Global Independent Analytics
Giuseppe Zaccaria
Giuseppe Zaccaria

Location: Italy

Specialization: Balkans, Yugoslavia

“B & B” model strikes back

In Serbia, former US general Petreaus is in charge of the project to buy large State companies and control the television media: bombing is always good for business

Serbian Prime Minister Aleksandar Vucic met with representatives of the American investment fund KKR on May 6th to discuss the state of the Serbian economy, arrangements with the International Monetary Fund (IMF) and new investments. "Political stability is vital for economic growth," Vucic said, adding that Serbia would do everything to maintain stability in the region. But you know who was the businessman who was discussing economics with the Prime Minister? It was the former General David Howell Petraeus, commander of American troops in the invasion of Iraq and then director of the CIA for a year, until 2012. This is just an upgraded version of the “B & B model”, namely bombs and business, that has emerged after each "war for freedom."

General Petraeus, who today is at the helm of KKR, congratulated Vucic on his party's election victory, underlining that the fact that victory was secured after the reforms were put in place shows Serbia is on the right track. He highlighted that KKR is satisfied with their investments in the region, and voiced the hope that the fund would soon broaden its investment portfolio, in both Serbia and the region. Prime Minister Vucic talked with KKR representatives about ways to solve the issue of non-performing loans in Serbia, already being tackled by the joint working groups of the finance ministry, central bank and KKR, the government's press office said in a release.

A few days later, the online edition of “SeeNEWS” reported, invoking unnamed sources from local media, that the U.S.-based investment fund KKR is interested in buying a total of 1 billion euros worth of non-performing loans (NPL) incurred by Serbian state-owned companies and guaranteed by the government. The fund is eyeing loans due for repayment by copper smelter RTB Bor, natural gas monopoly Srbijagas and to the power utility EPS, Serbian daily “Blic” reported. The three companies are on a list of 17 state-owned enterprises bound to be privatized or liquidated by mid-2016 as part of commitments which Serbia has undertaken under a 1.2 billion euro precautionary stand-by arrangement with the International Monetary Fund.

A joint group of experts of the finance ministry, the central bank, and KKR  are already working on the issue. According to the latest available official data, NPLs in the Serbian banking sector amounted to 425 billion dinars (3.5 billion euro), or 22% of the total as of the end of September 2015, wrote “SeeNews”.  To understand the KKR group and their portfolio in Balkan postwar countries it is necessary to recall some facts: US four star General David H. Petreus became KKR think thank ‘KKR Global Institute’ head when the KKR CEO decided to “give KKR’s the edge” whenever buying and influencing is on the table. His roles, according to KKR’s vision, is to support KKR's investment teams in the diligence process, especially when the Firm is considering investments in new geographies. But for Forbes analysts, the general’s real role this time is to use his network and help KKR to impose its own interests (or those of its powerful, hidden clients) “such as the role of central banks in the world since the outbreak of the crisis, changes in public policy, and other areas where KKR has interests.”

For Serbia and the region KKR is well known after buying the cable operator SBB, and not only for that.  “Media Observatory” net revealed December 2014 how ‘major powers tailored Serbian media legislation for Balkan CNN’ meaning the regional TV network, and CNN affiliate,” N1”, is owned by  KKR. In attempting to track this case, “Media Observatory” claims to have uncovered a more disturbing dimension to the legislative changes that enabled “N1” to launch its programme. It indicates that people working at the European Commission Directorate General for Enlargement Unit on Relations with Serbia have adjusted the country’s draft laws according to the comments they got on the issue from major players that threaten to undermine media pluralism in the country. On the other side, the Serbian government unquestioningly conformed to the Brussels opinion on the issue, instead of protecting the public interest of its citizens. The “Law on Public Information and the Media” and the “Law on the Electronic Media” have been under preparation for years. Over time, there have been many drafts that went along with the changes proposed by the Ministry of Culture, as well as changes suggested by members of working groups.

