|
Kosovo:
Open for Business
Kosovo became
an independent state in February and was
immediately recognised by the US and most European
countries. We look at one of the reasons why.
Kosovo emerged as an independent State after decades of uneasy
existence as part of Serbia. There was an inevitable new anthem and new
flag. But there are real political concerns best not forgotten in
the ballyhoo and hopes for a brighter future.
One man interviewed by the BBC’s Mark Madell described how during the
war he fled his village with many relatives under attack by Serbian
troops. He had to leave his aunt behind and she was burnt to death. He
said: “Kosovo is rich in minerals and rich in farming land, is rich in
all other aspects. Here, we provided wealth for so many years for the
whole of Yugoslavia, there is no reason why we cannot provide now for
just Kosovo. That’s why I’m saying Kosovo has a bright future.” (Mark
Madell’s Euroblog: ‘Mining Kosovo’s Future’ 29 January)
Alongside the declared humanitarian reasons for the UN intervention in
the Balkans in the 1990s there were other, economic and political,
considerations also in play. It is these interests that will shape
future developments in the states of the former Yugoslavia and dominate
the lives of workers there.
The New York Times (8 July 1999) carried an article by Chris Hedges
about the Stari Trg mining complex in Trepca, Kosovo. Possibly
inadvertently, it gave an insight into some of the considerations
that surrounded the decision to intervene. According to Hedges, “The
sprawling state-owned Trepca mining complex, the most valuable piece of
real estate in the Balkans, is worth at least $5 billion.”
It was the reported view of the mine’s director, Novak Bjelic, that
“The war in Kosovo is about the mines, nothing else. This is Serbia’s
Kuwait – the heart of Kosovo. In addition to all this, Kosovo has 17
billion tons of coal reserves.” The Yugoslav web site
www.yugoslavia.com (now defunct) described Trepca as having the
“richest lead and zinc mines in Europe.” The capacity of the lead and
zinc refineries ranked third in the world and the area as a whole
represented some 80% of Yugoslavia’s mineral deposits. The problem was
they were old and inefficient and seriously polluting.
According to Michael Palairet of the University of Edinburgh, a leading
authority on the economic and social history of the Balkans,
"The Trepca system 'as a rule' lost money under Yugoslav socialism …
Because of Trepca's incapacity to generate funding of its own for
investment, all investment funding had to be financed externally, by
fund providers who did not anticipate that they would see any return on
(or of) their capital." In his opinion the $5bn figure quoted by Hedges
above was exaggerated. However while Trepca consistently performed
poorly, this was not because it could not have been managed more
effectively: "Unlike most heavy industry… Trepca had good mining assets
and low cost access to energy, so on the face of things there were no
structural reasons for its inability to trade profitably.” (European
Stability Initiative http://www.esiweb.org/pdf/esi_bridges_id_2_a.pdf
)
Further insight may be gained into the economic underpinnings of the UN
intervention from a report by the International Crisis Group. The
report is interesting in that it provides further evidence that the
breakup of the former Yugoslavia was in large part motivated by
conflicting economic interests. The various regions of the Federal
Republic had fallen out over how their assets and liabilities were to
be divided and allocated. The differences were long standing and could
not be resolved peacefully. In other words it was a fight among
competing capitalists interests. One of these interests lay in Kosovo –
the supposed “heartland of Serb identity.”
“Trepca is a sprawling conglomerate of some 40 mines and factories,
located mostly in Kosovo ... Its great mineral wealth is the basis of
the economy of Kosovo, but the complex is badly run-down as a result of
under-investment and over-exploitation by governments in Belgrade.”
(Trepca: Making Sense of the Labyrinth (ICG Europe Report N°82, 26
November 1999) http://www.crisisgroup.org/home/index.cfm?id=1585&l=1)
In 1974 Tito’s new constitution accorded the province near-republic
status, with its own parliament and courts, Kosovo elites enjoyed a
period of greatly increased control over their own resources. They used
their enhanced authority to build factories in Kosovo that capitalised
on their mineral production, created thousands of jobs, and brought
some income into the province.
After Tito’s death, pressure grew for more rights and greater political
and economic autonomy, but with little success. Belgrade reasserted
control of the mines. Kosovo Albanian workers were accused of
having stolen vast quantities of gold and silver and many engineers and
technicians were fired.
