State is offering loan guarantees to lure Slovenia Officials hope to create 'catalyst' to spur trade

June 17, 1992|By Liz Atwood | Liz Atwood,Staff Writer

The state of Maryland is trying to entice the former Yugoslavian republic of Slovenia to do business here by offering it loan guarantees to buy Maryland products or use state services.

Although the U.S. government has yet to extend diplomatic relations to Slovenia, Gov. William Donald Schaefer and members of his Cabinet have decided to extend their own recognition. The state has agreed to guarantee up to $1 million for each transaction between that country and Maryland, officials said.

Such transactions include buying goods from Maryland companies, employing state brokers for purchases or shipping through the port of Baltimore or Baltimore-Washington International Airport.

The loan guarantees were explained yesterday after state officials briefed business executives on the governor's recent 10-day European trade mission.

Previously, state officials had announced a commitment from the Slovenian government to purchase $2 million worth of medical instruments from a Maryland broker.

In comments yesterday, officials clarified that the commitment, which also carries loan guarantees, consists of an oral agreement and that details of what would be purchased and LTC from which company have yet to be decided.

The trip, which cost the state about $100,000, also included visits to Germany, Italy and Britain as the governor called on companies already doing business in Maryland and tried to make new contacts.

Scott Blacklin, director of the Maryland International Division, said the state decided to offer the loan guarantees to Slovenia in order to pursue trade more aggressively. The guarantees "are a little bit of a risk," he said, but provide the catalyst needed to spur business between Slovenia and Maryland.

Slovenia, a country the size of Maryland and with half as many people, declared its independence from Yugoslavia last year. Although the U.S. government has recognized Slovenia, it has not established diplomatic relations, a position with which Mr. Schaefer said he disagrees.

In the past, the Maryland Industrial Development Financing Authority (MIDFA) has guaranteed loans for foreign companies buying from Maryland companies, but only once before has it extended the guarantees to a foreign country, said Marie Torres, a MIDFA official.

In that case, MIDFA offered to guarantee loans to Yugoslavia in 1987 to purchase dredging equipment from a Maryland company, but the guarantees were never activated because the company did not get the business, she said.

The state thinks it can afford to guarantee only a few such loans, Mr. Blacklin said. He said state officials would study each transaction carefully before making the loan commitments.

The state has already agreed to back a $1 million loan to Slovenia for the purchase of a $13 million radar system from Westinghouse Electric Corp. and has made the same offer for another radar project Westinghouse hopes to win.

Regarding the medical-equipment deal, Mr. Blacklin said the head of the Slovenian Ministry of Science and Technology has an oral agreement with the state to purchase $2 million in instruments through a Maryland broker, Walter J. Sistek, head of the Systech Organization Inc., a Towson consulting business.

Mr. Sistek said he is representing about a dozen Maryland companies and hopes to persuade Slovenia to buy the medical equipment from local companies, although the Slovenians are interested in buying at least some of the equipment from a California company.

Mr. Sistek said he plans to travel to Slovenia this week to secure a written agreement.

Mr. Blacklin said the medical-supplies order is small but that the state hopes it will lead to larger purchases from other Slovenian agencies.

In addition to making contacts in Slovenia, the state received a commitment from a group of Italian businessmen to visit Maryland this fall to explore investment opportunities.

The trade mission also helped secure a tentative agreement from Minerva SRL, an Italian processor of olive oil, to establish a plant in Baltimore and to route its imports through the port of Baltimore. The company already operates a small sales office here.

The new plant would create 30 to 40 jobs, the state said. A final agreement on that project is expected this summer, said Mark L. Wasserman, secretary of economic and employment development.

At the breakfast meeting yesterday with state business and government leaders, Mr. Schaefer said the state must do more to improve its image abroad.

"If you think anyone is going to sell Maryland but us, you're wrong," he said.

The governor said that the executives he meets overseas frequently have never heard of Maryland or Baltimore, although they have heard of the University of Maryland and the Johns Hopkins University.

Mr. Wasserman said it will be several months before the state determines how effective the latest trade mission was.

Last year, the state had high expectations for trade with Kuwait after the Kuwaiti ambassador signed an agreement to buy Maryland products or at least to ship goods through the port of Baltimore in that country's rebuilding effort. Little business has resulted, however.

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