Please continue to follow us for a minute, and you will understand better how the "B & B" scheme works in the information system. The version of the draft “Law on the Electronic Media”, presented for public debate in October 2013, did not allow cable distributors/operators to have news programmes, but permitted it to all the rest, including allowing state-owned telecommunications company and cable operator,” Telekom Srbija” to have its own sports programme. “Telekom” owns the four “Arena” Sports Channels. According to Article 109, “in order to prevent distortion of media pluralism, or the exercise of a predominant influence on public opinion, it is not permitted that: 1) the operator provides general media services and media services specialized in informative programming content.” Hence, it follows that it can provide sports news. According to seven interview respondents, who were tasked with drafting the law in different stages, no one knew who actually wrote this particular clause. Media Observatory learned that this provision was unexpectedly added at the Ministry, before the public debate in autumn. The country’s leading cable operator, “SBB”, on the other hand, found this provision too restrictive and insisted that it be withdrawn to allow all operators to produce news programming. After public debate, and prior to adopting any law, as an EU candidate country, Serbia is obliged to send the draft law for review to Brussels-based DG Enlargement Unit of the European Commission through the country’s Office for EU integration. Once comments on the draft legislation are received from Brussels, the revised draft can go forward for adoption by the government and the parliament.

Around the same time, on September 16, 2013,” Adria News Ltd.” was registered in Serbia, headquartered in Belgrade at Zoran Djindjic Boulevard  8a. Its main activity is television programming production and broadcasting. The founder and sole shareholder is company Adria News S.a.r.l., based in Luxembourg. The company is actually “N1” TV, CNN’s affiliate in the Balkans, powered by United Group (SBB/Telemach). On October 15, 2013, private equity fund KKR, based in New York, acquired United Group from another private equity, Mid Europa, which tripled its money on the sale. EBRD remained the minority shareholder. This is KKR’s first direct investment in Southeast Europe. A few months earlier, in January 2013, former U.S. Ambassador to Serbia, Cameron Manter, began working as a senior advisor to the SBB-Telemach Group’s Board of Directors. No doubt this appeared to be a good investment from a business perspective. Operating under the SBB and Telemach brand names, United Group serves about 1.89 million cable and satellite TV, broadband, fixed and mobile customers across six markets of the former Yugoslavia (Serbia, Slovenia, Bosnia-Herzegovina, Montenegro, Croatia and Macedonia), with a combined population of over 20 million. Statistics show that about 60 percent of people in Serbia watch TV exclusively through cable. The total number of cable TV users in Serbia stands at 1.44 million, and this market continues to grow. According to 2013 data from Serbia’s RATEL (Agency for Electronic Communication), more than half of the users, almost 800,000, are clients of SBB. Petraeus, a retired U.S. general and former director of the CIA, visited Belgrade twice, meeting with all relevant media figures at a  gathering organized at the residence of the U.S. Ambassador to Serbia, but also with Serbian Prime Minister Aleksandar Vucic. During his second visit, on April 15, 2014, Vucic told Petraeus that KKR’s first direct Balkan investment - new cross-border TV station, N1, - was welcome in Serbia, according to a statement from Vucic’s office.

We now return to the role of Petraeus, who in this scheme acts as a frontman. The statement added that Petraeus told Vucic that KKR wished to increase its investment in Serbia and turn Belgrade into a centre for digitalisation in the region. Brent Sadler, “N1” director and a former award-winning journalist at CNN, went even further than SBB in autumn 2013, when he threatened to take the case to the European level if Belgrade refuses to back down. This is exactly what happened. As “Media Observatory” has learned from several sources, United Group hired Brussels- based law firm Gide Loyrette Nouel to lobby at the European Commission for the changes to the laws that would enable content distributors/operators to also be content providers. As a result of the lobbying activities, the DG Enlargement Unit sent the “Law on Public Information and the Media” back to Serbia with a comment to revise Article 46 in order to allow content distributors/operators to produce content, albeit through an affiliated legal entity. Being on its EU integration path, the Serbian government unquestioningly accepted the Brussels’ proposal for change of the controversial provision. Is this sufficient to make it clear how the scheme operates?

