What is the politics of Slovakia and the Euro as well as the eurozone/EU

Sovereign euro Risk of Slovakia according to the rating agencies

September 2011	Sovereign risk	Currency risk	Banking sector risk	Political risk	Economic structure risk	Country risk
	A	BB	A	AA	BBB	A

Sovereign risk

Stable: The commitment to fiscal consolidation will remain strong, and debt levels should remain well below EU thresholds. 

Currency risk

Stable: Growing concerns regarding the solvency and competitiveness of some euro area members are potentially negative for the single currency. However, interest rate differentials should favour the euro in the short term.

Banking sector risk

Stable: Slovakia's banking sector is very conservative and very profitable but also very conservative in its asset allocation. The banking sector has been resilient to the aftermath of the global crisis of 2008-09. However, some foreign banks with branches in Slovakia could face distress because of the euro area crisis.

The Slovak capital Bratislava, the economic hub of the country

Political risk

The centre-right government looks less stable than its predecessor, but it is more investor-friendly. None of the parties likely to make it into parliament in a general election threatens Slovakia's international creditworthiness.

Economic structure risk

The economy's dependence on exports of automotives, machinery and electronics weighs heavily on the outlook for the economy, and could make medium-term growth more volatile.

Slovakia is led by a four-party, right-wing coalition, in which the largest party is the Slovak Democratic and Christian Union-Democratic Party (SDKU-DS the political party that brought about the 19% flat tax). The government has delivered pro-business changes that dilute workers' rights in the hope that will reduce the disincentives to hire people. This has dismayed many given widespread reform fatigue. Fiscal consolidation will be the main economic policy issue in the coming years.

The chances of the current coalition surviving until the election scheduled for 2014 are fair given that the overcast global environment does not favour major changes. But personal and programmatic clashes could bring it down before then. Real GDP growth is slowing in 2011 as the government is performing fiscal consolidation with a view to put aside funds in case there is a global crisis. Growth until 2015 will be slower than in the boom years but fairly fast in the chastened environment but at least this is not over levaraged unstable growth. Inflation is settling around 2.5% in 2012-15. The current account is expected to register deficits averaging around 3.4% in 2011-15.

Political outlook The centre-right ruling coalition turned one year old in July. Coalition parties have shown resilience despite frequent disputes. Disagreements between ruling parties could spill over in late 2011 when parliament debates the government's recent decision to sanction Slovakia's financial contribution to the European Stability Mechanism (ESM) from 2013.

Economic policy outlook

Slovakia's fiscal consolidation effort has been progressing in line with plans in 2011. At end-July the state budget posted a deficit of €1.67bn (US$2.3bn), 30.4% smaller year on year.

Economic forecast

In June seasonally adjusted industrial output fell by 2.2% month on month. The economic sentiment indicator (ESI; 2005=100), which had moved lower in the second quarter, after climbing in the first quarter, edged down further in July, dropping by 1.6 points month on month, to 93.9. This reflected weaker confidence in the industrial sector, owing to weakening demand of trade partners in the EU.

Centre right wins

It seems that our predictive ability is uncanny

My concern remains at the insistence of the right to make hiring and firing  extremely easy. This is something that most decent societies take a moderate position on. It rewards unscrupulous employers at a time of high unemployment, and SDKU should not underestimate how much this might help to send them to opposition once again... If they allow again employers to keep employees as temps forever...

The mixed bag of results from the election mean the following

1. We are likely to get the first Slovak female PM, ms Radicova (pictured) given that the guy hugging her is the leader of the hungarian minority party, chances are that relations with Hungary are going to be vastly improved
   
2. Robert Fico (PM) is still popular by a united left of centre. His party resembles PASOK in greece of the 1990es to 2001. Corrupt to a certain extent, enough to keep itself relevant, and keep the right on its toes.
   
3. The right has won the election in the sense that the 4 parties that form the right (Christian non-democrats, Hungarians, Christian democrats, SAS neoliberals) are fairly moderate and would provide a welcome counterbalancing interregnum for Fico during which he can reconsider some of his extremist excesses (not so much in policy but in style).
   
4. Most of the press is anti-Fico perhaps overly so. The left should be respected and the country needs a serious newspaper of the responsible left.
   
