SKOPJE, Macedonia, Sept. 11 (UPI) -- When lightning struck the main power plant in Pristina, Kosovo, 2 months ago, the damage was spectacular. Someone allegedly had forgotten to turn on the plant's lightning detection system, and a heap of melted metal was all that remained of the West's huge investment. The chief of the United Nations mission, Michael Steiner, estimated that the reconstruction costs will amount to $15 million to $50 million.
With little chance for quick repairs, mandatory electricity conservation has been imposed and even the wealthiest foreign charities are working from generators. It will be a cold winter indeed in Kosovo.
Yet the incident aroused both criticism and suspicion. While the U.N. mission's explanation for the scope of the destruction was an unusually powerful lightning strike, local meteorologists claimed that the storm had been too weak to cause such damage.
One wonders why the United Nations didn't just rebuild the bombed plant from scratch in 1999. After all, the West poured some $580 million into what Steiner now calls "not a Mercedes ... but a repaired Zastava (a local brand of vehicle)."
Admittedly, infrastructure is not sexy. Investments take a long time to pay off, and the benefits can be hard to quantify.
Infrastructure projects in the Balkans are of vital (and easily underestimated) importance. Indeed, fixing that pesky pothole on Main Street isn't the same as rebuilding the Balkans -- a region long stunted by underdevelopment, devastated by war and crippled by economic sanctions. Yet efforts here have long been haphazard and vulnerable to internal (and external) politics.
Privatization is a major phenomenon in post-socialist Balkan countries. That it runs smoothly -- and that the buyers fulfill their commitments -- is critical.
Hard-pressed sellers of state assets often complain of buyers reneging on their responsibilities. Greek critics attempting to derail LUKOIL's ultimately successful 25 percent investment in Hellenic Petroleum brought up the case of Bulgaria, where LUKOIL allegedly ruined the Neftochim refinery by not carrying out the promised upgrades. Subsequently, Croatia approached the recent partial sale of its own state-run INA oil company with caution.
The December 2000 privatization of Macedonia's telecoms company stipulated that the new buyer (MATAV of Hungary) undertake a 2-year infrastructure overhaul. According to Macedonian dealmakers, MATAV hasn't fulfilled its obligation, despite winning concessions from the government in a recently resolved corporate dispute.
Yet the success or failure of Balkan infrastructure projects often depends on the host country's initiative. A case in point is Greece's Egnatia Highway, the long-anticipated highway that will traverse the northern section of the country, partially along the route of the eponymous Roman road.
The highway was considered stillborn until the European Union named it one of 14 continental priority transportation links in the mid-1990s. It was put under the management of a government-owned company, Egnatia Odos AE, in 1995.
But work was sporadic and slow, due in part to the significant engineering challenges presented by the mountains of Epiros and Thrace -- until a fed-up EU ordered that the project be removed from government administration. Apparently, the bureaucracy and laid-back attitude of the Greek government were at fault.
To protect its large share in the $3.2 billion investment, the EU mandated that foreign expertise be brought in. Thus arrived Brown and Root, the engineering subsidiary of Halliburton.
Apparently, work picked up significantly once the London-based logistics company arrived in 1996. No longer was progress impeded by entrenched, midlevel bureaucrats.
Shortly thereafter, in September, Brown and Root also took over Hellenic Shipyards. At the time, Halliburton boasted about this, its acquisition of "the largest dry dock in the Mediterranean." Like the Egnatia Highway contract, this privatization was also co-funded by the EU ($30 million towards a modernization program).
Yet factors specific to the Greek situation have also conspired to impede progress. The Egnatia Highway is, above all, a confirmation of political realities. Historians know that the Roman road also traversed southern parts of the Republic of Macedonia and Albania, simply because the terrain there was more suitable for road construction. With the modern highway route, however, efficiency is sacrificed for the Greek national interest.
Six years after putting construction into private hands, there are still huge stretches of road -- several hundred miles -- to be built.
Nevertheless, the Greeks are optimistic that the project will be finished by the 2004 Olympics. This crucial event has seen the building of more new infrastructure in Greece -- including a new airport and Athens ring road -- than has been built for decades.
In fact, transport programs in the Balkans usually conform to one national interest or another.
Turkey would like to re-establish itself as the "crossroads between East and West," through an ambitious program that would link Central Asia with Europe. Turkish highway schemes under consideration would link the country with Greece, Bulgaria and Serbia.
Turkey enjoys much support from Washington and has clinched a deal for the new Baku-Ceyhan oil pipeline -- another example of how expensive routes are often chosen for political reasons.
Yet the country is also in the midst of significant political unrest, ahead of the Nov. 3 early elections. Beleaguered President Bulent Ecevit has warned that Turkey's economic reform program may be compromised by the timing of the elections. Some analysts predict that if reformist Finance Minister Kemal Dervis is replaced, Turkey's economy -- and its $16 billion in IMF loan commitments -- may collapse.
Such volatility is unfortunately still characteristic of many Balkan countries. This means that progress can be either non-existent or maddeningly slow. It also means that many laudable projects never get off the ground.
Part 2 of this analysis will appear Thursday.
