International Information Centre for Balkan Studies

Montenegro to Put Arms Exporter up For Sale




Montenegro has decided to sell off its state-owned arms exporter and a manufacturer of explosives, in the hope of bringing in strategic partners that will update the companies.

Montenegro's government on Thursday launched a tender for the sale of the state-owned arms trader, Montenegro Defense Industry, MDI, and a majority stake in a factory for the production of plastic explosives, Poliex.

With annual turnovers of 30 million to 50 million dollars, MDI and Poliex are the most important components of the arms industry in Montenegro.

Besides these companies, the state still has a share in the arms manufacturing company, Tara.

According to the tender's conditions, which BIRN has seen, any potential buyer will have to a "successful company in the business of selling weapons" with an annual income of at least 15 million euros. It needs to provide proof also that it has never been on the list of companies that have violated United Nations arms embargoes.

Commenting on the announced privatization, MDI's director, Zoran Damjnovic, said the sale would help the company "fulfill its mission" after years of stagnation, and redefine what products they could market internationally.

Damjenovic told BIRN on Friday that one of the company's tasks was to buy new equipment for the Montenegrin Army following independence in 2006, but also to sell off tons of surplus weapons and ammunition that had remained in the country following the Yugoslav wars of the Nineties.

"Now is the time for company to be linked to larger, strategic partners," Damjanovic added.

A prerequisite for this is to change the law that prohibits foreign investors from being majority owners of companies involved in selling weapons, Damjanovic explained.

MDI was previously part of the Yugoslav state conglomerate, Jugoimport SDPR. It is also the legal successor to Yugoimport Mont Ltd., established in 1997 as a joint venture between Jugoimport SDPR from Belgrade, owning 60 per cent of the company, and the government of Montenegro, owning 40 per cent of it.

After Montenegro gained independence in 2006, the government paid several million euros to buy out Jugoimport SDPR's part of the company and became the sole owner of MDI.

In 2012, watchdogs accused MDI of illegally exporting arms to Libya and Syria, but the company denied the claims.

EU representatives have told Montenegro to harmonize its legislation on the arms trade to match the EU Code of Conduct on Arms Export, which defines common rules on governing the exports of military technology and equipment.

Dusica Tomovic

Source: http://www.balkaninsight.com/en/article/montenegro-approves-privatisation-of-largest-arms-exporter





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