Progressive Defence

A real campaign, or counter-campaign, was launched recently against the Democratic Party (DS) in defence of Serbian Prime Minister Mirko Marjanovic who is also director of the Progres foreign trade company, and the so-called gas arrangement with partners in Russia. It was a barter deal (goods for goods); Serbia gets Russian gas and pays for it in shoes, clothing and furniture. Progres is the middle man.

Anyone who knows how much Serbia loves foreign trade via goods lists and its efforts to defend clearing payments, despite well intentioned expert advice that it was just damaging the economy, has to be surprised by the flood of ordered defenders of the gas deal and the Serbian prime minister.

The amount of fuss surprises the uninformed: wasn't something wrong with the gas deal? VREME tried to find out and here are some details.

Marjanovic, in the years before he became prime minister, held an enviable trade position in Moscow. He made big deals, like the gas deal which is worth 200 million USD, before he took office. VREME has no reason to reveal details of the deal which the businessmen involved considerable trade secrets but everything points to the conclusion that the deal was a classic goods for goods trade. That does not mean the deal was not mutually beneficial, especially for the Belgrade company which mediated both ways. That trade position has to be paid for. Some company directors said Progres used its accounts abroad to pay debts by Serbian companies under the sanctions so that they could do some business at least.

That's why the reaction is not understandable. Political and business circles said, but would not verify, that the current explosion stems from the fact that Marjanovic kept quiet for a long time over accusations that he was directing wheat exports. They added that he was silent because he was covering up the decision by a higher instance to give the wheat deal to a private company owned by JUL (or JUL official Zoran Todorovic) and that most of the vast profits were being used for the party's election fund.

Even if that speculation isn't correct, the prevailing impression is that the family and friends aren't losing control of the national economy. In other words, if Marjanovic was wrongly accused of illegal activities in the wheat for gas deal, that does not mean he is innocent considering the obligations he took on as prime minister.

The list of people who are guilty of not meeting their mandate obligations is longer than the acceptable length for an article but it boils down to the formula: preventing privatization. Last week in a meeting with representatives of an international revision company, Marjanovic did say regulations are being prepared which would allow foreign investors majority shares even in public companies. Also, at the recent SPS congress, he said one of the priorities is a speedy building up of the market economy system.

Whoever thinks these are nonsense dilemmas can check the results of visits by business delegations from the West. Check the basis for the latest statement by Serbian minister coordinator Dragan Tomic that the Serbian economy is attractive to foreigners because it didn't destroy its capacities and the market many lost in the "much praised transition", i.e. what National Bank Governor Dragoslav Avramovic is suggesting. It's true that foreigners start deals with Yugoslav companies with no special guarantees. At first glance. A British bank is financing (60 million USD) the reconstruction and expansion of the Montenegrin merchant fleet but the ships have been mortgaged. Another British company is about to sign a deal on financing (45 million USD) the renewal of aluminum and steel production in Podgorica and Smederevo but that loan will be paid for in goods from state companies.

Everything else is standing still although there are interested investors who would like to see deals worth up to a billion dollars. Everything will stay as it is until privatization is allowed. Possibly there will be trade with Russian companies but that will be a step back. And the family and friends will put their percentages in Western banks.