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    Copyright: The following text is for personal information only. Any professional use or publication in written or electronic form is subject to an agreement with AIM, 17 rue Rebeval, F-75019 Paris, France

    WED, 12 NOV 1997 22:23:24 GMT

    "Gala beginning" of Privatization in Serbia


    The Serbian Law on ownership transformation came into force on 31 October, and its initiation, much more than by the appropriate festivity at the Chamber of the Economy of Serbia, was marked by the murder of a high leftist "privatizer" Zoran Todorovic and swift devaluation of the dinar. What is actually happening?

    AIM Belgrade, 5 November, 1997

    There are many arguments which speak in favour of the thesis that coming into force of the Serbian law on privatization on 31 October this year, in a way cost Zoran Todorovic alias Kundak, secretary general of the Yugoslav United Left (JUL) and director general of oil company Beopetrol, and owner of a few wholesale enterprises (killed on 17 October), his life. First, news leaked in public that Todorovic was in a hurry to change the privatization plan of Beopetrol, the company which was established based on the network of former gas stations of INA from Zagreb (those that happened to be on the territory of Serbia), and that this was the reason why he clashed with those who had already considered this network their own and were just waiting for the law to come into force to privatize it, since from the very beginning of the Yugoslav war they had used it for distribution of smuggled fuel and derivatives of oil from the "liberated" (of Croatia) oil wells in Baranja and Western Srem.

    According to a somewhat different, but essentially similar version, Zoran Todorovic did not work only for his own benefit, but was also making plans for Beopetrol to be swiftly claimed by JUL, and to enable this leftist organization, created by the wife of the president of FRY Slobodan Milosevic, the very day after legal privatization begins to appear as the private buyer of the main distributer of oil in Serbia, Belgrade Jugopetrol which is controlled by Dragan Tomic, high official of the Socialist Party of Serbia (SPS) and the current acting president of the Republic of Serbia. It is, of course, difficult to find evidence for any of such allegations, but the mentioned stories easily fit into the obvious "personal comradeship" of the most powerful family in Serbia, family Milosevic-Markovic, with the top of the state, financial and economic authorities in the state, so it is almost improbable to assume that the latest series of murders of prominent individuals from this powerful circle has nothing to do with announced "ownership transformation" which was approved politically by that circle and which will be controlled by that circle. The experience of other countries which carried out privatization shows that this process is always accompanied by series of murders, but usually the victims were directors of state agencies for evaluation of the capital (like in Czech Republic, for instance).

    The other important signal that the law on privatization has finally come into force is the return of inflation to the Yugoslav market, that is, the fast drop of the exchange rate of the dinar in relation to the world currencies - however illogical it may seem. In fact, since serious and comparatively just privatization through purchase of shares on credit and with relatively long payment time limits is fatefully connected with stability of the domicile currency, return of inflation to Serbia can, nevertheless, be interpreted in two logical ways.

    The first is that the market reflexively reacts to uncontrolled issue of the dinar with which the "favourites" of the central bank should buy the economy (famous profitability of privatization with "someone else's money"), and the other is that inflation was set in motion by powerful state officials who need re-devaluation of the remaining social property - in order to be able to buy it more easily with privatized state foreign currency reserves, which, allegedly due to the world sanctions, they "had to" put away on their personal bank accounts on Cyprus, in Greece, Russia, Udzhbekistan, Tadzhikistan and other friendly countries whose financial authorities are not too strict. The technics of the latter mechanism was deja vu in 1993, but the results of privatization at the time were simply cancelled by law, because the political leadership obviously was not satisfied by distribution of property, since pursuant the previously valid law it did not have mechanisms for precise control of privatization processes.

    The fact that in the past several months the dinar somehow resisted the powerful pre-election increase of the quantity of money (from 5 to almost 10 billion dinars) but started to drop when the law came into force speaks in favour of both versions according to which coming into force of the law on privatization is connected with the current decline of the value of domestic money and the threat of a new surge of superinflation. As noted by the author of the law, Prof. Dr Mirko Vasiljevic, neither the state nor the enterprises have created institutional preconditions for privatization. Vasiljevic, however, believes that the very inauguration of the law will set enterprises in motion to "identify" their property (which has not even been registered in the compulsory state registers and land registers).

    After that, five thousand Serbian socially-owned enterprises must determine their own value according to the legal "return methods", and this process will be extremely slowed down by the fact that there are only about a hundred odd "evaluators" in the state. After that the enterprises must make programs of their privatization which would be, as he said, a "projection of their future ownership picture". These latter Vasiljevic's words sound ambiguous. From the professional aspect, it is only normal for the enterprises to reach the decision about the so-called "autonomous privatization" (euphemism for uncompulsory privatization), to have their program of objectives to be attained by radical property transformation. From the other, political aspect, Vasiljevic evidently means the process of "approval" of this program of privatization - "where it should" take place, if the mentioned projection of "property picture" does not coincide with "national interests".

    That the Serbian political centre is greatly interested in direct control of ownership transformation of a certain number of enterprises, and that it intentionally wishes to remove privatization of other (mostly successful) firms from the insight and influence of state mechanisms - was illustrated by the publication of the list of 75 firms which will be privatized by special approval of the government of Serbia. Allegedly, over 500 directors had applied to have their enterprises entered on this list, since without financial intervention of the state they see no possibility to save them from bankruptcy, and the political centre was forced to reduce the circle of "state privatization". Some of the socialist directors are allegedly "punished" by introduiction of their companies in the mentioned list, so that they will not be able to privatize them as they would like and with "their" foreign partners (Dusan Matkovic with Smederevo Sartrid 1913 is mentioned in this context), but majority of them are satisfied. The criterion of "national significance" was obviously not decisive for the revisor of the list, because it does not include, for example, the two greatest trading companies in Serbia - Progres (director is the prime minister of Serbia Mirko Marjanovic) and C Market (Director is Slobodan Radulovic, vuice prime minister of Serbia).

    In Serbia, privatization was outright refused for a long time. All the attempts of privatization according to the recipe of the last prime minister of SFRY Ante Markovic were liquidated in time. Social ownership is eternilized in the republican constitution. For years, privatization was officially described as the greatest social evil. Now when departure of Serbian socialists from power is in sight, they themselves have made up their minds to proceed with privatization, but privatization which will be carried out in the circle of "fitting families".

    Dimitrije Boarov