The ghosts of privatization
The government’s pledge to transform Kosovo’s privatization process faces as many difficulties as opportunities.
In the center of Prishtina, a dormant beauty awaits the shake-up that will end its long nightmare of oblivion. The high walls of the former Kino Rinia cinema, once a window to the world for generations since the 1950s, today form a dead skeleton in a vegetative state hoping for a miracle.
The vestiges of this forgotten city-center treasure, which is now dressed up with a gigantic supermarket advertisement, isn’t unique in the struggle for remembrance, survival or even rebirth. And like many of its kin, its survival has no easy path.
Kino Rinia is only one of many buildings with an unresolved legacy and status.
It was during the Yugoslav socialist period that its particular business model — entities collectively owned by workers through salary contributions — was born, including in Kosovo. But with the fall of Yugoslavia, the repression of the Serbian state apparatus against ethnic Albanians, the war, and ultimately the arrival of capitalism, another tale came along that has left too many ghosts behind: Privatization.
Rather than returning to where they once were, in the hands of workers, two regulations approved by the UN’s Mission in Kosovo (UNMIK) in 1999 and 2002, gave the international entity the administrative rights over socially-owned enterprises. This paved the way for the creation of two agencies: First the Kosovo Trust Agency (KTA) in 2004 and subsequently its transformation in 2008 into the Privatization Agency of Kosovo (PAK), which would oversee the transition from collectively owned to privately owned enterprises.
Since coming to power earlier this year, the current Kosovo government led by Vetëvendosje has been publicly stating that it will transform the privatization process. The government, which accuses the Agency of long-embedded corruption and failure to efficiently complete the privatization process by itself, has pledged to take direct management of the social enterprises and their assets, by transferring them to a Sovereign Fund, yet to be established. The recently presented governing program presents few additional information on how this will work, beyond saying that strategic assets will be ascribed a value with the aim of attracting foreign investment and access to foreign markets, and that PAK will be abolished and transformed into a government agency.
Nevertheless, Albin Kurti’s government plans to set these processes in motion as soon as next year, according to media reports. The administration just recently made its first move to transform the privatization process by dismissing the board of the Agency with parliamentary approval, and announcing that this is just an initial step.
Such an undertaking would have to pass through parliament, and PAK has stated that it will accept whatever parliament approves. But it also claims that there will be potential risks from financial insecurity to legal troubles for all parties involved — for administrators and managers or past, current or potential future owners — as the problems it has been dealing with over the years have been piling up and could possibly be transferred to the government.
The ghosts left behind speak of the struggles.
Rilindja, the eviction of a cultural giant
Standing 74 meters tall, and reigning over the city of Prishtina, was once a brutalist tower, home to the former Palace of the Press, Rilindja. Today it is a government building, near the Palace of Youth and Sports. What many may not know is that the first palace project did not foresee a tower at all, and it was meant to be built where Grand Hotel Prishtina resides today. But in the end, the Palace of the Press would be built just a little bit farther west.
The 18 floor tower and its adjacent wing are nowadays nothing like what they once were inside, and out.
The Kosovo government made interventions to the Rilindja tower in 2008, covering any shades of brutalism and transforming it into a dry office building — different in aesthetic and purpose from what had been built back in 1978. The brutalist design described by Prishtina architect Arber Sadiki as an elegant, expressive gift for the city, is gone forever. Almost as erased as the history it once hosted.
Privatization: Why?
With the fall of the Berlin Wall, countries across Eastern and Central Europe embarked on the so-called “transition to democracy.” This was accompanied by a range of economic transformations, toward a free-market economy — capitalism. One commonality for the majority of the post-socialist or post-communist economies was the process of privatization.
A similar fate awaited countries stemming from the disintegration of Yugoslavia, specifically for socially and public-owned enterprises. In Kosovo’s case, these changes arrived after the 1999 war.
Socially-owned enterprises were based on the idea of social property introduced in the 1950s, a collective form of property where a social community, a broader social network of citizens — not the state — has ownership of what they produce and the profits.
