Books on Slovakia
% of GDP
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: 083 - (19/03/04)
Presidential election in April
There are to be presidential elections on April 3rd. The incumbent, President Rudolf Schuster, is standing for another term. As a last intervention in Slovak politics before the elections, he called on the government to settle the Gypsy problem as a first priority.
The most important fact about it is that the opposition leader, Vladimir Meciar, the former premier (1993-98), is standing. He is a populist demagogue and it is not true to say that the presidency is only a ceremonial post. The president is commander-in-chief, unlikely to be important today. But he can under certain circumstances dissolve the parliament. Since the party he heads, People's Party - movement for a democratic Slovakia, is the largest party in parliament, despite being in opposition, this could present opportunities for advancing it interests, such as manoeuvring it into office.
There is a third candidate who counts, the front-runner in the polls, Eduard Kukan, the present foreign minister. He was put forward as the candidate of the Slovak Democratic and Christian Union, which may tell against him, as also his past membership of the communist party. But he has the big plus of having negotiated Slovakia's progress into NATO and the EU, which are due in April/May.
Kukan is on 26%, Meciar on 22% and Schuster on 16% in the polls. The election is likely to go to a second round on April 17th and be between Kukan and Meciar.
The Gypsy problem
The Slovaks have a big problem at the moment. There is growing unrest among the Roma, also known as Gypsies. They comprise 8% of the total population, but predominate in the eastern part of the country. There is widespread looting and petty crime going on. Roma are poorer than most Slovaks and far less likely to have jobs. The rate of unemployment is 16%, but 30% in the eastern provinces and even higher amongst the Roma.
There has been centuries of discrimination against the Roma and a failure to integrate them into the wider society in not just Slovakia, but a score of European countries, denying them the same opportunities for education and jobs as other citizens in the mainstream of society.
The government has just introduced cuts in unemployment relief and social benefits. They are aimed at breaking a cycle of dependency on welfare, inherited from communism, in which everyone was guaranteed a job. This is what has sparked off Roma protests. At least 2,000 police and army troops have been sent to the area, the largest deployment since the end of communism.
Roma protests have only intensified anti-Gypsy feeling in the country. Their critics have always alleged that they are a people apart, more prone to lawlessness and violence. Their protests for these opponents are further proof that their charges are right.
The widespread disdain for the Gypsies throughout the Europe of their habitation bears out the saying of Dr Johnson: "The world will never be long to find good reasons to hate the unhappy."
Problems with EU membership
The problem of the Gypsy protests and looting debouches onto the issue of Slovakia's imminent entry into the EU on May 1st, The EU is worried that an influx of Gypsies could arise, seeking benefits in their countries, as would be the case if the principle of the free mobility of people were maintained. All of them are imposing restrictions, new rules on work and welfare for immigrants. The UK, an exception hitherto, joined them in early March.
The problem is just one of the difficulties of integrating countries at very different stages of development. The core EU countries will be a magnet for not just Gypsies, but also people of talents, wanting a wider world in which to exercise them, a brain drain that could enervate their economies. There are traditional lines of economic activity in Central European entrant countries that are likely to be squeezed by a flood of Western goods, more than competitive with them.
Plusses and minuses for the economy
Only those sectors that are taken over by foreign capital have a chance of long-term survival. Slovakia is a good venue for such investment, close to the core of the EU and with a low wage, highly-educated work-force.
Slovakia has mastered much of the difficult transition from a centrally planned economy to a modern market economy. The DZURINDA government, re-elected last year, has made excellent progress in the last three years in macroeconomic stabilization and structural reform. Major privatizations are nearly complete, the banking sector is almost completely in foreign hands, and foreign investment has picked up. Slovakia's economy exceeded expectations in 2001-03, despite the general European slowdown.
Unemployment at 16% remains the economy's Achilles heel. The government faces other strong challenges in 2004, especially the cutting of budget and current account deficits and the prevention of a revival of inflation.
Hyundai chooses Slovakia
Hyundai Motor Group, South Korea's largest carmaker, recently decided to build its planned European car plant in Slovakia, dealing a blow to Poland, which had also competed for the investment, New Europe reported.
