September 22, 2009 / 11:08 AM / 8 years ago

American's Bosnia wine investment a leap of faith

TREBINJE, Bosnia (Reuters Life!) - In stubbornly unstable Bosnia, Alex Kostovic’s investment in vineyards requires a leap of faith, which is just as well because his minority partner is the Serbian Orthodox Church.

“I really don’t see anywhere in Europe a better place than ex-Yugoslavia for investment,” the Serbian American said of his several million euro, 2003 purchase of 200 hectares of vineyards in Trebinje, the country’s southernmost town.

“With all the things that have happened with stocks and bonds, this was the best possible investment.”

Kostovic now sells his Merlot, Cabernet and local Vranac red grapes to regional vintners, but dreams of leaving a legacy by making wine and building a tourist center.

His Californian wife and daughters think he is crazy.

“My wife blames me for that. I was never attracted for money alone, it was always a goal to accomplish something,” Kostovic said. “In a sense to me it is almost like early pioneers in America... (but) I didn’t prove yet that I am right.”

In much of the world, buying land cheaply near the town center of an area known for wine might be a sure bet. Yet Bosnia remains deeply divided following its 1992-95 war, in political deadlock between its Serbian and Muslim-Croat halves.

Just 28 km (17 miles) from the Croatian medieval walled city of Dubrovnik, Trebinje is known for good grapes. Kostovic’s partner, the Serbian Orthodox Church’s Tvrdos Monastery, has a long history with wine. Costs and labor are a fraction of those in the European Union Bosnia aspires one day to join.

CHURCH COMES WITH THE DEAL

Kostovic left Yugoslavia in 1968 as a young man, going first to France then to the United States in 1970. He grew wealthy importing clothing from India to the United States.

He moved back to Belgrade after the fall of Serbian strongman Slobodan Milosevic and bought a 56 percent of state shares in the firm Agrokop in 2003, gaining 440 total hectares, of which 200 were planted vineyards.

The Church, headed by local Bishop Grigorije, leader of the diocese of Zahumlje and Herzegovina, has slightly more than 29 percent of the shares in a sometimes challenging arrangement.

“We all have in common for the company to do well,” said Kostovic, an Orthodox believer. “But they would like to have more people employed. We are trying to have as few people as possible.”

Grigorije is a respected voice because of the Church’s influential role in the Serb half of Bosnia, and because, at age 42, he is seen as a rising star, someone who could one day become Patriarch of the entire Serbian Church (the current head is 95 and infirm in hospital). Grigorije heads the Church’s finance wing, but says he does not focus on profit.

“Our goal is to help people, because people were so confused after the war, after communism,” said Gregorije. “All of our work is working for all people, not to make money.”

Since making his investment, Kostovic says he has reinvested all income every year, and faced many headaches. Trimming the workforce from almost 100 to 40 and modernizing equipment did bring tension with the Church.

“We inherited the state-owned company and management. It was a typical post-Communist socialist management,” he said. “We had lots of difficulty to clean (up) the company; they thought this was their company.”

FRONTIER INVESTING

To this day, Trebinje has a tough reputation: some privatizations have failed; factories from before the war are struggling. The shadow of recent history remains strong.

If Croatia’s Dubrovnik is the “Pearl of the Adriatic” (as poet Lord Byron once dubbed it), Trebinje was once part of its glamorous shell, a place where tourists often made daytrips.

Yet the 1991-92 shelling of Dubrovnik from Bosnia’s Serb Republic and mistreatment of Trebinje’s Croats and Muslims, including destruction of some mosques, badly damaged those ties.

In a region still searching for its economic footing after the wars of the 1990s, the main faiths - Roman Catholicism, Orthodox Christianity and Islam -- are key stakeholders. In recent years they have regained many places of worship, buildings and agricultural land that Yugoslavia nationalized.

“If the process of restitution goes as planned the church definitely may become a much more significant economic factor in the Balkans,” said Father Sava Janjic of the Decani Monastery in Kosovo, one of Serbian Orthodoxy’s most famous sites.

Bishop Grigorije’s business links have raised some eyebrows in a traditional, conservative institution.

“There is some criticism that Bishop Grigorije is involved in some economic issues more than he should,” said Anatoly Viktorov, who heads the international community’s Bosnia oversight office that includes southern Bosnia.

But the Trvdos Monastery is a veteran in wine production. It separately owns a winery that produces 500,000 well-regarded bottles a year, and recently took out about two million euros in bank loans to buy new Italian wine-making equipment.

Still, the bishop worries about a repeat of history in a country considered the least stable in the Balkans.

“We have war every 30 years, it is such a big problem.”

Additional reporting by Dina Kyriakidou in Athens and Daria Sito-Sucic in Sarajevo, editing by Paul Casciato

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