Forward-backward

Privatization is the prevailing nightmare of Serbian directors. The battle for property in Serbia did not start with the workers' current ``rebellion over property,'' but with the civil war in Yugoslavia. Perhaps the war for territory after the disintegration of the Socialist Federal Republic of Yugoslavia, is only a variant of the war waged in dismembering the lean corpse of Yugoslav ``sociallyowned'' property, left over after the break down of ``selfmanaging Socialism in the country.''

It is interesting that the war over property has managed to slip away from public attention so far. It has recently become obvious that in the hinterland of the bloody war in Bosnia and the Krajinas, behind the smoke curtain of numerous elections and clashes between the opposition and authorities, during the chaos of hyperinflation and mafia banking scandals, a quiet and speedy privatization of half of Serbia's industry has been carried out.

The question which crops up now is: can the wheel of privatization be turned back? At the recently held 12th Congress of the Alliance of Independent Trade Unions of Yugoslavia held in Novi Sad, it was said that privatization must be stopped. This stance was then toned down with the formulation that ``changes of property relations must be made subordinate to the opening of perspectives for work, structural changes of the economy, an efficacious economy, market competition and social justice.''

The presidency of the Serbian Chamber of the Economy which has already proved itself in protecting the regime from the economy, gave its support indirectly for a revision of privatization when discussing directors who ``thanks to their position, and not their money managed to acquire a large number of shares.'' Economist Zoran Popov said that a great part of social wealth had ``spilled over'' into the private sector through the ``correct implementation of erroneous laws.''

The Federal law on the transformation of sociallyowned property was adopted in summer 1990, taking as its criteria, the bookkeeping value of the sociallyowned property of a firm, which, because of its underrated value greatly multiplied the discounts which were approved for the purchase of ``internal shares'' approved to the employees. Since evaluation was not obligatory, and since no one was authorized to control the transformation, and the payments from the shares practically remained within the firm, the model resembled a free division of social capital to the employees (all the more so as the firms could credit the employees in the whole matter, and this could be carried out by manipulating salaries).

It was concluded in Serbia that former Yugoslav PM Ante Markovic was buying himself a political career with this law, and taking power away from Serbian President Slobodan Milosevic's political elite. Serbia adopted its own law on the transformation of property in 1991, whereby a republican state agency was responsible for carrying out the evaluation of capital. However, the hyperinflation which was promoted by the Serbian leadership in order that it might finance the war, lasted too long (a year), so that the shareholders with a fiveyear installment payment term, practically got the factories for free. However, it remains to be seen if they have really profited; part of the state apparatus believe that they fared badly in this unsystematic privatization.

This is why the ``property rebellion'' is being promoted by forces of ``social justice'' sitting in government offices, who before and after each management change, at the demand of ``deprived workers'' and with the help of the police, declare some as ``being unfit for ownership'' and pass the privilege to others, or even ``abolish shares'' and give the workers back the illusion of sociallyowned property.

Scandals such as these, in which the authorities remind ``errant directors'' with the help of the police, of who has enabled them to become what they have become, throw a ray of sunshine on the far gone privatization of Serbia's industry. It still remains to be seen if this privatization has been carried out ``in spite of everything,'' or, if everything else has been burned down and staged, in order that the new owners might acquire enormous chunks of property.

In the last two years, in spite of the Serbian socialists' loud claims that they would not allow the ``sale and looting of Serbia,'' a cheap property transformation has gone a long way. According to data given by the Agency for property transformation in the Republic of Serbia, 2,573 firms have passed into private ownership since March 1994, which is close to 72.6% of the entire number of firms (3,543). In these ``transformed'' firms 45% of the capital is sociallyowned, while 660,000 employees have bought shares (i.e., 80% of those working in the firms). This means that 37% of the entire number of working people in Serbia own a share of Serbia's state capital. Since about 36% of the capital is ``state owned,'' and 45% is ``privatized,'' simple mathematics lead us to the conclusion that those who were ``asleep,'' or concerned over the ``solution of the Balkan crisis'' and the ``national program,'' have been left with less than 20% of the former ``social capital.'' Everything else has been grabbed. It is very likely that not all those among the ruling elite fared well, because it has long been obvious that there are two opposed currents within the SPS and the state apparatus with regard to ``ownership transformation'' . Last summer the hardliners prevailed so that a draft law appeared before the Serbian Assembly on the ``freezing'' of regulations which allowed the speedy, and in conditions of hyperinflation, profitable privatization.

