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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: 066 - (22/10/02)
The Slovaks stepped back from the brink in the summer's general elections and re-elected the government coalition of Premier Mikulas Dzurinda, rather than returning to former strongman, Vladimir Meciar, who was premier in 1993-98, the first in an independent Slovakia.
Meciar was a notorious figure for connivance at corruption; and what tipped the scales against him was probably the seizure in South Africa and forcible return of his police chief, now on trial for many a misdemeanour at the time. People want to know what happened then when privatisation went amuck and many a crooked business empire was created. Had Meciar won the trial would probably have never taken place.
The new government
The result has been greeted with undisguised relief in Western capitals. The process of integrating Central Europe into the EU and NATO can now continue. A Meciar-run Slovakia would have been a nightmare for Brussels and Washington.
Dzurinda is highly esteemed, the more so because he has won without electioneering stunts or swerves, in stark contrast to Schroeder in Germany. He now has the aura of a European statesman. That should serve Slovakia's turn well in the years ahead.
The other parties in the centre-right coalition likely to share power are the Christian Democratic Movement (with 8.2% of the vote), the Hungarian coalition party, representing Slovakia's large Hungarian minority (11.2%) and the Alliance of the New Citizen, a new party led by media tycoon Pavol Rusto (8.1%).
Altogether the four centre-right parties won 43.4% of the vote, which is likely to translate into 78 seats in the 150-member parliament.
New economic policy
The economy is faring reasonably under difficult circumstances. GDP is growing in the 3.6-4% range on an annual basis, being 3.9% in the first half as against 3.1% in Hungary and 0.7% in the EU as a whole, the natural yardstick. Inflation is coming in at under 3%, a great achievement since 6.7% was expected. Indeed, if soaring social expenditures could be curbed, Slovakia would qualify for early entry into the Euro.
A pre-election consumer boom needs to be reined in, as well as constraint resumed on public spending. With the election out of the way the government can now concentrate upon aligning Slovakia with EU norms, making it ready for membership in 2004-05 or so. A European future is at last beckoning and the nightmare is over.
US Delphi chooses Slovakia for new investment
Delphi Corp., a US-based car components maker, announced it will construct its new plant in Slovakia and not the Czech Republic, the Czech News Agency (CTK) reported. The decision was financially based, as the company said the Czech investment would have cost the company 200m Czech crowns and created between 200-250 jobs.
"Delphi has revised its plans and decided to expand to Slovakia which has a cheaper workface compared to the Czech Republic," CTK quoted Pavlina Bolfova of government agency, CzechInvest, as saying. The US company, which is also one of the biggest in the world, said it had been mulling over three Czech towns for the plant's site: Koprivnice, Prerov and Valasske Mezirici. Delphi had hoped to have the plant's construction carried out by another investor and then rented to the company. Prerov's biggest investors was going to be Delphi.
"Unfortunately, plans of the Delphi concern have ended in failure not only for Prerov but also for the entire Czech Republic. The company told us that if it has opportunity to start business in the Czech Republic in future, it would consider Prerov again," CTK quoted Prerov Deputy Mayor, Bohumil Prochazka, as saying.
The US company started production of cable harnesses in Senica, Slovakia earlier this year. The Slovak arm of the German carmaking giant Volkswagen is Delphi's biggest client. Delphi, with over 300 plants in 40 countries, left the General Motors Group three years ago.
Irish Ballymore Properties eyeing Slovakian venture
Ballymore Properties, an Irish development company, announced it is willing to participate in a major new venture in Slovakia, according to Irish press reports. The plan involves a 10-12 hectare block in the capital city of Bratislava. Owned by Sean Mulryan group, Ballymore Properties has yet to determine how the 330,000 sq m project will be used. It is currently reviewing plans to possibly develop office, retail, hotel and apartment space, the company said in a statement. The project might have to be green-lighted by Slovak authorities. As a result, Ballymore's plans may either run on schedule or be postponed for some time. The Slovak project is a sound project for the Irish group. The Irish Independent newspaper quoted a Slovak business source as saying that the top-of-the-range apartments, a Ballymore specialty, of approximately 120-140 sq m were in short supply and renting for 2,000 Euro a month.
Slovakia opens electricity market to foreign competitors
Slovakia is opening up its electricity market for foreign suppliers, as of 1st October. Some 20 of Slovakia's large-scale consumers (over 100 GWh) will be allowed to import around a twelfth of their annual consumption, TASR web site has reported.
The market opening comes earlier than expected in January 2003, amid worries concerning, especially, the largest Slovak power producer Slovenske elektrarne (Slovak Electric/SE), which will probably lose some market share.
The Economy Ministry affirmed that as SE is paying for the dead costs (arising from, for example, the nuclear Mochovce plant construction and ecological investments), the losses incurred to SE by the acceleration of the liberalization might by partly compensated by the Slovakia's Office for Regulation of Network Industries through a surcharge on electricity. According to Economy Ministry energy section director, Jozef Urmin, companies will benefit from the market opening, notwithstanding the deformed low prices on the Slovak market.
The external liberalization will be further extended as of January 2003 for medium-sized consumers (above 40 GWh), which will be allowed to import one-third of their annual electricity consumption. In the following year, consumers exceeding 20 GWh consumption will be allowed to import two-thirds of their consumption, and in 2005 the market will be eventually opened for all customers.
External liberalization corresponds well with the internal market liberalization started on 1st January 2002. The same rules apply for the electricity distribution companies with the only exception being 2003, when the companies are allowed to import a maximum of one-fourth of their purchased volume.
