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SLOVAKIA


 

 

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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 31,868 23,700 20,500 59
         
GNI per capita
 US $ 4,920 3,950 3,760 73
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 118 - (29/03/07)

Slovakia has had three major leaders since independence in January 1993, Vladimir Meciar, a populist dreaded in the West, Mikulas Dzurinda, an austere reformer, the darling of Brussels, and now another populist in Robert Fico. But he is proving more flexible than Meciar and is not really reversing Dzurida's reforms, which is making him acceptable to the West

Slovakia signals U-turn on tax
Slovakia, for example, has for the first time signalled it could be willing to enter into discussion over Brussels' wish to move into the sensitive area of tax, a move that has led to a political clash between the Slovak government and its opposition. 

"I understand the advantages of [our] national tax system, but on the other hand I also understand that EU heavyweights will hardly respect tax allowances started by new member states," Slovak prime minister Robert Fico said in an interview with EUobserver. 

According to Mr Fico, Slovakia "will not avoid a tax debate...and will not be screaming no," when a common solution is being sought. 

So far, Slovakia has been one of the strongest opponents of any EU move into the tax area, including being against plans by the European Commission to harmonise the taxable base on company profits across the EU. 

The country runs a low-tax regime on the basis of a flat tax, which has helped to secure record levels of foreign investment. 

This policy has caused irritation in larger member states. Former German chancellor Gerhard Schroeder and French presidential hopeful Nicolas Sarkozy have both accused Bratislava of engaging in tax dumping and called for cuts in its European funding. 

Robert Fico, himself a social-democrat, came to power last June, ending an eight-year-long era of the centre-right government of Mikulas Dzurinda which had carried out sweeping free-market reforms and turned Slovakia into one of Europe's fastest-growing economies. 

Even though Mr Fico stressed that he did not see tax issues resolved within the coming few years, his softened stance has been strongly criticized by the centre-right opposition. 

Later, all three opposition parties are set to press ahead with a parliamentary declaration on tax sovereignty, a document aimed at binding the government to opposing any tax changes at the European level. 

More generally, the 43-year old Fico pledged to turn the wheel from right to left, to increase social welfare spending, to improve the rights of employees and union members, but also to keep Slovakia on track for adoption of euro in 2009. 

Slovakia's biggest challenge remains to meet inflation goals as part of the so-called Maastricht criteria for new entrants to the eurozone, with Mr Fico saying these criteria are "unjust" to new EU states. 

"They [Maastricht criteria] do not reflect different economic conditions in new member states", he said, as central European states struggle to curb inflation while their economies are booming. 

"There are only fourteen months left until the decision on Slovakia's euro entry is taken ... so we have to achieve the impossible - to combine high economy growth and low inflation". 

So far, the country's economy has been on a sound footing, with GDP growth hitting a record of 8.3 percent last year and the inflation outlook also improving. The central bank forecasts annual inflation at 1.5 percent, compared with January's 2.2 percent.

Slovakia to meet Schengen criteria 
Slovakia is showing flexibility in geopolitical ways too, agreeable to Brussels.

Slovakia will meet the EU conditions concerning its border with Ukraine by June, Slovak Minister of the Interior Robert Kalinák said at a March 14 press conference. "We don't accept any variant other than that we will be prepared," Kalinák said. 

The Slovak-Ukrainian border is to become an external border of the broadened Schengen area as of Dec. 31, 2007, when nine of the 10 countries that joined the EU in 2004 will join the visa-free travel zone. Cyprus will still maintain its border controls. An EU assessment commission will arrive in Slovakia in late June to check the security of the border with Ukraine.

The government of Prime Minister Robert Fico agreed on an action plan according to which Slovakia would join the Schengen area. Kalinák said the plan was a reaction to last year's critical comments about Slovakia not being sufficiently prepared. Austria was among existing Schengen area countries to express concern that Slovakia couldn't properly maintain its border with Ukraine. The Czech Republic, which is also joining the Schengen area at the end of 2007, then offered to maintain border controls with Slovakia if it remained unprepared (see "Controls for Slovakia?" CBW, Dec. 18, 2006).

Kalinák said that a new Slovak-Ukrainian border crossing in Vyšné Nemecké would be opened by June. An EU commission will come to Slovakia in late March to assess the country's preparedness in the area of personal data protection. In September, the commission will check the protection of Slovak air borders.

Originally, the Schengen area was to be enlarged in October 2007, but due to technical difficulties in launching a new police database supercomputer-the Schengen Infor-mation System II (SIS II)-a delay of a year or more was threatened. This was resolved in December 2005 when expanding the existing SIS I system was approved. 

