THE ROPE OF PRIVATIZATION IN NEED OF A PEDRO

Some analysts of political developments in Croatia think that the Parliamentary interpellation is actually aimed at President Tudjman himself, whose family also did not remain immune to the challenges posed by the transformation. They think that if this did not reach the very top, it would represent the last warning to Tudjman to finally decide which side to cross over to and - while he still can - do away with HDZ (Croat Democratic Union) managers. The quick response of the HDZ Presidency, which, nonetheless, welcomes the announced Parliamentary discussion, but rejects the "unfounded accusations against the process of privatization" giving support to the hitherto model according to which it evolved, supports the idea that the parliamentary initiative of some forty deputies aims very high. But, it is seen that those analyses proceeded from wrong assumptions.

AIM, OSIJEK, November 13,1994

"Privatization of former socialist ownership has been carried out so far in the most primitive fashion, scores of illegalities, the accumulation of vast wealth by individuals and their families, the complete marginalization of trade-union influence or joint decision making on the part of the former social owners on their destiny...". The quoted sentence which succinctly and harshly assesses the manner in which it was implemened and the consequences which the transformation of social ownership in Croatia caused, is not the view of an opposition politician, but of a neutral foreign expert - the German Fabian A. Schonhoffer. Schonhoffer, namely, makes this observation in a study entitled "A Changing Society", in which he analyses the manners in which the former countries of Eastern Europe are going about the painful process of ownership transformation.

The hot potato of the hitherto course of transformation in Croatia, which has so far encompassed about a fifth of what was once "social capital" will be on the agenda of the Croatian Parliament on December 17. The numerous scandals and obvious financial malversations attending what was called transformation in Croatia, created widespread dissatisfaction in the public and confirmed the conviction that the national wealth was actually being sold for nothing, and through almost legal robbery had overnight produced some two hundred families, dubbed "the new owners of Croatia" by the media. Although the opposition had been drawing attention to such a situation for a long time, the marginal position of the Croatian Parliament and the equally marginal role played by the opposition in political life, were the reason that the authorities gave almost no heed to new and more glaring evidence of numerous illegalities in the transformation.

When at the last session of Parliament 38 HDZ deputies (they were joined by Anto Djapic, President of the Croatian Party of Right, and the independent deputy, the Count Jakov Eltz), "exceptionally sensitive to violations of the law, the forms of transformation and privatization in which ownership relations were changed in an illegal way", signed an interpellation demanding a parliamentary debate to clear up the "cases of crime, robbery and sacking", the public was convinced that actually the continued settling of accounts within the ruling party was in question. Vladimir Seks, who by moving from the Croatian Government to Parliament, practically took over the role of Chairman from the anaemic Nedeljko Mihanovic, was thought to be the mastermind of the whole action.

Among the 38 signatories most consider themselves the "right wing" of the ruling party (with several "moderates"), so it was believed that the parliamentary debate would actually aim at toppling the Government of Prime Minister Nikica Valentic and the circle of managers around him, holding the key levers of the Croatian economy. It was, namely, believed that when Mesic and Manolic left the ruling party with a group of deputies personifying the "left wing", the process of dissipation of the HDZ had in no way been completed and that the "hard core" in Parliament (Seks, Vukojevic, Perica...) would strive to eliminate the managerial, moderate group, which together with Prime Minister Valentic, comprises a group of people headed by Franjo Greguric.

Some political analysts in Croatia thought that the parliamentary interpellation was actually aimed even higher, up to President Tudjman himself, whose family also has not remained immune to the challenges of transformation. Even if it did not reach the very top, they believe, it would nevertheless be the last warning to Tudjman to finally decide which side to cross over to, and himself - while he still can - do away with the HDZ managers. In any case, the conclusion of the mentioned interpellation was exceptionally harsh: "We most seriously warn of the responsibility of all state bodies with regard to their duty to truthfully and fully, without any papering over, in their reports for the parliamentary discussion, present the full truth and the actual state of affairs".

