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Books on Slovenia
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Update No: 115 - (21/12/06)
Slovenia adopts the Euro
Over the coming year, Slovenia will reach two important milestones that will
raise the country's visibility in the world and put the EU's embrace of
ex-communist countries to a new test. On January 1st, the former Yugoslav
republic became the first of the EU's10 new members to adopt the Euro.
The step will complete Slovenia's transition from planned economy to being a
full member of Europe's competitive single market. A year later Slovenia will
inherit the EU's rotating six-month presidency, another first for a new member
from the east and a signal of confidence from larger member states.
Each step, if successful could help revive the faded feeling among the eight
central European countries that joined the EU in 2004 that Brussels and core EU
countries are serious about continuing their integration rather than treating
them as second-class. The steps could also significantly raise the image of
Slovenia, which has suffered from obscurity since its birth in 1991. "For
locating Slovenia on the world map, this will be a very good occasion,"
says Janez Jansa, prime minister.
The Slovenian-Slovak confusion
Bertrand Russell, the philosopher and wit, once made the remark that the First
World War broke out because of the difference between Slovenia and Slovakia and
personally he could never tell the difference. Not one of the sages wittiest
remarks, but a good instance of a certain sort of Central European humour.
Confusion between Slovenia and Slovakia, among everyone from average EU citizens
to US presidents, provides fodder for much self-deprecating humour in Ljubljana,
the capital. But a low profile has other effects. Before its accession to the EU,
Slovenia was consistently ranked by EU citizens as the country they would least
want to see join, despite it being the most prosperous candidate for membership
from the region.
Coming EU presidency
The chance to run the EU's political machinery from January to June of 2008 will
undoubtedly raise that profile but will also represent an extreme challenge for
a country of 1.9m people. "It's a little bit like taxiing a 747 with a
bicycle," quipped one Western diplomat.
The government is not taking the task lightly, devoting substantial attention
and resources to preparing for the task and recruiting nearly 2,000 bureaucrats.
Much of the responsibility is purely administrative, but it also includes
sensitive tasks, such as chairing more than 200 committees and working groups
and drafting their agendas.
Slovenia could find itself playing an important role in attempts to revive the
EUs failed constitution and reform its finances.
But Slovenia's first political priority, says Mr Jansa, will be to keep the
momentum of enlargement alive for its Balkan neighbours, including Croatia, the
most advanced, and Serbia, perhaps the most problematic. With Romania and
Bulgaria joining in 2007 and disagreement over Turkey's candidacy splitting the
big countries, Mr Jansa is keen to see the rest of the Western Balkans are not
forgotten.
Pole of regional stability
Slovenia has its own economic interests at stake. Its companies have worked
hard to revive trade connections in the region. But Mr Jansa insists the entire
EU would suffer from the instability that would follow if countries such as
Bosnia-Herzegovina and Serbia were to feel the EU has closed the door to them.
Mr Jansa has shown some boldness in pursuing regional stability with troops as
well. By March, when Ljubljana despatches more soldiers for peacekeeping in
Kosovo, Slovenia will have more troops abroad in Nato missions per capita than
any other member of the alliance.
Euro adoption represents a different opportunity, lowering risks and costs for
companies doing business in the Eurozone. It may also boost the image of
Slovenian companies. Marjan Kramar, chief executive of Nova Ljubljanska Banka,
Slovenia's largest bank, says: "Slovenian companies will be, in principle,
even stronger, because they will be not only European but form the heart of
Europe."
Slovenia's move to the Euro exposes, however, some troubling aspects about
adoption rules and about the single market. For Estonia and Lithuania, it is a
harsh irony that their openness to foreign investment and other pro-growth
policies ended up helping to disqualify them from Eurozone membership by
fuelling inflation.
Slovenia, for its part, has never embraced privatisation and regularly stands
accused of hampering foreign investors. But having satisfied the Maastricht
criteria, Slovenia will adopt the euro first.
