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Slovenia’s political upheaval puts economic recovery at risk.by Martin Ehl 6 May 2014
EU commissioners evidently have a special sense for irony. When Commission Vice President Siim Kallas presented the bloc’s economic forecast this week, he said of Slovenia that Brussels expects, in particular, an end to political instability.
Slovenians are only lucky that the moderate economic recovery in Europe and the crisis over Ukraine has drawn attention away from the situation in the euro zone. A year ago, Slovenia was the next hot candidate after Cyprus for an EU bailout package. Only the arrival of the Bratusek government, the quick promise of reforms, and their inception, consisting primarily of bank recapitalization, saved the country.
In February, the government managed to issue bonds to keep the state afloat until December, and the Fitch rating agency has upgraded the country’s economic forecast to positive. That’s pretty much it for the good news.
Slovenians’ reluctance to relax the traditionally strong grip of the state (which controls half of the economy), the slowness of privatization, and constant internal and personal disputes among the country’s political class remain huge obstacles to progress.
As for internal disputes, Bratusek ended up shipwrecked – similar to Slovak Prime Minister Iveta Radicova two and a half years ago – on, let’s say, a macho approach to politics. She was suitable at a difficult moment as a fresh face for crisis management, because the head of her Positive Slovenia party, Ljubljana Mayor Zoran Jankovic, had become embroiled in corruption allegations.
But when Bratusek wanted to become party leader so she would have a stronger domestic position, Jankovic steamrolled her. After she lost the inner-party battle, she decided to leave. Now speculation is that she could be nominated as the new Slovenian EU commissioner or could head a new party formed by rebel lawmakers.
The decision should come this week whether it is legally and organizationally possible to have elections on 22 June, as proposed by the outgoing prime minister. If so, the winner would theoretically have enough time to assemble a coalition government and prepare for the continuation of the reform plan and budget for next year.
But the elections could also take place much later, by which time it would be difficult to ensure the continuation of the unpopular privatization program and very difficult to agree on a new budget, which will, like this year’s, be an emergency one.
An additional bit of irony, this time of the domestic kind, is that former Prime Minister Janez Jansa – the head of the Slovenian Democratic Party, which is likely to win the elections – has been sentenced to two years in prison for corruption during the purchase of armed personnel carriers. The Supreme Court upheld his conviction the day after Bratusek lost her inner-party duel.
It wouldn’t be Slovenia if there were not a range of possible solutions. Jansa – a tough and quite intolerant politician – could serve his sentence in an alternative form, instead of in prison. And if not actually prime minister, then he could be the one pulling the strings, hovering in the background. As he waits for the results of the corruption inquiries, Jankovic had been playing a similar role in the case of Bratusek. The domestic political scene is thus de facto controlled by two men entangled in corruption charges with one of them already convicted.
So instead of gaining a strong government to navigate it as fast as possible out of the crisis, Slovenia will probably get even more bogged down in political disputes. And with the close interconnection of the state and the economy, those feuds will harm the business climate. A kind of vicious circle has thus arisen that the country, once at the head of the post-communist class, will have a difficult time escaping.