The assumptions that the parliamentary initiative of forty deputies aimed very high, was attested to by the quick response of the HDZ Presidency, a body which has - certainly not without the knowledge and wish of President Tudjman - been cleansed of party first-liners. The statement of the HDZ Presidency, in point of fact, welcomes the announced parliamentary debate, but it rejects the "unfounded accusations against the process of privatization", giving support to the manner in which it evolved so far. As time went by, it became clear that actually another HDZ game was in question, which should in the increasingly dissatisfied public create the impression that the party in power was against the pillage raging in Croatian enterprises.

Polls conducted by the "Pecat" weekly, show that as many as 63 percent of the interviewees think that transformation in Croatia is not proceeding in the right direction. Only 18 percent think that it is. That is why HDZ strategists could have deemed appropriate for the ruling party, rather than the opposition, to put the issue of "robbing in transformation" on the parliamentary agenda. When it is well known what a minor influence the Croatian Parliament has on the political life of the country, it might turn out quite convenient, over a few days of discussion, with a live TV transmission, to deflate the balloon of accumulated dissatisfaction, through the valve of the microphone on the parliamentary rostrum.

That this line of thinking is closer to the possible truth can be attested to by all those who had a chance to see the material prepared in the workshop of Valentic's cabinet, a comprehensive report on 350 typewritten pages, on the results of investigating legality in the process of transformation. That voluminous file will be on the desks of the parliamentary deputies, but it will hardly be inspiring for discussion. The Croatian Fund for Privatization, at whose expense most criticism was levied (because of that it was left by the trade-union leader Dragutin Lesar and the opposition leader of the Croatian Peasant's Liberal Party, Goranko Fizulic), announced that by the end of October it had received only 417 submissions on irregularities in transformation. That accounts for a bit over 16 percent of the total number of formerly socially - owned enterprises issued a decision on transformation by the Fund.

But, analysing those 417 submissions, the Fund rejected almost a half (48.2%) as unfounded. In 67 cases it issued orders for removing the observed irregularities, while only in 5 cases (!) the irregularities were of such magnitude that approval was denied. Ivan Penic, President of the Croatian Privatization Fund said a few days ago to the Zagreb "Vijesnik" that the Fund worked properly and that everything was done according to the law. He, moreover, added that the attacked model of paying shares with old foreign exchange savings "was the best thing Croatia could have done".

The Croatian public is of late increasingly of the opinion that shares should be distributed to exiles free of charge, i.e. to that part of the Croatian population which suffered the most during the war. That idea today has the undivided support both of the authorities and the opposition. But, when at the beginning of discussions on the most favourable model of privatization, as an introduction to regulating that issue, almost the entire opposition upheld a model according to which shares would be distributed to the workers free of charge, the HDZ was adamantly against. What brought about such a turnabout?

Some analysts believe that a well thought - out game is again in question, aiming to kill two birds with the same stone. Namely, it is clear to everyone that exiles are not the best of entrepreneurs and that the turning of that category of the population into shareholders will show the ostensible concern of the authorities for the welfare the mainly unemployed homeless. Before the elections - whenever they might take place - this move will bring them a lot of points: they had given a chance to the dissatisfied exiles; they should have taken it.

It is, however, clear to everyone that the flood of shares in the market where they are not exactly selling like hot cakes - in accordance with the law of supply and demand

• will only additionally reduce their value and enable genuine entrepreneurs to buy them literally for a pittance. Truth to tell, the state would be completely bypassed in that transaction, but if the fact is correct that the process of transformation involved 2,364 enterprises so far, with an assessed capital of DM 22.1 billion and that only DM 1.4 billion was collected (only DM 400 million in cash), "the generosity" of the state does not seem particularly impressive. In any case, the sieve of transformation had over the past two to three years already separated and "transformed" the most attractive enterprises. What fell through will hardly, or never, find a buyer. Why not then distribute shares and turn "real" capital into political capital.

Nonetheless, it is not totally unlikely that the parliamentary debate, no matter how controlled and staged by the HDZ, will disclose so much dirty linen that a Pedro will have to hang for it. During the four-year rule of HDZ in Croatia, no one has yet gone down the drain because when pouring honey he licked his fingers more than was polite. That could, at least judging by the atmosphere created prior to the pompously announced parliamentary debate, again be the case.

DRAGO HEDL