Hyundai Motor's decision ends months of aggressive lobbying by the two countries to win one of the biggest foreign investments in Central Europe this year. The plant - to be located in Zilina, northern Slovakia - is the latest step in Hyundai's rapid global expansion, following the opening of factories in the US and China over the past two years. Officials at Kia Motors, a subsidiary of Hyundai, said the company will invest a total of €700m (US$870m) in the plant and begin construction this year.
The company said the factory aims to achieve annual output of 200,000 cars and start mass production in 2006. Hyundai is the latest in a series of car manufacturers to build factories in Central Europe, attracted by the region's low labour costs and its closeness to the big markets of Western Europe.
For Poland, the defeat adds to doubts about the country's competitiveness compared with neighbouring countries, following its loss of a €1.5bn joint investment by Toyota, the Japanese carmaker, and PSA Peugeot-Citroen of France to the Czech Republic two years ago. Both Poland and Slovakia had offered incentives such as tax relief, free land and new infrastructure, to lure Hyundai. Poland had proposed Kobierzyce, near Wroclaw in the country's southwest, as its site.
Hyundai, 10% owned by Germany's DaimlerChrysler, is one of the world's fastest growing car companies, having exported more than 1m cars for the first time last year, representing more than 60% of total sales.
Until now, Hyundai had focused its expansion on the US and, more recently, China, but the opening of a plant in Slovakia would signal the start of its push to become a serious competitor in Europe, led by the Kia brand.
About a third of Hyundai's exports went to Europe last year and the company aims to double its sales on the continent by 2005.
The South Korean company, the world's seventh largest carmaker, has set itself a target of breaking into the top five by the end of the decade. Once dismissed as a manufacturer of cheap and low-quality vehicles, Hyundai is attempting to emulate the success of its Japanese rivals in western car markets by improving quality while maintaining price competitiveness.
Canada's Rockport to invest US$60m in Slovakia
The Canadian construction company Rockport wants to invest US$60m (1.9m Slovak crowns) in four Slovak plants to produce low-cost housing modules, said Jan Bajanek, director of the Slovak investment agency SARIO, in a statement released recently.
Rockport chose Slovakia, says Bajanek, for its "competitive environment," and because it is a good base for exports to other countries. The investment is expected to create 3,200 jobs. The plants are to be built this year. Rockport management is to further discuss the investment with the Slovak economy minister. The housing modules would cost 12,000 crowns per square metre, compared to 40,000 crowns per square metre for new apartments in the capital Bratislava, New Europe reported recently.
Slovakia green-lights 66% sale of power utility SE
The Slovak government has approved a proposal submitted by Economy Minister, Pavol Rusko, to sell the state's 66% stake in the country's biggest power producer, Slovenske elektrarne (SE).
"The entire process will consist of two rounds, and in the first one SE will be put up for sale as a whole. If we pick the investor in the first round, the process will be concluded. If not, a second round will follow," Rusko said.
If a second round is needed, the government will separate SE's conventional power production units and its nuclear holdings for individual sale, according to Rusko.
The government would prefer to sell the firm as one whole, he added. Previously, the government offered just 49% in SE to bidders.
The tender already underway will serve to sell the increased stake in the firm. The tender has attracted five bidders. Czech power utility CEZ and Russia's RAO UES have confirmed submitting bids for SE. They are both interested in SE as a whole.
According to reports in the Slovak press, other bidders include the US firm AES, Britain's International Power and Germany's E.ON. Bidders will now carry out due diligence on the firm and then submit binding bids. SE operates two nuclear power plants, two coal-fired facilities and several hydroelectric plants. The firm claims 85% of Slovakia's electricity production, Interfax News Agency reported.
FOOD & DRINK
Heineken to pump 75m crowns into Slovak brewery
Heineken Slovensko plans to invest 75m Slovak crowns this year in the Gemer brewery in Slovakia, Gemer spokesman, Stanislav Marku,s said, New Europe reported recently.
The company will put money into a storage facility, a new energy centre, and a cooling plant.
In 2003 Heineken invested 42m crowns in Gemer. The Slovak brewery produced 20,000 tonnes of malt last year, of which it exported 14,000 tonnes (a 40% year-on-year increase). Gemer expects exports to be even higher after Slovakia enters the EU in May. Revenues rose 11% in 2003, but Markus did not reveal the exact figure. The brewery, which employs a staff of 210, produced 364,000 hectolitres of beer last year. Heineken owns four of Slovakia's 11 breweries.
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