Negotiations with dubious funds: Dodik covers RS bankruptcy with warmongering rhetoric

The warmongering rhetoric of Milorad Dodik, the president of the smaller BiH entity, is an excellent cover for all the financial malversations committed by the authorities in RS, which have literally led to bankruptcy, as evidenced by the urgent need of the RS Government for IMF loans, writes the Patria news agency.

And while Dodik secures funds through dubious funds, the talk of a referendum has blinded the local population. Only a few media outlets in the smaller BiH entity write about the financial collapse, while citizens, worried about their safety, do not even think of publicly issuing an ultimatum to Dodik to stop indebting even unborn children in Republika Srpska.

Most, blinded by January 9th, fantasize about ultimately deciding in a referendum to celebrate January 9th as the Day of RS, despite the Decision of the Constitutional Court of BiH, and none of them think about whether there will be empty celebration tables.

Almost everyone has already forgotten that Dodik triumphantly announced in Banja Luka in October last year that the government of that entity had secured a loan of 300 million dollars. They borrowed from the American investment fund Global Bancorp Commodities and Investments. He explained that the loan would be realized at an interest rate of three percent.

- The grace period is three years with the possibility of extension for another three, Dodik said, adding that the repayment period is three years from the withdrawal of each tranche.

Immediately the following year, i.e., from the beginning of 2016, he again entered into secret negotiations, with the aim of finding credit funds, because it is obvious that the government coffers are empty and the 300 million from Global Bancorp Commodities and Investments went to waste.

For all activities related to secret negotiations, Dodik tasked the Minister of Finance, Zoran Tegeltija, who, together with the chairman of the board of directors of the Swiss fund TANNIVEL FINANZHOLDING SCHWEIZ" ZUG, Vito Mikoli, entered into negotiations and requested a loan in the amount of between 350 and 500 million euros, with a repayment period of 10 to 15 years and an interest rate between 2.5 and 3 percent.

Otherwise, there is no data on financial transactions or references on business credibility, and the fund is registered as a joint-stock company.

Tegeltija allegedly established contact with Mikoli through the Italian owner of the newly built ferrosilicon plant in the municipality of Mrkonjić Grad. This was another futile attempt, just as the case of the fake loan of 300 million dollars from the American fund Global Bancorp Commodities And Investments Inc. was.

In a letter dated January 27, 2016, Tanniveld Finanzholding Switzerland AG confirmed its interest in providing a loan under the following conditions: loan amount 350 million euros, contract duration maximum 15 years, interest rate maximum 5 percent per year, and state guarantee as collateral!

Tegeltija stated in written correspondence that the offer was acceptable, but...

- We would like to mention that in accordance with the Law on Guarantees of Republika Srpska, MTN (medium term note) is not possible, but considering the Law on Borrowing, Lending and Guarantees of Republika Srpska, there are defined conditions for activating the guarantee for foreign borrowing, based on the decision of the National Assembly of Republika Srpska, which is a significantly safer collateral - Tegeltija replied.

All these negotiations were hidden from the public, while Dodik, as well as Željka Cvijanović, the Prime Minister of RS, confidently stated that they did not need an arrangement with the IMF.

The opposite will prove true, so Dodik will momentarily bury the hatchet and with the SDA president Bakir Izetbegović just so that the IMF money reaches BiH, specifically RS, which is on the verge of bankruptcy.

However, that does not stop Dodik from contradicting the international community (the PIC's stance is clear), on whose goodwill he also depends, and preparations for holding a referendum in RS on the Day of the Republic are proceeding according to his plan.

But, where Dodik intends to get the 1.42 million KM for the organization of the referendum on September 25th remains to be seen. Also, the fact that they negotiated with dubious funds shows that even such dubious entities do not give money to Dodik's government.

As things stand, in a little over a month, citizens will be able to circle their answer to the question: "Do you support January 9th being marked and celebrated as the Day of Republika Srpska?".

And when he gets the results he desired, and the citizens, intoxicated by the "victory", also declare themselves in the elections on October 2nd, it will be time to return to everyday life, which is getting darker and darker. Then the warmongering stories, phrases about "RS as a state" and singing under tents will no longer have fertile ground. How then to explain to the citizens that RS has gone bankrupt and that future generations will repay the loans into which they were consciously pushed by giving "black under the fingernails".

Šain: They ensure social peace through borrowing, but it cannot last too long

Professor Željko Šain from the Faculty of Economics in Sarajevo says that the citizens' reaction to the authorities' excessive borrowing is absent because the majority of the population in BiH is economically illiterate.

- So, without offense, but the majority of the population in BiH is economically illiterate. Citizens seem to literally take the Catholic prayer - Give us this day our daily bread. So, give me my salary today, and we'll see what happens tomorrow. And, hopefully, there will be some new providence - says Professor Šain for Patria.

- Therefore, due to this economic illiteracy of the widest segment of the population in the country - and this was also shown in borrowing from Hipo bank with a currency clause in Swiss francs, when people fell into financial slavery - we do not have a stronger reaction to the borrowing of all levels of social communities, from municipalities, through cantons to entities. The people do not seem to be aware of this trend - explains Šain.

And, this expert further warns, those who lead politics in BiH ensure social peace in the country through borrowing. However, such a situation cannot last too long.

- Pure economic theory states that such behavior cannot be continuous, and that at some point it must take completely different forms. Borrowing can be justified, but not to cover budget holes. Borrowing is justified exclusively if it is for investment and development projects. However, borrowing as the authorities in BiH do should not continue for a longer period, as it would lead to the collapse of the entire society - warns Professor Šain.