bosnia report
New Series No: 27-28 January - May 2002
Bosnia's true potential
by Osman Pirija - interview

Interview with Professor Osman Pirija, former manager of ‘Hepok’, the once highly successful Herzegovina Agricultural Association, published in Ljiljan (Sarajevo), 11-18 February 2002. Professor Pirija died on 19 March 2002 in Mostar, at the age of seventy-seven. A highly decorated former Partisan, his ideas on how the agricultural economy should be developed brought him into conflict with the Communist authorities, so that in the early seventies he went abroad to work on agricultural projects in Libya and Ethiopia. Subsequently he held the chair in the Agriculture Faculty at Sarajevo University, and was responsible both for numerous agricultural development projects and for a long list of scholarly works in his field. This interview gives a fascinating insight into the economic dysfunctionality of the former Yugoslav system, especially in the agricultural field, and into the considerable degree of continuity between prewar and postwar Bosnia-Herzegovina in this respect.

Bosnia's True Potential

You are once again active in Herzegovina public life. Your current proposal brings back memories of past projects. Can you tell us about them?

The project I have put forward relies on our water abundance. My idea is to use it to irrigate Bijelo Polje and Bisca Polja, and in a final stage also the Dubrava plateau, so that we can increase our agricultural production and leave behind all the sooner the present state of our people's abject poverty. The idea in effect completes an older project, which had lacked a sympathetic environment. It is risky to restart the same business, especially for someone of my age, but the desire on the part of the local people to realize this project encouraged me to return and help as much as I can. I hope to realize today at least some of the projects that we in Hepok were unable to implement in the past.

What projects were these?

We in Hepok, of which I was the head, even prepared a statute for our enterprise, which was to be the first of its kind in the former Yugoslavia. We did not have the necessary expertise and were helped by the then Secretary of the Italian Communist Party Giancarlo Pajetta. He and I got together in Pocitelj in 1967 and drafted a statute for a quasi-shareholding socialist enterprise in which the shares would be owned by the employees. According to our conception the employees would formally be not self-managers, but shareholders in control of their own business. This project is now being realized in the USA, where it involves almost seven and a half million people. We would have probably done extremely well, setting an example to others. We would have broken through the barrier of backwardness to became leaders in our area, not only in regard to the economic development, but also in the sphere of management, which is very important.

What went wrong?

Our project was a direct challenge to the system, in that it showed that self-management was nothing but a charade. When in 1970-71 the state transferred some of the means of production to enterprise ownership, and when all that was needed was a decision that the return on invested capital should also become enterprise property, the republican government chose to appropriate much of the created surplus and distribute it as it saw fit by way of state banks.

Our other challenge was that we sought to create a highly productive industry capable of entering the world market. The idea was to produce for the local market only a limited type of goods, such as milk and milk products, and to export everything else, in particular our Herzegovinian speciality wines Zilavka and Blatina, as well as various kinds of fruit and vegetables.

Of our range of products the state controlled only two: milk and meat. Our strategic products for the European market were to be table grapes and also peaches, which were not commonly grown here. We soon became a major European producer of peaches. Then there were flowers. We became a major exporters of flowers in Europe. We used to sell twenty million blooms each year. Each evening the flowers were packed and transported by fast trains to appear in the early morning in Ljubljana, Zagreb, Belgrade, Novi Sad, etc. Our annual income from the sale of flowers was DM 20 million. Hepok also sought to produce finished goods, which meant becoming a direct exporter. Our enterprise indeed grew to the point that we were able to deal with all sides of our business. Our production was based on total vertical and horizontal integration. But our servile Bosnian mentality meant that we did not dare to be leaders!

Surely, that could not have been decisive?

No, although it greatly contributed to our ultimate failure. When a government does not want innovations, it relies on this servile mentality, which arrests every progressive idea. According to American management theory, 2.5% of the population of a given national or social group is enough to get development under way. Another 15% follows them, and these are followed in turn by the majority, who after a while accept the innovation and thus permit its consolidation. The remaining 30% never does. Our problem lies in the fact that we usually seek support in that retrograde 30%, which includes state and party officials. Their motto is 'don't disturb'. I’ll give you an example. A few days ago, at the presentation of my project, someone told me that the Americans are planning to build windmills in Podvelezje to generate electricity. I said that the local municipal archives would show that I had already planned, four years ago, to build windmills in more or less the same locations. His servile mentality, however, could not accept that we did something before the Americans.

Who was the main bearer at that time of the servile mentality you refer to?

