One winning concept emerging out of all the Eastern European revolutions of 1989 and following was privatization. More than forty years of Communism had demonstrated how state-owned businesses meant low productivity, low quality, and basically “selling” output only to “customers” who had nowhere else to turn. A key task for each post-revolutionary government – Russia’s as well – was getting state economic assets back into private hands, subject to private-sector incentives, as soon as possible.

At least one state company fell through the cracks, however – and it is doing rather well, thank you! Recently one of the three national German radio stations, Deutschlandfunk, in the form of its excellent week-daily morning program Europa heute (“Europe Today”), devoted a week’s series of programs to Slavonia, which is basically that third-part of Croatia situated farthest away from the coastline. There on its eastern border (which happens to be the Danube; Serbia starts on the other river-bank) is located the Borovo shoe-factory complex, now fully in the hands of the Croatian State after a colorful and turbulent history.

Things looked promising way back at the start of that history, in 1932, for the factory installations were an extension of Bat’a Shoes, the company out of Zlín, Czechoslovakia, that had pioneered in developing shoe-manufacturing equipment and would go on to conquer markets in Europe and much of the rest of the world before World War II called a halt. There was no production during the war, indeed the facilities suffered damage, but then the Yugoslav state took them as its own, dusted them off a bit, incorporated them in a socialist-style “Kombinat” organization and labeled the products made there with the “Borovo” name. Thereafter, if you were a Yugoslav, that was likely where your shoes ultimately came from, including soldiers’ military boots. (In fact, vehicle-tires and machine-parts were also fabricated there at the time.)

Production also took a break – and there was again damage – during the civil wars that broke up former Yugoslavia during the 1990s. The Borovo facility ended up in what turned out to be Croatian territory. From the visit Deutschlandfunk reporter Grit Eggerichs paid there, it seems little was ever done about that latest bout of military damage: many of the buildings on the premises still sit abandoned, with open holes where windows are supposed to be, foliage growing from the roofs and birds and animals wandering freely in and out.

Pare Down to Success!

But those buildings are simply unneeded, as the shoe-works have shrunk considerably from what they once were: around 600 work there now, when it was once it was 23,000. (They’re still not paid so well: Eggerichs’ report speaks of one master-sewer – female – who has worked there since 1982 and still earns only the equivalent of €400 per month.) Rest assured, though, there are no more tires manufactured, and in fact the company has narrowed down the range of shoes that it makes.

In particular, these days it is known for the stylish canvas sneakers (Completely “vegan”! No animal products used! Woke, man!) that it sells under the “Startas” brand (which itself traces back to Yugoslav times). Slate has called Borovo “Croatia’s hippest shoe company”; there’s an e-commerce site (“original non-aligned sneakers”) where you can order a pair of your own, as well as an Instagram account; and, in what is taken by the underpaid Borovo employees as a totemic cultural achievement, their pink-with-white-unicorns Startas sneakers were once featured in Vogue (scroll way down).

Things are going well for the company, then (although they could pay people better). Meanwhile, it is fighting against the very “finders-keepers” principle that made it Croatian in the first place by bringing lawsuits to try to regain ownership of the former Borovo sales outlets scattered throughout the other states that once collectively made up Yugoslavia. (So far only the Serbs are being recalcitrant about giving them back.) It seems state ownership does not preclude devoted experts putting out a good, stylish product – who knew?

Hooray, the Union is now 28! Surely Croatia’s accession should be the occasion for great rejoicing! Well, here at €S we go against the flow whenever possible, and in this case that is rather easy. Here’s TINA, in case you were never introduced to her by Margaret Thatcher:

Right: “there is no alternative.” Not the most cheery attitude to take, is it? Nonetheless, according to the Süddeutsche Zeitung’s Balkans correspondent Florian Hassel, that is the prevailing outlook behind all the ceremony – and for both sides.

For the Croats (George W. Bush would call them “Croatians”), polls now show only 45% supporting accession, as they reason that the new freedom to move wherever in the EU they want won’t really help against the much greater incoming economic competition they will face, which henceforth cannot be warded away by tariffs and other restrictions. Hassel: “In contrast to Europe of a decade ago, before the crisis, the EU is no longer a shining guarantee for personal and economic success.”

True, they can now look to pressure from Brussels to help drag the country into the 21st century economically and administratively – for example, there is widespread corruption, Croatian courts routinely take years to settle cases, etc. – but that is not likely to be painless. Similarly for the EU Hassel sees no alternative but to take in Croatia, help make it a success as a member state, and so go on from there to include the rest of the Balkan countries. It is a troubled region that cannot be allowed to fester.

Another German daily, Die Welt is scarcely more enthusiastic to see the Croats as new EU members.

Talk about a party-pooper: what else can you call it when the headline reads “Croatia is already the EU’s next problem-child” and the top of the article is dominated by a chart listing its current 4.0% government budget deficit? (Admittedly, that is placed next to another graph showing that its government debt as percentage of GDP, at 53.7%, compares quite favorably to the current EU average of 92.7%.) (more…)