Showdown at Arizona market
Showdown at Arizona market
It is Sunday afternoon at the “Faraon” restaurant, a slightly more substantial wooden building than the rest of the 3,000 wooden kiosks that make up the Brcko District’s sprawling Arizona Market in northeast Bosnia. But just like the rest of them the Faraon has a parking lot for a toilet.
After visiting the “toilet,” Matija Misic, 55 years old, is ordering his third brandy, banging the table with his fist and swearing loudly at the “international community” which, he says, wants to dispossess him of the land, given to him by his grandfather, where the Faraon sits.
“This is private land and the plan of these bastards won’t succeed,” Matija is yelling in the face of an American journalist, who sits across the table from him.
Misic is not alone in his anger. Like a judicial council, ten equally drunk and angry landowners from the market, who gather regularly at the Faraon, sit at the tables nodding their heads with the pounding of the table.
They are all landowners, or they rent kiosks in the market, which in early June, according to the plan of OHR and the Brcko District government, an Italian-Bosnian consortium will redevelop into the most luxurious shopping center in southeastern Europe--either with or without the landowners’ cooperation.
The plan has introduced the local landowners to the American style concept of “urban renewal” where government is allowed to take away property rights in the name of the “greater good.”
So far, the landowners aren’t buying it.
Although they hold the internationals responsible, the market’s businessmen have a local focus for their anger: Brcko District’s deputy mayor who was responsible for overseeing the project bid eventually won by the “Italproject” partners.
At least one of the market owners is not amused at Misic’s nightly performance. On his way out the door he stops and points a finger at the American.
“Tell the American,” he says to the interpreter, “If they try to steal our land, we will find the deputy mayor in Tuzla or Brcko and we will kill him.”
After a chilly moment of silence, Luka Stjepanovic, one of the retail owners, adds quietly, “I don’t know him but you could hear those words from anyone’s mouth in this cafe.”
For the last six years the Office of the High Representative (OHR) and international law enforcement have faced a special challenge in the Brcko District, particularly in the Arizona Market.
The sprawling “gray” market has been one of the few safe places for Bosniaks, Croats and Serbs to be brought together by the simple enticement of doing business. The market’s success led the OHR to proclaim it a model for the reintegration of all Bosnia and even the rest of the Balkans, which were bitterly divided by the war in ex-Yugoslavia.
But the market, long without any close regulation, has also become a haven for organized crime engaged in smuggling and trafficking of sex slaves. The lawlessness reached an alarming point in 2001 for the OHR and international law enforcement when news stories recounted SFOR troops visiting market brothels and even international contractors participating in sex slave trafficking.
The June ground breaking for Italproject is more than just another international development project. With the International Police Task Force (IPTF) pulling out of Bosnia this coming fall and other international commitments beginning to wind down, the success or failure of OHR’s model in northeastern Bosnia, may depend on whether the new development project will be successful in denying organized crime their traditional home in the Arizona Market.
That is why a team of seven journalists from Bosnia, Croatia and Serbia went to the Brcko District in the last two weeks of May to investigate the coming showdown between its western style future and its lawless “Wild Wild West” past.
The two-week investigation by Balkan journalists (funded in their work by IREX ProMedia, an independent U.S. contractor funded by USAID) found that despite the international community’s determined efforts to build western style institutions in Brcko, organized crime has not given up on being as much a part of Brcko District’s future as it has been of its past.
The investigation team, spent two weeks interviewing bar owners, prostitution victims, market business owners, developers, police and government officials in the Brcko District to find out if organized crime had really been replaced with international business development in OHR's model district.
Italproject’s headquarters is on the top floor of a brand new building in downtown Brcko.
Allasandro Luchetta, Italproject’s local director representing partners from Italy, sat at a conference table in the green marble offices designed and built by his local partner, Jovica Stevanovic.
Luchetta admitted he was nervous about discussing the project so close to the anticipated June vote by the district assembly on the detailed development plan laid out under glass on the conference table. The project will be built on public land owned by the district and privately owned land across the road.
The plan showed broad green avenues where the market currently only has dusty gravel roads. In place of the squatter’s kioks are glass storefronts that would not look out of place in Luchetta’s permenant home in Venice, Italy.
The June vote is a critical point for the development project and some local businessmen, Luchetta said, referring to the market’s private landowners, were trying to ruin the project’s reputation and credibility.
Making money in difficult situations is not unknown to Luchetta, who has directed projects in the former Soviet Union republics, even in Armenia in 1994 at the end of the war over the Nagorno-Karabakh area.
Luchetta emphasized that the contract the partnership signed last December with the Brcko District government, and with the OHR’s oversight, clearly assigned the issues of land ownership rights and the clean up of illegal activities in the market to the government.
From the partnership’s point of view this was strictly a business deal, Luchetta said. Anyone was welcome to sign a contract with Italproject and participate in the new market. Neither the OHR nor the district government had given the partnership any directions to avoid doing business with any of the Arizona Market’s more notorious business owners.
“Nobody told me to ask where the money is coming from,” Luchetta said of the deals the partnership has made so far with market business owners.