We were about to destroy Boris Kidric's old concept according to which Bosnia-Herzegovina was supposed to produce raw materials and semi-finished goods, while light industry was to be developed in Slovenia, Croatia and Serbia. Bosnia was thus to acquire a colonial-type economic structure. However, we were on the road to destroy Kidric's concept, since Hepok’s development was planned for the next twenty years. We were on the road to offer the world market our own products. When we built what was then Yugoslavia's most modern distillery, this distillery on its own brought such profits that we were able to finance our own development. We no longer depended on bank loans. When we showed that we had a better solution for securing for our people a higher standard of living and a better future, it became necessary to bring us down.

Our next step was to be the development of a cosmetic industry that would be directed at the Arab world, where exploitation of oil was beginning to produce great wealth. Our intention was to grab a slice of the cosmetic market from the French. We prepared eight products for that market. For the start we prepared in Popovo Polje three hundred hectares for the growth of aromatic plants, which would produce the necessary essence. Next to Popovo Polje, on the northern side of the Jablanica lake, we planned to grow roses for rose extract. The price of one phial of rose oil was then $28, of a litre $4,500. We were also drawing up plans for the development of a pharmaceutical industry. We started also to produce natural fruit juices. We had to produce our own raw material, so we planned first to plant one hundred hectares of quinces in Hutovo Blato, which is the ideal location for this; secondly to produce morello cherries in Bisca Polja; and thirdly to produce pomegranate, a project we worked on in cooperation with the Americans, who were supposed to modify the machines for processing the pomegranate juice. All this was intended for the American market. There was also a bilberry farm in Kupres, whose products were sold in advance to the Americans. So these were our four strategic products destined for the world market.

There was also the project of planting olive groves on four hectares of the then virgin land between Rodoc and Bacevici. We planned to erect also an olive-processing plant in the middle of this land. New York was to consume the lot. The demand for olive oil was high and our road to the world market lay open. We had imported four kinds of olive trees and in 1960 planted the central nursery in Gnojnice. By 1965 we had enough trees to activate four hundred hectares. However, in the area where we planned to plant olives the government decided to build a cellulose factory, for which the raw material was to be imported from Canada. Such a factory would have polluted everything around it. Thanks to Hasan Brkic, who was then prime minister and who supported our project, delighted that we could develop an industry capable of producing the final product using our own know-how and possibilities, the municipality returned the land to us. A year later, however, it took it back again and built the Aluminium plant there. The concept of producing semi-finished goods had won again.

The erection of the Aluminium plant endangered all our crops, since they - the vines and especially the peaches - are highly sensitive to hydrochloride. Not to speak of our cattle: our farm was some 500 metres from the factory. What happens to cattle which eat grass full of chlorine is that after four years their foot bones start to break. People in the vicinity suffer from hair and teeth loss. Even today, no one in Mostar knows the degree of concentration of chlorine in the air, or in the waters of the Neretva. We in Hepok had set up our own pollution-monitoring institute and discovered, for example, that the textile factory in Vrapcici was responsible for the decline in the growth of our alfalfa.

What happened when we warned against the pollution linked to the Aluminium plant? The party machine swung into action well before we could seek financial restitution. Kardelj arrived and told Mikulic: 'You have allowed technocrats to dictate Bosnia's economic policy. The Party here has been emasculated.' So Mikulic and his lot placed a Party umbrella over Hepok, called APRO. APRO was a Party committee that supervised Hepok and ensured its fall. They first wrecked the cattle farm, which was playing an important role in the production system, since cow dung was used for fertilization of the land. The production of fodder for the animals was organized on a permanent basis, with winter fodder followed by summer fodder. What they did was to go to Slovenia, where they copied the model used by the Slovene peasants. They invested four billion dinars to reconstruct the farm so that it would produce liquid rather than solid organic fertilizer. This fertilizer, following the methods of the Slovenes who do not produce in winter, would be plastered over the land. In other words, they invested an enormous sum of money to reproduce the model of a continental family farm. They also took over the distillery and forced our best engineer Mišo Kajga to hand them the money. They dismissed all the engineers who were involved in the creation of Hepok. They destroyed the project of warming the plastic greenhouses using the river Buna, and indeed all projects involving use of the river south of the Aluminium plant, since in the event of a major catastrophe the lives of 50-70,000 people would have been endangered. In other words, all use of the lower flow of the Neretva became impossible due to the Aluminium factory.

What about today?

