Stifling of Independent Media in Croatia

AIM Zagreb, 25 November, 1998

The ruling Croatian party, the Croat Democratic Community (HDZ) seems to be in the severest crisis since its foundation. In the past months in Croatia, secret services are publicly waging war against each other, Tudjman's closest associates are submitting their resignations and then declaring war on the HDZ, and certain independent media are in the state of permanent fear for their existence. Despite their high circulation, Nacional and Feral Tribune are, perhaps more than ever, threatened with shutting down - more precisely, stifling - because certain centres of power have obviously reached the conclusion that existence of such journals might jeopardise their already extremely questionable survival in power. The present crisis has because of that, at least when these two journals are concerned, reached its culmination, since the "sophisticated" pressure exerted on them, by means of financial instruments, has indeed threatened even with their disappearance.

What is it all about? A short introduction is necessary at this point. Majority of Croatian newspapers are sold via the sales network called Tisak. It is a chain of two thousand newsstands which used to be called Vjesnik. Tisak is the greatest enterprise of this kind in Croatia and it is quite justified to say that it has the monopoly in the business. Tisak covers almost 65 per cent of sales of all editions of Europapress Holding, the greatest newspaper publishing company in Croatia, as well as a similar percentage of Vecernji list, Feral, Nacional and all the other journals on the national level. Local sales networks, such as that of Novi list from Rijeka or Slobodna Dalmacija from Split, are significantly smaller, and sales by colporteurs is almost negligible - in comparison with Tisak. In other words, all the publishers are constantly dependent on Tisak, because the biggest share of the money necessary for their survival flows in from this sales network. According to all the rules of normal economy, Tisak ought to be a profitable, solvent enterprise, since it does not deal with any non-cash means of payment. At two thousand newsstands, only ready, cash money is paid every day, and the only task of Tisak's accountants is to charge the publishers very high circulation and transportation expenses, collect sales margin, and pay what is left of the selling price to the account of the publishers. After that, the only job left for the employees of Tisak to do should be just to pay taxes to the state, and divide among themselves high and sure earnings.

That is why, two years ago, Tisak ranked second among Croatian enterprises according to its profit - next to INA oil company. According to data for 1995, Tisak made a daily revenue of more than two million German marks, and last year it made the total revenue of over one billion and a half kunas (about 400 million marks), and after paying taxes, Tisak's profit was about five million marks. For Croatian circumstances, Tisak is, therefore, a gold-bearing mine which can, practically, never fail.

That is what it would be like according to the rules of a normal economy, but unfortunately, Croatian economy cannot be said to be that. In this business - Croatian newspaper publishing - the most influential virus because of whom collapse threatens many other publishers and not just the two mentioned independent weeklies, is called Miroslav Kutle. He is a newly fledged Croatian "tycoon". In Croatia, this word stands for wealthy persons who have become that after proclamation of state independence, owners of former state enterprises, and in the unspoken meaning, the concept of "tycoon" in fact implies a rapacious person, a favourite of the party in power, charged with the task to take over control of what once used to be sound enterprises and to suck out all their ready money which is then shared by the tycoon and the party in power. Before taking over Tisak - which was assigned to him because of its strategic political significance of this enterprise - Miroslav Kutle was buying Croatian enterprises at a frantic rate, having arrived at the figure of approximately a hundred and seventy of them! His empire, called the Globus Group, thus became the second or perhaps even the first in the state. Kutle bought these enterprises with the help of easily granted loans by state and minor private banks, such as the Bank of Dubrovnik. But, a significant number of enterprises from the Globus Group, like majority of them in this country, operate badly - before the war, Miroslav Kutle ran just a small coffee shop - and, after all, loans had to be paid back.

