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Privatisation Row Puts Montenegro Coalition Under Strain

18 04 2007  Junior party’s revolt over power plant sale reflects broader tensions in post-independence government.

By Nedjeljko Rudovic in Podgorica (Balkan Insight, 18 April 07)

Montenegro’s ruling coalition has been shaken by a growing dispute over the privatisation of the nation’s remaining assets.

The dispute, which has simmered for several months, appears to be reaching boiling point.

At the heart of it are contrary approaches to privatisation. The Social Democrat Party, SDP, the junior partner in the coalition, believes the state should continue to manage key national assets and resources.

In contrast, the senior coalition partner, the Democrat Socialist Party, DPS, advocates more liberal economics and the total privatisation of former state firms.

The two have locked horns over planned sale of the thermoelectric power plant in Pljevlja, in northern Montenegro, which the SDP has tried to block.

Political observers say the disagreements between the two sides could eventually jeopardise the coalition’s survival.

Resumption of talks between the two coalition partners has been scheduled for next week but there is still no agreement in sight.

The SDP leadership has told Balkan Insight it will not allow the state to lose control over the energy sector while the DPS reiterates that privatisation of the plant is inevitable.

The clash over Pljevlja between the DPS, headed by former prime minister Milo Djukanovic, and the SDP, led by parliamentary speaker Ranko Krivokapic, began last December, when the government first announced a tender for the plant.

The SDP immediately opposed the idea, saying the state needed to retain control over the energy sector, of which the country’s only thermoelectric plant is an important part.

The Pljevlja plant generates one-quarter of the electrical power used in Montenegro and the SDP wants any profits to be set aside for targeting social problems.

The DPS disagrees, saying privatisation is the most effective option as the state cannot run such companies efficiently.

Montenegro began privatising so-called socially owned companies back in the Nineties.

About 90 per cent have now been sold off. Of the larger ones that remain, the Montenegrin Electric Company is one of the most important. Others include the railways, the Port of Bar and agricultural company Plantaze.

While both the DPS and SDP say their coalition, which won last May’s election, will survive, analysts warn of possible political turmoil.

However, they believe this will only happen after the passage of independent Montenegro’s first constitution this summer.

Earlier, the SDP opposed the sale of the telecommunications company Telekom, the state aluminium company and the oil firm Jugopetrol.

But the SDP gave way on those occasions, as those privatisations were carried out before last year’s crucial independence referendum.

At the time the party felt it was vital not to cause a crisis in the government and jeopardise the success of the referendum, severing ties to neighbouring Serbia.

Now the political landscape has changed and a member of the SDP presidency, Dzavid Sabovic, said they would not give up.

“We cannot sell our natural resources,” Sabovic told Balkan Insight. “We are not in favour of this neo-liberal concept. In principle, we approve of privatisation, but the state should keep 51 per cent of the ownership stake in [some] companies.”

Sabovic said the SDP had ultimately agreed to the sale of Jugopetrol in 2002, the aluminium company and Telekom in 2005 on account of the pending referendum on independence.

“We will not agree to the sale of the thermoelectric power plant now,” added Sabovic.

The SDP leader, Ranko Krivokapic, has said the final decision should be left to the Montenegrin parliament. “Management of the generation of electricity is fundamental to Montenegro’s development,” said Krivokapic.

“The SPD is strongly in favour of a welfare state and of a state that manages its resources in such a manner as to ensure the social security of its citizens as well as social stability,” he added.

However, the DPS leader, Milo Djukanovic, has spoken in public in favour of the sale of the power plant, saying he has no faith in the state’s ability to manage such concerns.

The DPS spokesman, Rajko Kovacevic, told Balkan Insight that privatisation was inevitable, adding that the DPS was unambiguous on the issue.

“The state cannot run these businesses as efficiently as private companies,” said Kovacevic. He described opposition to the sale as “demagogy and an [as] attempt to please the target groups that may lose their jobs as a result of the privatisation”.

Political analyst Dusko Vukovic said the crisis in the coalition over the power plant was unlikely to peak for a few months.

“Nothing really serious will happen before the adoption of the new constitution,” he predicted.

“The SDP has been trying to present itself to the public as a different political option, but their coalition agreement has always been their priority.”

Analyst Svetozar Jovicevic agreed that the SDP currently lacked the strength to “divorce” from the DPS.

“The drafting of the new constitution will be yet another excuse for keeping the ruling coalition intact,” he said. “The question is whether some new circumstances and problems might arise that would force SDP to walk out of the coalition.”

Jovicevic said the turning point might be next year’s presidential elections. “The SDP might not restrain itself from backing the opposition in such a scenario,” he said.

Marko Canovic, director of the Centre for Democratic Transition, says that now the referendum is over, there is little to hold the two parties together.

“The referendum issue is no longer on the table, and that is what kept the DPS and SDP together in a coalition all these years,” said Canovic.

Canovic said a strong faction within the SDP was dissatisfied with “excessively close” ties to the DPS.

“The situation is now different,” he maintained. “The SDP will either blend into the DPS, or it will strengthen its position by insisting on something that makes it stand out from the standpoint of the senior coalition partner.”

Nedjeljko Rudovic is journalist with Vijesti and BIRN coordinator in Montenegro. Balkan Insight is BIRN`s online publication.