Adventures of a Minister-Astrophysicist

They confiscated merchandise, but kept no records. "Victims" were issued vouchers for the warehouse of the market inspection at 120 Third Boulevard (several hundred yards distant) where records were to be prepared, the identity of owners ascertained as well as the origin of their merchandise, and whether all applicable taxes on it were paid. General thievery and fighting broke out. The infuriated merchants were unloading trucks which the inspectors had previously loaded. At about half past seven the inspectors withdrew under the protection of the police, taking with them three or four trucks full of confiscated merchandise. Revolted, the "Flea Market" merchants refused to work that day. They barricaded Juri Gagarina Street for several hours. After a car slammed into the crowd, several windshields were smashed.

Soon after, the new city fathers arrived on the scene — Mayor Zoran Djindjic, President of Municipal Government Spasoje Krunic, and member of that government and Chairman of Crisis Headquarters for Marketplaces (put together with due speed) Dragan Covic. President of the Merchants Union of the Open Air Marketplace Vlada Markovic told them that merchants were refusing to work until a settlement is reached so that "no such actions occur in the future". The New Belgrade merchants complained that they were "made to flee like animals", that their wares were confiscated as they fled, and that no one asked them for any papers, or gave them any. Even the very rare merchants with official papers complained that much more property was taken from them than was actually recorded. They claimed that there are those who avoided the inspection, bribing the inspectors with merchandise. One of their colleagues, for instance, used a cassette player to that end. Zoran Djindjic called such behavior "highway robbery" and promised to take up the matter with the Government of Serbia. He stated that the city will file criminal subpoenas against the workers of the Ministry of Trade and of MUP. "They always do that when they are in need of cash", he stated.

"All merchandise was legally confiscated", stated Stanojla Mandic, an official with the Federal Trade Inspection. Her Chief, Chief Federal Inspector Srecko Minjovic, explained to the readers of Politika that inspectors are unable to keep records when surrounded by chaos and hundreds of angry people, which is why he issued a command to his inspectors to collect all sacks with merchandise in an orderly fashion, and to attach stickers with reference numbers and order of loading numbers clearly indicated. Over a thousand corresponding vouchers were issued, to which only 400 claimants answered. "They fear fees and penalties", explains Stanojla Mandic. Merchants from the "Flea Market" say that they have no intention of claiming their merchandise because it is well known that inspectors never return what they appropriate. All 400 "claimants" received penalties.

It turns out that the Belgrade trade inspectors sting is part of a Serbia-wide operation, because marketplaces in all 29 trade districts have recently been "attacked". It all began with Friday’s sting at the Belgrade Kvantas Marketplace. The Zelena Marketplace of Kragujevac was witness to a serious incident in which merchants attacked "in self-defense" two members of the Financial Police. Even though the gates of that "Flea Market" were open on Sunday, there was no trading; while in the neighboring streets a significant presence of the inspectors-policemen was observed. However, thanks to a system of lookouts and signals, the people of Kragujevac, armed with chains and clubs, managed to circumvent the siege.

In any case, Monday is not a marketplace day, even though significant trading activity was observed outside marketplaces. In all cities where the Opposition holds the reigns of power, local authorities accused federal authorities of illegality. In Kragujevac several hundred merchants demonstrated throughout the city. In Belgrade, that same morning, the first meeting of the mentioned Crisis Headquarters, the Market Place Authorities and the chiefs of the Union of Merchants was held. The representatives of the Ministry of Trade and Inspection were also invited, but did not accept the invitation. However, Minister Srdjan Nikolic did attend the afternoon meeting with the team of mediators which was headed by Djindjic.

"We did not reach any kind of settlement", was how Zoran Djindjic summed up that meeting. "The Ministry is imposing impossible conditions, so the ‘Flea Market’ will not be working in the days to come". It turns out that, in actual fact, last Monday, June 2, was the day on which the new Law of Minimal Required Facilities for Merchandising came into effect, effectively making all merchandising at the "Flea Market" illegal on the basis of technicalities. New Belgrade’s "Flea Market" is the biggest flea market in the Balkans: it has around 1249 stalls and around 700 parking spots where trading occurs out of cars which serve as stalls. "We already agreed with the Ministry on May 26 to change all stalls to meet new specifications within the next few months. They promised to tolerate the present situation until that time", were the bewildered words of Veselin Jovicevic, Director of the JKP City Marketplaces. Marketplace directors opened renovation contract bids to which six contractors answered. The shortest contract bid placed would see full renovation of the existing stalls within 45 days. While the "Flea Market" is out of operation, City Marketplaces is losing 40,000 dinars daily.

The law responsible for this is the result of the Changes and Amendments to the Law of the Conditions for Merchandising, for Services, and for Inspection, put in place on May 26. These changes and amendments stipulate that new merchandise can be sold in open air (which was prohibited last Autumn), but only if a merchant has a registered store, forbidding at the same time the use of stalls by proprietors of stores registered elsewhere, and limiting the assortment of marketplace merchandise to, in the words of Srecko Minjovic, "goods which do not require special care, declaration or instructions for use".