The privatization process in Kosovo inherited around 500 socially-owned enterprises, of which only 30% were functioning after the war. Many just did not survive and ceased operations, a consequence of the measures imposed by the Serbian state apparatus in Kosovo as tensions rose toward the end of the ’80s and the beginning of the ’90s.
In many cases, companies had experienced drastic changes: Albanians had been replaced with Serbs in management, and thousands of Albanians had been sacked from their jobs. After the war was over, many of these enterprises, which had been quite dysfunctional for a decade, faced problems such as technological obsolescence, a depreciation of their assets and poor resources. Meanwhile, many problems arose like conflicting property claims, and missing documents that had been stolen or lost.
Technically, municipalities had been acting as administrators of socially-owned enterprises and social property until 1989; with the approval of Resolution 2002/12 by UNMIK, the international body became the administrator of socially-owned enterprises registered in Kosovo in the time of Yugoslavia.
This resolution gave birth to the Kosovar Trust Agency, tasked to administer socially and publicly owned enterprises. The Trust Agency was, in essence, the predecessor of the Privatization Agency. The Law on the Privatization Agency of Kosovo foresaw the administration, privatization and liquidation of socially-owned enterprises and was intended to help unblock public programs, reduce unemployment, and overall, improve the state of the economy.
But two decades after the war, privatization remains unfinished and with plenty of deficiencies. These include: a tendency to highly undervalue socially-owned enterprises inherited from the past; exclusion of citizens and former workers from deciding the fate of many of the properties and companies; a failure to successfully use the funds accumulated from privatization sales to fuel economic development; the exclusion of farmers when agricultural land was privatized; and a failure to contribute toward employment growth.
Ultimately, PAK has often been subject to accusations of corruption, politicization and benefiting powerful individuals and private companies.
Sadiki still remembers the words of the building’s creator, the Yale-educated Macedonian architect Georgi Konstantinovski, when he visited the building back in 2014. “We went close to it and he kept looking at it, and there was no lie or acting in this — he just said: ‘I can’t recognize it.’”
Rilindja, in its entirety as a building and a venture, was once the queen of socially-owned enterprises in Kosovo, particularly in terms of its cultural legacy.
In February 1945, a few months before the end of World War II, the first edition of the Albanian language Rilindja newspaper was published. It would go a long way from its birth as an organ of the National Liberation Front in Prizren, to making it into the Palace of the Press in Prishtina in 1978.
From its beginnings, Rilindja gained strength as a force of knowledge in the Albanian language, contributing to the fight against illiteracy, disseminating cultural richness and facilitating access to education as well as information, and propaganda sometimes too.
By 1979, the Palace of the Press, known by the newspaper’s name, hosted the various entities of the Rilindja cooperative — the newspaper, the magazines, the publishing house, the printing house, the advertisement agency and more; a full-on cultural bastion. And within the walls of its tall tower and its adjacent lower wing, the Palace of the Press also hosted other smaller media, like TAN, in the Turkish language, and Jedinstvo in Serbocroatian.
But when Serbia abolished Kosovo’s autonomy in 1989 and subsequently intensified its crackdown on the rights of ethnic Albanians, Rilindja too suffered the consequences. In August 1990, Rilindja’s publication was suspended because the workers refused measures imposed by Belgrade that required the paper to be declared an organ of the parliament of Serbia. The publication of the newspaper and other activities were suspended in the building, with the exception of one floor that remained in operation.
“The worst day of my life was when the newspaper didn’t come out,” says 80-year-old Nazmi Rrahmani, a former writer, journalist in the Rilindja community and chief of the publishing house.
During the ’90s, the enterprise’s publications continued operating mostly outside of the original building, while the Rilindja newspaper itself operated covertly by publishing its content under the titles of other existing publications, such as Fjala and Bujku. On June 12, 1999, the day NATO peacebuilding troops entered Kosovo, a Rilindja team returned. The paper resumed operations in the building and began distribution the very next day.