“I don’t investigate where their money is coming from,” he said, adding that it was not the partnership’s job to investigate the new market’s tenants.
Stevanovic, the local partner and civil engineer who designed the project, also said that the partnership was not checking the backgrounds of potential clients for sale or lease of the new storefronts.
Stevanovic was asked if one of the existing market’s bar owner’s, a well known and reputed brothel owner and suspected organized crime figure, had visited Italproject. In fact, Stevanovic said the bar owner came to the office only a week before to sign a deal for two stores in the new market.
Stevanovic said the barowner told him he would have come sooner but that he just got out of jail.
The threat of the old market’s extra-legal “entrepreneurs” dealing themselves into the international community’s showcase project is just what the OHR does not want to hear.
“We absolutely don’t want to see a situation where illegal activities are going to go on in the (new) Arizona market,” said a clearly surprised Michael Montgomery, head of the OHR’s Brcko District economics office, when told about the Italproject deal with the bar owner during an interview with team reporters.
“We may want to look into this,” Montgomery said.
Despite its reputation for notorious behavior, the market had a harmless beginning in what at first was an unlikely Balkan story.
After the Dayton Peace Agreement, the bitter ethnic and national hatreds that fueled the war in ex-Yugoslavia simply disappeared at a crossroads in northeast Bosnia where IFOR established a base.
“There was an IFOR meeting point at (what became) the Arizona market on the opposite side of the road,” Suzana Pejčić, spokesperson for the Brcko District OHR’s office said. “It was a safe spot so locals themselves began to exchange cows and other goods.”
In 1996 in the fields where farmers used to grow wheat before the war, Bosniaks, Croats and Serbs met for the first time without weapons.
“We had to trust each other,” said Tomo Tomsic, a 70-year old market land-owner. “If we hadn’t traded with each other, we would have starved, and it was easier to be involved in a black market than to plow a field.”
Beside the dusty main road from Zupanja to Tuzla, without any business licenses or construction approvals, people built parking lots and restaurants, opened brothels and small shops, and sold cigarettes, cattle or women as successfully as detergents, ceramic tiles or chocolate.
The OHR was not managing the market but they were not against the first signs of rapprochement since the war.
“The market was encouraged,” Michael Montgomery, current economics chief of the OHR’s Brcko District office, told the reporters team in late May. “One way to move forward in the post war years was to use business as a foundation. To use an American phrase, the market was in "everyone’s self interest.’”
The Brcko District’s special status came from the Dayton Peace Agreement, which left the area’s administration after the war undecided. The parties could not agree on which entity should control the corridor between the two halves of the newly created Republika Srpska (RS) within the new Bosnia Herzegovina.
The impromtu success of the market, as well as the necessity of guaranteeing a connection between the two halves of the RS, persuaded the OHR to create a Brcko District administered by a tri-partate administration.
After three years of hardly any legal control or taxes under Croatian municipal administration, in 1999 the new Brcko District government sent police and tax collectors to the market.
For the market’s high rollers the new district was the beginning of the end of their wild days of prosperity.
“We lived better when there was no District,” Luka Stjepanovic, a carpet dealor, said with a sigh, on a hot afternoon at the market in late May.
It was a time when Balkan rules were respected more than western rules.
“We didn’t pay taxes, we didn’t keep books, and workers got cash,” Stjepanovic said.
By the end of 2001, the government had issued 1,624 permits for kiosks in the market, and nearly 5 million KM poured into the district’s budget.
But much of that money could be attributed to the ill-gotten gains of the market’s various shady enterprises including prostitution.
To end the illegal and criminal taint on the market’s otherwise thriving economy, the OHR and ITPF began a crackdown in October 2000.
Last year the international police closed 19 brothels, and inspectors stopped work by caterers and dealers who did not have valid district business permits, according to the district government.
But local law enforcement says that the brothel closings did nothing to control the organized crime organizations behind them. (see project story on trafficking)
Potentially, OHR’s redevelopment project idea, however, could accomplish that goal by disenfranchising the criminal businesses in the market.
It’s an American idea as old as “urban renewal” in northeastern U.S cities during the 1960s. Government officially designates a high crime area as “blighted” and uses the designation to take land from private property owners and redevelop the area.
The claims of private property owners in the market area were the first concern of Ivica Santovac, one of Italproject’s local partners.
“(OHR) told me that (private property claims) are going to be solved through expropriation,” Santovac told team reporters at his office in one of the few solid structures in the existing Arizona Market. “They told me that all cities in the world had been built that way.”
Lucchetta, the local director from Santovac’s Italian partner, emphasized that Italproject’s contract is completely legal and was approved without opposition in the Brcko District Assembly.
Lucchetta agreed with the description of many of the market’s grumbling property owners that the project contract, which Italproject won by open bid last November, was a “good deal” for the partnership.
Under the terms of the contract, Italproject will get 100 percent of the income from leases and utilities for 17 years of the 20 year contract. In return the partnership will build 143,000 square meters of new stores and warehouses, which the partnership will own or can sell. The partnership also will build the roads, electricity and other infrastructure, which will be owned by the District after the contract
Montgomery, the OHR economics chief in Brcko believes Italproject is a good deal for everyone.