Similarly, the gas market liberalization, started in July 2002, will continue, too: while in 2002 market was opened only for the customers with over 25m cubic metres consumption, in 2003 consumers exceeding 15m cubic metres consumption will benefit from the liberalization.
However, upon EU entry, Slovakia will have to adapt to the EU rules, added Urmin.
EIB ploughs on in Slovakia despite clouded bridge tender
Despite controversy over a recent tender for a new bridge in Bratislava, and despite its unwilling involvement in a previous hot corruption scandal, the European Investment Bank (EIB) says it is undeterred from investing in Slovakia, and that it has no doubts about transparency.
The bank's latest project, known as the Kosicka bridge, is slated to be the Slovak capital's fifth link across the Danube river. It is being co-financed by the EIB, a non-profit European institution which supports capital investment projects in economically weak regions of the European Union and beyond.
The bank is supposed to supply a loan of 45m Euro covering 50 per cent of the estimated cost of the Bratislava bridge; the other half will be financed through Slovakia's state budget.
According to the results of a two-round public tender, the bridge will be built by a consortium led by Slovak construction company, Doprastav. However, the decision of the tender committee has been criticized by the losing consortium, led by another domestic construction company, Zipp, and has raised doubts over the projects transparency.
The Zipp objections come before a previous scandal had even had time to cool: A tender for 35 light trains for the state railways firm, which the EIB indirectly financed.
In the scandal, a tender commission led by PM Mikulas Dzurida's brother picked a Swiss-Slovak supplier which offered a purchase price over Sk800m more expensive than its competitor. The fall-out from the tender caused the resignation of Transport Minister, Jozef Macejko.
Corruption in Slovakia, according to public opinion surveys, has reached epidemic proportions. The EU has said that graft will be a major focus of its upcoming evaluation of the country.
However, EIB officials insisted that the Kosice bridge tender had been clean, and that they were satisfied with the results.
"There is a lot of talk about the tendering process in Slovakia. We want to react to these discussions here," said EIB vice president, Wolfgang Roth, of the allegations.
"The EIB controls the Kosicka bridge tender procedure. It's fair, it's absolutely correct."
The Kosicka bridge project began around a year ago when the EIB signed a contract with investor Metro Bratislava, co-owned by the Slovak state and Bratislava city governments.
EU approves Slovakia's first projects paid for by pre-accession fund
The European Union has approved the first nine Slovak projects to be funded partly from SAPARD pre-accession fund for rural and agricultural development.
The projects are worth a combined 96m Slovak korunas (2.3m euros) with SAPARD providing 48m korunas and entrepreneurs the rest, the EU SAPARD agency in Slovakia said, TASR web site has reported.
Slovakia's potential SAPARD allocation stands at 900M korunas and is expected to be raised to 3bn korunas. The funds must be drawn before the end of 2004, the year when Slovakia plans to join the EU.
The EU began accepting applications for Slovak SAPARD funds in May and has so far received 49 projects seeking 269m korunas. Five have been rejected and 35 are still under review. Nineteen projects relate to food-processing businesses, thirteen to agriculture, 10 to diversification and seven to forestry related development. Of the nine approved projects, five relate to agribusiness, three to food processing and one to forestry.
IMF tells Slovakia structural reform must be completed before EU entry
Slovakia must complete structural reforms and reduce its dependence on imports before EU entry. "EU entry and possible introduction of the euro requires reforms to strengthen the stability and flexibility of the economy and financial markets while disinflation and fiscal consolidation must be maintained," the International Monetary Fund (IMF) evaluation report reads, TASR web site has reported.
"If Slovakia wants to achieve this, it must focus on realization of fiscal and monetary policy aims, and on improvements on the labour market and the flexibility of the business sphere," it continues. The supply side of the economy should be improved and dependence on imports reduced. Slovak firms should have a better approach to capital, which would be inevitable for financing investments and adjustment for new marketing strategies in the new environment.
A better labour code could also help companies. According to IMF, the code should provide a 'very general framework for labour relations, giving flexibility for employees and employers to agree on labour conditions, including part-time or temporary work, as well as introducing greater geographic mobility of workers'.
In fiscal policy, the government should support real convergence by improving stimuli and providing more effective municipal services. The IMF also called on government to complete public administration reform. The pension system should also be improved by introducing the second pillar, with technical assistance coming from the World Bank. Expenses in the sphere of healthcare should be reduced and the accumulation of arrears should be stopped. Among other priorities to be solved are above-average social aid, improvement of public finances management, strengthening of administration and tax collection.
The financial sector needs further consolidation, the IMF stated in its report, adding that after their recapitalisation and privatisation Slovak banks opened up a significant market for new products (such as mortgages and consumer loans). However, they are still not sufficiently resistant to macro-economic shocks.
US company signs deal to supply IT system to Slovak State Treasury
Hewlett Packard Slovakia [HPS] finally signed on 2nd October the contract to supply the State Treasury a 1.04bn-koruna IT system by the end of 2003, TASR web site has reported.
The contract was signed by HPS General director, Peter Weber, and Finance Minister, Frantisek Hajnovic.
A tender for the project was called in November 2001, but when HPS won, rival bidder Siemens Business Services (SBS) successfully appealed to the Office for Public Procurement (UVO).
The tender was rerun several times, with HPS winning each time and SBS getting the result annulled, until it was scrapped by Hajnovic earlier this year. Both HPS and SBS were instead asked to submit their projects and contractual conditions by 26th July, and after evaluation by an expert commission, the contract was awarded to HPS.
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