But this time around, it would be one of the paper’s very last breaths.
The war over and the country liberated, there would be a new barrier to using the building. UNMIK, with executive authority over the country, would now be its administrator.
Another Rilindja historical figure, Behlul Jashari, the last editor-in-chief of the newspaper and representative of the workers of the former socially-owned enterprise, has not forgotten how they lost their workplace.
“Nineteen years ago, on February 21, 2002, the traditional Kosovo newspaper, Rilindja, was viciously forced out of its home, named the Palace, and consequently it was closed by the UNMIK administration,” he says.
His words speak of disappointment toward an international administration that was supposed to help but instead planted the first seeds of a process that has yet to end, two decades later.
In 1999, UNMIK took over administration of those properties in Kosovo that had previously been registered under the Yugoslav Federation and the Serbian Republic. Three years later in 2002, UNMIK approved Regulation 2002/12 that created the Kosovo Trust Agency, PAK’s predecessor, to “administer, preserve and privatize socially-owned enterprises.”
“Rilindja was an institutional pillar of Kosovo,” says author and researcher Ervina Halili, who has played an important role in preserving part of the legacy of this cultural house through the project Arkivi Rilindja and a documentary film. “Out of it came books, a newspaper, magazines, but also political parties. And it has been treated like a factory that produces pieces of a car, just like the cultural memory it produced as an institution has been treated like a car parts factory.”
Besides publishing special editions as a form of protest and resistance to its closing, Rilindja never really made it back, and its tangible heritage — the content of its library, archives, printers, etc. — is mostly lost.
Under PAK’s management, Rilindja’s graphics and newspaper enterprises entered the liquidation process, in 2014 and 2017 respectively. This process offers room for creditor claims and the sale of assets still in possession. At the same time, the Rilindja workers also made their requests at the Special Chamber of the Supreme Court, including demanding compensation for the collective loss of their jobs when UNMIK took over the building.
In 2014, the government took the shortcut of expropriation, a mechanism it can apply to the assets of socially-owned enterprises when it wishes to do so on the basis of public interest, and took ownership of the Palace of the Press.
But years later, and even though the Palace has been occupied by government employees for years, the former Rilindja workers are still waiting to receive the 20% of the property’s value that is due to them by law when socially owned enterprises are privatized.
In a bitterly ironic twist of history, PAK will be moving their headquarters this year to the very same rooms where the Rilindja printing machines once were.
Its privatization might be considered over, but the pending workers’ benefits and its cultural legacy or even potential continue to remain an unfinished story.
Kino Rinia, a gem awaiting salvation
That a treasured local cinema becomes a supermarket, a call center or a clothes store is a very capitalist story. These are just some of the many prospects that could end up facing what was once called — and what many still refer to as — Kino Rinia.
Built in the ’50s, and located on what today is the busy intersection of Luan Haradinaj and UÇK streets, Kino Rinia spent more than half of its life as one of the city’s central cinemas. But over the past two decades it has also housed a range of institutions and businesses within its walls, including a casino, at least two nightclubs, a court, a doner kebab shop and a TV channel.
Kino Rinia has not become a new business yet, but there was a scare in the early pandemic summer of 2020, when the first lockdown measures were slowly being lifted. Having been in the process of liquidation since 2014, construction work taking place at the building immediately raised alarms.
It took cultural activists, municipal and ministerial hands to put two and two together and quickly knock at the door of PAK, which is responsible for the management of the former cinema that once shone a light on the cultural life of the city.
Although it may seem as though its future legacy is awaiting a new status, Kino Rinia continues to be an inspiration for anecdotes over several generations.
PAK says the investor had decided not to continue moving forward. But as director of the Kosovo Cinematography Center Arber Zharku explains, there was also a legal barrier to proceeding. According to the Law on Cinematography, a socially-owned cinema under the management of the Agency must keep its original functions even through a sale, and it can only change function with the Cinematography Center’s consent.
