MILS NEWS 08/03/96

From: "M.I.L.S." <mils@MILS.SPIC.ORG.MK>

Macedonian Information Liaison Service Directory

CONTENTS

MILS NEWS

Skopje, 8 March 1996

[01] MALESHKANU IN MACEDONIA

Foreign Minister of the Republic of Romania Teodor Maleshkanu is paying a two days visit to the Republic of Macedonia. Macedonian Foreign Ministry informed that Minister Maleshkanu and his Macedonian counterpart Ljubomir Frchkovski had talked yesterday about the bilateral relations of their countries. They had expressed their satisfaction from the current positive development of the relations and from the cooperation in certain fields, as well as the readiness of both countries to further intensify them. The cooperation within certain European, regional and international organizations and initiatives, was also a subject of discussion.

A Protocol on the cooperation between the Macedonian and Romanian Foreign Ministries is expected to be signed today.

Minister Maleshkanu was received yesterday by the Macedonian President Kiro Gligorov, who invited the President of Romania Ion Iliesku to pay an official visit to Macedonia.

During that visit, an Agreement on friendship and cooperation between the Republics of Macedonia and Romania would be signed.

Maleshkanu was also received by the Macedonian Premiere Branko Crvenkovski, and they discussed the development of the mutual economy relations, as well as the problems of the transitional period. Crvenkovski invited the Premiere of Romania to visit Macedonia.

[02] HILL - NEW US AMBASSADOR TO MACEDONIA

The associate and plenipotentiary US Ambassador to Macedonia will be Christopher Hill, as Macedonian Television has informed. The procedure for his appointing is in the last phase. Hill had worked in the US Embassies in Belgrade, Warsaw, Seoul and Tirana.

[03] FRCHKOVSKI INVITED TO ATHENS?

According to the Greek daily 'Katimerini', reported A-1 Television, the solution for the name issue will be brought very soon, and the Greek Foreign Minister Theodoros Pangalos had invited his 'Slav-Macedonian counterpart Ljubomir Frchkovski to visit Athens during the following week'.

The Greek pro-governmental daily 'Ta Nea', according to its sources in New York, wrote that Macedonia had agreed on a complex name during the last discussions in New York, but it had still not offered a concrete solution.

'Elefterotipia' yesterday informed from Skopje that the information that President Gligorov had allegedly agreed on a complex name, and that he had even preferred the name 'New Macedonia', are considered false in Macedonia. The paper reminded that Macedonian Foreign Minister Ljubomir Frchkovski (as well as his predecessor Stevo Crvenkovski before) had excluded the possibility for the Constitutional name of the state to be changed.

According to the Athens News Agency, reported Macedonian Television, the next meeting of the Macedonian and Greek negotiators, Ivan Toshevski and Hristos Zaharakis, will take place on 14 and 15 April.

'Elefteros Tipos', the paper of the Greek opposition Party, New Democracy, accused Simitis's Government for preparing a national treason.

[04] GREEK PRESSURE ON THE MACEDONIAN MINORITY

Macedonian media informed on the annual report of the US State Department about the human rights in the world, which reads that Greece exerts pressure on the Macedonian minority. Macedonians in Greece hide their national identity as they are afraid of being banished. The data of the US State Department show that there are 10 000 to 50 000 Macedonians in Greece.

[05] GLIGOROV - MEDIATOR BETWEEN PRISTINE AND BELGRADE?

After its comment on the meeting of Macedonian President Kiro Gligorov with the leader of the Albanians in Kosovo Ibrahim Rugova, the Albanian daily 'Koha Jone' speculates on the possibility Gligorov to appear as a mediator in the eventual dialogue between Pristine and Belgrade. As 'Makpress' agency reports, 'Koha Jone' writes: 'Considering the political experience of the Macedonian President, his participation in the politics of former Yugoslavia, his being respected by the former and current politicians of the former Yugoslav republics, there is a possibility for him to be the third party in the dialogue between Pristine and Belgrade.' The paper reminds that the subject of the dialogue will be the solving of the 'issue of Kosovo', and that the meeting Gligorov - Rugova came immediately after the Rugova - Berisha one. It is also stated that Gligorov had met with the President of the Montenegrin Parliament Svetozar Marovic and that he might soon meet with the Serbian President Miloshevic in Skopje.