5. Preliminary results of Slovakia’s general election, released Sunday by the Slovak Statistics Office, are likely to lead to the replacement of Prime Minister Robert Fico’s left-of-center cabinet with a business-friendly right-of-center coalition that will try to improve the country’s recently strained relations with Hungary. (However the Hungarian side seems to be on a nationalist crescento of its own making)
   
6. The new ruling coalition will likely include politicians who represent Slovakia’s large Hungarian minority, potentially helping Slovakia mend fences with its southern neighbor.
   
7. Although Mr. Fico’s Smer-Social Democrats party came first in Saturday’s elections, taking 34.8% of the vote, it won’t likely find suitable coalition partners in the 150-seat parliament.
   
8. Preliminary results showed the Slovak Democratic and Christian Union, or SDKU, with 15.4% of the vote, followed by the liberal Freedom and Solidarity Party, or SaS, with 12.1%, the Christian Democratic Movement KDH with 8.5%, and the Hungarian minority party Most-HID with 8.1%. Final election results are expected late Sunday.
   
9. The new parliament will thus be dominated by right-of-center parties led by the Christian Democratic SDKU, and the Hungarian minority party Most-HID. This coalition of four that will also include the Christian Democratic KDH and the liberal Freedom and Solidarity Party, and will hold a total of 79 parliament seats, compared with 62 seats to be held by Smer. The remaining nine mandates will be in the hands of the extremist Slovak Nationalist Party, or SNS (who's vote halved and nearly didn't make it to parliament!).
   
10. The Freedom and Solidarity Party (SAS) was formed last year by Richard Sulik, an economist who designed the flat-rate tax system introduced by the previous SDKU-led governments that ruled in 1998-2006. Mr. Sulik’s party, supported by mostly young voters thanks to its Internet-centered campaign, will be a novice in the Slovak parliament. Its agenda that includes the decriminalization of cannabis use for medical purposes and registered partnerships for same-sex couples is likely to face strong headwinds in this conservative country.
    
    
11. Nevertheless the solid result of Mr. Sulik’s party, the third-largest grouping after Smer and SDKU with 22 seats in the incoming parliament, showed voters’ discontent with the more established two junior partners in Mr. Fico’s outgoing leftist coalition cabinet.
    
    
12. Slovakia will have the first woman PM! A very good signal to be sent abroad. The Christian Democrats SDKU led by, run by Iveta Radicova, a sociology professor and a former presidential candidate, has long opposed Slovakia’s current labor regulations introduced by the Smer-led cabinet, which stipulate minimum wage requirements and limit employers’ freedom to dismiss employees.
    
13. Talking to reporters in a live television broadcast in the small hours of Sunday, Ms. Radicova, likely to become the first-ever female prime minister of Slovakia, sounded upbeat about her country’s prospects.

“Slovakia chose the path of responsibility that will help tackle its current problems,” Ms. Radicova said, referring mainly to lackluster economic growth and high unemployment.
“We’ll again turn Slovakia into Europe’s tiger,” she said, referring to the country’s reputation during the double-digit economic growth period in 2007 and 2008.

Sramko Central banker of Slovakia

I am a major fan of Ivan Sramko (photo on the right -Robert Fico Slovak PM is on the left-). He is the central bank governor of Slovakia and exactly the right kind of mature and serious banker with a distinctly old-fashioned banking pedigree that oozes a sustainability and soberness largely missing in the western and particularly Angloamerican institutions and boardrooms.

Sramko is the architect of the euro adoption plan and took very effective measures to filter out speculation in the Slovak banking market. So much so that when neighbouring countries became overly vulnerable on currency volatility and speculation, Bratislava was and is an island of tranquility during the crisis.

I believe it is people like this that form the mass of the best prime ministers Slovakia will never have, or maybe the political class in Slovakia will come to recognise his contributions... who knows... For now he should be a shoo-in for another term at the ECB (where he is widely liked) and at the Slovak National Bank.

5 year term expired (Reuters)

Slovakia's current central bank governor Ivan Sramko, who is also a European Central Bank governing board member, is among the government's top candidates to be the bank's chief in the upcoming period, daily Sme reported on Saturday.