Although the operation was called off, a visible supermarket ad on the facade together with the neon signs of a doner kebap hosted by the cinema building in the past form a flashy reminder of the looming threat allowed to coexist with its potential victim.
But Zharku sees an optimistic solution: amending the Law on Cinematography to give the Cinematography Center full legal responsibility over these properties and their future.
Although it may seem as though its future legacy is awaiting a new status, Kino Rinia continues to be an inspiration for anecdotes over several generations, with its more than half a century of life.
For 69-year-old writer and publisher Abdullah Zeneli, this theater was, as he puts it, his Facebook, his internet.
“We came often with school classes and I would make my whole class come to see ‘War and Peace,’” says Zeneli, who particularly remembers the four-part Russian production based on Leo Tolstoy’s novel.
While the cinema allowed some music events in its lifetime, it also hosted Albanian and Yugoslav film productions, and it was indeed a window into the world through international productions and an escape for many when Kosovo was becoming more and more isolated by political repression during the ’90s.
For sociologist Linda Gusia, who also frequented the cinema during that decade, the venue was one of the very few cultural hangouts available, alongside a handful of other exceptions such as the Dodona gallery, another cultural meeting point in the city. “It was a place where you could still hang out while freedom of assembly and freedom of movement for Albanians were being restricted,” she says.
Like many others who watched Mel Gibson’s “Braveheart” at the cinema, she remembers the applause that would break out amongst Albanians when Gibson’s William Wallace character gave his famous quote: “They may take away our lives, but they’ll never take our freedom!”
With limited operational and distribution ability during the hardest decade of Kosovo’s recent history, the cinema operated until 1998 and hardly made it back to life after the war. Together with Kino Vllaznimi (currently operating as the ABC cinema on Rexhep Luci street) they were owned by the Nikola Tesla social enterprise, which after the war changed its name to ABC Genci. According to PAK, international experts evaluated the state of Kino Rinia after the war and declared it unviable for operation, whereas the other small theater known today simply as ABC has been functioning since 2000.
The potential reactivation of Kino Rinia as a cultural venue was shown last winter, when the foundation Shtatëmbëdhjetë (Seventeen) organized an exhibition at Kino Rinia’s outdoor venue, a summer cinema oasis annexed to the indoor Kino Rinia that remains empty.
“For us it was important to light a sparkle and let people be aware about this space and tell people that there was a cinema here once,” says Sihana Klisurica, communications officer at Shtatëmbëdhjetë.
Willing to continue the mobilization of forces through art and cultural research to rescue public and abandoned spaces from oblivion — including venues at risk of privatization — Shtatëmbëdhjetë has launched an annual project, called “Metamorphosis.” Through this year’s edition, they will dedicate their energies to recovering the collective memory of the cinema.
“Through this year’s ‘Metamorphosis’ we will bring attention to it, see how we can protect it and perhaps give it back for people to use,” Klisurica says. “We can do that by being together.”
Like many properties managed by PAK, the former Rinia cinema is also in limbo — that is, in court. The building was built on municipal land, and now the Municipality of Prishtina and PAK both claim ownership over the building itself.
Legal troubles come in different shapes when it comes to the properties undergoing the privatization process.
According to PAK’s latest annual report, there are thousands of cases that have ended up stuck in court; whether because of disputes over the property rights, debt claims going unrecognized by the Agency, or other reasons related to the process.
There are around 19,000 cases stuck in the Special Chamber of the Supreme Court dedicated to the privatization process, and around 2,000 cases stuck in basic courts.
For PAK’s director, Valon Tolaj, these legal cases could represent a great risk if the government were to take over the assets under the Agency’s management without enough legal security.
“There are millions of euros in claims awaiting the court’s decision,” Tolaj adds.
However, while the new government has promised to transform PAK it is unclear how it will give a final way out to those waiting for a solution.
Grand Hotel: when privatization is a golden opportunity lost
Like a mammoth sitting in the middle of a desert, the Grand Hotel has seen it all. From high-class parties to miner protests, and cases of rape and torture within its walls. More recently, tourists have talked about cockroaches and mold. Today, most of the Grand Hotel is rented out or unused, under the administration of the PAK.
