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In 1918 the Slovenes joined the Serbs and Croats in forming a new nation, renamed Yugoslavia in 1929. After World War II, Slovenia became a republic of the renewed Yugoslavia, which though communist, distanced itself from Moscow's rule. Dissatisfied with the exercise of power of the majority Serbs, the Slovenes succeeded in establishing their independence in 1991. Historical ties to Western Europe, a strong economy, and a stable democracy make Slovenia a leading candidate for future membership in the EU and NATO.
Update No: 065 - (26/09/02)
The Slovenes are having local and presidential elections on November 10th. The incumbent president since independence, Milan Kucan, is standing down, having completed his second and final mandate.
The premier, Liberal Democrat Janez Drnovsek, is clear favourite in opinion polls to succeed him. Having put in a long stint as head of government he clearly feels the time has come for him to have the largely, but not wholly, ceremonial post of the presidency.
Should he win, he may make more of it than Kucan did. Kucan made foreign trips, intermediated with Brussels on Slovenia's behalf and hosted foreign leaders in their visits to Ljubljana. These included Bush and Putin who met for the first time in the Slovene capital in June, 2001.
Yet basic foreign policy remained the prerogative of the government. Drnovsek and Kucan worked well together and both became very popular. It will be well worth noting who is to become premier in November, presumably a Liberal Democrat minister.
Good economic record
The popularity of the two leaders is easily explained. Slovenia has the soundest and by far the richest economy of any post-communist state. Steady, if not spectacular growth from this high level has occurred since independence, with modest inflation.
Foreign direct investment (FDI) has been somewhat disappointing. FDI at US$2bn accumulatively is below what could be expected of such a well-located and together place, with the most skilled business and professional people in the Balkans. High wages are doubtless one factor. But another is tight laws on foreign ownership, made to keep Italian mafia and southern Balkan gangsters out of town. Slovenia is free from the rampant corruption and crime of, say, Albania or Montenegro.
The Slovenes are moving into Serbia in a big way now that there is a new regime. They know the ropes of course and should soon be a dominant force throughout the Balkans. With EU entry imminent, their laws on foreign ownership of land and property are being relaxed. It could then become a magnet for new investors from all over the place as the natural gateway to the Balkans. With its lovely Alpine scenery it is likely to develop its considerable tourist industry rapidly. The future looks rosy.
State to set aside higher subsidies for agriculture
Slovenian Agriculture Minister, Franci But, in an interview with the Maribor-based daily, 'Vecer' recently, said that the state plans to allocate more money to the agriculture sector in the coming years. This will complement plans to promote a healthier and more cultivated environment in keeping with the European model. Minister But noted that in 2003, some 62bn tolars (272.5m Euros) will be allocated to agriculture, while 16.2bn tolars (71.2m Euros) will go for direct payments.
However, Minister But emphasised that despite the additional state assistance, farmers would still have to deal with market conditions. State withdrawal from the market means it will no longer interfere with setting prices, while farmers will now have to start acting as entrepreneurs, Slovenia Business Week reported. Increased state aid will used mainly for development of rural areas and a healthy environment, But told Vecer.
With regards to the negotiating stance in upcoming negotiations with the EU on the agriculture sector, the minister suggested that Slovenian negotiators would not agree to a level of agricultural production lower than the present one. He is also convinced that the anticipated EU common agricultural policy would offer much more to Slovenian farmers than the existing Union's policy.
Foreign capital changes Slovenia's banking sector
Among the first to make their entrance into the Slovenian market was the French bank, Societe Generale, with its takeover of the largest Slovenian privately-owned bank, SKB, in spring 2001, Slovenia News has reported. This was followed in May of 2001 with a government decision to launch the privatisation of the two largest Slovenian banks.
The privatisation of the second-largest Slovenian bank, Nova Kreditna Banka Maribor (NKBM) in which the state wanted to sell 65 per cent, was stopped this spring. The process was accompanied by ongoing debates about national interest and efforts to prevent the bank's sale. The government expects to draft a new programme of NKBM privatisation by this autumn.
Meanwhile, the privatisation programme for Slovenia's leading bank, the Nova Ljubljanska Banka (NLB), proved to be a greater success. Belgian banking and insurance group, KBC, is to become a 34 per cent owner in early September, when it is due to pay for the deal. The KBC recently overcame its last hurdle on the way to obtaining a stake in the NLB, when it gained the approval of the Slovenian central bank.