“Ultimately Italproject will recoup their investment through rental and sale of the shops and in return we have the project paying for the market’s infrastructure,” Montgomery said. “The existing market jobs will be retained and more jobs will be created, and taxes from registered businesses will go to the Brcko district government.”
Exactly who will benefit from the “good deal” is not completely clear, according to landowners because they have never been told the identity of the Italian partners Luchetta represents.
Luchetta will say only that his partners come are industrialists from the Venice area.
OHR may not know their identity either.
“I am unable to answer that question (at this time),” Montgomery said during an interview.
The Italproject contract mandates that all of the existing Arizona Market shopowners and even the private landowners, who have been collecting rents from the illegal shops, must get a contract from the developers to stay in business.
The rental rates, 280 to 1200 KM for a 15 square meter shop, are not supportable, according to the shop owners. But the price increases will bring the new shop owners sanitary facilities and legal businesses, according to the partnership.
The district government is expecting the project to cause business casualties on the district government owned part of the market land, on the west side of the Zupanja-Tuzla road.
“The old Arizona market is slowly disappearing,” said Ismet Dedejic, the head of the district’s Department for Urbanism, Environmental Planning and Privatization. “Of 3,500 dealers who are working in it now, there will remain maybe 1,000 of them. The others will find another job.”
But the private landowners on the west side of the road believe that Italproject and the district are also expecting them to fade away.
That includes the crowd at the Faraon most of whom inherited what used to be primarily agricultural land. The chance arrival of the market was a windfall for them. Some went into the night bar business or prostitution motels, others were satisfied with shop rentals and parking lots.
The contract gives all rights for building on Arizona market land, including the private property, to Italproject, effectively denying the private property owners ownership of the land.
“I’m not an educated man, maybe I misunderstood something,” said Tomich, one of the landowners at the Faraon. “But I thought that private property was of paramount importance in capitalism.”
Tomich, who said he learned about capitalism during 20 years in Germany, showed an order from the district government forbidding him to charge parking fees for his lot until he signs a contract with Italproject in which he agrees to renounce his land for 20 years.
Tomich’s 33-year-old nephew, Marijan Petrovic, said he had invested in clearing mines from his land for a restaurant and warehouse. Now Italproject plans to build a casino on the land he inherited from his grandmother.
“I have enough money to pay legal zoning and building licenses and make improvements,” Petrovic said. “But I have not the slightest intention to sell everything to some Italians.”
Italproject has tried to reach agreements with the private landowners, according to Stevanovich, one of Italproject’s local partners and the designer of the project. But the landowners came to Italproject with their own plans for a separate market on the private land.
That isn’t what the District or OHR envisioned Luchetta said. There is going to be one market according to the contract, he added.
“We don’t have to reach agreement with anybody,” Luchetta said.
Attorney Jozo Andjic, who represents Tomich, Misic and the others who gather at the Faraon, said the landowners have been to the Italproject office several times to negotiate a deal but every time they agree to pay, the price goes up.
“That land brought them a lot of money and they are now willing to pay as much as it is necessary for the legalization of their facilities,” Andjic said.
Luchetta and Stevanovich say the landowners are having trouble getting used to the high cost of running a legal business after years of working in an extra-legal environment.
But there are some businessmen from the market who have been able to reach deals with Italproject.
The 108th Brigade, a Bosnian Croat army veterans organization, do not even own any land in the market but they are happy with Italproject, said Niko Maric, the director of the organization’s company, Posavina 108.
“When Italproject won the bid I threatened Mayor Kisic,” Maric said. “I said that my soldiers would fuck his mother if he let the foreigners take our land. The contract we signed is very favorable to us, much more favorable than to private owners.”
Mayor Kisic confirmed that Maric made the threat but Kisic said that he did not take it seriously.
But the negotiations were serious enough that the 108th Brigade, which had only squatted on the district owned part of the market and built illegal buildings, now has a serious stake in the new market.
Maric produced an Italproject contract that promises the partnership will pay 10,000 KM a month for two years to the brigade to make up for lost rents from the brigade’s illegal buildings. After that Maric said Italproject has promised to allow the brigade to manage part of the new market.
Lucchetta said that the brigade deal was an example of the lengths to which the partnership was willing to go to try and include everyone in the new market.
Lucchetta said he and Stevanovich have been working 15 hour days to get the new market development started. Luchetta who notes that those long days in the hot and humid summer in Brcko compare unfavorably with his home on the sea in Venice, said he is not threatened by the Arizona Market’s past and he is positive about its future.
“You can be sure you will see our faces here for the next 20 years,” during the length of the contract, Luchetta said nodding to his local partner Stevanovich.
Meanwhile, back at the Faraon where the private property owners’ threats have produced little more than hot air in the restaurant, the mood is still angry stirring memories of the Arizona Market’s Wild Wild West days.
“I won’t give them my land, and I will defend it with my life if necessary!” Misic yelled at no one in particular.
Everyone in the cafe nodded.