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In Article 85 of the Constitution of Serbia, it is written that foreigners cannot acquire ownership of goods of general interest, and "Telecom", i.e. its property, is a good of general interest. Article 11 of the Law on Public Property does not allow foreign persons to become owners of the telecommunications network. According to Article 5 of the Privatization Law, the subject of privatization cannot be a good of general interest, and the telecommunications network is one of those goods.
Unlike Vučić - who claims that critics of the sale of "Telekom" lower its price, I claim that the stories of him and ministers Sertić and Vujović, some members of the Fiscal Council, etc. about the alleged decline in the competitiveness of "Telecom" and its technological backwardness contribute to the decline in its price
What is a good price for Telekom? The prime minister would probably accept 1,5 billion euros. But, if it is taken into account that 78% of "Telecom" is being sold and that today the value of the euro in relation to the Swiss franc and the US dollar is at least 30% lower than in 2010, the conclusion follows that Serbia would receive 78% from the sale. Telekom essentially received less than the Austrian Telekom offered 5 years ago (990 million).
If the Government decides to sell Telekom to one of the "vulture funds", it will be completely clear that the Government and the Prime Minister are working according to the dictates of the IMF and that Serbia de facto has the status of a vassal state and even a colony
The PRESSURE exerted by the external power centers on all the neoliberal governments of Serbia could culminate in these very days and the sale of "Telecom" for Aleksandar Vučić becomes - inevitable. And regardless of the price! Despite the fact that this company was the most profitable Serbian company in the first decade of the new century and a very important source of state revenues.
Despite the fact that it was the "founder" of social services through low prices of fixed telephony and various donations.
The sale was first attempted in 2010 by then Prime Minister Mirko Cvetković, but the price was not adequate. The current Government - in an agreement with the IMF - committed to privatize Telekom by the end of this year, and at the end of that process, many controversies surfaced, which we discuss with Professor Mlađen Kovačević, a regular member of the Academy of Economic Sciences.
The first of them is: why is the government conducting an irrational, and above all, illegal and unconstitutional matter and why did it conclude an agreement with the IMF that obligates it to take such a step (even with a time clause!)?
- Serbia is in debt slavery, addicted to the inflow of foreign capital, and the current government believed that the agreement with the IMF would enable a high flow of new loans, and indirectly the so-called foreign direct investments. The Prime Minister emphasized that neoliberalism is the best option and that the proposals of IMF experts are without any doubt very useful, so it is understandable that the obligation to sell the "Golden Coke", "Telecom" was accepted lightly.
But Prime Minister Vučić, President Nikolić, Governor Tabaković during 2010 were fierce opponents of the sale of "Telekom", their party at that time even sued the government of that time, and some of them said that, in case of sale, they would take some measures, it could be to say, and terrorist actions. What Đinđić said was confirmed: "Who cares about morality - he has nothing to look for in politics." And what is tragicomic, the Prime Minister qualifies the critics of the sale of "Telecom" as ignoramuses unaware that the time of self-management has long passed. As Cvetković said that Serbia is not a communist country, so the state runs the economy...
However, in developed countries, do governments really run businesses?
Yes, a large number of developed countries and countries in transition have very successful state-owned companies. In Norway, which has a per capita income of over $97.000, over 20 companies with full or majority state ownership are successfully operating. State companies are most often in the so-called strategic sectors such as energy, mining, and telecommunications. As an illustration, let us cite: of the 50 largest oil companies in the world - 20 are XNUMX% state-owned, and seven are majority state-owned.
The powerful, probably the most successful energy company in Eastern Europe, the Czech Republic CEZ is majority state-owned. The most powerful company in Chile (from non-ferrous metallurgy), "Codelco" remained fully owned by the state even during the Pinochet regime and to this day, and contributed the most to the country's exit from the severe debt crisis (1973 to 1989) that it fell into during the harsh application of the ideology of neoliberalism
In Germany, there are about twenty successful banks in majority state ownership.
Furthermore: in Switzerland, Norway, Sweden, Finland, Belgium, France, Slovenia, as well as in Japan, Russia and China - the state is the dominant or majority shareholder in the most important telecommunications companies. In the German "Telecom", the state has about 30% ownership, but also a dominant role in business, because millions of small shareholders have almost no power and no role in management. The Norwegian "Telenor" is 100% owned by state pension funds (they bought the Serbian "Mobtel").
In China, all important sectors are dominated by state-owned enterprises, and for decades they have achieved a fascinating average annual GDP growth rate of as much as 8-10%.
