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 explained that the commitment, which also carries loan guarantees, consists of an oral agreement and that details of what would be purchased and 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.
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.