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  SLOVAKIA

REPUBLICAN REFERENCE

Area (sq.km) 
48,800

Population
5,415,000 

Capital 
Bratislava 

Currency 
Koruna 

President 
Rudolph Schuster

Private sector 
% of GDP
60%

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Background:
In 1918 the Slovaks joined the closely related Czechs to form Czechoslovakia. Following the chaos of World War II, Czechoslovakia became a communist nation within Soviet-ruled Eastern Europe. Soviet influence collapsed in 1989 and Czechoslovakia once more became free. The Slovaks and the Czechs agreed to separate peacefully on 1 January 1993. Historic, political, and geographic factors have caused Slovakia to experience more difficulty in developing a modern market economy than some of its Central European neighbours. 

Update No: 067 - (19/11/02)

The Slovaks have been through an interesting if unenviable experience since they embraced independence in 1993. The move to independence was undoubtedly due to the ambitions of Vladimir Meciar keen to escape domination from Prague in the Republic of Czechoslovakia and Prague's eagerness to lose the deadweight of Slovakia, as they perceived it. That same break-up left long established and more senior Slovak politicians stranded in Czechoslovak ministries that no longer existed.
He therefore basked in the acclaim of that year which saw him elected overwhelmingly, but accepted the verdict of the electorate in 1998 and was voted out and ejected. This rather belies the idea that he was totally dictatorial; Saddam Hussein does not behave in such a wayward fashion for a dictator. But Meciar was certainly careless of many democratic principles, other than as a populist 'par excellence.' He used the country's post-communist secret police as a private enforcer for his own agenda.
He accepted his defeat in the summer's general election to parliament, the seat of power in Slovakia. It seems unlikely he will ever come to office again in his country, his electorate being the old and from the rural backwaters, although he may not yet have come to accept that, government in Slovakia being rather a shaky coalition, united mainly by their fear of Meciar.

The EU are delighted
The EU have confirmed the verdict on Meciar by welcoming the news of his defeat. It has given the country "an overwhelmingly positive report on progress achieved in the accession process. 
It now looks likely that accession to the EU is imminent for Slovakia. In fact the date is set for 2004.

The government in agreement
The leaders of the four centre-right parties that won a narrow majority in recent parliamentary elections signed a coalition agreement on October 8th. They vowed to remain united, while pursuing a programme of painful social reforms, to be launched in the first half of their four-year term.
The agreement aims to guarantee the governments slim two - seat majority in the 150-member parliament. Each party has a veto over basic government proposals as a gross breach of faith. Since any such back sliding would involve collaboration with opposition leader, Meciar, it is unlikely to happen. The unspoken objective of the coalition is to keep him out in the cold, aware that his return to office is the one thing that could jeopardise Slovakia's EU entry, now so strongly endorsed and welcomed in Brussels.
The spoken areas of the agreement include reforms to the welfare, education, health, pensions and other social programmes. They are likely to be coordinated at every stage with the EU.

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AUTOMOBILES

Volkswagen moves Spanish operation to Slovakia

The carmaker, Volkswagen, plans to move part of its Spanish production of the Polo model from Navarre to its Bratislava factory, according to the Financial Times, in order to consolidate manufacture of the Polo, whose sales are falling.
A Madrid business professor quoted by the paper said the move was caused by the fact that Slovak wages are one-fifth of what VW pays its Navarre workers, and that the firm, faced with falling demand for the Polo, preferred to close a Spanish rather than a German plant after failing to come to a deal with workers on overtime pay.
The move of Polo production follows an announcement recently by the Seat automaker that it would be moving production of its Ibiza model from Barcelona to Bratislava.

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CONSTRUCTION

Metro impatient to start bridge construction

The chief investor for Brtislava's Kosicka bridge project, the planned fifth bridge across the Danube river, has announced plans to sign a construction contract, despite a pending lawsuit by the losing bidder in the bridge's tender proceedings, the Slovak spectator has reported.
Metro Bratislava, co-owned by the Slovak state and the city of Bratislava, selected the consortium of Slovak construction giant Doprastav and Austrian company, Vatech Voest, over a consortium led by Austrian steelworks, Alpine Mayreder, in a two-round tender, which closed in late summer.
The Alpine-led group had complained that despite being chosen by the tender's selection committee in both rounds, the evaluation committee had selected Doprastav both times. Alpine also claimed that Doprastav's price estimate was unrealistically low.
"At the moment, Metro is preparing conditions for the fastest possible signing of the contract with Doprastav. The two sides should officially sign the contract within a month," said Metro director general, Vladimir Kovalcik.
Alpine appealed the tender decision in early October in Bratislava Regional Court, and a decision on the appeal is due within 30 days.

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EU ACCESSION

Slovakia to get 1.6bn euros after joining EU, contribute 880m euros 

In the three years after joining the European Union, Slovakia should receive up to 1.6bn euros from the EU budget and contribute 880m euros to it, according to the financial agreement reached by EU leaders in Brussels on 25th October, TASR web site has reported. 
EU payments to Slovakia will be allocated mainly for development of regions and agriculture. Regional support for new members was cut to 23bn euros from the originally proposed 25.5bn euros. 
Details of the EU budget for new members will be provided in a joint standpoint due to be published by the beginning of November. Under the budget proposal worked out by Denmark, current holder of the EU presidency, Slovak regions will get 417m euros in 2004, 533m euros in 2005 and 671m euros in 2006. 
Slovakia's contribution to the EU budget will be 287m euros in 2004, 291m euros in 2005 and 302m euros in 2006. 
The payment figures approved by EU leaders are maximum limits, which means Slovakia and the other candidates have little room for manoeuvre when final negotiations are held at the EU summit in Copenhagen on 12th-13th December.