“From 1981-89, Belgrade monopolised the export of Trepca’s minerals to
Russia and elsewhere, reaping the profits in hard currency and oil,
while compensating the Kosovars only with electricity and other
non-fungible forms of payment.…
Trepca’s Kosovar management attempted to sell its products on the
European market and to modernise the facilities’ modes of production,
only to be foiled time and again by the Serbian government, which was
in the process of “integrating” Serbia’s economy – that is, of
tethering all economic sectors even more closely to Belgrade.
By the late 1980s, with the final integration into the Serbian system
of the power generating system, Kosovars had lost virtually all control
over their economy, as they would over their politics and civic
freedoms.” (Trepca: Making Sense of the Labyrinth (ICG))
In 1996 Trepca had
exported $100 million of products, making it the largest exporting
company in the Federal Republic of Yugoslavia and an invaluable foreign
exchange earner at a time when the country was experiencing grave
economic difficulties.
Throughout the 1990s the ownership of Trepca conglomerate was never
entirely clear. In November 1997 Trepca was under consideration for
privatisation by the federal government in Belgrade. This process
stalled when the ‘red businessman’ Zoran Todorovic, was murdered by a
gunman in Belgrade. Todorovic had been a close confidant of Slobodan
Milosevic and was one of the richest men in Yugoslavia. He was
one of a group of state capitalists who had been able to use their
political connections to purchase state assets at bargain prices. (He
was also director of Beopetrol, another state firm in the process of
being privatized.) This was in effect a conversion of state owned
assets into de facto privately owned ones by the ruling capitalist
class.
Officials of the UN Interim Mission in Kosovo (UNMIK), who took over
governing Kosovo in 1999 after the withdrawal of Serbian troops,
concluded that the complex was overall public property and
therefore came under their authority in accordance with its mandate.
The then head of UNMIK, Bernard Kouchner (now French Foreign Minister),
confirmed that an international consortium had been appointed to run
the plant. A $16m (£10.7m) investment package was also announced,
funded by Britain, France, Spain, Germany, and the EU. The money was to
be spent on a full-scale refurbishment of the plant prior to it being
sold off. “We have no intention of closing any part of the Trepca
mining complex. On the contrary, we’re going to make it safe and
profitable.” he said. (The Guardian, 15 August 2000, http://www.guardian.co.uk/world/2000/aug/15/balkans)
But it was not only the mines that capitalist interests had their eyes
on. In July 2000 it was announced that a fund run by the billionaire
George Soros was to invest $150 million (most backed by U.S.
guarantees) in companies in the Balkans. Soros Fund Management would
invest $50 million of it own equity in new businesses, expansions or
privatization in the region and would have full autonomy to choose the
investments in a whole swathe of South East Europe. Soros had invested
millions of dollars in philanthropic endeavors in the region, but said
this fund would practice “tough love,” and be driven purely by profit.
The U.S. Overseas Private Investment Corporation had agreed to provide
a loan guarantee for another $100 million of investments. OPIC
describes itself as a self-sustaining federal agency that sells
investment services to American businesses expanding into emerging
markets around the world. It provides a level playing field for U.S.
businesses in emerging economies.
“Since 1971, OPIC has supported nearly $130 billion worth of
investments that will generate over $61 billion in U.S. exports.” (http://skopje.usembassy.gov/southeast_europe_equity_fund.html
)
The Soros investment was conceived at a “donor” conference in Sarajevo
in 1999. It was one of a series of efforts to take advantage of
emerging investment opportunities in the Balkans. “A year ago, after
NATO won the war in Kosovo, more than 40 leaders came together in
Sarajevo determined to win the peace with economic investments”,
according to National Security Advisor Samuel M. Berger.
George Munoz President and CEO of OPIC said he was pleased that they
were making the region safe for international capital. It was a
demonstration that “Southeast Europe is an important region on which we
should focus our efforts, to enable it to rebuild and enter the global
marketplace as a full partner. The Southeast Europe Equity Fund is an
ideal vehicle to connect American institutional capital with European
entrepreneurs eager to help Americans tap their growing markets.”
The Soros Private Funds Management, he said, was sending “ a strong,
positive signal that Southeast Europe is open for business.”
GWYNN THOMAS
|
|