BALKANS: Privatisations Pick Up in Kosovo, Privately

By Apostolis Fotiadis Reprint | | Print |

Apostolis Fotiadis

PRISTINA, Aug 23 2007 (IPS) - “The Kosovo Trust Agency is now preparing to privatise one of the most remarkable properties remaining in south-eastern Europe – the Dragash Sarrprodhimi socially owned enterprise. Sharrprodhimi offers over 22,000 hectares of largely untouched land…with excellent potential for tourist industry development.”

So says the narrator’s voice, with a British accent, while the film on the Kosovo Trust Agency (KTA) website presents mountainous Balkans images from Kosovo, the southern province of Serbia dominated by about two million ethnic Albanians. The autonomous region is caught in a troubled search for independence, which Serbia is resisting.

Sarrprodhimi, a mountainous rural area of Kosovo, seems to present no legal conflict between Kosovo’s unresolved status and the privatisation of 22,000 hectares of public space.

Privatisations in Kosovo have become the flag of progress and economic reform. But in order to legitimise them a legal loophole was necessary.

The authorities disregarded a 1997 law that held good for former Yugoslavia. The old Yugoslavia state had publicly owned the petroleum, mining, car and tobacco industries. About 75 percent of industry was state owned. The 1997 privatisation law stipulated that at least 60 percent of shares in sell-offs must be allocated to a company’s workers.

Later in 2002 the Kosovo Trust Agency for privatisations was set up. The United Nations Mission in Kosovo (UNMIK) tasked with administration of the disputed province passed regulation 2002/12 under which all socially owned enterprises and property were to be administered and sold by the KTA. Five hundred such enterprises were listed.

In May 2003, in an effort to push further economic reform and attract foreign investment, UNMIK changed the regime governing the way land is owned in Kosovo, allowing the KTA to sell 99-year leases with businesses.

No appraisal of property value was considered necessary. As then spokeswoman for UNMIK Sara Haskaz said, “the UN will not assess the value of any property. This will be trusted on the market forces.”

Privatisations are publicised on the KTA website as a major success story. The agency has moved now to offer real estate services. But not many question its performance.

“Few remember how soon after the war the Trepca mine complex, whose value in 1997 was estimated at 5 billion dollars, was seized from its workers and managers by more than 2,900 NATO (North Atlantic Treaty Organisation) troops, who used teargas and rubber bullets,” Neil Clark, a writer specialising in Balkans issues wrote in The Guardian.

Trepca is a conglomerate of some 40 mines and factories, mostly but not all in Kosovo, and including Stari Trg, one of the richest mines in Europe close to the ethnically divided city Mitrovica, 25 miles northwest of Pristina.

Kosovo authorities have decided to maintain public ownership of the mine complex, given its spread and its complex ownership structure. The international administration, which persistently tried to find a privatisation formula here, has expressed considerable frustration over this decision.

The plan is that workers here get 20 percent of privatisation proceeds as compensation. “There is a list of criteria for an employee to fulfil in order to be in the 20 percent list,” says Alban Bokshi from COHU, an anti-corruption NGO based in Pristina.

“The list is prepared by three bodies – workers’ council of the SOE (Socially Owned Enterprises), management of the SOE, and trade union of the SOE – and then this list goes to Special Chamber of the Supreme Court, and gets published,” says Bokshi.

“If any employee does not find her/his name on this list, she/he has the right to appeal to the Special Chamber, and the proceeds won’t happen unless all the cases are resolved by the Special Chamber. This is delaying the proceeds immensely.”

Serbian employees of the privatised enterprises who were displaced during and after the war are unable to register on the compensation lists. Serbian government claims to property rights were also ignored.

According to the KTA, until May 1 this year only 44 compensation lists had been approved, and of 60.7 million euros that employees were entitled to, only 11.5 million had been released. A small amount, considering that from 2002 onwards 260 companies have been privatised. Authorisation of another 122 sales contracts is pending.

The amount raised from the privatisations, excluding compensation money, is 303.7 million euros. The companies privatised are in every market sector – agriculture, textiles, winery, retail, entertainment and heavy industry like construction, mining and steel production.

Misgivings have been mounting. “There is considerable circumstantial evidence of corruption by some local (Kosovo Albanian) actors,” Iain King, former head of planning for the UN mission in Kosovo told IPS.

“I heard from people working in the KTA that groups of people who knew each other would submit bids, and then withdraw all but one at the last minute, so that only one could be accepted. I don’t know what checks were put in place to look into the sources of the money. There was a widely held suspicion that some money was ‘dirty’, but I don’t know what was done to stop this having an impact.”

The KTA has defended its decisions. “We do not publish winners’ names because the contracts of sale are commercial contracts drawn up between KTA and the winning bidder,” KTA spokeswoman Besa Kabashi said.

“However, we can state with assurance that there is a very large group of people who have won. Some have won two or three tenders, but in general winners are usually winners of only one tender. Where potential corruption and bidder coordination have been detected, the perpetrators where immediately blacklisted and tenders cancelled.”