On Monday Minister Nikolic stated the results of his stings: confiscated merchandise with a value of over 1,600,000 dinars, excise goods (alcohol, coffee and cigarettes) with a value of nearly 500,000 dinars taken from only five individuals, and 400 penalties issued. He lamented the "unacceptable politicization" of this incident, because merchandisers do not pay taxes, excises or duties, creating a hole in the budget which should finance social services expenditures, wages of educators, costs of the legal system, etc. On top of all that, publicly owned department stores are complaining and making demands on the government because the "Flea Market" has taken all of their business. Aren’t those the same enterprises to which the government has been giving enormous tax breaks for years? Those same enterprises in which no one enters except when it’s raining outside because the prices are astronomical, and the assortment of merchandise is comical?

"I would be among the first to stop coming here if I had a job", says one young "merchandiser". The people that come to the "Flea Market" to earn a living are by and large refugees, the unemployed, pensioners (who are not receiving pensions because pension funds are nonexistent) and "the employed" (those who are under forced leave of absence, or those who simply do not feel a need to show up to work because they have nothing to gain by doing so, and whose behavior is tolerated because there isn’t any work for them in any case). Of course, there are those who are better off, like the five individuals who had merchandise valued at half a million. The Minister thus claims that the hole in the budget has been created by those who have been driven to this way of life by the very existence of that hole. Perhaps we should ask an astrophysicist for a commentary on such a claim.

Another meeting was held on Tuesday in the JKP building of the City Marketplaces at the Marketplace Djeram. The objective of that meeting — at least that is what the representatives of merchandisers and directors of marketplaces thought — was to discuss a compromise and a reasonable resolution. The man sent by the Ministry, Radivoje Bojcic, quickly managed to disabuse them.

After yet another session of time-wasting came to an end, the chiefs of the Union of Merchandisers went back to work where they were expected by several hundred colleagues eager for a resolution. The delegation was unable to offer one (it was more a question of saving one’s skin as the assembled crowd was simmering), so that the whole assembly noisily decided to continue their work on Wednesday without regard for the consequences.

Wednesday morning did not see the sort of crowds that were expected. By nine o’clock only a quarter of the merchandisers had showed up. "Usually the place is buzzing by now", stated a security guard at the marketplace. However, the "Flea Market" did begin working. We asked the merchandisers what they plan on doing if the inspectors show up. "I’ll brake the arm of the first one that tries to confiscate my stuff", was the most frequent reply. "I have no other source of income, so that if they are driving me to criminal acts, this is as good a place as any to start".

At yet another meeting of the Crisis Headquarters, this time without the merchandisers, it was "decided" that all conditions will be accepted. "We will place a thousand new stalls of the type required by the Ministry. The existing stalls will be kept, but they will be used for the resale of used merchandise. It is not our job to regulate the kind of merchandise being sold", states Jovicevic. Many were moved to seek the reasons behind the stings in the first Serbian vertical division of authority. The reason behind these measures, supposedly, is to bring the city government to its knees and to ever closer capitulation through expenditures that would completely deplete all its resources. We do not know whether that is the reason for the speedy response of the city leaders, who, it is said by those in the know, had to repeatedly apologize for their harsh language. They were probably moved by the atmosphere of the marketplace. The criminal penalties are no longer being mentioned, so everything has settled by now. The city leaders decided to look on the bright side of things. They will negotiate a large contract from which someone will benefit. The inspectors, whose measly two million is going to be a mere drop in the bucket of the projected billions in the budget — if they get there at all (the funds from confiscated merchandise never show up in government books) — are going to wait for their victim to relax before they make another attack. As the thick fog which enveloped New Belgrade’s "Flea Market" slowly cleared on June 4, the reporter Srecko Minjovic was promising new adventures of the trade inspectors to his viewers on RTS.

The merchandisers are saying: "If they only let us work. We do not need any publicity, but we do need bread. We haven’t even paid off the confiscated stuff". Their creditors, which number among them, some say, even ministers, were beyond the reach of the law. In other words, it is as if nothing happened, except that the merchandisers have raised prices slightly — to recoup losses.

Zoran B. Nikolic

The Privatization of PTT

Sale!

A telephone hookup costs three times less here than in Czechoslovakia and Hungary

A delegation of the Italian state communication company STET has been "residing" for two weeks in a villa owned by the public company PTT. The negotiating team from this Italian company is concluding negotiations with the representatives of the Serbian government regarding the final details of the contract. The date by which the conclusion of the negotiations should take place is being guarded like a top national secret, but informed sources say that the transaction should be concluded by mid-June. At that time, Milorac Vucelic, the newly appointed CEO of Serbian Telecom, should affix his signature to a document that will hand over 49 percent of Serbian telecommunications to the Italians.