Things have not changed much. We still prefer producing railway tracks and steel ingots rather than perfume. The problem of this mental cast is present all over the world, but at least efforts are made elsewhere to allow the development of societies permitting good entrepreneurial ideas to be implemented. There is also the legal protection of property: everything that Hepok had created was destroyed. The state destroyed it instead of protecting it. For reasons of its own it favoured the development of a non-ferrous metal industry producing semi-finished products, which enabled it to earn hard currency. For if we exported wine to Germany and Japan, we in Hepok - and not they - would have got foreign currency. This they could not permit. It was a mafia which stole whatever it could. Nationalism and chauvinism is not of recent date, it was nurtured already in the previous system.

What has survived, however, is not being used today either. Six years have passed since the end of the war and nothing is being done. The current governmental bodies have no concept of development, no strategic vision. We have the same old bureaucracy albeit in a different dress, which subjugates all activity to its own interests. Instead of using what has remained and stimulating production, it waits for something to happen. The distillery, for example, could be made to work and produce money for other projects, but they prefer to beg around and seek alms from donors. Yet the Federation imports annually DM 140 million worth of alcoholic drink. We could start producing fruit juices within four months; but the press was never made to work - it has been standing idle for fifteen years. They say we have no money, but this is because they wait for someone to give it to them, while the real money - such as the distillery - is staring them in the face. If in 1990 Hepok had been privatized on Markovic's model, the 3,700 workers as new owners would defend their plant.

Who prevented Hepok's privatization in 1990?

The same people who had prevented its development. The Party loyalists and Communist puppets - the puppets of KOS [military intelligence], which took power in the former Yugoslavia in 1972 by creating a network of para-state institutions. They destroyed everything and now, when you ask for money for irrigation, they’ll tell you they don't have it. We worked with nine partially irrigated systems. We waited for the building of the Salakovac dam, which would have permitted us to irrigate Bijelo Polje and Bisca Polja - not just Hepok's land, but all of the private sector. However, when the dam was built some twenty years ago, the construction of the irrigation system was prevented. Bosnia had invested enormous capital in a dam that was to be used not only for the production of electricity, but also as an aid to agriculture. Instead we were left with dry land wondering what would happen to our people. When I wrote at the time that Herzegovina would soon have 500 hectares of privately-owned polythene greenhouses, the editor crossed out one zero on the grounds that I was exaggerating. Today you have more than that number in the area between Grude and Svitava alone. You can imagine what could have been achieved, if we had speeded up the development of the infrastructure in the countryside, if we had brought water to Dubrava, Podvelezje, Grude etc. In Citluk and Posusje, where this has now been done, the people show an amazing degree of enterprise. The other day, when I was explaining my project, someone from the Economic Chamber told me that they have made a developmental plan that would bring $1,600 gross income per capita for the next ten years. The five hundred greenhouses that exist, and which involve 4,000 households between Grude and Svitava, already supply DM 8-10,000 annual gross product per capita. Practically every house owns a Mercedes car.

Where lies the way out?

It lies in individual initiative. There is the example of Mrs Zukanovic, who fled from Visic to Neretvica. Living as a refugee during the war, she rented a plot of land and employed two people. By selling peppers she earned enough to buy herself a Mercedes. How does she sell her goods? She calls Sarajevo on her mobile phone. We do not have such entrepreneurs in our government, nor a government that would present such people as a positive example, let alone promote them. The press also fails to mention them. People like this, people who were once desperate refugees, did not beg for alms. There is also Hana from Glavaticevac. She asked the donors not for money, but for a greenhouse. Her 250 square metres earn her DM 4,000. She sells all her peppers from her doorstep to the tourists who in the summer season come to swim in the Boracko lake. By contrast, those who draw up development plans seek first of all to secure their own position within them, so that every project that threatens that position is stopped. Our development is in fact being determined not by our own government through concrete plans, but by the fact that Bosnia-Herzegovina is to become a member of the EU within the next ten years. So the framework is there. If you wish to become an EU member, you cannot do so as a beggar. It is up to us to prove ourselves.

Do you think that your project, which has been well received by the government of the Herzegovina-Neretva canton, will be implemented?

We can survive only by adopting development programmes. Mr Prodi's view is that countries in transition do not need aid or donations, but money for development. He is right. Development that assumes simultaneous advance at all levels is a chimera. Only profitable programmes secure progress. I believe that the 2.5% of which I spoke will prove their mettle. I also believe that the 30% who perceive the new as a threat will not be able to stop us.

This interview has been translated from Ljiljan (Sarajevo), 11-18 February 2002


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