Serbian privatization troubles on the rise

BELGRADE (AFP) – Jeers and whistles rang out in Belgrade this week as strikers demanded their employer be renationalized, piling pressure on a crisis-hit Serbian government heavily reliant on privatizations. The noisy rally outside the Privatization Agency offices was staged by hundreds of factory staff from auto parts producer Zastava Elektro who complain they have gone unpaid since the start of the year. »Our main goal is to prevent the factory from going into bankruptcy, like the thousands of other factories throughout Serbia that have been ruined in privatization scams,» said one striker, Milan Sreckovic. «The strike began with the demand that the owners pay us what they owe us, but now we are insisting on the annulment of the privatization deal and the renewed start-up of production,» he told a local news website. This incident of strike action was just one of dozens going on across the country against the authorities, which were forced to turn to the International Monetary Fund over a dearth of cash normally raised by selling public enterprises. Privatizations of the past, present and future have proved to be a headache for the former republic of communist Yugoslavia since the ouster in 2000 of late autocratic President Slobodan Milosevic. Successive democratic governments have sold off state assets including the country’s biggest mobile telecoms provider Mobtel to Norway’s Telenor in 2006 for a record 1.5 billion euros (then 1.9 billion dollars). But with those funds drying up, the pro-Western coalition of Prime Minister Mirko Cvetkovic has failed to find buyers for a large number of the national companies it has put up for sale since coming to office last year. Sales that have collapsed include the national carrier JAT Airways, the country’s largest copper mine RTB Bor, truck and tractor maker FAP, and the Belgrade fair grounds. This has forced the government to turn to the IMF for financial aid to help deal with a gaping budget deficit and find the cash it needs to keep its costly public administration running. Serbia’s unemployment rate already stands at around 25 percent. The country has been battered by tumbling foreign investment as a result of the global crisis. Its economy shrank 3.5 percent in the first quarter compared with last year but is expected to contract more than 6.0 percent in 2009. Cvetkovic has said he will ask an IMF mission to permit a larger budget deficit when it visits the country on August 24. The IMF approved in April a 3.0-billion-euro (4.0-billion-dollar) standby loan with Serbia in a deal foreseeing the budget deficit at 3.0 percent of gross domestic product, which Cvetkovic would like to expand to 4.5 percent. But even successfully privatized companies have complained about the original IMF arrangement, which Telenor has criticized for a measure to increase taxes on mobile telephony services. Elsewhere, furnaces at US Steel Serbia have been running at reduced capacity for most of the year, while oil monopoly NIS, in which Russia’s Gazprom bought a controlling stake late last year, is trying to retrench thousands from its bloated work force.