[06] MACEDONIA ON THE NATO MEETING IN PRAGUE

Macedonian daily 'Vecer' informs on the announcement of the Czech Foreign Ministry about Macedonia being invited to the forthcoming Conference of 12 countries of Central and Eastern Europe, interested in the membership in NATO, which will be held on 19 March in Prague. The meeting will be on the level of ministers, and its subject will be the new security structure of Europe and the spreading of NATO towards the East. The Conference will be attended by the US Secretary of State Warren Christopher.

[07] THE DAY OF PROFESSORS FROM ALBANIA CELEBRATED IN TETOVO

Following the initiative of the vice president of the Town Council of Tetovo, Liman Kurtisi, the day of professors in Albania - 7 March was celebrated yesterday in Tetovo. The celebrating academy was attended by professors on the 'Tetovo university' and by some guests from Albania.

[08] DIGITAL COMMUNICATION WITH ALBANIA

PTT 'Makedonija' and 'Telecom' from Albania signed a contract on constructing a digital radio-relay system in the SDN technology, with a capacity of 1 920 telephone channels.

Both of these companies have already signed agreements with the Italian firm SIRTI for the construction of this system.

The project should be accomplished by October 1996.

[09] PARLIAMENTARY INFO

On the 40th session of the Macedonian Parliament yesterday, the Law on the Scientific and Research Work and the Law on the Macedonian Academy of Sciences and Arts (MANU) were passed. The significant news regarding the first Law is that, besides the public ones, it will be possible private scientific institutions to be established. The founders may be domestic and foreign legal and private subjects, after they have obtained an approval from the Government.

The new Law on MANU abolishes the category 'corresponding member of MANU'.

Members of the Party for Democratic Prosperity of Albanians (PDPA) said the Law was 'exclusive, as it refers to Macedonians only, while it ghettoizes the other nationalities.' They denied the name of MANU, and required it to be changed to 'Academy of Sciences of Republic of Macedonia'. Otherwise, they said the Albanians would be forced to form a parallel Academy of Sciences and Arts.

The Parliament will continue its work on 13 March.

[10] NEW NON-GOVERNMENTAL ORGANISATION PROMOTED

The new non-governmental and non-party organisation 'National Convention' was promoted yesterday in Skopje. 'It will act as a national Macedonian movement, gathered to defend the name of Republic of Macedonia', was said on yesterday's press conference. One of the aims of the National Convention, according to the President of the Organisation and former Macedonian Premiere Nikola Kljusev, is to initiate a national reconciliation, which will unite everybody in one national community - the Republic of Macedonia.

MILS SUPPLEMENT:

[11] 'Total Eclipse Flags New Era'

('Central European', February 1996), Part 2

Privatization by proxy has its drawbacks. 'The privatization of the banks needs to be speeded up," says Nenovski of the NMB. "But we can't do anything if the privatization of the enterprises goes slowly."

Another problem is the ownership structure that will result from privatizing the banks through the companies which hold shares in them. "Handing control of the banks back to the companies that run them into the ground during the 1970s and 1980s is asking for trouble," says Lazarevski of Coopers.

The national bank disagrees. "The Commercial Banking Act gives the Central Bank the right to withdraw licenses from banks whose shareholders build up stakes of 25% or more without the permission of the Central Bank'" says Nenovski.

But it is the recapitalisation of Stopanska and Komercialna, Macedonia's too largest banks, that promises to be the crowning achievement of banking reform.

'After restructuring began the Government removed its accounts from Stopanska and placed them at the National Bank,' says David Meader, adviser to the governor of the NBM. 'Stopanska became very illiquid as a result. Because of this Stopanska needs daily injections of liquidity from the NBM. It needs recapitalising urgently.'

The EBRD is spearheading the drive to recapitalise Stopanska. It is offering to take up part of a new issue of shares along side and international strategic investor. An Austrian and a Dutch bank are involved in negotiations. 'If the deal goes trough then it will be fair to call the whole process of banking reform a success,' says Nenovski.

Macedonia is also developing a grass-roots private banking sector, with many new banks being established to provide finance to fast-growing trading groups. Almako, one of the largest of these, was started by Almako Group, and exporter of wine and trader in metals and automobiles.

Almako Bank has just received a Dm10m ($ 7.1m) credit line from the German Government designed to help small Macedonian companies with working capital difficulties. 'The terms of the loan are favorable for us, ' says Ivan Cvetkovski, president of the supervisory board of Almako Bank. The loan is over 30 years with a grace period of 10 years and an annual interest of 2%.