Economists, extreme neoliberals, a la prof. Danica Popović, they pointed out that the state-owned company NIS - while it was state-owned, made losses, and after privatization it became the most profitable. However, she was not informed that the buyer is the Russian company "Gazpromneft", which is majority owned by the Russian state. Therefore, these two examples show that in the territory of Serbia, even in the conditions of a severe economic crisis, foreign companies in full or majority state ownership can operate successfully, so the question arises - why should not "Telekom" with the current ownership structure.
Some officials and some academic economists point out that "Telekom" is less and less competitive, especially technologically, and that it should therefore be sold. Is that correct? And how dangerous is it to sell goods that you sell and should "raise the price"?
As the purchasing power of the population declines, so does the company's profit. In addition, in 2014, "Telekom" made a net profit of as much as 15,3 billion dinars, invested over 13 billion dinars, repays the loan in the annual amount of about 200 million euros, with which it bought 20% of the participation of the Greek OTE. In addition, "Telekom" became the owner of 65% of the capital of "Telekom" of Republika Srpska, 83% of mobile operator Mtal in Montenegro, 100% of FiberNet doo (in Podgorica), 100% of TELUS in Belgrade, 100% of TS:NET in Amsterdam and 51% of HD-WIN doo Let's add that "Telekom" at the end of 2014. bought 55,78% of the shares of Dunav banka (for 9,5 million euros, which will enable him to make profitable mobile payments.
Due to all of the above, and especially due to the mentioned investments, "Telekom" of Serbia was declared the largest regional investor at the so-called Danube Business Forum.
In addition to all that, "Telekom" annually pays at least 5,5-6 billion dinars into the Serbian budget, but also donates many activities that the state would have to do through the budget.
Unlike Vučić, who claims that critics of the sale of "Telekom" and the selection of the privatization advisor - the company "Lazard" lower its price, I claim that the stories of him and ministers Sertić and Vujović, some members of the Fiscal Council, etc. about the alleged decline in the competitiveness of "Telecom" and its technological backwardness contribute to the decline in its price, and there is a danger that the company, under the pressure of the IMF, will be sold at a pittance price, which would be an unacceptable scandal and grave irresponsibility towards current and future generations.
What is a good price for Telekom?
The prime minister would probably accept 1,5 billion euros. But if it is taken into account that 78% of "Telecom" is being sold, which the officials keep silent about, and that today the value of the euro in relation to the Swiss franc and the US dollar is at least 30% lower than in 2010, the conclusion follows that Serbia would of the sale of that 78%, "Telekom" essentially received less than the Austrian "Telekom" offered 5 years ago (990 million), and the then government rated that offer as unsatisfactory. It is possible that Vučić will accept an offer of 1,2 to 1,3 billion.
Especially problematic is the sale to investment funds, which British Prime Minister Brown, in principle, ten years ago, called "vulture".
If the Government has to make a sale at that very low price, I believe it would be best if "Telekom" is sold to one of the companies that are successfully engaged in this activity, such as a Russian or Chinese telecommunications company. In that case, it would not be privatization but the sale of a state-owned company to a state-owned company from another country. Neoliberals would say that in that case "Telekom" Serbia will fail, and that story has no basis. On the contrary, the very positive experience of selling NIS would probably be repeated here, and I'm sure that selling to one of the "vulture" funds was the worst option. However, if the Government decides to sell "Telecom" to one of those funds, in that case it will be completely clear that the Government and its Prime Minister are working according to the dictates of the IMF and that Serbia de facto has the status of a vassal state and even a colony.
Academic circles appeal that "Telekom" must not be sold at any price. Do you have the same opinion?
The Academy of Engineering Sciences, headed by the former rector and now dean of the Faculty of Electrical Engineering, prof. Branko Kovačević, Ph.D., six months ago took such a position, as did the Society for Electronics, Telecommunications, Accounting, Automation and Nuclear Technology, as well as a number of other institutions, as well as 200 top experts, thirty of whom are academics and 129 PhDs. We have signed an open letter expressing our opposition.
The highest price is expected from investment funds, which you warned are the most dangerous buyer. What are the economic and social consequences of selling to them, and what are the consequences of selling to another profile of bidders?
Possible sales to foreign companies from the same field, especially if they were from Russia, China or some country with a social democratic government, would have a smaller scope of negative effects than if the buyer were some problematic investment fund such as "Apollo", especially since that fund has strategic partnership agreement with privatization advisor "Lazard".
If the buyer were from the West, the negative economic and social consequences would be multiple. First, the number of employees would be significantly reduced.