The orthodox Marxists and the supporters of social justice are not giving up all that easily. A few months ago they pushed through a new package of laws sponsored by the Federal government which ensured the state's arbitrage in the ``transformation'' of the remaining capital and a mass ``revision'' of the already carried out privatization. The opposition and a good part of National Bank of Yugoslavia (NBJ) Governor Dragoslav Avramovic's team of experts are opposed to this legislative project. The possibility of revising the transformation is not only linked to the violation of existing laws, but it is demanded that it be carried out when it is obvious that ``great damage has been done with regard to sociallyowned capital.''

Under the old regulations, a reevaluation of the deposits used to buy shares on an installment plan, was carried out only once a year. In the greatest number of cases hyperinflation made privatization a free gift. If the process of reevaluation were placed within the competency of republican agencies, the public legal office, the public prosecutor, the financial police, the trade unions and ``all persons and bodies who have a legal interest in seeing that a reevaluation of the property transformation is carried out'' were allowed to demand revisions, it turns out that literally anybody could challenge any of the already completed ``transformations.'' Everything would come to a standstill, because under this same project, those firms which would be reevaluated would not have access to their money until the process came to an end. And what litigation over property rights in Serbia has ever lasted less than a decade?

There would be no new privatization of that which had remained, because the new legislative project foresees a monthly revision of the installment pay off of shares. And who in Serbia is now prepared to buy something at a ``realistic price'' when they didn't want it when it was dirt cheap?

The above mentioned project sponsored by the Federal Government has not been welcomed by experts who have worked in the regime's apparatus. Serbian PM Mirko Marjanovic asked that it be withdrawn from the Federal Assembly while the government studied it. Deputy Director of the Serbian Agency for transformation Miodrag Zec who is also a member of Avramovic's team of experts, put forth a number of arguments against the Federal legislative project.

Zec underscored that it was practically impossible now to ``reevaluate'' the payments of some 660,000 shareholders, all of whom had profited and earned ``inflationary income.'' Zec said that the law, because it is a general category, cannot classify all these shareholders into big and small winners, so that an attempt at ``punishing'' all and annulling all shares, would result in legal chaos and insecurity. Zec believes that it would be impossible to implement such a law, because some of the new ``revised'' owners would not have right of access to their property.

The ``Matroz'' JointStock CompanySremska Mitrovica

The affair over the dismissal of the general director of the only newsprint factory in Yugoslavia, Vladislav Trecak, and the resignation of alleged ``Matroz'' major shareholder and president of the executive board Milenko Isakov, attracted public attention, because the nod for a property transformatio n had allegedly been given by the Ministry of Information which didn't want to lose control over a politically vital raw material for the ``production of public opinion.''

In midMay the workers announced a general strike because they suddenly discovered that with their 16.5% participation in property ownership, they didn't have their representative on the firm's executive board. The state which holds 49% of the capital invested in ``Matroz'' didn't appoint its representative. The director allegedly didn't share out the promised internal shares, but said on May 12 that the workers were on paid leave and threatened with dismissals. There were accusations that private firms had used sociallyowned capital to arrive at their part of the shares and finally win total executive control.

Milenko Isakov, who owns the Belgradebased firm ATL and is coowner of several other firms, said after meeting with the workers that he had gained the impression that they wished to go back to being a socially owned company. Director Trecak said that Isakov had helped transfer ``Matroz's'' seven million dollars' worth of debt via London to a Vojvodina Bank subaccount in Cyprus. Trecak claims that Isakov arrived at his 700 shares legally, having bought them with his own money. A link between these two firms was set up after ``Matroz'' bought a fifth of the shares in ATL. With the money it got, ATL bought 338 shares in ``Matroz'' (in Montenegro the system of exchanging shares was the main form of socially owned property transformation). Without going further into this story, because precise data are lacking, it must be noted that this case has shown that by buying off a foreign debt for a relatively small sum of money, it is possible to acquire nominally much greater capital, because our debts ``cost'' fivesix times less than their nominal value on the secondary market of papers of value. When sanctions are lifted one day, we will see who took advantage of the situation.