067 for the Chinese

Since the German company 'Siemens' has to obey the decision of the European Union about the ban on investment on the territory of Yugoslavia, now we are about to receive a wild copy of 'Siemens'. If we can wear fake Calvin Klein jeans and Armani jackets, why wouldn't we have some kind of fake mobile telephony? This is how a famous Belgrade expert for telecommunications describes the Yugoslav-Chinese contract regarding the partnership in the sphere of telecommunications. Behind such a clumsy phrase, the essence is in the intention of the local authorities to establish a shared company with the Chinese, which would set up the third system of mobile telephony in Serbia, along with the existing 'Mobtel' and the 'Serbian Telecom'. According to some very reliable sources, the company will start to operate by the end of April, and in about six months, a new GSM network will be launched, probably with a dialing code 067.

At the time when representatives of the Balkans in Brussels were endeavouring to procure the donations for financing the national development projects, the Yugoslav Minister of Telecommunications Ivan Markovic was leading the local delegation in Peking which negotiated the aforementioned contract. On his return home, he had all reasons to be content. Bodo Hombach, a coordinator of the Stability Pact of south-eastern Europe, repeated that the international association would not offer any aid to Serbia as long as it is ruled by the actual government. However, he had to admit that a real stabilisation and development of the Balkan States is not possible without a prosperous Serbia. At the same time, Markovic returned from China with a concrete projects in his hands - the Chinese agreed to invest funds in the establishment of the new GSM network in Serbia.

LICENCE: The Yugoslav-Chinese negotiations were initiated already in September last year, when the current agreement could be perceived, but has been kept in secrecy ever since, due to political reasons. The details were not revealed because of the involvement of the German company 'Siemens', one of the most serious foreign partners of Serbian PTT and its most reliable supplier of equipment for the stationary telephony. The details of the reached agreement are still unknown, and Markovic refused to reveal how the forming of the new company would look like. According to the information obtained by VREME, the contract signed in the name of PTT (the Serbian Telecom) in Peking by the president of the administrative board of that company Radmila Andjelkovic, is worth 225 million US dollars. That is, namely, the amount which the Chinese attempt to invest in Serbia in the form of equipment for establishing a new GSM network. In return, the Chinese partner, the 'ZTE Jung sing Telecom' will be given a licence to exploit the network and collect the incomes in the next 20 years, though the Belgrade 'Politika' daily published a report about this contract under the title 'Not only because of profit'.

As VREME sources in the Government of Serbia find out, the entry of the Chinese into business with the mobile telephony seemed as something already definite at the moment when Serbia received a famous credit-gift in the amount of 300 million dollars. Independent economists, however, speculate that it is about the money of Yugoslav origin, once removed to one of the banks in Peking, and which are now returned to the country at this moment of crisis. Shortly before the New Year, Serbian Prime Minister Mirko Marjanovic received a letter from PTT, in which the Government of Serbia was requested to announce offers for the concession in the sphere of telecommunications, with the pretext that this public company is in need of a fresh capital. The response from Markovic's cabinet was negative, since the proposed arrangement was legally improbable; and how that problem was solved now, will be known if the content of the contract is revealed. However, chances for that are almost unlikely, since the public has never been introduced either with the contract on the sale of 49% of PTT to the Italian 'STET' and the Greek 'OTE'. As our sources have it, the Chinese-Yugoslav company will operate within PTT Holding as a dependent corporation and pay to PTT a certain fee for exploitation of the mobile phone network, just as the Italians and Greeks do to the Serbian Telecom. Similar problems occurred when STET and OTE bought stocks of the Telecom of Serbia, when Karic, as a founder of 'Mobtel' complained that one regulation of his contract with the Serbian Government had been violated, that which guaranteed the monopoly in the sphere of mobile telephony to a period of 20 years. Now, complaints of the same kind could be expected from foreign joint owners of the Telecom, though the chances for that are pretty small regarding the fact that a representative of that company took part in the negotiations with the Chinese. The interviewee of VREME, an expert for telecommunications, says that such problems would not occur, if Serbia showed respect towards European standards, according to which the telecommunications, as an activity is of a general and national meaning, are never conferred to anyone without a proper competition at which the best offer is chosen (in America there is a practice of organising auctions where the winner is that who offers the greatest amount of money).