The governor of the National Bank of Slovakia (NBS) is formally appointed by the President for a five-year term on behalf of the government, whose proposal also needs to be approved by the parliament. The new term will start at the beginning of January.

A parliamentary committee proposed a legal change on Thursday that would allow current central bank chief Sramko serve another term. Under current legislation, Sramko would have to stand down by the end of December when his term runs out .

A report on Sme's website cited sources close to the Prime Minister Robert Fico as saying Sramko, central bank Vice-Governor Viliam Ostrozlik and bank board member Jozef Makuch were the top candidates: http://ekonomika.sme.sk/c/5066311/zacala-sa-hra-o-guvernera-nbs.html


Ivan Sramko's background
Mr Ivan Sramko was born on 3 September 1957 in Bratislava.

In 1980 he graduated from the University of Economics in Bratislava, Faculty of Management. Between 1981 and 1990 he worked as Head of financial units in several corporations.

From 1990 to 1991 Mr Sramko was Deputy Director of VUB - ING, a.s. (advisory banking company).

In 1991 - 1992 he was appointed Head of the Task Force of the VUB Bank establishing the joint venture of VUB - Credit Lyonnais.

Between 1992 and 1998 he held the position of General Manager of Istrobanka, a.s. (subsidiary of Bank für Arbeit und Wirtschaft AG, Vienna, the then-subsidiary of Slovenska poistovna, a.s., Bratislava), and was Deputy Chairman and later Chairman of its Board of Directors.

From 1998 Mr Sramko was a member of the management of Tatra banka, a.s. (subsidiary of Raiffeisen International Bank-Holding AG, Vienna, the then-subsidiary of Raiffeisen Bank, Vienna), and from 2000 to 2002 a member of its Board of Directors.

From 11 January 2002 to 31 December 2004 Mr Sramko served as a Deputy Governor of the National Bank of Slovakia. He was appointed Governor of the NBS effective from 1 January 2005.

Mr Sramko is a Member of the Governing Council of the European Central Bank, a Governor in the International Monetary Fund and an Alternate Governor in the European Bank for Reconstruction and Development.

Since 1998 he has been a member of the Board of the Slovak-Austrian Chamber of Commerce and since 2003 a Chairman of the Managing Board of the University of Economics in Bratislava.

He is fluent in English and German.

He is married and has three children.

Alojz Hlina, Slota and Robert Fico

Now that the economic situation is more stable and the future looks more like a typical bad spell followed about 3.4% GDP growth next year for Slovakia (OECD forecast), we can turn our attention to improving the quality of the democratic discourse in Slovakia.


We really are starting to admire Alojz Hlina, a slovak citizen and businessman (owns the Slovak pub in obchodna) who is becoming the only serious critic of Jan Slota the leader of the nationalistic pondlife known as the Slovak Nationalist Party (SNS).

In most countries the politics of SNS would fit within the conservative fold of the political spectrum not the far right despite the occasional windbag-like comments about Hungarians etc. SNS and Slota are really just a bunch thieves disguised as a political party, they don't seem to have much in the way of a political philosophy and are just Jan Slota and his acolytes trying to prise open the public purse.

Clearly SNS is being used by Robert Fico the prime minister to stay in power long enough to form a credible centre-left political formation in Slovak politics (SMER is still a very young party). I believe that Fico miscalculated how much the SNS would cost him, but the surprising fact is that the centre-left party of slovakia SMER is itself quite clean corruption-wise which is a hopeful sign for the future of Slovak politics.

However there are limits for how long voters such as myself are prepared to tolerate Meciar and Slota milking the state with constant scandals. Dzurinda was not a bad prime minister and both Dzurinda and Fico should form the core of the new slovak politics. Fico needs to cut the crap about SDKU being evil etc. The real evil is SNS and Meciar. He needs to get rid of them as allies as now his popularity is at stake. Mr. Fico himself must be appreciating how difficult it is to keep coalition partners off the trough and how mr. Dzurinda must have felt when he was trying to keep his fractious coalition together.

Thankfully Fico may be about to start acting about Slota and Meciar. The smell of elections is in the air and mr. Fico should arrange some serious discussions with the more commendable elements of the centre right and the hungarians to form a much less kleptocratic and nationalistic coalition. He can be a better prime minister in a second term but he needs to find a way to dump his current partners.