Illustration: after the purchase of the Slovakian "Telekom" by the German "Telekom", the number of employees was reduced by as many as 8.000, and in Croatia by 5.700. It was similar in Hungary, Macedonia, etc. The consequence: the number of users per employee is significantly higher in all those countries than in the headquarters of Deutsche Telekom in Germany. A few years ago, it was announced that Deutsche Telekom had 289 users per employee, 463 in Croatia, 800 in Macedonia, and 806 in Hungary. On the other hand, in countries that have not sold their telecommunications companies, the number of users per employee is was significantly lower, in Sweden 347, Slovenia 356, France 377, and Belgium 390.
Therefore, the dismissal of workers after the sale of domestic telecommunications companies to foreign companies is a consequence of greed for the highest possible profit.
In order to maximize profits, potential buyers from Western countries with a market economy will significantly raise the prices of their services - in Serbia, Montenegro and Republika Srpska.
For the same reasons, they will invest significantly less than "Telekom" did in recent years.
They will do everything in their power to reduce expenditures based on the promised social program and payments to the Serbian budget, and the profit will be taken out of the country. Instead of domestic business partners and suppliers of equipment, products and services, they would reorient themselves to foreign countries, especially from the country where the customer is from, which would directly and indirectly adversely affect employment and gross domestic product.
If the problematic investment fund were to be the buyer, they will sell "Telekom" in a few years!
So far, we have talked about economic and social reasons for not selling Telekom. However, that act is also contrary to the Constitution and laws of Serbia?
It is! In Article 85 of the Constitution of Serbia, it is written that foreigners cannot acquire ownership of goods of general interest, and "Telecom", i.e. its property, is a good of general interest.
In Article 11 of the Law on Public Property, foreign persons are not allowed to become owners of the telecommunications network.
According to Article 5 of the Privatization Law, the subject of privatization cannot be a good of general interest, and the telecommunications network is one of those goods.
Unfortunately, the Government and the Prime Minister are acting according to Tito's slogan "You should not follow the law like a drunkard."
According to a survey by the magazine New Serbian Political Thoughts, as many as 64% of Serbian citizens are against the sale of Telekom. How to explain that the Government ignores that too?
And this Government, like Cvetković's, is not a supporter of democracy in privatization.
Advocates of the sale of "Telecom" are far more present in the main media than its opponents. I believe that it is no coincidence that despite the huge controversies related to the sale of "Telecom" and the undeniable economic and social damage that would occur in the event of its realization - there is no discussion on that topic on RTS. It did not occur to the government and the prime minister that at any time in the past 2-3 years, the discussion on the privatization of "Telecom", Komercijalna banka, RTB Bor, Aerodrom, Energoprojekt, agricultural combines, etc. was organized.
The question arises: who gives advice to the Prime Minister on this matter?
Maybe Tony Blair, who should not be allowed to enter the territory of Serbia because he told terrible fabrications about Serbia and Serbs in order to justify his fierce support for air aggression against its inhabitants, economy and infrastructure.
Perhaps he is being advised by the previous minister, Lazar Krstić, who promised a "Serbian economic miracle".
How do you evaluate the Prime Minister's proposal to invest the proceeds from the sale of Telekom.
Let's go back to the price. If it is 1,5 billion, after the payment of the loan for the purchase of the shares of Greek OTE, "Telekom" could make an annual profit of 300-350 million euros, the price of 1,5 billion is therefore very low, because the buyer would returned the investment in 4 years.
Favorable for the customer, unfavorable for Serbia, because it remains without the "golden hen" and without the "golden eggs" (profit).
Where will the Government invest the money?
I don't see any potential or current activity where the profit rate from that investment would be as high as the current profit rate that "Telekom" achieves and that, with professional management, it could achieve in the future.
During the football crisis in Serbia, the income from the stadium (especially in foreign currency) would be very modest, and the overall business would bring losses.
The question is whether it is rational to prematurely repay loans, especially those denominated in euros, with funds from the sale of "Telekom", because the annual profit rate of that company with a top management team will very likely continue to be high, i.e. significantly more than the interest rate contracted when obtaining those loans. In addition, the value of the euro expressed in dollars and Swiss francs is significantly lower than it was at the time of the loan. And, considering the enormous problems of the euro zone countries in the EU and the consequences of pumping huge financial doping into the banks and economies of the EU countries, and the likely strengthening of the economic crisis in most EU countries - it is very likely that the value of the euro will continue to fall and that all debtors in to that currency, and Serbia de facto to return less than the agreed sum than the principal and interest was agreed upon.
The question is whether we will have to pay the creditors the entire interest (which we would pay in installments).