Miroslav Kutle, however, was not capable to do it, but what he was capable to do was to pull along with him towards the bottom, all the enterprises he could get hold of. His collateral for new loans was previously acquired possessions, primarily Slobodna Dalmacija which he abandoned only after he had burdened it with a debt of eighty million German marks, and this newspaper was then, along with the debt, taken over by the state. Wiser bankers had predicted such a disaster, so they demanded from Kutle - as a collateral for the loans - guarantee of Tisak. For instance, that is what Neven Barac, manager of the Bank of Dubrovnik, has done, and others followed. That is how it happened that Kutle's loans started being paid back from the income of Tisak. That is how gradually the loss was created which is estimated by some sources to amount to 10 million marks, and by some to as much as 30! For quite some time Tisak failed to pay the bills for cigarettes - which form a little less than half of Tisak's turnover - but, after merger of the Rovinj Tobacco Factory and the Zagreb Tobacco Factory - which made them a monopoly in tobacco industries in Croatia - the tobacco trust withdrew its products from Tisak, so wishing to continue to sell cigarettes, Tisak was forced to pay the debt to Rovinj Tobacco Factory. But, in order to pay this debt, Tisak withheld its dues to publishers, primarily those which are a thorn in the side of the ruling party: Nacional, which until a week ago Tisak owed about 800 thousand German marks to, and Feral which Tisak owes 200 thousand marks to along with the debt of more than 700 thousand marks which should, but never will be paid to this weekly by the sales network of Slobodna Dalmacija from Split.

Miroslav Kutle has in this way encountered problems which he will not be able to resolve in the long run, and others are an unsolvable riddle for him even in the short run. In the beginning of past summer, Kutle was not able to pay off even the shares of Tisak - which his enterprise, the pompously called International Newspaper Corporation, had bought, so the Privatisation Fund took them away. But, in the past weeks it was decided - behind the scenes, obviously, by the party leadership which is manifesting signs of panic - that these shares be returned to Kutle after all. "The alternative to that is ruin", said president of the Chamber of the Economy, Nadan Vidosevic. He failed to explain whose collapse, nor did he offer a chance to the journalists to ask him that, but it was more or less clear that he meant Kutle's ruin. And if Miroslav Kutle is ruined, everybody knows, he will pull along with him 170 enterprises, the economic crisis in this country will be deepened to enormous proportions, additional several ten thousand unemployed will be thrown out in the street, and, which is not at all insignificant, HDZ will be left without one of the important levers of power - Tisak. Problems which Kutle will soon not be able to solve are, only in the sphere of newspaper sales, the mentioned ten-million mark debt which Kutle has transferred from t he rest of his empire to Tisak. Where will he find that kind of money? After the terribly serious threat of collapse of the Croatian banking system - because of the very same catastrophic granting of loans with political motivation, which bank will dare grant new loans to Kutle when it knows in advance that it will not be able to get back even the interest, least of all the capital amount? On the other hand, it seems that the co-owner of Tisak is the greatest Croatian publisher, Nino Pavic - ownership relations in Tisak are not transparent for the public - which makes this story even more complicated.

But, this is a completely different problem, in solving of which the state will have to participate, but it seems not this one - which seems to have neither the will nor the knowledge to avoid political ruin and economic bankruptcy

• but, probably the one coming after it. The problem of Tisak can be solved in only one way. "I am certain that the whole story has a political background", says Ivo Pukanic, editor-in-chief of Nacional. "The rigid faction of the HDZ, headed by Ivo Pasalic is trying to ruin Nacional with the help of Miroslav Kutle and his Tisak, because it has obviously become a big obstacle in carrying out their plans. The attempt to destroy Nacional is, I believe, the so far severest attack on freedom of the press in Croatia. I dare even compare this with the situation in Serbia". The only solution Pukanic sees is urgent taking Tisak away from Miroslav Kutle and returning it to state property again, after which it could in a couple of years be resold to new private owners. The government, which Pukanic appealed to, did not show any interest for this idea. Kutle's ship is therefore sinking, slowly but surely, dragging along numerous both accidental and intentional companions. The former among them could be, as it was said in the beginning, sacrificial lambs in the form of independent newspapers whose drama has not yet been ended. The question of Tisak - which has for a long time been marginalised by the international community, partly because of ignorance and partly because of priority of democratisation of television - has finally, due to the latest developments, been promoted into an important problem in Croatia: CNN has reported about Nacional on its Internet pages, and the world association of journalists has accused president Tudjman - among other - of exerting pressure on independent journals by means of Tisak's monopoly. This raises some hope, but uncertainty will disappear only after newsstands become property of those who only naturally should be their owners: small private entrepreneurs, families which wish to do small, but sure and honest business.

BORIS RASETA