Slovenia & Bosnia vs. Croatia

The Oil War

While neighbours are quarreling and gloating, the damage is increasing - INA's tank trucks are not traveling to Bosnia any more, and Slovenian transporters are still taking oil to B&H, but by taking five times longer routes (through corridors - about 1000 kilometres long instead of 180) in journeys that last not 8 but between 32 and 38 hours!

AIM Ljubljana, February 5, 2002

"Croatia has caught itself in its own trap", concluded one of the commentators who is from Slovenia following the development of the latest Slovenian-Croatian-Bosnian "oil conflict". The situation became strained at the moment when the Croatian government with a special regulation banned transportation of oil on its roads. After protests from Slovenia, Hungary, Austria, Bosnia & Herzegovina and other states the controversial decision of Racan's government was withdrawn, but the passions did not die down because the mentioned regulation now enables transportation of oil from Slovenia through a few Croatian corridors to two border crossings (Slavonski Brod and Zupanja) but in such a complicated procedure and financially so entangled that Slovenian oil traders claim that this business is not profitable because the expenses have increased four to five times. This is unacceptable for the Slovenian and the Bosnian governments although the administration in Sarajevo introduced reciprocal ban of oil import for Croatian tank trucks.

Bosnia now permits import of oil only via Izesic border crossing - the very same one whose use in transportation of oil products Croatia has banned. Slovenian media have carried the statement of Hasib Salkic, deputy director of B&H Customs Administration, that should the Croatian Government persist in the implementation of its restrictive decision, the consumers in Bosnia would make do with "the existing reserves and import of oil products from FRY". The Council of Ministers of B&H could also decide to permanently ban import of oil and its products from Croatia, and Slovenia does not wish to give up on the complaint lodged against Zagreb at the World Trade Organization (WTO) and OUN Economic Commission. WTO Commodity Trade Council will decide about the Slovenian complaint on February 11.

What caused the latest friction in the Northwest of the Balkan? Briefly

• the decision of Croatian Ministry of Internal Affairs reached according to the amended regulation on transportation of hazardous materials on the territory of Croatia, which means the ban of crossing of the border for Slovenian tank trucks carrying oil for Bosnia & Herzegovina. This was a blow to Slovenian enterprises that sell oil and its products to partners in Bosnia. When the regulation came into force it blocked about 250 tank trucks at border crossings, and among them even the ones owned by Croatian enterprises.

"We wish to win the battle against crime and protect the environment. This is a legitimate right of every state and there can be no negotiations about it", declared Prime Minister Ivica Racan immediately after the first criticism of the new regulation. In the neighbourhood Racan's statement was interpreted as pure cynism, because it leaked into the media that this had nothing to do with environment protection, but it was an attempt of Croatian INA (oil company) to ensure a monopoly for itself on the market of Bosnia & Herzegovina. Such interpretation was corroborated by the fact that, although it for "environmental" reasons does not permit transportation of oil products except by sea, air and railway, the new regulation does not limit Croatian firms to use any itinerary they wish if they purchase oil in refineries in Sisak and Rijeka. That is why the "environmental reason" used in defence of the controversial regulation was just a flimsy pretext, especially when one knows that transportation of oil by railway is not safer than transportation by road, but is much slower and up to 40 per cent more expensive. It did not pass unnoticed that the controversial document was signed by deputy prime minister who happens to be the president of the supervisory board of INA.

Slovenian commentators warn that INA has a monopoly in Croatia and that it intends to ensure the same position in Bosnia for itself. It is believed that the first step in this direction is the purchase of Energopetrol especially because the regulation of the Croatian Ministry of Internal Affairs, although written in October 2001, was passed on the eve of the call for tenders for Energopetrol just in order to "strengthen" the position of INA and reduce chances of the others interested in the purchase.

It is clear that none of the parties will easily give up on the effort to attain the privileged position especially since consumption of oil products has significantly increased in Bosnia & Herzegovina. Of all the oil imported in B&H, the Federation consumes about 70 per cent and Republika Srpska about 30 per cent of the available quantities. Last year, B&H Federation imported 839 thousand tons of oil products (worth about 539 million convertible marks), but another 150 thousand tons of oil and its products entered Bosnia unofficially across its "porous" borders. About 60 per cent of the mentioned quantity was imported by INA and the remaining 40 per cent are shared by enterprises of Slovenian oil industry, primarily Petrol and OMV Istrabenz. That this is a big business that brings high profit is confirmed by projects for the future of Slovenian oil companies: OMV Istrabenz, for example, wishes to build 10 new petrol stations in B&H until the end of this year, and Petrol intends to build 50 new modern stations in the course of next five years, or 10 every year. This would raise the share of Slovenian and Slovenian-Austrian enterprises that trade in oil products in the market of B&H to about 53 per cent, while INA would keep about 30 per cent. It is obvious that the "war" for the market was inevitable, although nobody expected that the states would interfere by introducing restrictive measures.

Although in the beginning of the oil crisis Drnovsek's cabinet let the colleagues in Bosnia do most of the "dirty work" in squaring accounts with official Zagreb, Slovenian government finally decided to protect the interests of its oil traders and noted that Croatia was using impermissible protectionist measures violating in this way the provisions of the agreement on free circulation of goods. Slovenian government claims that Croatia's manoeuvre is aimed at "restricting competition and trade in south-eastern Europe" which is proved by "selectivity" of the regulation since it refers only to oil traders. As the final proof that it was not the matter of highly moral environment protection, Slovenian experts state the experience from local Kras which is exceptionally sensitive to spilling of hazardous material, but that does not prevent about 200 tank trucks to speed across it every day and it did not even occur to the government in Ljubljana to ban transportation either to Slovenian or foreign shippers.

"We don't know what is the background of the controversial regulation on the ban of oil transit by the roads on Croatian territory. I am inclined to assess that this is a mixture of 'unselfish' - environmental and tourist - and 'selfish' - economic and protectionist - reasons. Its introduction is so openly discriminatory that there is almost no doubt that it is primarily the matter of protection of Croatian interests in the oil market in Bosnia & Herzegovina", believes Mile Setinc, commentator of Ljubljana based Dnevnik. Unlike previous inter-state skirmishes the latest one is more bizarre because traditional lines of conflict that have so far determined the direction of economic but also real wars in the region, have been confused. On the map of the invented "confederation of Western Yugoslavia" published by Mladina from Ljubljana in the end of the eighties, Bosnia, Croatia and Slovenia were on the same side of the border. Nowadays they are involved in an unusual economic conflict in which Republika Srpska as part of B&H that borders Croatia and often is not a very friendly neighbour - has welcomed the decision of the Croatian government.

The disentanglement of the controversy is still uncertain and introduction of "reciprocal measures" by Slovenia is still possible. There have been ideas in Slovenian media that the number of permits for transit of Croatian trucks should be reduced and that all Croatian vehicles should be banned to enter Slovenia if they have no catalysts. While the neighbours are quarrelling and gloating, the damage is increasing - INA's tank trucks are not entering Bosnia any more, and Slovenian transporters are still driving oil to B&H but along routes that are five times longer (through corridors - about 1000 kilometres instead of 180), and the journey does not take 8 but 32 to 38 hours! The attempt of the Ministry of Ethnic Communities in neighbouring Yugoslavia that is advocating tolerance (which "costs nothing but is worth a lot") obviously still does not have followers in this space. Until then - oil traders, environmental scientists, ordinary people - will all have a difficult time.

Svetlana Vasovic

(AIM Ljubljana)