So lets deal with each of the issues:
WHAT IS GOING WELL
Economy & EURO
ING bank analysis on Slovakia
- Budget proposal represents a credible fiscal path towards meeting Maastricht criterions
- ING sees 2009 euro adoption probability at 65% from 40-45% previously
- Our expected scenario thus changes to euro adoption already in 2009 (macko says same time as Estonia! i.e. before Czech and along the virtuous club of new nations in the baltic and just after trailblazer Slovenia)
- We raise our EUR/SKK forecast to 36.2 by end-2007, though we regard this as conservative due to the still high uncertainty on euro adoption
- MinFin assumes an unchanged 36/EUR conversion rate
- CPI (Inflation) at 4.6% lower than expected, but underlying pressures unchanged
- Foreign trade worse than expected on imports
The overall pro-market stance of Slovakia is safe unlike what particularly American press would have you think! for examples of overly pessimistic articles on Slovakia see: here & here
What is good in Politics & and why "Ethnic Tensions" are massively overplayed
- There is no doubt that 9%+ of Slovak population are ethnic hungarian. These people are chiefly represented by the SMK party which was part of the former government for 8 years, and enjoy protection afforded to them by both the constitution but also by the council of Europe (Slovakia is a member). Hopefully the tensions will subside given the european integration that renders most borders irrelevant. Lets hope so.
- Within the context of a post communist state and compared to what is going on in Poland and Hungary. Slovakia is a stable and increasingly prosperous country with a maturing political class and debate (Slota is the main fly in the ointment).
- Slovakia's democracy does have some refreshing attributes in the fact that changes & unexpected things can happen at all! If you compare it with Blair's Britain, where you have Gordon Brown almost literally SUCKING ASS (pardon my french) in the City of London and basically promising to the bankers that the next labour government is going to be EVEN more right wing, then, well its the time when all shame has ceased to exist and that we should recognise that the UK has transformed into a USA-style political system, where there are two right wing parties of government + some right wing extremists to pick from (electoral market failure).
Slovakia still has genuine choices and the a livelier debate, even if that allows some awful characters like Meciar and Slota to show up in the political spectrum. Don't forget that there are versions of these phenomena even in the UK, (UKIP, Vanitas, BNP) with increasing electoral clout.
- If you think what the content of Fico's pre-election speeches contained, breathing a huge sigh of relief is in order..
WHAT IS NOT GOING WELL
- Walking jokes like Stefan Harabin that are wounding the state of justice and the image of Slovakia... Why are heart attacks happenning to the wrong people...
- Cancerous growths like Vlado the Corrupt Dinosaur participating in government, and being legitimised by doing so. KDH is right to pursue him.
- Corruption and lessening institutional independence reflecting the control freakery of the new PM, the independence of state institutions is being undermined by Robert Fico by stuffing governmental organisations with his people (not exactly a rare phenomenon even in advanced democracies however).
NOTE: Independence for institutions was not purely a Dzurinda instinct, it was Ivan Miklos (the ex-finance minister and the real author of the growth Slovakia is experiencing) that devolved power. I lament the loss of independent technocrats in organisations under Fico, i like technocrats running the economy. On the other hand elections ought to vote in responsible and capable people enough for it to be unnecessary to create independent institutions to protect us from the morons we elect... (btw top marks to Roger for the C. Dion pun :) in this link).
- Lack of good managers of government business. In government in most cases its not ill-will that causes disasters, but managerial incompetence of most elected representatives. This poverty of capable people versed in politics or the professions is very visible in SMER. To illustrate this Fico was even forced to get the excellent Jan Kubis (who is not SMER member neither will he join) because he simply did not have a credible foreign minister within SMER.
Jan Pociatek at the finance ministry is ahem well the guy looks 16 years old, he has an economics degree but... well i don't want to talk ill of him, he at least seems to want to apply economic theory and listen to technocrat advice so he heeds the rule "first do no harm".
Overall however I fear that Fico deliberately got lightweights like Pociatek in Finance and -old plastics executive from Nitra(??)- In economy ministry. This could be either because they are pliable so these offices can be abused for corruption, or because Fico wants to really run these ministries himself for reasons of egotism and narcissism or corruption. In this context non-corrupt Narcissism is the best we can hope for...
- I suspect that also this institutional independence thing creates a democratic deficit, if elections cannot change the bank governor and most of the key political decisions, then you have to ask why hold elections... I know these are luxuries in Slovakia at the moment but this is exactly why people don't bother to vote in many societies that the government is not basically able to change much. Its good for the economy and business... but once our votes cannot change things, we are tacitly agreeing that voters cannot be trusted with important decisions which is really a cynical view on the electorate. The problem is that it is also at least partially true... :)
- Fico, Slota & Meciar need to be watched on corruption, Meciar's Lexa, and EU funds allocation, that is where i suspect the biggest drawbacks of Fico's administration lie. I don't think a bit of moderate Social Democracy is going to be bad for Slovakia, in fact i think it needs it for 5 years. Its the corruption that sets an upper limit on growth and prosperity. Although Fico himself is an unknown quantity in this sphere, Meciar and Slota are notorious. There are 440 BILLION SKK coming Slovakia's way up to 2011. The wise utilisation of this money will determine if Slovakia will be the Ireland of the east.
- The people that backed Fico are the same greedy businessmen that backed Meciar for a while in the past! They don't much like competition... I think the auditors of the EU investigating how EU funds are spent in Slovakia, should send their best people and keep a very close eye on the EU purse in Slovakia.
- This is really where the focus of the media should be... But unfortunately crap like hungarian/slovak relations are what is in the news... This needs to change, a program on TV called corruptionwatch would be a good idea..
I am -reluctantly- prepared to tolerate the nationalism of this (secretly) mildly anti-gypsy government etc... given that the alternative of unbalanced and one-sided political direction for the country would have been worse and not broadly reflect the democratic will of the people.
Lets keep an eye on the corruption levels and Justice, not the fireworks of Slota and pseudo-crises with Hungary that act as distractions from the key issues and give the corrupt the opportunity to act.
Recently i included information that was not correct on the situation of slovak & hungarian teaching in Slovak schools. Below is the status in full from an EU website which seems fairly non-partisan.
EU take on minority language education in slovakia