Balkan ports of call

By bne IntelliNews October 14, 2010

Ian Bancroft in Belgrade -

As an historic trading route linking east and west, the Balkans have seen their disputes often centre around strategic access and transit points. With the borders of the region finally settled - according to most anyway - states are increasingly focused on securing commercial, as opposed to territorial, paths to the high seas.

Serbia - essentially landlocked since the demise of its union with Montenegro in 2006 (although the Danube does provide access to the Black Sea) - is particularly keen to open new routes to the Adriatic. Earlier this year, the Serbian infrastructure ministry announced the creation of the company BB Cargo that will participate as part of a consortium of Serbian firms in the tender for the Montenegrin port of Bar, which currently operates below capacity and at a financial loss. Plans are also afoot to construct a 445-kilometre highway linking its capital Belgrade to Bar, whilst reconstruction of the Belgrade-Bar railway is also being considered.

As Milan Celebic, commercial director of the Port of Bar Container Terminal and General Cargo Operator (a majority state-owned company, in which a 54.5% stake and 30-year concession was offered for sale earlier this year), tells bne: "in the previous [failed] tender, Serbia expressed its interest. It was based on the need to have a strategic solution for the shortest link with overseas destinations. Our expectation is that this interest will be expressed in the following period, as well at the time of the new tender."

The port is currently seeking financial support to purchase cranes and cargo handling equipment, and to support its voluntary redundancy programme - both of which are designed to improve its privatisation prospects.

Despite the historical ties between the two countries, Serbia's expression of interest is not without problems. Critics - who describe the move as politically motivated - insist that the port is too expensive, query the cost estimates given for improving the port's functionality and reconstructing the railroad, and point out that only around 8% of Serbia's trade currently goes through Bar.

Professor Marija Maksin-Micic, an expert in regional development at the University of Singidunum in Belgrade, emphasises that the other port of interest should be Thessaloniki in Greece. "Which port would be of greater interest to Serbia, however, will very much depend upon the quality of access to both ports. If construction of the Corridor X highway finishes before that of a highway from Belgrade to the Adriatic sea - which is the most likely scenario - then the port in Greece with be of major interest to Serbia. The same goes for the reconstruction of the railway in both directions."

Indeed, the Thessaloniki Port Authority, the operator of Greece's second-largest port, recently announced that it's looking elsewhere in the Balkans - particularly to Bulgaria, Serbia and Macedonia - in an effort to boost cargo volumes and revenues, and is set to invest in additional infrastructure and storage facilities.

Kosovo - which itself declared independence from Serbia in February 2008 - has sought to resolve its own land-locked dilemmas by strengthening ties with neighbouring Albania. In 2009, the Albanian government agreed to give Kosovo access to the Adriatic via the northern port of Shengjin, with plans to improve road links with Djakovica/Gjakova in western Kosovo. The construction of a highway linking the Albanian port of Durres and Pristina - financed, according to some, at the expense of Corridor VIII (linking Durres to Tirana, Skopje, Sofia, Plovdiv, Burgas and Varna-Constanta) - will also provide Kosovo with important access to the Adriatic Sea.

Ship wrecked

Croatia, meanwhile, continues to grapple with the burden of its own shipyards, the restructuring of which the EU has made a key condition for concluding accession talks. The traditional beneficiary of heavy government subsidies (equivalent to some 10% of the value of each ship produced), such assistance violates EU competition regulations.

As Dr Visnja Samardzija, head of the European Integration Department at the Institute for International Relations in Zagreb, tells bne, "restructuring of the shipyard sector is a key element in the accession negotiations on the competition policy chapter, which is - together with the judiciary - considered to be one of the two most difficult chapters. The shipbuilding industry enjoyed strong government subsidies in past years and employ around 11,500 people. Out of six state-owned shipyards, only one - Uljanik from Pula - is functioning on a sound basis. The first attempt to privatize the shipyards failed last year."

A number of shipyards are now again up for sale - including Kraljevica near Rijeka and Brodotrogir just outside Split - and will be forced to close if no buyer is found. A request to exclude Uljanik in the port of Pula from the restructuring programme has been submitted to the EU. In the meantime, the yards cannot take new orders, leaving employees facing the prospect of wage cuts and even redundancy. Some 3,000 Croatian workers recently held protests in Split against the planned sales, and more social unrest could further impact support for EU membership (currently estimated at a surprisingly low 30%). Samardzija, however, believes that the government "is on a good track to finish the privatisation process in this sector in due time and conclude negotiations on this chapter."

One of Croatia's own container terminals, Brajdica in the port of Rijeka, continues to attract interest, with five companies (APM Terminals, Dubai Ports World, Hamburger Hafen und Logistik, International Container Services and Grup Maritim TCB) short-listed to establish a strategic partnership with Jadranska Vrata, whose own concession over the terminal runs until 2043. The partnership is motivated by the need to increase competitiveness, boost cargo volumes and secure investments in new terminal infrastructure and equipment.

As with the region's railway networks (a joint-venture, Cargo 10, established by Serbia, Croatia and Slovenia, was launched on October 1 in order to cut travel times), Balkan ports and shipyards - many under-utilized and loss-making - would benefit from similar forms of strategic partnership designed to facilitate regional transit trade and improve efficiency. Suspicions will continue to linger, however, that national and historic ties have an undue influence on strategic considerations.

Related Articles

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

CEE leaders call for Nato troops to help deter Russian aggression

bne IntelliNews -   Central and Eastern European leaders blasted Russian "aggression" on November 4 and called for Nato to boost its presence in the region. The joint statement, issued at an ... more

Notice: Undefined index: subject_id in /var/www/html/application/controllers/IndexController.php on line 335