian population in the province of Bosnia-Hercegovina, decreeing that all Slovene-owned assets in the city are to be inventoried and frozen. One of the major motivations behind Slovenia's independence grab was to free itself from the "Yugoslav risk" that hampered most attempts to attract foreign investment. Now, Mr. Skoberne and others worry about an emerging "Slovene risk." At the stock exchange, Mr. Veselinovic frets that his post-independence plans to trade in gold, commodities and foreign currencies are jeopardized by the uncertainty engulfing Slovenia. "We had been getting a lot of interest from abroad, but they won't invest now while things are so unsettled," he says. "But this is only logical. I wouldn't do it, either."
While federal army tanks and jets pounded Slovenia last week, the Ljubljana Stock Exchange enjoyed one of its best days ever. But yesterday, with a tenuous peace settling over Slovenia, the exchange panicked. The exchange's chief executive opined, "Slovenes are now beginning to see the costs of independence more clearly than when we were at war." The fact is that no one knows where Slovenia is headed. The shunning of Slovenian independence by Western Europe and the U.S. is particularly disillusioning to the Slovenes who have always considered themselves as Westerners. Finding new markets in the West is critical to Slovenia's future.