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The EU Will End up Like Yugoslavia and Other Slovenian Reflections

Crisis, nationalism, rich versus poor, predictions of collapse – they’re all there.

by Martin Ehl 2 July 2013

At least Slovenian Prime Minister Alenka Bratusek can breathe more easily over one thing. The social sciences department at the University of Ljubljana has just decided that her master's thesis was not plagiarized, as some Slovenian media had claimed.


Otherwise, after three months in office, she can congratulate herself for only minor successes. Of the 15 government-owned companies offered for privatization, only one has been sold off, the Merkator retail chain, and for half the price that the new owner, the Croatian Agrokor, offered a year ago.


Nevertheless, the fierce debate about whether Slovenia will become another Cyprus, has quieted – at least for now. Therefore, it is perhaps useful to look at Slovenia's, and actually Europe's, problems through the eyes of two Slovenian economists from across the political divide.


In the first half of the 1990s, Maks Tajnikar co-founded the model of Slovenian state capitalism as the economy minister. Today he teaches economics at the University of Ljubljana and argues that Slovenia will survive this year as well as next without financial assistance from abroad. “But the problems will come afterward. If economic policy does not jump-start economic growth, catastrophe will come,” Tajnikar said.


As has become fashionable in Europe, Tajnikar criticized the policy of saving, which Brussels pushed on Bratusek’s government. “The examples of Spain and Portugal show that a policy of cuts is wrong. It is collective suicide not only in Slovenia, but in the entire European Union – it is a vicious circle that will not lead to growth,” Tajnikar said.


More interesting is his comparison of the European Union with the former Yugoslavia. Like the historic federation, he points out, the EU “has a common currency, decentralized fiscal policy, and huge differences in productivity.”


The Yugoslav conflicts, which led in the 1990s to war, began deep in the 1980s around disputes about indebtedness and taxes. “The key moment was when Slovenia in 1989 ceased to pay customs duties collected on its borders into the common treasury,” Tajnikar said. He argues that the euro zone cannot survive without financial transfers, just as Yugoslavia did not survive when the richer parts stopped paying for the poorer, which greatly contributed to the nationalism whipped up on all sides.


The liberal economist Bernard Brscic of the Joze Pucnik Institute in Ljubljana, who was state secretary under right-wing Prime Minister Janez Jansa, sees the roots of Slovenian's problems in the political system that developed in the country after the breakup of Yugoslavia. “Slow economic growth is the result of a degenerated political system where there are too many parties in parliament and in the government coalition, in which it is then difficult to find a consensus,” Brscic said. The majority system, he says, would be better for Slovenia, because it would clearly show who is responsible for what.


That is an ideological view, likely informed by the fall of Jansa's government this spring and the subsequent corruption conviction and two-year prison sentence for the ex-premier. “The Slovenian courts are corrupt. No one tries former businessmen,” he said bitterly with a tacit reference to the experience of his former boss.


“The entire political spectrum is shifted so much to the left that when your government proposes savings, then you are immediately labeled fascists,” Brscic said, who speaks from experience. He said one root of Slovenia’s current problems is that communists-turned-socialists took advantage of partial privatizations after the country’s declaration of independence and created a new class of company owners and managers who had more connections than skill. “They had privileged positions and they received political loans from state banks,” Brscic said.


He said the fear of foreign capital, which Slovenians didn't allow much of into the country, was “xenophobia with no economic justification.” Brscic would greatly expand the government’s list of 15 companies slated for privatization. “Slovenians will not privatize until there is tough pressure from abroad,” he said, alluding to the cautious attitude of Bratusek’s government, which prefers to find “strategic partners” rather than to privatize.


Unlike Tajnikar, Brscic thinks Slovenia could be headed for a major crisis soon. “The current Slovenian model cannot continue without reform. But because the current government has no ability to make reforms, the collapse could happen as early as next year,” Brscic said.


To understand the situation in the European Union, a close review of the history of Yugoslavia’s disintegration may be in order, with an eye on Slovenians as they try, with no help from Brussels, to dig themselves out from under the mountain of their own problems.
Martin Ehl
 is the foreign editor of the Czech daily Hospodarske noviny, where this column originally appeared. He tweets at @MartinCZV4EU. He recently won the prestigious Writing for Central Europe journalism prize, awarded by the APA – Austria Press Agency in cooperation with Bank Austria.
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