The Slovenian banking sector will thus be richer for another foreign bank. Along with Societe Generale, the sector has also seen the penetration of Italy's SanPaolo IMI, which owns Banka Koper, Slovenia's firth largest bank. Meanwhile, Austria's Raiffeisen Zentralbank has recently become the owner of the ninth-largest Krekova Banka.
Advocates of the sale of banks to foreign investors say that this will improve the efficiency and competitiveness of the sector, while opponents warn that the local economy is losing power. More heated and intense debates can thus be expected as the privatisation of NKBM is to be recommenced and the sale of another, smaller, state-owned bank, Postna Banka Maribor, is to be put on the table.
Abanka signs year's second long-term syndicated loan
The press service of Abanka, Slovenia's fourth largest bank, announced that the company has signed a contract for the acquisition of a 30m Euro international syndicated loan from a consortium of foreign banks.
The loan, to be paid off over five years, will be used for investments in retail banking, Bluebull reported.
The consortium of banks providing the loan is made up of the London-based subsidiary of the ING Group, the Vienna-based Raiffeisen Zentralbank and Germany's Kiel-based Raiffeisen Zentralbank and Germany's Kiel-based Landesbank Schleswig-Holstein Girozentrale as well as five other prominent banks from four different nations.
In the first five months of 2002, the bank surpassed performance expectations by assuming a 6.5 per cent domestic market share, and increasing its total assets by 25.68bn tolars (113m Euros) to almost 281.29bn tolars (1.2bn Euros). Profits totalled 1.098bn tolars (4.8m Eurso) up 29 per cent over the first five months of last year.
Kmecka druzba moves ahead with plans to sell majority stakes
Slovenian financial company Kmecka druzba Holding has set procedures in motion for the sale of majority stakes in insurance companies Slovenica and Adriatic. Together, the two control about 14% of the Slovenian insurance market. Media reports indicate that a number of leading European insurance and financial institutions have expressed interest in both ownership shares.
Slovenica and Adriatic had previously made attempts to merge. However, the move resulted in failure largely due to differences on the mutual exchange of shares.
A subsidiary of Kmecka druzba Group, KD Holding has to this end hired auditing and consultancy firm, Deloitte & Touche, to take charge of coordinating all necessary steps for the sale of the group's 97% stake in Slovenica and 52% in Adriatic. According to Slovenia Business Week, while KD Holding holds a 79% stake in Slovenica, together with parent company KD Group it controls 97% of the insurance company.
Investment firm, KD Holding, has left the door open for selling the two insurers separately or simultaneously, with a decision to be made on the basis of offers it will receive, the KD Group informed recently.
In February the Slovenica supervisory board decided to sell its 52% stake in Adriatic, at which KD had planned to keep Slovenica, but later said that in the event a suitable offer presented itself, they may sell both insurers together.
Italian insurance company Generali, Austria's Uniqa, and Belgian banking and insurance group, KBC, are among those reportedly interested in Adriatic, the country's fourth biggest insurer with a 9.43% market share.
In addition, Adriatic appears to have attracted Italian bank SanPaolo IMI, which noted its interest in the Koper-based insurer via Banka Koper. Banka Koper, 62% owned by SanPaolo IMI, already holds 18% in Adriatic.
Novartis to bid for Lek
Swiss pharmaceuticals company, Novartis, said it planned to place a purchase bid on all shares of the Ljubljana-based drug maker, Lek. The bid is to be officially published on September 18th, with the Swiss company offering €417.3 a share. Some analyst said the price should be set at €439, others were convinced that it could rise as high as €527. Lek said partnership with Novartis could lead to a major generic drugs company in Europe and the United States.
The two firms agreed that the Ljubljana-based company would go on as a separate company based in Slovenia, with its own corporate identity and trademark, without cutbacks or layoffs. Novartis demands that Lek's statute be amended to eliminate the current limit of a maximum of 15% voting rights for individual owners, and that Novartis be given a majority on the supervisory board. In addition, the chief financial officer would be appointed by the Swiss.
Foreign analysts have suggested that Novartis has targeted Lek because of its antibiotic, Amoksiklav, a generic version of GlaxoSmithKline's top-selling drug, Augmentin. Lek could serve Novartis as a bypass to the lawsuit it faces in the US regarding its own version of the drug. Lek's largest shareholders are the state-run Restitution Fund (SOD) and Pension Fund Management (KAD).
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