Exclusion from labour markets of Euroland
It is also ironic that Slovenians will soon use the common currency but
remain barred from free access to some of the Eurozone's labour markets. Austria
and Germany, most notably, still control labour movement from the eight central
European countries that joined in 2004. As a matter of principle, this irks
Slovenian policymakers.
"We would have preferred a faster timetable to make a reality of the
political commitment to the free exchange of people and capital," says
Andrej Bajuk, the finance minister.
In practice, however, the restrictions have little impact. Few Slovenians, even
the young and university educated, seem interested in working abroad. They have
good reason to stay. Per capita GDP in purchasing power parity is more than 80
per cent the EU average and the gap is closing as Slovenia's economy grows twice
as fast as the rest of the Eurozone. Welfare benefits are among the most
generous in Europe.
Need for further reforms
Unfortunately for home-body Slovenians, many economists are convinced they
cannot sustain their competitiveness in the global economy without paring down
the social welfare net and cutting taxes.
The centre-right coalition headed by Mr Jansa came in to power in 2004 promising
a real shake-up. It campaigned on pledges of privatisation, lower taxes, pension
adjustments, streamlining government and a host of other reforms.
The government has lowered taxes - "the biggest step forward in the tax
system in Slovenia's history," boasts Mr Jansa - but the pension system
remains, according to a European Commission report, a "time-bomb." The
government has replaced hundreds of managers and directors at companies it
controls, supposedly as a prerequisite for privatisation, but almost nothing of
importance has been sold since 2004.
Thomas Robertson, US ambassador to Slovenia, insists the government should not
be judged a failure on reforms, but gives low marks on privatisation. "They
have taken control but if this is the end of the game, it has been less than
successful," he said.
Mr Jansa agrees and pledges that privatisation will move forward in banking,
telecommunications, energy and other areas. But, he is quick to say, "I
don't think we will be successful by selling everything." He also adds:
"These companies are doing quite well. If we stop at this point no harm has
been done."
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CONSTRUCTION
Construction works stood at 2bn Euro in 2005 - Slovenia
Slovenian construction companies carried out construction works worth nearly 2
billion Euro, Slovenia Business Week reported on November 27th, citing data
released by the National Statistics Office.
The value of construction increased in all categories in comparison with 2004.
It rose by 12 per cent to 270.5 billion Slovenian tolars (1.13 billion Euro) for
buildings, and by over one percent to 207.1 billion Slovenian tolars (864.2
million Euro) in engineering, it was reported. The value of buildings
construction was higher mainly due to the 24 per cent increase in the value of
residential construction. The value of non-residential buildings construction
meanwhile rose by almost nine percent.
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DEFENCE
Ministers Sign Cerklje Airport Reconstruction Document
Four Slovenian ministers recently signed a protocol on the scope and contents of
a national spatial plan for the renovation of the Cerklje ob Krki military
airport. The Defence Ministry said that the facility would not be used as a NATO
airbase, Slovene News website reported.
The protocol was signed by Defence Minister, Karl Erjavec, Economy Minister,
Andrej Vizjak, Environment and Spatial Planning Minister, Janez Podobnik, and
Transport Minister, Janez Bozic, in Cerklje ob Krki barracks. Erjavec said that
the national spatial plan should be adopted early in 2008.
The defence minister added that construction of new buildings at the location
would take place between 2007 and 2011. The project is estimated at around 70m
Euro, with NATO contributing 38m Euro.
The upgraded airport is to serve as a host nation support facility, meaning that
Slovenia should allow NATO aircraft to temporarily land there if asked by the
alliance. As a NATO member, Slovenia would also have to allow aircraft
maintenance and supplies, Erjavec said.
After the upgrade, the facility will serve as the Slovenian Air Force's main
base, housing the majority of the aircraft currently located at the Brnik
airport, Erjavec noted.
The modernisation involves a cutting-edge navigation system that would allow
landings by day and night, and an increase in the length of the runway. The
airbase will also be equipped for civilian aviation purposes, the minister
explained.