Vucelic’s pen will do away with the dilemma of where it is the Socialists are supposed to get funds for their pre-elections campaign. For the better informed the answer to this question came three weeks ago when the voting mechanism of the Federal Parliament adopted the new Law of Network Systems. With its ratification the Serbian government for the first time sent a clear message to the public regarding its decision to "seriously reform telecommunications in Serbia". Translated into the language of economics, the members of the Serbian Parliament gave a go-ahead for entering the final stages of the sale of domestic telecommunications. Laying the groundwork for the sale of fixed telephone systems alone has lasted for over two and a half years, according to "Politika". The government's desire to close this deal in the best possible way is evidenced by the hiring of the London firm NetWest Markets, even though its precise role in the negotiations has not yet been publicly outlined. It is well known that at the beginning of this year the Serbian government sent invitations to several telecommunication companies throughout the world (French, German, British, Italian, Danish, Greek and South Korean companies) to come and learn more about telecommunications in Serbia, with a note about its intention to hand over part of the public telecommunications monopoly to a foreign investor. France Telecom did not express any interest in the offer, stating that it has already begun cooperation with PTT through Alkatel, and that it has no intention of expanding such cooperation. A similar explanation came from German Telecom, which pointed to the cooperation of PTT and Siemens, while British and Danish Telecoms made no statements whatsoever. The Greek company OTE was still bidding even at a time when it was publicly known that the decision of those responsible went with STET.

The biggest hurdle in the negotiations up until now has been the government’s insistence that STET pay in cash, while the Italians have constantly been asking that half the amount be paid in cash, and the other in equipment. The foreign partners' argument is that in this way PTT’s equipment would be updated. It foresaw the distinct possibility that the Serbian government might spend the cash, leaving the Italian STET to invest further in equipment.

Such an arrangement was refused outright by the government, so that the latest news suggests that an agreement on payment has been reached, even though it will be in three installments. The manner of payment was decided upon last weekend, and on Friday there were even rumors that the contract is about to be signed, even though it appears that all the i’s will be dotted, and the t’s crossed two weeks hence, when all the other details will have been finalized.

During the negotiations the Italians were not the only ones to be making concessions. The initial intent of the Serbian government was to create a holding company with the Law of Network Systems in which PTT would become an owner of two dependent companies — Serbian Telecom and Serbian Post Office — where decisions about business policy would be reached at the level of the holding company. Probably under Italian pressure, at the last moment, the government gave the power over PTT to Serbian Telecom.

According to the present negotiations, STET will pay about 1.7 billion DEM’s for 49 percent of Serbian telecommunications, which translates to 900 US dollars for a hookup fee. One billion would be deposited immediately through a domestic bank, while the rest would follow in two installments. The government is claiming to be happy with the price reached, even though it pales in comparison with the hookup fees negotiated by Czechoslovakia (2,700 US dollars) and Hungary (a little less than in Czechoslovakia).

Specialists are still arguing over the price. Some claim that the sum is acceptable, while others point to the experience of other East European nations and the fact that what is at stake is the strategic security of a country, and that the government, but above all the citizens of Serbia have been duped. John Crawly is the most enthusiastic in his praise of the whole deal, stating in an interview for "Politika" that the government has done well, and that PTT will emerge out of this "a stronger and more modern company". Some domestic specialists claim that the government, in a hurry to get their hands on cash, avoided a procedure which would ensure a better price for the sale of PTT. In direct negotiations only Estonia, of all East European countries, truly acted the "host" by charging a mere 170 US dollars for hookup fees. International tenders managed to ensure far higher prices to its neighbors. The Serbian government claims that it did not avoid tenders, and that a type of tender was achieved through the invitation extended to international telecommunications companies.

As the government denounces claims that German and French telecoms were completely disinterested, specialists are wondering why the die fell on STET. Internal conflicts are expected in this company because it itself is getting ready for privatization, and it received a warning several days ago from the European Commission about its unwillingness to give up monopolies it holds in Italy, in direct contradiction with the Green Paper on Telecommunications signed in Bruxelles by all West European nations.

The reputation of STET in Eastern Europe is suspect, given the fact that this company participated in all tenders in that region, always coming up with the best cash offers, but never becoming the actual buyer. In Russia, STET signed a contract with Russian Telecom, breaking the agreement at the last moment because of the impossibility that the Italians could honor the agreement. It is believed that the government was swayed by the fact that STET has a lot of ready cash.

STET will be the buyer of Serbian telecommunications, which is an open secret even in the Serbian government, even though certain officials claim that other "foreign" companies are still in the running. Moreover, according to the latest information the present contract includes the possibility that STET might get mobile telecommunications in Serbia, which according to specialists is only one more bizarre twist in this whole matter.

BK Trade, the majority partner of Mobtel, the mobile operator in Serbia, threatened PTT and STET with a law suit in the event mobile telecommunications are handed over to the Italians. Mobtel, according to BK Trade, has received a 20 year license and a monopoly in this market. On the other hand, the threats of international courts are comical if one takes into account how BK Trade received the contract for mobile telecommunications. It got the monopoly in the same way that it stands to lose it.