Fico negotiates electricity imports from Ukraine
Secure borders are a plus for energy supply. Slovakia should begin importing electric energy from Ukraine, according to an agreement reached between the Slovak and Ukraine Prime Ministers, Fico and Viktor Yanukovich, at a meeting in Kiev on February 26. 

Fico's spokesperson, Silvia Glendová, said that the details of the agreement would be worked out soon. "Thanks to the previous government's decisions, Slovakia is becoming dependent on imports of electricity, and the agreement with Ukraine is of strategic importance for Slovakia," Fico said.

During the meeting Fico also asked his Ukraine counterpart to resolve the longstanding dispute over the KTUK iron ore mining and processing plant in Krivoi Rog, Ukraine. 

Construction of the complex began in 1986, and after the breakup of the Soviet bloc, it remained in the hands of Ukraine, Slovakia and Romania. 

Fico also expressed interest in the transit of light Caspian crude oil to Slovakia, the Czech Republic and Germany.

In Ukraine, the Slovak delegation signed agreements on transport, support for and mutual protection of investments, and Slovakia's role in the European Union-Ukraine action plan for 2007. 

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ENERGY

Fico negotiates electricity imports from Ukraine


Slovakia should begin importing electric energy from Ukraine, according to an agreement reached between the Slovak and Ukraine Prime Ministers, Robert Fico and Viktor Yanukovich, at a meeting in Kiev on February 26, Slovak Spectator reported.
Fico's spokesperson, Silvia Glendova, said that the details of the agreement would be worked out soon. 
"Thanks to the previous government's decisions, Slovakia is becoming dependent on imports of electricity, and the agreement with Ukraine is of strategic importance for Slovakia," Fico said.
During the meeting, Fico also asked his Ukrainian counterpart to resolve the longstanding dispute over the KTUK iron ore mining and processing plant in Krivoi Rog, Ukraine. Construction of the complex began in 1986, and after the break-up of the Soviet bloc, it remained in the hands of Ukraine, Slovakia and Romania.
Fico also expressed interest in the transit of light Caspian crude oil to Slovakia, the Czech Republic and Germany.
In Ukraine, the Slovak delegation signed agreements on transport, support for and mutual protection of investments, and Slovakia's role in the European Union-Ukraine action plan for 2007.
In related energy matters, Slovakia's dominant power producer, Slovenske Elektrarne (SE), is to complete the third and fourth blocks of the Mochovce nuclear power plant (EMO), Slovak Spectator reported.
The Italian firm Enel, which holds a 66 per cent stake in SE, made the decision 10 months after entering SE. "Construction at Mochovce should begin in the second half of this year," Fico said following a meeting with the head of Enel, Fulvio Conti.
EMO's third and fourth blocks could begin producing electricity in 2012. SE is to invest 62-63 billion Slovak crowns in completing Mochovce, Conti said. 
Fico said the government would not participate in the project financially.

Slovakia wants Russia to help build Mochovce NPP

Russian specialists may help complete the construction of the third and fourth power generating units of the Mochovce nuclear power plant in Slovakia, Slovak Economy Minister Lubomir Jahnatek said after a session of the two countries' intergovernmental commission for economic, scientific and technological cooperation, Interfax news Agency reported on February 20th.
"We spoke about establishing a consortium that would finish the construction of the third and fourth units using Russian specialists and technologies," he said.
"However, this nuclear power plant does not belong to Slovakia. An Italian company has acquired 66 percent of shares. That is why a decision (on whether or not to invite Russian specialists) will not depend on us," the minister said.
Jahnatek called for setting up a consortium of Russian and European companies to build two new units to replace the nuclear power plant in Jaslovske Bohunice that will be taken out of operation soon. "For this reason, I want Russian companies to have strong chances," he said. All new units must use the same type of fuel that is supplied to the facility, he said.

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TECHNOLOGY

Samsung investment confirmed

South Korean firm Samsung will build its new plant for the production of LCD flat screens in Slovakia, Slovak Spectator reported. Slovak Economy Minister Lubomir Jahnatek and Samsung Electronics President Sang Wan Lee signed an investment memorandum between on March 13, said the cabinet office's press department, adding that Jahnatek also reported on the investment at a press conference together with Slovak Prime Minister, Robert Fico, New Europe reported.
Initially, the Slovak government did not officially confirm the information presented in the media that the South Korean electronics producer Samsung has decided to land its new investment in Slovakia.
Nevertheless, the cabinet approved a draft investment agreement on March 7 between Slovakia and the South Korean company. "The cabinet settled all the necessary issues that the foreign investor required at today's session. It is now up to the investor whether the agreement will be signed," Slovak Economy Minister Lubomir Jahnatek announced after the cabinet's session. The minister was optimistic about Slovakia's chances of going through with the investment.

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