Fico claims that it is willing to sacrifice the government coalition, which would leave the SNS collapsed as a political force. "Smer is ready for this."

How Slota will respond to this "blow" from the Prime Minister, remains open.

Fico's party yesterday was refusing to respond. "Jan Slota will say more in the coming days," said press secretary of SNS Jana Benková.

Alojz Hlina and people against primitivism in politics
Alojz Hlina has serious misgivings about SNS staying in power even under Fico's control and so do I, it is starting to affect the country's character and politics. Fico needs to follow the austrian example with Haider about 10 years ago and get rid of the far right from government.

Alojz Hlina owns a couple of bars in central Bratislava which i will start going to simply for solidarity (I don't like the taste of alcohol so i ll order a tea i think)
Hlina should be the model for Fico's rheteric about his ally Jan Slota.

Activist posts banner against SNS’s Slota on Bratislava Castle
14 Aug 2009 Flash News

Activist and businessman Alojz Hlina was detained on August 13 when construction workers repairing the Bratislava Castle called police that Hlina had crept up the castle scaffolding where he and another activist fastened a banner several metres tall criticising the head of the Slovak National Party, the Sme website reported.

“We believe that after the repair and cleaning, there will be no more Slota and his likes,” the banner read. Workers noticed the unusual bustle only after about 15 minutes and two of them went to negotiate. After several minutes, the banner was peacefully taken down.

This protest is the most recent in a continuing a series of public actions Hlina has staged against what he calls “primitivism in politics”. He asked for a meeting with a representative of the Slovak parliament to whom he intended to hand over a letter with three questions.

The letter asked whether Slovak laws were valid for all, including for Ján Slota, and whether the parliament had a sociological study that would prove that if someone broke the law without consequences, some groups start to take justice in their own hands. However, Hlina failed to hand over the letter because the Slovak parliament’s representative did not show up. Both activists were detained and interrogated.

SME newspaper

Tax changes coming - budget neutral

Robert Fico seems to want to change how the weight of funding the budget are spread among taxpayers. He seems to want to reduce retail taxes and shift the burden onto the banks who have had record profits.

Tentative signs of a reduction in VAT (retail taxes/indirect taxes) along with the abolition of one tax rate fits all were discussed by the Prime Minister of Slovakia Robert Fico recently.

The very rough translation is that he favours a reduction of value added tax (VAT), but with the condition that a progressive income tax would replace the current flat rate.

"I am ready to do so," said the Prime Minister on Thursday in a speech.

Fico also agrees with the reduction in excise duty on fuel, subject to the introduction of additional taxes on banks and the privatized companies.

"The only way to combat the world financial crisis is solidarity - international and domestic. Everyone must contribute in some way and we will do everything possible to maintain a civilised social standard in 2009"Fico noted.

The government he will not tax benefits, contributions or gifts at birth of a child (tradition in Slovakia), or impose other such burdens.

"I'm sorry to say there that there is no way to change the Labour Code, to reduce labour taxes and levies given the situation" said Fico. The government of Robert Fico is ready if necessary to allocate additional resources to mitigate the impact of economic crisis on the Slovak economy, and is continuing the checks of public spending for areas of additional cuts.

"I am glad that our people are no longer just cheap workforce. I am glad that there are other factors we can offer foreign investors. Slovakia's notable political stability, Schengen membership, the euro, the good business environment, a skilled workforce with progressive values and a strong work ethic, are important for attracting investors to the territory of Slovakia," said Fico .

Slovakia votes in Presidential poll - Slovakia : news, world | euronews

http://www.euronews.net/2009/03/21/slovakia-votes-in-presidential-poll/

The first round of presidential election will take place on Saturday, March 21st from 7am to 10pm. The voters can choose from seven candidates, including the incumbent president. Slovak Republic as a parliamentary republic does not provide the president with influential powers. The Slovak president is ceremonial but he has some veto powers for legislation. He also represents Slovakia abroad.

He can also recall the Prime Minister in case of a vote of no confidence. In the same case he can also recall the ruling government. The president signs laws passed by the Slovak Parliament. He also has a right of veto and can return laws to parliament with comments attached.