CALCULATION ACCOMPLICE

What is the Loss of Montenegro Because of the Blockade in Serbia

The Montenegrin authorities are making calculations. They are trying to present themselves not only as an "unwilling partner", but also as a true hostage of the Serbian regime. Talks of losses that the Montenegrin economy has suffered sound like political calculations of the DPS.

AIM Podgorica, 5 February, 1997

"In case reintegration into international community does not happen soon and meaningfully, our economic situation will already in 1997 deteriorate and exacerbate to the extremes". Montenegrin Prime Minister Milo Djukanovic said this, inter alia, with the aim of pointing to the price the smaller federal unit is paying for keeping company with Belgrade.

It is on account of events in Serbia that the London bank "Berliner" has postponed the granting of US$ 17 million worth line of credit planned for the reconstruction of the ships of Kotor shipyard "Jugooceanija". Recently, the famous Montenegrin businessman Milan Mrvaljevic, owner of a bus station in Budva, the famous "Mogren" hotel and as of recent a majority owner of another three transformed social enterprises, also complained that his foreign partners had cancelled US$ 5,5 million worth contracts precisely on account of the events in Serbia. Are these two examples sufficient to confirm so frequently forwarded suggestions on enormous damages the Montenegrin economy is suffering because of the "Serbian disgrace"?

However, to a direct question on concrete arrangements that have fallen through because of the situation in Serbia, Vice-President of Montenegrin Chamber of Economy, Miodrag Causevic replies in brief:

"We do not have such information. Until now no one in the Chamber of Economy has complained of losing a deal or having some concrete contract cancelled on that account. True," continues Causevic, "all our dealings with foreign countries are paid in cash, so that there are no credit lines and it is therefore hardly probable that those who found their interest in doing business under such terms, would quit because of political instability in Serbia. All that is in progress goes on somehow, but", points Causevic, "there are no serious long-term arrangement, particularly higher forms of cooperation and what we are most interested in - investments in the transformation of social enterprises."

We get somewhat clearer picture of the losses that the Montenegrin economy has suffered from Milutin Lalic, Director of the Republican Agency for Economic Reconstruction and Foreign Investment, who reminds that Montenegro has above the average open economic structure. The indicator of that openness (which is a quotient of the total foreign trade and social product) is between 60 and 65 here, and in Serbia only 25 to 35 percent. To close such an economic system would mean its destruction. Lalic primarily warns of the process of privatization in Montenegro and describes the existing situation in this field as a jump to the other side. Without foreign capital that side will never be reached and the only possible outcome is a fall into abyss.

The key limiting factor of privatization is the fact that this process is evolving without any financial assistance from abroad. The postponement of normalization of relations with the International Monetary Fund makes it impossible to rehabilitate and reorganize national banking system, claims Nebojsa Medojevic, councillor in the Republican Restructuring Agency. In addition, without foreign financial assistance there can be no privatization of large infrastructure systems - railways, power generation and distribution, regional water supply system, telecommunications - systems which without foreign support can be neither technologically modernized nor privatized.

Namely, until now only 45 smaller enterprises have been privatized in Montenegro. By the end of the year the Government plans that some 70 percent of enterprises will be in private hands, which will be hard to achieve with domestic capital. In addition, the economic policy of Montenegrin Government for this year envisages 10 percent growth of social product provided however that the "outer wall of sanctions is eliminated" and "relations with the international financial and trade organizations are normalized". Only then the most important project which Montenegro has visualized as its shortcut to heaven can be realized - tax and customs paradise.

In other words, there were no concrete arrangements for the participation of foreign capital in the privatization of Montenegrin enterprises. There were only talks with a well known financial company "Bali" regarding the purchase of the Aluminium Complex, the Niksic Brewery conducted negotiations on the participation of foreign capital, and so did the Tobacco Combine from Podgorica, but all that was hidden from public eye so that it is impossible to know the real outcome of these negotiations, or the true reasons why no further arrangement have been concluded. After the lifting of the sanctions representatives of a number of companies have come to Montenegro and the authorities used contacts they had with them for their pre-election marketing. There were promises of comprehensive and fruitful cooperation, but specific contracts were not concluded. Now, there is not even that.