Brussels’ comment demanding revision of the article came as a surprise, given that the Commission had applied different standards to the Serbian public service broadcaster, “RTS”, then it did to Croatian and Slovenian media legislation. Neither Croatia nor Slovenia, as EU member states,   have such a provision for cable operators. Regardless of EU policies on the issue with regard to various EU member states, the Serbian media experience to date does not leave room for optimism. For example, If you are a client of SBB cable, you do not have any of the four Arena Sport channels that are owned by Telekom Srbija. If you have Telekom Srbija’s Open IPTV, you do not have Sport Club, which is an SBB channel, in your package. Moreover, B92 Info, a cable channel which is a rival of N1, has been removed from SBB’s basic cable packaging. These examples show a hidden geopolitical agenda, from war to business, with unprecedented consequences for the public interest and citizens’ right to be informed, as an integral part of a decent life. If by chance one still wonders how information is connected to a decent life, just remember that for neo- colonialism the first stage is always  to win hearts and minds prior to imposing more easily the (post)modern variant of slavery. KKR is moving forward from the realm of the media to taking control of public enterprises. It is a foregone conclusion  that the only interest KKR will serve is its own, as it pursued “business as usual” in war torn and destroyed countries.

To be frank, this is not a unique example of the tight connection between bombs and business. Let us recall NATO aggression on the Federal Republic of Yugoslavia, and the subsequent creation of the phony “state” of Kosovo.  Does anyone still remember today that the ‘famous’ US Secretary of State so frantic to bomb a European country for 3 months, Madeleine Albright, was inspired by the hidden agenda of  privatizing  Kosovo? The Times  account described Albright and James W. Pardew,  special envoy sent to the Balkans by President Bill Clinton, offering competing privatization bids for the Kosovo  postal and telecommunications agency, known as PTK (from its Albanian and Serbian initials). In the same article, Matthew Brunwasser wrote that General Wesley Clark, once NATO Supreme Allied Commander for Europe   during the bombing of FRY, later chairman of Envidity, a Canadian firm interested in Kosovo's coal mines and potential for synthetic fuel production, has also been to Kosovo in search of financial advantage. But Albright's involvement has given her the highest profile in the discussion of Kosovo's economic future. According to the Times, "’Albright Capital Management’, founded by Ms. Albright, has been shortlisted in the bidding for a 75 % share in… PTK." The Times estimates the probable payout to Kosovo political leaders for PTK, if the deal is consummated, at "between $400 million and $800 million." Officials of another Albright entity, “Albright Stonebridge Group”, have a minor share in PTK's only competitor, the private company IPKO, based in Slovenia. Times correspondent Brunwasser wrote that the situation could "threaten… market competition if Ms. Albright's consortium wins the bid" for PTK.

The same agenda is visible in Libya. Western security, construction and infrastructure companies that see profit-making opportunities receding in Iraq and Afghanistan have turned their sights on Libya, now “free” after four decades of dictatorship. Entrepreneurs are abuzz about business potential in a country with huge needs and the oil to pay for them, plus the competitive advantage of Libyan gratitude toward the United States and its NATO partners. In the Ukraine, Monsanto’s opening of an office in that country coincided with its land grabs, using loans from the IMF and the World Bank by one of the world’s most hated corporations – all in support of its biotech takeover.  Previously, there was a ban on private sector land ownership in the Ukraine – but it was lifted ‘just in time’ for Monsanto to have its way. Or, US Vice President Jo Biden’s son Hunter Biden who was appointed board member of “Burisma Oil and Gas Holdings” in the Ukraine to ‘help develop’ the local oil and gas industry, of course. As deeper level analysis invariably shows, in most of the war torn countries war was the  means for taking over their national economies for the benefit of powerful foreign financial interests.

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