Farewell to Private Property

Whoever thought they owned their apartment now knows they don’t, because the way they can dispose of the apartment is set by the government making it the actual owner. This isn’t the first time that socialism is limiting the right to dispose of property. Lenin did it with his project of New Economic Order and so did Stalin to finally do away with kulaks.

The regulation on measures of financial discipline in 1998 is a legal conundrum which regulates completely different things; from real estate sales via special bank accounts to the way salaries are paid. The greatest public revolt came over the parts of the regulation which say that the owner does not set the price of an apartment but the municipal authorities do, and that the price has to be paid through banks in dinars, and the part which says houses, apartments, and cars can’t be presented freely as gifts.
Lawyers said they remember even worse regulations over the past few years but this one signed by deputy Prime Minister Slobodan Radulovic, who is also director of the largest supermarket chain in Serbia, is interesting because it runs counter to virtually every legal principle and regulation.

The Serbian government, which is not legitimate since it was formed by a parliament whose term in office expired four months ago after the elections, issued a regulation which it had no right to do, even if it was legitimate. Regulations, as a sub-legal act, serve to implement laws not proscribe the basic relationships in a state. That is done by laws which are adopted by parliament not the government. That means that Mirko Marjanovic’s government usurped parliament’s legislative role and suspended the newly elected parliament.

The regulation flagrantly violates the legal regulations on ownership. This is a violation of the constitution of the FRY which guarantees ownership rights. The elementary right to ownership is within the jurisdiction of the federation and the regulation violates a number of federal laws: the laws on obligation relations, balance of payments, basic ownership relations. Just imagine the outcry if the Montenegrin government did anything similar.

The Serbian constitution has also been violated since it also guarantees ownership rights, as well as the republican law on property sales under which the sale and purchase of real estate is free. Another violation is of the internationally recognized right to enjoy property. That right was defined after the French revolution in 1789. The regulation runs counter to the Universal Declaration on Human Rights.

Law professor Dragor Hiber said the right to present gifts is the result of the oldest contract in the history of law. Gifts existed before barter.

The public outcry is unprecedented although this isn’t the first illegal regulation imposed by the Serbian government since Slobodan Milosevic came to power. The regulation is the talk of the town in buses, on the streets and in cafes. The daily press have introduced special pages titled The Regulation; opposition parties are fiercely attacking it, calling it a robbery of the already robbed people, a step taken in panic, a sly measure, an anti-market step.

Lawyers and economists are appearing in the media to say why the regulation is illegal and damaging. Ways to sidestep it are being discussed openly and one daily paper even published an article titled "How to Avoid the Regulation on Financial Discipline".

Even Vecernje Novosti has attacked Radulovic in an article titled "Praises the Dinar Loves the German Mark" because, allegedly, Radulovic “illegally rented out 1,365 square meters of office space for 15,000 dinars a month. That contract includes a proviso which says the rent will change with the exchange rate. The man who is publicly advocating a stable dinar doesn’t believe himself, but rather the black market exchange rate.”

Since everyone else believes the same thing, it’s not very probable that the Serbian government will achieve whatever it wanted to achieve. How many people are willing to agree to sell their apartment for dinars at a price set by the municipal administration and then take payment through banks which don’t even have enough money to pay out any amount? Whatever the government thinks, it’s easy to assume that there aren’t many people like that. Real estate sales have dropped off in the few days since the regulation was imposed which means the state will be left without the sales tax (three percent of the value of the sale) which it's gotten regularly so far.

The Serbian Civil Alliance believes that if there is any logic in the madness that produced the regulation, this might be it: the sales tax on real estate sales are collected by the municipal authorities. The majority of those transactions are in urban municipalities ruled by the opposition. The monthly income from that sales tax is estimated at 7.5 million DEM a month. The regulation does away with that income for the opposition and that’s a possible political motive. The municipalities ruled by the SPS are smaller and the loss will be made up to them from the republican budget.

The impression is that the Serbian government regulation has slaughtered the calf for a pound of meat.

Belgrade law professor Vojin Dimitrijevic said the measure is a call for corruption because it will be sidestepped by everyone who can. One possibility is fictitious bank transactions. Another, which has been covered in the press, is registering the sales contract in Montenegro. Some lawyers claim the contracts can only be registered where the real estate is located, but Hiber said the registering of the contract is only a verification of the authenticity of the signatures and can be done in any court in the country. Another way is the Kosovo model which ethnic Albanians have been using to buy property illegally from Serbs. The Serb sells the property to the ethnic Albanian who pays in foreign currency. The ethnic Albanian moves into the property after the Serb signs for the money, but the new owner can’t be registered in the municipal property books.

Interestingly, the outcry has gone to Kosovo as well. Property agencies are protesting along with the public. The law only prohibited sales by Serbs to ethnic Albanians not the other way around and mechanisms were developed to sidestep that law. Now all the ethnic groups in Kosovo are equally affected for probably the first time in many years.
Besides damage to the population, the regulation has inflicted political damage. Legal insecurity is now complete. If the government has taken away a citizens right to ownership what might it do tomorrow? Will it impose a regulation banning freedom of speech, will it regulate how children should be raised? Some people believe the government won’t have to limit any liberties after this. If the state limits the irrefutable right to ownership it can declare freedom of speech because most people will keep quiet if their property depends on the state.

It’s probably too idealistic to believe that the regulation met such fierce opposition because civil awareness has been raised. Belgrade law professors Vojin Dimitrijevic and Vesna Rakic-Vodinelic are probably right when they say that the regulation was fiercely attacked because it affects a powerful lobby embodied in the property sale agencies and lawyers. Those people are attached to the establishment and are capable of organizing, reacting, animating the media which make a living from advertising property for sale among other things. Rakic-Vodinelic proves her point by saying that there was much less outcry against the part of the regulation which says salaries can be paid in cash only up to 1,000 dinars. That is also counter to the constitution, but affects members of influential groups much less. Also, there have never been this many requests to the constitutional courts for an assessment of the constitutionality of measures like this (80 or more as this article goes to print).

The Serbian government can revoke the regulation without waiting for the constitutional court ruling if it realizes that it won’t gain anything with it or if it sees that too many people are grumbling.

Serbian President Milan Milutinovic has already given the government a way out by suggesting at a meeting with some ministers that there was a need to explain or re-examine parts of the regulation. Serbian Finance Minister Branislav Milacic quickly called a press conference to say that the government isn’t considering revoking the regulation but isn’t shying away from explaining it either and might even change some things.

In that case, the regulation will probably amount to nothing.