The myth of foreign investments: Episode two

Zdravko Saveski

Foreign investments were Nikola Gruevski’s “great trump card” when it came to power. He offered great legal benefits and then some! Macedonia broke into the world’s top “Doing Business” list according to the so-called favorable business climate. And what an atmosphere was created for foreign investors! They raised them to the level of saviors. The next step would have been lighting candles in church and praying for their health. But they, despite all the tricks, did not come to a greater extent, and the experience with those who did come did not turn out as presented by the propaganda.

The myth of foreign investment seemed to have failed so greatly, that it seemed its propaganda potential was exhausted when here’s the second episode: NATO membership will bring foreign investment! As if! If Gruevski lied to us that legal privileges would lead to a flood of foreign investments, now the “strongest trump card” of SDSM propaganda for their vassal-militaristic NATO membership policy is that NATO membership is what investors are waiting for, so they can storm Macedonia with investments. They were not satisfied with the privileges Gruevski gave them. What they needed was for Macedonia to become a NATO member.

This claim is more than desperate. In a healthy democracy with developed citizenship and with media that do not suppress different opinions – it would be disgusting to pay attention to such sweeping statements at all. But in Macedonia anything goes, it turned out that many people know how to turn a blind eye … and they try their luck. Perhaps the authorities will manage to persuade us that this time it will be different.

Let’s see the balance of the policy of attracting foreign investors from Gruevski. So we can understand what he gave them, yet they did not come in great numbers. The unwritten legal privileges they received were actually so great that few countries in the world had more privileges for foreign investors than Macedonia. Privileges were, in brief, the following: total exemption from payment of all taxes (ie from income tax, profit tax, value added tax); full exemption from payment of customs duties and other import-export duties; total exemption from communal costs for building an object; covering the costs of building a facility worth up to 500,000 euros; covering the cost of training workers up to 50 percent of the cost; direct “cash grant” from the state in the amount of up to 70% of the investment value or 50% to 70% of the salary for new employees for a period of two years, depending on the size of the firm. So who can expect more than this to „have mercy“ and invest in Macedonia? The state, with our money, became a co-investor, without having a share in the ownership or the profit! Unheard of! And again I ask, who can expect more than this? What else do we need to do? Agree to work for free so that investors would come to the country?

But, in spite of all these legal privileges, the results – were flailing. Foreign investors did not come in large numbers. The results not only flailed, but the whole policy of attracting foreign investments to Gruevski suffered a great debacle. Findings by economist Branimir Jovanovic in his study “The real price of cheap labor” best illustrate this. He calculated that in the period between 2007 and 2015, the government incurred direct costs for attracting foreign direct investments of 160 million euro of national money and that the total amount of wages for employees in foreign companies that received state aid in the same period was 92 million euros. And it concludes that not only with the direct costs of the government for attracting foreign investments, the salaries for all 12,600 employees in companies that received state aid could be paid, but also that “if the state directly gave this money to the workers who are engaged in these companies, their incomes would be 73 percent higher than those they actually made. “

What an absolute debacle to the policy of attracting foreign investment through giving extraordinary legal privileges is this! And if indeed the only or main reason for the huge money-making from the state treasury was securing the livelihood of the unemployed, then why, really, they did not give that money directly to the workers? It would have cost us cheaper. Instead of public money ending in the private pockets of foreign capitalists and corrupt domestic power. And the smartest thing would be for the state to invest that money through its own investments. But even this very thought is blasphemy not only for Gruevski, but also for SDSM. It is to that extent that they are one and the same in their blind faith in neoliberal fundamentalism!

And now, after the debacle of seeing foreign investment policy as the main way for economic development, SDSM, having no arguments that would defend the need for Macedonia’s membership in NATO, revived the outspoken Gruevist myth about foreign investment. NATO membership will lead to foreign investments. The incredible privileges that Gruevski gave them did not bring a bigger influx of foreign investments, NATO membership would do so! I passed biology, so I’m going to be a good programmer. This assertion is from the same „rank“. And, seriously, in a democratic country where the level of public debate is on a worthy level, it would be disgusting for me to waste energy to refute this “argument.”

The volume of foreign investment depends on a variety of factors. They can generally be grouped into four groups: economic, geographical, infrastructural, political and security. Each of these groups contains several factors. Among the economic factors are the government’s investment privileges, the size of the market, the cost of labor, the level of workers’ organization. Among the geographical and infrastructural, there are: the geographical position of the country, the proximity to world markets, the country’s infrastructure network. Among the political factors are the level of corruption and the implementation of the principle of the rule of law. Security factors are those that provide peace and stability to the country, both internally and externally.

And now, in this whole set of factors, of which we have listed only the most significant, to come up with the claim that membership in NATO is the only, main or decisive factor, regardless of the situation with other factors, is really an amateur move. Or, pure manipulation! Even if Macedonia joined NATO, not once, but ten times, at this level of corruption (which this government maintains!) – there will be no increased inflow of foreign investments. Not to mention that foreign investments do not guarantee a decent life for the common man at all, and what we clearly see from the fact that foreign investors have not brought European standards of decent work, but rather they are adding to the Macedonian gray economy at low wages and violating workers’ rights. Indeed, it is expected, for anyone who does not easily fall to propaganda.

And another thing on the topic of NATO and investments. NATO propagandists tend to avoid the topic of how much NATO membership will cost Macedonia in terms of money for “defense”. As a NATO member, Macedonia will have to increase its military budget, in fact, it will have to double it in just a few years! That increase will be over 100 million euros a year. That’s 100 million euros a year – flushed down the drain! If the main argument for NATO membership is to increase investment, instead of flushing those 100 million euros a year down the drain, invest them directly in Macedonia! How big is this amount for Macedonian standards, the best indicator is that the level of foreign investment in Macedonia in the previous 10 years was on average 235 million euros a year. At such a level of foreign investment, the additional 100 million euros per year will mean a significant revival of the Macedonian economy.

That’s what the numbers and facts say. But if we prefer the cheap lies of propagandists, then ok, NATO membership will increase foreign investment. Can pigs fly? They sure can.