A walk through its dark corridors helps the visitor to understand that this place has seen a lot, and has also been neglected.
Built in 1978, the design of Grand Hotel had originally been destined for the Croatian seaside, where instead of its current rectangular towers it would have had cylindrical ones, with balconies. But it was adapted to a new position in Kosovo’s capital instead, as demanded by the times as Prishtina witnessed increased architectural and urban growth and development.
“The Grand can handle strong earthquakes that no other building would survive,” says Zekë Çeku, the former director of the hotel during part of the ’80s who continued working there into the early ’90s.
He has dedicated his life to raising up the level of Kosovo’s tourism industry and speaks with nostalgia about a period of full effervescence for the Grand Hotel.
The Grand Hotel was part of a hotelier umbrella enterprise known as Slloga, which also included other businesses such as the former Hotel Iliria (currently the Swiss Diamond hotel) and the Hotel Union (currently a clothes store and cafe), both in downtown Prishtina. The Grand Hotel though, with its 32,000 square meters and its privileged presence, even included a special suite to accommodate Josip Broz Tito and a special Panorama restaurant on the top floor.
ALTHOUGH ÇEKU DESCRIBES THE GRAND AS CAPABLE OF ENDURING AN EARTHQUAKE, THE SAME DOESN’T SEEM TO HOLD TRUE WHEN IT COMES TO SURVIVING THE PRIVATIZATION PROCESS.
Çeku takes pride in the hard work to live up to the hotel’s then five stars, especially in the ’80s, when he took over what he describes as a poor administration that was ruining the hotel. But the ’90s were a precarious time that left it chronically wounded.
Despite having been a place with mixed staff and guests, from early in the decade Albanians were not welcome or comfortable inside the hotel, where the mercenary paramilitary forces of Željko Ražnatović — Arkan — were installed. By 1992 there was a sign at the door that said: “Entrance is not allowed to dogs, Albanians and Croats.”
During the Kosovo war, the Grand Hotel was a home and office to journalists and diplomats, a function it continued to have in the war’s immediate aftermath. In those early postwar days, Çeku was assisting with translation for a British colonel and witnessed the discussions to recover another social enterprise’s building at the time, Elektro Kosova. “I introduced myself and explained to him that I was in fact the legal director of the Grand Hotel and asked if they could help me recover the hotel,” he says.
In a matter of weeks, Çeku recalls taking bold steps to return the Grand Hotel into shape. He reduced the prices and tried to bring back the workers. As a coffee aficionado, he even traveled to a Slovenian coffee factory with the goal of creating an exclusive coffee for his hotel and for Kosovo, the “Grand Barcaffe” — a brand that he claims contributed to spreading the love for macchiato back in Kosovo.
But it was not enough for what the new times had in store. Although he describes the Grand as capable of enduring an earthquake, the same doesn’t seem to hold true when it comes to surviving the privatization process.
Privatization: How?
The legal framework approved after the war paved the way for several forms of privatization, initially through the Kosovo Trust Agency and later the Privatization Agency of Kosovo.
In most cases, enterprises were privatized through a “spin off” process. This meant that a new corporation (or “NewCo”) was established, and the assets and liabilities — the rights and obligations — of an enterprise were transferred into it. On one hand, any sales of shares would be given to creditors and owners of the socially-owned enterprise. On the other hand, after the complete transfer of assets from an old socially-owned enterprise to a NewCo, the remaining socially-owned enterprise could be liquidated, or sold off and closed.
In other cases, a special spin off process was held. This required the investor to fulfill some commitments such as the payment of a financial bid, capital investment in the enterprise and/or employment goals. The failure to fulfill these commitments could lead to the annulment of the transfer.
Nowadays the Privatization Agency also manages the sale of assets, such as buildings, of socially-owned enterprises under liquidation, where there is no need to buy an entire NewCo, but only a specific building. Direct negotiation is also a way of selling specific assets, when a tendering process would be counterproductive. Very often through this process allegations of corruption arise.