Vučić's announcement that we will invest in infrastructure is also problematic, because Serbia has over 3,5 billion approved for these purposes by international financial institutions, and due to the lack of specific projects, we are not using them and paying penalties in the millions. It is normal that in the coming years, we will primarily invest these funds in the development of infrastructure. Very favorable loans for infrastructure development have been agreed with China and it is very likely that they will be realized quickly.
In such conditions, the funds from "Telecom" would be sitting on some accounts and due to the very probable fall in the value of the euro, their value would decrease. If it were kept in Swiss banks, there would be no interest, and 0,5% would be paid for keeping that money.
Does it follow from this that the sale of "Telecom" is dictated by the IMF and will he insist that the remaining good companies, even EPS, Komercijalna banka, agricultural combines, Dunav osiguranje, Aerodrom, etc., be privatized as soon as possible?
The dictation of the Fund is important to a large extent, but the prime minister and the relevant ministers pretend to be "bigger Catholics than the Pope".
In order to acquire ownership of the natural resources of underdeveloped countries, international financial institutions give them high loans that they cannot repay unless they sell them to transnational companies from developed countries, as John Perkins, a participant in those combinations, convincingly writes about in his book Confessions of an Economy Killer.
The imposition of the ideology of neoliberalism has brought disaster to the economies of Latin America. The head of the IMF at the time, Michel Kemdesi, was at the Fund's annual meeting in 2000. said from the podium that Argentina is a textbook example of the success of the IMF's measures, and only ten months later its finances and its economy experienced a complete collapse.
I don't know a single country that achieved dynamic economic growth following the Fund's prescriptions.
Because of all that - and the complete compromise, the IMF ran out of funds and it would probably have shut down if the world financial and economic crisis had not come.
In the Fund, the dominant position (capital and management) is held by the USA, Great Britain and other large developed countries, so the Fund's function is increasingly reduced to collecting the debts of debtor countries, i.e. they work in the interests of creditors. And that is why he pressures all highly indebted countries to privatize the most valuable resources and companies, and their customers are usually transnational companies from developed countries. Bearing in mind that Serbia has a huge foreign debt, the principal of which at the end of September this year reached almost 26 billion, and the annual repayments are almost five billion euros, it is realistic to expect that the Fund will insist on further privatization and will claim that only this will enable the growth of the economy. And our politicians and eligible economists, who are still supporters of neoliberalism, and statisticians qualify those funds obtained from the sale as "foreign direct investments" even though they are essentially disinvestments. Therefore, if the Precautionary Agreement with the Fund is maintained, and none of the officials in Serbia questions that, the consequences for the economy will be very unfavorable, so it will all come down to a reformulated folk saying "Who with the Fund "plants pumpkins on his head" are banging".
Can't we send the IMF, as the people say, "to hell"?
During this century, IMF "aid" was eliminated by Uruguay, Argentina, Brazil, Ecuador, the Russian Federation, etc. Hungary prematurely returned the debt to the IMF, gave up any agreement with it, and in 2014 and 2015 achieved an average annual GDP growth rate of around 3,5%, while Serbia had a GDP decline of around 1,8%.
In the spring, the IMF "suggested" to Romania that it privatize the electricity industry and mining, it did not accept, it stopped cooperation with the Fund, and after that there was a revival of economic activity!
I belong to a very small group of economists who, since 2001, have been proving that the reform concept that was imposed on Serbia from the outside has a serious structural flaw. I have been characterized as a "catastrophist", "on-duty catastrophist", "defeatist", "man who spreads negative energy" ... Unfortunately, reality has shown that we were right. Economists and statisticians who spread positive energy and projected high growth rates of GDP and living standards received great material and social recognition, were elected to the Council of Governors and the Fiscal Council and are still there.
It is tragic that the Government and the Prime Minister continue to lead the economic policy of their predecessors.
My proposal, from the beginning of this century, is to form a team of top experts who would create a vision of an original economic and social system, adapted to our specifics, which would be adopted in the parliament and consistently implemented. Instead, Serbia will increasingly become a colony, it will remain in a deep economic and social crisis in which desperate old people will increasingly participate, while it will still be at the top due to the brain drain. That would be an unforgivable sin against future generations.
( http://fakti.org/serbian-point/sa-prodajom-telekoma-srbija-ce-ubrzanim-korakom-stici-do-statusa-kolonije-zapada; akademik Mlađen Kovačević – Zašto nipošto ne treba prodati „zlatnu koku“; Portal Facts 02.12.2015.)
( Telecom Union 02.12.2015. transmits from the Fakti internet portal the conversation Diana Milošević had with academician Mladen Kovačević02.12.2015)