POLITICAL IMPULSES: As far as the owners of mobile phones are concerned, the only good turn they may expect is the drop in prices of connecting to the network, but not the improvement of the quality of service. An expert for telecommunications even clams that neither a considerable decrease in prices should be expected, because the telecommunications are not an activity based on man power, where the Chinese can be cheaper than the Western companies. The greatest benefit will be gathered by those small Chinese merchants throughout Serbian flee markets, although Karic's 'Mobtel' signed a contract with the 'China Telecom' ten days ago, which stipulates that the owners of mobile phones connected to GSM network 063 can use their phones even on the territory of China.

Some sources close to the Government of Serbia state that the telecommunications are only one of many spheres in which we will have the Chinese for partners. Along with the negotiations about introducing the third network of mobile telephony in Serbia, the representatives of the Electrical Industry of Serbia (EPS) are currently in a process of negotiation with a Chinese partner about the credit for reparation of ore excavation sites and transmission systems. It is about the credit of 47 million DM, for which it is not known how it should be paid back, and it is therefore assumed that the Chinese would turn their investment into ownership over the adequate number of EPS's stocks. It sounds just like another proof that there is no lunch free of charge, i.e. that friendship should not be mixed with money transactions. Our source close to the Government of Serbia comments these contracts (with Telecom and EPS) as something that should be understood as part of the official Belgrade's politics, which has an agreement about aid intended for the reconstruction of Serbia, reached with China after the NATO bombardment. Experts for telecommunications assert that even the Chinese follow certain political impulses in making business with Serbia. Serbia is, namely, a market with less than ten million potential users of mobile phones. Two operators are already active, which means that the Chinese attempt will not make a telephone boom. On the other side, some independent economists say that Marjanovic and his company are rushing, which is proved by the contract on the delivery of Chinese oil drawn in 1997, according to which Serbia was supposed to import two million tons of oil each year until 2002. A half of that quantity was supposed to be paid in cash, another half in goods, but it turned out that Serbia did not have goods appropriate for export to China, after what the Chinese company 'Sino hem', the bearer of the contract on the part of China, cancelled the deal. According to the data of the Yugoslav Chamber of Commerce, Serbia has imported more than three million tons of oil and created a debt of about 200 million dollars. Similar annulments of contracted businesses occurred with another great supporter of Serbia - Russia, regarding the import of natural gas. The Russians also cancelled the agreement on a credit in the form of goods intended for Serbia, in the amount of 150 million dollars, which was in the end used only in the amount of 30 million dollars due to the lack of goods appropriate for export.

WRONG CARD: Serbia's turning towards China, does not find approval among the economic experts, especially because of the fact that the authorities in Belgrade are getting comfortable with the idea that they can cope very well without Europe. China entered the year 2000 with foreign reserves of over 150 billion dollars, which means that smaller gifts like 300 million dollars cause no problems to them. But, on the other hand, along with the famous Chinese boom, it is about the country with social product of 600 - 700 dollars per head, in comparison with more affluent countries of the European Union which approach the figure of 40,000 dollars. At the same time, China started to record a slight economic improvement, it is rather an importer than an exporter of capital, and Serbia should not restrict itself to co-operation with that country exclusively. The telecommunication experts say that China is not the best partner whatsoever, particularly when speaking of high technologies, in the sphere of which this country is famous of being rather a good plagiarist than an innovator. In business in which three potential partners were involved - the German 'Siemens', the Swedish 'Ericsson' and the Chinese 'Jung sung', it was definitely wrong to pick the third card, especially if the first two already proved to be good and successful partners.