End nears for indebted industrial giants of former Yugoslavia
Aluminum Factory
BY: REUTERS

PODGORICA, Montenegro: There was once a time when a job at Podgorica’s sprawling aluminium plant meant a free apartment, a discount on holiday rentals and a large dose of prestige in socialist Yugoslavia.

In its heyday in the late 1970s, Kombinat  Aluminijuma Podgorica (KAP) supported the families of 5,000 workers. Now, with its workforce cut to a fifth, huge parts of the complex resemble a ghost town, blanketed in dust and suffocated by debts of more than 380 million Euros ($513 million).

That’s 10 percent of the economic output of Montenegro, the tiny Adriatic republic that inherited KAP when Yugoslavia fell apart in war in the 1990s.

Montenegro is now torn between a pressing need for economic stability and the political and social cost of closing down KAP.

It’s a choice faced by others in the Balkans: giving up a cherished, but ultimately unprofitable business model, spurred by financial necessity and hope of renewed prosperity within the European Union.

“This is not the 1980s anymore,” said Andrew Roberts, head of the Belgrade-based Eastern Europe Economics research consultancy. “These companies have debts, they’re inefficient. In some cases you might be able to reduce size, in some cases you have to close it and some jobs will have to be lost – the question is when?”

The former Yugoslavia is littered with such industrial dinosaurs, deprived of the largesse of the late socialist leader Josip Broz Tito but kept on life-support by governments too scared to pull the plug.

KAP stands out for its sheer size relative to a country of 680,000 people. Last year, the plant accounted for more than 30 percent of Montenegrin exports, 40 percent the year before. It now faces bankruptcy proceedings.

Political wrangling over KAP’s debt has weakened the hand of Montenegro’s dominant political figure for the past two decades, Prime Minister Milo Djukanovic.

He sold KAP in 2005 to Russian billionaire Oleg Deripaska for 48.5 million Euros, a year before Montenegro split from its state union with Serbia and became independent.

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