Problems of Privatization

By Kevin Sullivan, InterPress Service, 14 February 1999

SARAJEVO, Feb 14 (IPS)—Delayed and heavily criticised plans to privatize Bosnia's economy have come under renewed fire, this time from representatives of two of the country's religious communities.

In the three years since the end of the Bosnian war ambitious privatization proposals have been faulted for lack of transparency and incompetent drafting of relevant legislation.

There also was a widespread belief that politicians and well-placed civil servants were scheming to buy-up assets at bargain-basement prices.

While the pace of privatization has been glacial in the Serb Republic—one of the two entities into which Bosnia-Herzegovina was divided by the 1995 Dayton Peace Agreement—the parliament of the Muslim-Croat Federation, the other entity, recently adopted a privatization law which opened the way for the sale of public housing.

The process was complicated by the fact that legal tenancy in many cases has been disputed following the forced migration of large numbers of people during the three and-a-half year civil war.

Vouchers to buy privatized state assets started being issued this week, after considerable delay and privatization of the banking sector is scheduled to begin next month.

The process was stepped up at the end of January when Carlos Westendorp, the UN representative, charged with supervising the implementation of the Dayton Peace Agreement, inaugurated a Privatization Monitoring Commission, designed to resolve political deadlock and examine social issues raised by privatization.

This week Westendorp received separate open letters from leaders of Bosnia's Jewish and Muslim communities criticising the latest proposals to sell off state-owned property.

The religious leaders said that property confiscated by the pre- World War II Kingdom of Yugoslavia, as well as property stolen by the wartime Nazi puppet regime and property nationalised by the former communist regime, should not be put up for sale until provision was made to compensate the original owners.

At present, the government has proposed paying compensation, when it is deemed necessary, with vouchers, a form of scrip which has not impressed potential beneficiaries.

In the first post-Communist elections, held in 1990 “all political parties promised restitution,” said Jewish Community President Jakob Finci, “Everything which was taken under socialism was to be turned back over to the original owners.

“Now, after eight years, nothing has been given back, not communal property, not private property.”

Finci stressed that before the Holocaust in the 1940s, Jews in Sarajevo were the owners of “a respectable amount of property.”

“Nationalising things is like making scrambled eggs,” he said “ Restitution is like putting the eggs back together again; you can’t do it easily, but some mistakes can be avoided. You can provide cash instead of certificates and I’m against restitution in valueless paper.”

Similar arguments were used by Mustafa Ceric, head of Bosnia's Muslim clergy, who wrote to Westendorp arguing that “the process of taking property from the Islamic community dates from 1918.”

He said “more than 90 percent of the property of the Islamic community has been taken and the value of confiscated property is put at several billions of Deutsche Marks.” And he underlined the the confiscation of residential and institutional buildings owned by Islamic charitable foundations.

“If restoration of the property is not possible the law provides for compensation through vouchers, and it's well known that vouchers don’t represent fair compensation for property taken,” Ceric said in his letter. “We suggest that religious communities and property holders without any preconditions are given back their residential and commercial buildings.”

Ceric conceded that land which had been developed since it was expropriated could not be returned, but should therefore be the subject of compensation payments.

In the Islamic tradition, maintaining the property of charitable foundations is a religious obligation.

“A ‘vakuf’ (religious foundation) means a permanent charitable deed, lasting in the other world,” explained Professor Resid Hafizovic of Sarajevo University's Islamic Studies Faculty. “That type of property cannot be alienated or given to someone.

“If the Islamic community is the keeper of an old building, for example, their obligation is to maintain the building. If they have to sell it for some reason then they have to buy another building to be used for the same purpose.”

The obligation to maintain charitable foundations—and consequently to seek the restoration of property owned by such foundations—affects a considerable amount of property. In Sarajevo alone around 300 choice residential locations now in state hands and scheduled to be sold off are believed to have formerly belonged to the Islamic community.

The issue of religious property further complicates a Byzantine bureaucratic and political situation.

“The parties now in government promised fast privatization after they won the elections, but that hasn’t happened,” observed newspaper commentator Ibrahim Polimac. “Not more than 5 percent of apartments have been bought by citizens and people are waiting for certificates that are now a year late.”

Among the many practical obstacles to selling off property is the absence of reliable data on ownership. “Statistical information

is much worse than in other countries,” said Polimac, noting that Serb, Croat and Muslim-controlled local authorities have resisted the countrywide collation of information.

“You have three sources, everyone is giving his own source, plus agencies like the World Bank have their own statistics. So there is no exact data, just estimates.”