A public institution, such as a municipality or the government, can also take ownership of a property, such as a building, through the method of expropriation — as long as there is justifiable public interest. And although it is not a full privatization, the government of Kosovo, with approval of the Assembly, has the power to propose the transfer of the right to use a socially-owned immovable property, such as a building, for a period of up to 99 years, if it considers it beneficial as a strategic investment.
In all cases, the registered workers’ collective of the former enterprise have the right to receive 20% of proceeds from the sale of privatized assets. But often, the recognition of the rights of these workers, who must have been registered as employees at the time of privatization or liquidation according to UNMIK’s initial regulation, becomes another reason for trouble in the courts.
By 2006, the Grand Hotel had been sold through a public tender through the special spin off process, one that required bidders to invest in the building as well as maintain an employment quota, among other conditions. With an offer of 8 million euros, the owner of Unio Commerce, Zelqif Berisha, won the bid, but according to PAK he failed to fulfill his commitments to invest around 20 million euros into the Grand Hotel, and to hire over 400 employees. For this reason, the sale was revoked by PAK in 2012 and the Grand Hotel enterprise went back into liquidation under the Agency in 2015. Since then, it has been waiting for its future to be determined.
Last year, there were attempts by the Ministry of Trade and Industry under the LDK-led government to privatize the hotel through the Law on Strategic Investments, but this process failed too.
As luxurious as it once was, today parts of the hotel are rented by businesses including a gym and a kickboxing club, and other rooms are rented out for conferences and events.
Among its problems are outstanding debt claims by different historical creditors — amounting to 44 million euros, according to the Agency, although only around 1 million euros has been formally recognized by the Liquidation Authority at PAK.
Debt claims are one of the fundamental problems that PAK has had to deal with, and that any future successor will have to address. The Agency has an independent Liquidation Authority that verifies and recognizes creditors’ claims relating to money invested in socially-owned enterprises in the past. When the Liquidation Authority rejects a claim because it is considered ungrounded, those creditors have the right to send their case to the Special Chamber of the Supreme Court, where thousands of cases pile up.
According to the Agency there are about 2 billion euros in outstanding claims in general, 1.2 billion of which are from creditors based in Serbia.
“We don’t know what will happen: Maybe they will all be rejected, maybe they will all be accepted,” Tolaj says. “And this is a risk that every government has to take into consideration.”
And while considerations are made, the Grand Hotel will stand majestically decadent as a reminder of things gone wrong and the work still needed to be done.
Moving forward with the past
Even though the process of dismantling PAK has not been fully elaborated in the Vetëvendosje executive’s governing program, in practice this may have already gotten started with the dismissal of PAK’s board, a move approved in parliament in May of this year.
“This is only a new step toward the extinction of the Privatization Agency, something that opens the road to creating the Sovereign Fund,” said Prime Minister Kurti in parliament. He also had harsh words toward the Agency, accusing the former board of “stealing payments and privatizations for years.”
But even if the new government wants to accelerate the closing of the Agency and to integrate the privatization process within its governance, it will have to come up with solutions to the range of problems that it will inherit in doing so.
In its 2020 annual report, PAK reported 591 socially-owned enterprises under its management, 500 of which are still in the process of liquidation. Hundreds of assets that remain to be sold have unique problems, while thousands of cases are piled up in court — these must all be resolved in order to close the books, and to ensure former workers receive their fair share.
Whether they want it or not, whatever approach it takes, the new government will have to confront the process of privatization and its ghosts — and if the chance is taken seriously, these ghosts may at last find a heaven.
Feature Image: Atdhe Mulla / K2.0.
This publication was produced with the financial support of the European Union as part of the project “Citizens Engage”, implemented by K2.0 in partnership with GAP Institute. Its contents are the sole responsibility of Kosovo 2.0 and GAP Institute and do not necessarily reflect the views of the European Union.
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- This story was originally written in English.