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ENERGY
Power Giant HSE to Generate Over 33m Euro in Net Profit in 2006
Slovenia's biggest power producer, HSE group, expects to generate SIT 186bn
(0.78bn Euro) in revenues this year, and about one billion Euros in 2007. The
core HSE company is to post SIT 8bn (33.38m Euro) in net profit and thus become
one of the most profitable Slovenian companies, HSE chief executive, Joze
Zagozen, said recently, Slovene news website reported.
According to the official, HSE has spent SIT 26bn (0.11bn Euro) on investment
this year, while it plans to raise the sum to SIT 100bn (0.42bm Euro) in 2007.
The company's long-term plan foresees HSE-generated power to increase from 7
terawatt hours to 39 TWH in 2018, when the company is expected to make two
billion euros in revenues.
"This will not be possible without an efficient trade network abroad,"
Zagozen said. He reminded the reporters that the company had set up companies in
Italy, Serbia, Hungary, Croatia, the Czech Republic and a branch office in
Romania.
Zagozen said the company would continue the construction of a chain of hydro
plants on the lower Sava river, upgrade the Avce pumped storage hydro plant and
start the overhaul of the thermal power plant in Sostanj.
Moreover, he said preparations would be launched for the construction of power
plants on the middle Sava and other construction projects. Nevertheless, Zagozen
does not think this will be enough to reduce Slovenia's energy dependence.
The HSE has therefore studied around 100 possible locations in southeastern
Europe, while it is currently working on 20 investment projects, in particular
in the countries of the former Yugoslavia, according to Zagozen.
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TOURISM
Over 1m tourists used Slovenian tours in 2005
A total of 874,225 Slovenian and 306,593 foreign tourists used Slovenian tour
operators in 2005, with the largest number of Slovenians (40.5 per cent) going
to Croatia, according to data published on November 29th by the National
Statistical Office, New Europe reported.
Other popular destinations for Slovenians included Italy (6.7 per cent), the
Czech Republic (5.2 per cent), Greece (5.1 per cent) and Turkey (4.4 per cent).
A total of 5.7 percent of Slovenian tourists travelled outside of Europe, mainly
to Africa (67.8 per cent), Asia (18.3 per cent) and the Americas (13.9 per
cent), data from the Statistical Office also shows. The number of Slovenian
tourists who spent at least one night on tours organised by Slovenian travel
agencies increased by 34.4 per cent and the number of their overnight stays by
41.2 per cent in comparison with 2004. While in 2005 the number of Slovenians
travelling around the country increased by 9.2 per cent, the number of Slovenian
tourists travelling abroad increased 2.5-fold. Meanwhile, over 1.35 million
overnight stays were recorded in the country in 2005, 17 per cent more than in
2004. The largest number of foreign tourists that came to Slovenia on organised
tours in 2005 came from Germany (17.7 per cent), followed by Italy (15.4 per
cent), Austria (11 per cent), France (10 per cent) and the UK (9 per cent), it
was reported. They averaged 4.4 overnight stays in Slovenia, the office added.
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TRANSPORT
Modernisation Contract Signed for Part of 5th Route Section
The management of the National Rail Transport Agency and subcontractors recently
signed a SIT 8.7bn (36.3m Euro) deal to modernise the Pragersko-Ormoz section of
the railway. The section in NE Slovenia is part of the 5th pan-European
transport corridor which makes it a priority investment, Agency director Rajko
Satler said, Slovene News website reported.
The signing in Maribor was attended by Jelka Sinkovec Funduk, the head of the
Railways Directorate at the Transport Ministry, who said this was the first and
an important investment for modernising the country's rail infrastructure.
The contractors selected for the construction began work on 15th December and
are expected to complete the modernisation in 720 days. Minor disturbances to
passenger and cargo transports are expected during the works.
The deal is also partly financed by the European Union, which contributed SIT
3.5bn (14.6m Euro), while the remainder came from the state budget.
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