Almako's simple balance sheet is typical of Macedonia's young private banks. Liabilities consist of household deposits, with 60% to 70% of assets made up of short-term loans to private businesses. Its managers, poached from the old state - owned banks at the beginning of the 1990s, are strong and relatively conservative. Again, this is typical of the new private banks. Like the others, Almako faces the same fundamental problems.

It is undercapitalized, and deposits, the main source of capital, are relatively expensive. To cover liabilities, it needs to lend to profitable projects. This remain thin on the ground.

Banks are still only entitled to take property and fixed assets as collateral on loans. It is illegal for the banks to take possession of product or office furniture if a company defaults on a loan. However, new legislation on suitable collateral will increase the number of projects banks can participate in.

The new law will open up a whole new set of options for lenders, but will not enable banks to lend on the basis of collateral alone. Macedonia's private economy needs to become stronger for the banks to find investments lucrative enough to cover their liabilities.

That the country has a private sector at all is remarkable given the shocks to which the Macedonian economy has been subjected over the last three years. Yet, despite an unemployment rate of 20%, the Government has been able to master the political will to meet a World Bank demand that it privatize 791 enterprises by January 15 1996.

The latest company to be privatized is the monopolistic oil and gas distribution company Makpetrol. The privatization ministry wanted to sell part of the firm to a foreign buyer.

'We had hoped to make a public offering of Makpetrol shares but the company vetoed it,' says Miroljub Shukarov, former Director of the Privatization Agency. Instead the company will be sold to its management, which already owns a 51% stake as a result of the 1989 privatization program initiated by the Markovich Government in Belgrade. The holding will be increased by a further 30%, with payment staggered over 5 years.

The power still in the hands of the workers' councils, which dominated industry in Yugoslavia, has meant that management buy-outs have been almost the sole means of privatizing companies in Macedonia.

'Except for setting the legal frameworks, the government's power to control the privatization process is limited,' says Eguren of the World Bank. 'The only politically feasible privatizations are those that give workers and managers a stake in the process. Without this nothing happens, as has been shown elsewhere in eastern Europe.'

Makpetrol is the first privatization to fail to attract foreign capital due to powerful managers being unwilling to cede control.

Foreign interest in Macedonian privatisation was focused on its internationally-renowned tobacco sector. Philip Morris, BAT and RJ Reynolds all placed bids for Makedonija Tabak, the tobacco and cigarette trading monopoly, and for three tobacco processing plants. The tobacco giants hoped to use Macedonia as a base to attack other former-Yugoslav markets where consumption outstrips production. Not one of the bids was accepted, and attempts to negotiate a deal with Philip Morris finally failed in September 1995.

Philip Morris decided to withdraw partly because of Makedonija Tabak's links with Serbia during sanctions. The government was also reluctant to bless the deal because of the impact competition would have had on other Macedonian cigarette makers. The most significant resistance however, came from Makedonija Tabak itself. Straso Nelkovski, its general manager, used all his political might to persuade the government that a lucrative slice of Makedonija Tabak was safe with him.

Philip Morris was offering Macedonia's tobacco industry the capital and know-how it needed to regain markets lost because of sanctions and the Greek embargo. 'Recapturing former Yugoslav markets won't be easy. In fact we are sure it won't happen,' says Borce Ivanoski, director of planning and analysis at Tutunski Kombinat in Prilep, one of the cigarette manufacturing companies put up for international tender. 'A foreign company would have brought the marketing know-how we need to attack these markets.'

Makedonija Tabak and the three processing companies are now being sold separately. The remaining shares in Tutunski, and the other manufacturing companies, are being sold to managers. But foreigners may still be able to purchase a stake, though probably not a controlling one, in Macedonia's tobacco industry. 'I still think foreign investment is a good idea,' says Ivanoski at Tutunski. 'Once management and employees have 51% it will be easier for us to negotiate with foreign investors.'

The Bargala shoe factory in Stip is the latest Macedonian company to be sold to foreign investors. Intershoe of New York will invest Dm2.5m ($1.8m), giving it an undisclosed number of shares, to build a new factory. Bargala sells 90% of its output, 70 000 pairs of shoes a month, to the US.

This will be increased by 150%.

(to be continued)

(end)

mils news 8 March 1996