Mihajlo Banjevic, Director of the Republican PIO Fund, to which over 30 percent of the social capital has been transferred, reminds that the number of last year's frequent visits of foreign delegation has decreased and that negotiations on the participation of foreign capital in the privatization of Montenegrin firms are being postponed for some better times. "The events in Serbia are also a trap for the privatization process in Montenegro. Privatization is our priority interest and no one has the right to deny us that right", explains Banjevic the reasons for reactions of Montenegrin leadership to current developments in Serbia.

And the federal negotiations with the IMF were interrupted in December, just when Radoje Kontic four years too late accepted all that IMF had offered already in 1992. Everything is at a standstill waiting for denouement in Serbia. Thus, calculations of Montenegrin authorities. They are trying to present themselves not only as an "unwilling partner", as Momir Bulatovic did in his interview to "Figaro", but also a true hostage of the Serbian regime.

Stories about losses suffered by Montenegrin economy because of the events in Serbia are completely true and clear, but still reek of political calculations of the DPS which is looking for a way to derive political benefit from all (including losses) of it. For, if we bear in mind the fact that governmental central coordinating teams are running the Serbian economy, and the DPS management boards the Montenegrin, then we can see that differences between characters of these two systems are not so large. Needless to say, it must be admitted that the official Montenegrin stand that "the pace of economic and political reforms will depend on the speed and quality of the reintegration of FRY in the international community", is far from the JUL ideological pup selling. It is precisely this awareness of the character of transitional processes that separates the two regimes most.

That is why the Montenegrin Government is insisting on the unity of the FRY, on one hand, and is starting stories about "activating its constitutional right to directly deal with the international institutions", on the other. "The proposal on the resumption of cooperation with the international economic, financial and other organizations" was unanimously adopted this summer by Montenegrin Parliament. The proposal was submitted by Zoran Ljumovic and Milorad Vukotic, deputies of the Liberal Alliance at that time.

The meaning of this message, which is, as of late, again becoming topical in Montenegro, is that this Republic can and should join the IMF on its own, if it can achieve it sooner than as a part of the FRY. This is precisely what the new Vice-President of the Montenegrin Government Miodrag Vuckovic has explained these days in the "Pobjeda", albeit in a "Pythian" way, and that is what the ideologue of Montenegrin privatization, Milutin Lalic has in mind.

Receiving the American Congressmen, who, as it turned out, were in a private visit to Montenegro in mid January, Milo Djukanovic made public the formulation of his proposal to the Americans: "Having in mind the fact that the outer wall of the sanctions against the FRY is still in place, and the positive changes introduced in Montenegro both on the economic as well as political plan, a more flexible regime of relations with Montenegro should be established aimed at creating a positive climate for the initiation of an investment cycle in Montenegro and for securing financial assistance of international financial institutions." On that occasion the proposal was thoroughly discussed, said Djukanovic. Talks on this subject will be continued during Djukanovic's visit to the States scheduled for February.

Since this offer did not meet with much understanding of Washington, which was confirmed by statements of Ratko Knezevic, Head of the Trade Mission in USA, another move was made. Momir went to sit at Slobo's sofa, while the Montenegrins took advantage of recent Lilic's visit to show their concern over the future negotiations (of Yugoslavia) with the IMF. After Lilic's talk with the Montenegrin triumvirate (Momir, Milo and Sveto) the following statement was issued: "Full and speedy reintegration of the FRY in the international community is our strategic objective. It is therefore, necessary to end the political crisis in Serbia, as soon as possible".

The unwilling partner is counting his losses.

Dragan DjURIC AIM Podgorica