PODGORICA -- When it fired up the smelters in 1971, the massive Podgorica Aluminum Plant (KAP) was supposed to become a pillar of Montenegro's economy. But that dream is now crashing down.
Once the country's leading exporter, KAP entered bankruptcy proceedings last week with debts amounting to 340 million euros ($442 million), about 10 percent of the tiny Balkan country's annual GDP.
Layoffs among the sprawling complex's 1,200-strong workforce began this month.
"My name is Radoman Minic. I am a crane operator. I have been working at KAP for 18 years," one of them told RFE/RL. "I and many of my colleges lost our health working for this company. The moment I received my layoff notice felt to me like social death. I feel helpless."
The Montenegrin government, which owns about 30 percent of the company, may also be feeling pretty helpless as it wrestles with a problem that could bring down the government and cast a shadow over the country's ambition to follow neighboring Croatia into the European Union.
Another 30 percent of the company is owned by the Cyprus-based Central European Aluminum Company (CEAC), which in turn is controlled by Kremlin-connected Russian oligarch Oleg Deripaska.
And with the Russian connection also come the inevitable concerns about Moscow-hatched conspiracies. Podgorica-based political analyst Blagoje Grahovac sees KAP's current woes as part of a "geopolitical plot" to strengthen Russia's grip in the Balkans.
He says that "one should not doubt" that Russia wants to block Montenegro's progress toward the EU. "It might seem confusing -- how can it be a geopolitical plot when we are talking about one company? But Russia is interested in staying in the Balkans. We are witnessing a process in which the dirty money of Russian tycoons is being invested in the West, and then it is coming to the Balkans as 'Western investment.' But the final owners are Russians."
Directed From Moscow
Under the 2005 privatization agreement, CEAC bought 65.4 percent of KAP for 48.5 million euros ($63 million). The deal was heartily endorsed by the Kremlin and top Russian officials such as then-Duma speaker Boris Gryzlov and then-Emergency Situations Minister Sergei Shoigu visited the plant.
Russian businessman Oleg Deripaska was once Russia's richest man, but has fallen on hard times.
After a collapse in global aluminum prices in 2009, the government was forced to buy back nearly 30 percent. Nonetheless, CEAC still controls the company's management and has run up KAP's ruinous debts.
The rest of KAP's ownership is murky, although local experts believe the remaining one-third is owned by Montenegrin oligarchs, some of whom may have ties to Russia as well.
On the night of July 10, KAP Financial Director Dmitry Potrubach -- a Russian citizen -- was detained trying to cross the border into Serbia. He was wanted in connection with an investigation into KAP's alleged theft of electricity from a Europe-wide energy grid. Non-Russian KAP shareholders accuse Potrubach of concealing the extent of KAP's financial woes from them.
Nonetheless, Prime Minister Milo Djukanovic -- a former communist who has remade himself as a pro-Western politician -- is scrambling to come up with 102 million euros ($133 million) to keep the plant's doors open. He told the Associated Press recently that closing KAP would pose "a serious risk in the long term."
Doing so, however, poses two risks to the government, says Nedeljko Rudovic, deputy editor in chief of the daily "Vijesti." First, there is the public response to the budgetary squeeze a bailout could cause. "If payments to state workers or pensions are delayed, there will be an eruption of social discontent that could manifest itself in a number of ways," he notes.
KAP's financial manager, Dmitry Potrubach, was detained trying to leave the country on July 10.
Also, Rudovic says, the Social Democratic Party, which is part of the ruling coalition with Djukanovic's Democratic Party of Socialists, could seek to distance itself from the unpopular KAP policy and trigger new elections.
In addition to buying back half of Deripaska's KAP stake after the price collapse in 2009, the government also provided guarantees for a 132 million euro ($172 million) loan that Deripaska took from Hungary's OTP bank and Russia's state-controlled VTB.
KAP's Russian management has refused to pay back that loan -- which has since grown to 170 million euros -- and the banks are now calling in the government's guarantees.
Analyst Grahovac sees a sinister side to Djukanovic's plan to pump more money into KAP, arguing that it fits in with Russia's effort to increase its hold in the region.
"For that policy to be implemented, the coordination and cooperation of the political elite of the host country is needed. I have no doubt that the ruling party has been assisting in implementing that policy," Grahovac says.
"What is the situation at the moment? We have politicians who speak in favor of joining the EU. But with their actions, they are providing opportunities for Russian tycoons to occupy the country. And the Russian tycoons are acting on behalf of Russian interests."
Even some of KAP's workers are skeptical of Djukanovic's plan and intentions. Eco Esmir received his layoff notice on July 11.
"In the streets of Montenegro, people are blaming us workers for KAP's misfortunes. But we are not to blame," Esmir says. "Whatever the government is planning to give to the Russians, they should give to us workers instead and then close down production."
Robert Coalson contributed to this report from Prague