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FOREIGN INVESTMENT

Samsung Electronics to spend US$60m in Slovak plant

The Slovak subsidiary of Samsung Electronics, a leading Japanese company, is prepared to spend US$60m on its plant that is located in the southern region, reported New Europe. The funds will be apportioned by 2005. The investment will help create 2,000 jobs and increase turnover from PC monitor production to US$1.1bn each year from US$20m.

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INFORMATION TECHNOLOGY

Slovakia, Hewlett-Packard in Treasury system accord

Hewlett-Packard Co. one of the world's leading hardware groups, has entered into an agreement with Slovakia to supply the government with a state Treasury system, reported New Europe. The deal, worth US$24m, had been met with a great deal of criticism because several people said the tender was not transparent, according to local reports. HP was at the negotiating table with the Slovak government in September following the Finance Ministry's decision to cancel the original tender to procure the Treasury's system. Although HP was confirmed the winner of the process five times, controversy emerged over the level of fairness of the process by the local public procurement regulator, the Siemens Business Services and IBM. The Treasury system's tender, valued at US$24.4m, will manage state accounts and payment activities.

Samsung plans huge Slovak operation

Samsung Electronics slovakia, has announced plans to invest US$60m in its south Slovakia factory during 2005, creating 2,000 jobs and boosting turnover in PC monitor production from the current US$20m to US$1.1bn annually.

Companies ride Slovak call centre wave

The US-based Dell computer company has become the latest high-tech firm to open a telephone serve centre in Slovakia, joining a number of technology firms and other companies seeking to cut costs while maintaining high service profiles.
Dell is set to have 120 operators working in the centre by December serving primarily the German market, where the company plans to expand its market share to 11 per cent.
According to company officials, Dell chose Slovakia for the high technical and language skill of workers in the country, combined with wage costs that are a fraction of those in current European Union member states.
"We did an intensive analysis in this sector of the telecom business, and Slovakia emerged as very close to the German market and its customers," said Dell Slovakia general director, Bernard Heuer.
"This goes along well with our goal of expanding our operations in Austria and Germany but also in other territories. We believe we have found the right people in Slovakia, who are ambitious and motivated to increase their technical knowledge and language skills," Heuer continued.
Dell worked closely with the Slovak investment agency, Sario, in setting up the deal, which Sario head, Artur Bobnovnicky, described as the largest investment in information technology Slovakia has seen since 1997.
"It is the most significant investment that Sario has helped realise in the recent period. In the last five years, I don't know of any technology investment of this type in Slovakia," said Bobovnicky.
"It is about providing the technical support for Dell customers in German-speaking countries. That means that all customers with Dell computers who have a problem or want to buy a new computer will call a specific telephone number, which will ring in Bratislava." 

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TOURISM

EU entry to put Slovakia on the map

As Slovakia prepares to enter the European Union in 2004, its anaemic travel and tourism sector should get a significant boost from the increased availability of state and EU financial support, say industry insiders, The Slovak Spectator has reported.
Despite a wealth of natural and historical attractions, Slovakia has chronically lagged behind its neighbours in the area of tourism, mostly due to lack of government support and promotion abroad, travel experts say.
"I wasn't aware of the country before I came here myself in February," the newly established European Commission ambassador to Slovakia, Eric van den Linden, told the Slovak Spectator.
However, observers expect the slowly growing tourism sector to show significant improvement once the country takes advantage of benefits that EU entry will bring. For example, it should begin to enjoy a higher profile.
"The moment Slovakia becomes a members of the EU, the country will be more well known. There is a lack of knowledge about the country.
"If you ask people in current member states where Slovakia is, not many know," said van den Linden, adding that the country is still often confused with the former Yugoslav stage of Slovenia or with former Czechoslovakia. 
Besides enjoying greater recognition as an EU member state, Slovakia should be able to receive more EU finances for the development of the tourism sector.
"Membership brings Slovakia access to regional structural and cohesive funds. From 2004 to 2006, the country should benefit from a total of 1.7bn euro, or 600m euro per year," said van den Linden.
"If that is used in an effective way, then it may also attract foreign investors, create jobs, increase the level of income and the well-being of the population," he said.
Slovak travel professionals say that money is sorely needed and they are hopeful Slovakia can follow in the footsteps of other countries once it has access to EU funds.
"We may see a similar thing happen here as happened in Ireland when it gained access to EU financial resources, which are now very substantial for the development of tourism," said Julius Cmorej, head of the Slovak Association of Travel Agencies (SACK).

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TRANSPORT

Kosicka bridge deal goes to Doprastav-Vatech consortium

The Slovak Spectator reports that the leading investor for the Kosicka bridge project in Bratislava has disclosed it will ink a construction deal despite a pending lawsuit by the losing bidder in the project's tender proceedings.
The project involves the construction of a fifth bridge across the Danube River. The consortium of local construction group Doprastav and Austrian firm Vatech Voest succeeded in clinching the contract. The decision was made by Metro Bratislava. The consortium beat out a bid submitted by Austrian steelworks Alpine Mayreder. The tender, which was carried out in two rounds, was closed in late summer, the paper said.
According to reports, Alpine Mayreder said even though it was picked by the tender's selection committee in both rounds, the evaluation committee settled on Doprastav both times. The Austrian group also said that the consortium's price estimate was too low. "At the moment, Metro is preparing conditions for the fastest possible signing of the contract with Doprastav," Metro Director General, Vladimir Kovalcik, was quoted as saying. "The two sides should officially sign the contract within a month."
Alpine Mayreder appealed the tender decision recently in Bratislava Regional Court, and a decision on the appeal is due shortly.

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