Privatisation in Serbia

Struggle for Prestigious Enterprises

The law on privatisation of state and socially owned property, besides the concept of free shares, prescribes privatisation of 75 largest enterprises pursuant a special government program. This caused a rush among the political parties and among influential individuals for acquiring the best possible positions in the forthcoming "distribution" of property. The law is unjust to inheritors and the employees of branches of enterprises from other republics of former SFRY, and there are (ones and the others) more than 800 thousand.

AIM Belgrade, 20 March, 1998

In the shadow of the tumultous developments in Kosovo, in Serbia the process of privatisation has started, which literally depends on the way the crisis of kosovo will be resolved. The reason for this are the announced sanctions which will be imposed on Serbia if it fails to obey the rules of the international community to resolve the Albanian issues in Kosovo by political dialogue. The sanctions among other, include denial of financial loans for the process of privatisation. Without loans, Serbia has nobody to sell its property to, that is, to get through privatisation the financial means necessary for its economic development. Concessions to foreign investors have also been questioned, whose interest to enter into business deals where political circumstances are unstable is weakening.

Even without the "mortgage" of Kosovo, privatisation in Serbia causes considerable suspicion, because the law which regulates this matter has numerous defects, so there is justified fear of abuses among the public. The state and socially-owned property which is planned for privatisation is evaluated to be 100 billion-German-mark worth. Even "small" departures form the rule are, therefore, sufficient to make some people extremely rich in the transition of collective property into private hands, and to leave others high and dry.

Since the necessary legal and judicial conditions for the process of privatisation which would guarantee fair play have not been created, attempts to enter the process of privatisation from the best possible starting positions are becoming evident. They are determined by the state, of course, or rather its institutions, primarily the republican government, since the agency for evaluation of the property intended for privatisation operates as its part. According to many, the key of privatisation lies in the mentioned agency which, being in charge of evaluation of property to be privatised, can stimulate or discourage possible buyers depending who appears in this role.

That is why it is not at all unimportant what the government of Serbia, which the former prime minister Mirko Marjanovic will form, will be like. This is indeed one of the reasons why Serbia, not even six months after the parliamentary elections, still has not got the new cabinet.

And while composition of the government resembles bargaining among parliamentary parties, moves are made behind the scene which are intended to provide the best positions at the very start. The law itself was made so as to be convenient for those "who are close to the fire". It prescribes privatisation of the largest enterprises according to a special government program, which means that the best opportunity will be given to those who are either in it or at least have good connections with the government.

The program of special privatisation refers to 75 largest Serbian entrprises, from oil industries, the electric company to cement works and manufacturers of cigarettes. This package has already acquired the attribute "ministerial", because it is believed that it will first be made accessible to the members of the cabinet, less as buyers but more as people who will enjoy conveniences in the role of sellers.

Under the pretext of care for state and social property, a struggle for ministerial posts is going on, but also for key positions in management boards of enterprises which will be put up for sale. In the past few days, in the oil industries of Serbia, for instance, the president of the management board was replaced. The new president of the management board is Zivko Sokolovacki, one of the high officials from the leadership of the Yugoslav United Left (JUL). This party coalition headed by the wife of the president of Yugoslavia, holds the key positions in the electric company as well, in which the manager and the president of the management board are also its prominent members.

The posts of presidents of management boards of large companies are the most attractive ones, so that certain high officials of the Socialist Party of Serbia (SPS) hold up to ten odd such posts. Apart from quite high income, they bring conveniences in decision-making. That in this process of "winning" the largest possible number of enterpriese which are well-off, conflicts are quite ruthless both among parties but also among individuals is illustrated by frequent arrests of "big fish" who were untouchable until just recently. It is obvious that appetites are much bigger than property which should be privatised.

And while "war" is waged among the leaders of parties over "juicy morsels", the less attractive enterprises are offered by the ruling strata almost as a gift: such property is worth nothing until big money is invested in them. The law had no understanding for all categories of the population either, because almost half a million people were deprived of the right to donated shares. The law prescribes that for every year of work, each employee is entitled to 400 German-mark worth of shares as a gift, which cannot be sold in the following five years.

Besides, they are entitled to 20 per-cent discount in purchasing shares. The law, however, deprives many of the right to donated shares and to purchase them at a reduced price. Those who were employed in branch offices of enterprises from other republics of former SFRY are damaged the most. Such approach was explained by application of recoprocity, because the other republics acted in the same manner, which are all parties at the litigation concerning division of property of the former joint state.

Each of them fears to give shares free of charge to its own citizens who were employees of enterprises from other republics because in the process of succession it might have to compensate the true value of the property which has remained on its territory. Because of that, it is assessed, about one million people from the space of former Yugoslavia will remain in an unequal position in relation to their compatriots, although they had also participated in creation and improvement of social and state property. It is not impossible that this category of people will appear in front on international arbitration which is expected to resolve the question of inheritance of property of former SFRY by its former republics.

According to the law on foreign currency savings drafted by the federal government, the citizens whose savings were spent by the state will also be entitled to purchase shares at a reduced price. Depositors will be offered to choose whether they will buy shares with their emptied savings accounts or wait for their savings to be paid to them in 12 years when the last instalment is due. Of course, this will happen if the state obeys the law which should soon be passed by the federal parliament.

Inheritors of the dead who would have been entitled to conveniences prescribed by law had they been alive are also deprived of the "privilege" to be given free shares or buy them at a reduced price. Since this is a personal right, many lawyers believe that inherotors should not have been deprived of inheritnce of their ancestors.

All this shows that not even the "crumbs" have been distributed fairly. The deprived can do nothing but find consolation in the fact that it is uncertain whether this "gift" would have further deteriorated their already difficult financial position, because apart from four or five thousand so-called well-preserved enterprises which might pay dividends to their owners, and these have already attracted the attention of the influential, everything else is practically worthless.

Ratomir Petkovic

(AIM)