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SLOVENIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 26,284 21,108 18,800 63
         
GNI per capita
 US $ 11,830 9,810 9,760 51
Ranking is given out of 208 nations - (data from the World Bank)

Books on Slovenia

REPUBLICAN REFERENCE

Area (sq.km) 
20,273

Population 
2,011,473

Capital 
Ljubljana 

Currency 
Tolar 

President 
Janez Drnovsek

Private sector 
% of GDP 
40% 



 
Update No: 100 - (25/08/05)

Croatian-Slovenian relations strained
Relations between Croatia and Slovenia continue to be strained by a number of problems left over from the break-up of former Yugoslavia 14 years ago. The most recent was last September when Croatian border police, near Secovlje, detained a group of Slovenes, including an opposition leader, after they refused to show identity cards. After an emergency meeting, then Slovene premier, Anton Rop, said that it showed that Croatia was not fit to join the EU, to which Slovenia belongs. 
This was obviously an over-reaction to the impetuosity of a few border guards. The spat has since blown over, helped by the fact that Rop was replaced in November by Janez Jansa, the leader of SDS, on the centre-right of the political spectrum. 
This year, in addition to the hardy perennial question of maritime border issues, a dispute over highway construction has moved to centre stage. 
The first half of 2005 represented a generally peaceful respite from the tensions that have marred Slovenian-Croatian relations since they both declared independence from former Yugoslavia in June 1991 and traditionally flare up during the summer months. Perhaps it was in part to take advantage of this lull that the Croatian and Slovenian governments held a joint session on the Croatian island of Brijuni in early June. Although a number of agreements were reached -- most notably, an understanding to avoid future incidents in the contested Bay of Piran -- the goodwill expressed at the meeting appears to have reflected wishful thinking rather than true rapprochement in bilateral relations. 
Years of petty incidents and squabbles between Slovenia and Croatia have polarized attitudes among both the general public and political leaders in both countries. Some of the contentious issues stemming from the post-Yugoslav succession include property rights, bank accounts, land frontiers, and the use and funding of the nuclear power plant at Krsko. But heading the list has been the dispute over the demarcation of the countries' maritime border, which was nearly resolved in 2001 by an agreement initialled by former Slovenian Prime Minister Janez Drnovsek and his Croatian counterpart at the time, Ivica Racan, but which was later rejected by Croatia's parliament. Since then, numerous incidents involving fishing vessels have taken place every summer, and resentment in Slovenia reached its apex in 2003 when Croatia unilaterally extended its jurisdiction over much of the Adriatic, effectively cutting Slovenia off from access to the open sea. 
The Bay of Piran appears set to become a point of contention once again in summer 2005. Slovenia's daily "Delo" reported on 16 July that there are almost daily incidents in the bay, mostly involving maritime police notifying fishermen that they are in contested waters. It was reported that on 14 July Croatian police intercepted a sailboat of Austrian tourists in waters claimed by Slovenia and demanded that they identify themselves. Slovenian Foreign Minister Dimitrij Rupel also raised Croatian hackles in an interview published on 9 July in which he stated that the Drnovsek-Racan agreement remains the optimum basis for resolving the maritime dispute, despite its having been repudiated by the Croatian side. 
Further inland, however, grumbling can be heard about a new issue: Slovenian delay in building highway connections to link Croatia's superhighway network with points northward. In July, Croatia celebrated the completion of a superhighway link extending most of the length of Dalmatia, as far south as Split. Dalmatian tourism is big business for Croatia and a key element in both the national economy and Croatia's image as a maritime country. 
The Dalmatian superhighway is intended to speed Dutch, Austrian, and German tourists to their destinations -- and money into Croatia's coffers -- but there is one catch: You cannot get there from here. Or, at least, getting there is very inconvenient. Croatia's western and eastern superhighway connections feeding into Rijeka and Krapina stop short at the Slovenian border, where they degenerate into tedious secondary roads threading their way northward. The central Zagreb superhighway link does extend into Slovenia but peters out on its way to the Slovenian town of Novo Mesto. The comments published in Rijeka's "Novi List" on 1 July exemplify Croatia's resentment: "We're building, and the Slovenes are standing still. At least we're better than the Slovenes [who are members of both the EU and NATO] at road construction.... The Slovenes probably won't finish their part for another 20 years!" 
Popular opinion in Croatia contends that Slovenia is deliberately delaying the development of road links to the south in retaliation for what Slovenes see as Croatian intransigence on bilateral issues. However, Slovenia counters that it is simply pursuing its own priorities first in highway construction. Slovenia's mountainous terrain has represented a significant challenge in developing its highway network, and the superhighway linking Slovenia's two major cities -- Ljubljana and Maribor -- is slated to be completed only on 12 August. 
Completing Slovenia's second national superhighway -- from Jesenice to Brezice -- will be the next priority, and creating connections to regional population centres will follow. Unfortunately for Croatia, the Slovenian regions that abut Croatia's northbound superhighways are some of the least populated in the country, and Slovenia therefore has little or no national incentive to hasten highway construction in those areas. 
In a meeting at the Slovenian resort of Otocec on 4 July, Slovenian Transport Minister Janez Bozic promised his Croatian counterpart Bozidar Kalmeta that Slovenia will accelerate its plans to complete the link to Croatia's eastern superhighway connection. According to a 4 July article in Zagreb's "Vecernji List," construction of Slovenia's 40-kilometer Maribor-Gruskovje/Macelj segment has been advanced from 2010 to 2008, while Croatia will complete its 15-kilometer Krapina-Macelj segment by 2007. This will complete Croatia's lucrative connection to Germany via Austria's Pyhrn (A9) superhighway. 
A 5 July "Delo" article pointed out that the Slovenian segment is due to become the greatest bottleneck on this route between Scandinavia and the Adriatic. Perhaps ultimately German and Dutch beachgoers -- rather than Zagreb politicians -- will pressure Slovenia to meet Croatia's highway demands, or Croatia will modify their position on the Bay of Peran in a 'quid pro quo.' 

Lithuania, Slovenia to lead charge against Blair's farm cuts 
Eastern European countries including Lithuania and Slovenia on July 18th opposed U.K. Prime Minister Tony Blair's proposals to cut the European Union's 50 billion euros (US$61 billion) in agriculture subsidies, government officials said. 
Eastern countries are seeking to hold onto financial aid that they started receiving after joining the EU last year. The aid is scheduled to increase gradually to western European levels by 2013. The payments to Eastern countries started last year at 25 per cent of the amount received by their French or German counterparts. 
''We've not yet had the opportunity to eat all the cake that the old member states have been eating for many years,'' said Vaidotas Asmonas, an agricultural negotiator for Lithuania, which is more dependent on farm jobs than any other EU country. ''If they are proposing the same level of cuts for the whole 25 countries then we definitely disagree.'' 
Britain used the meeting of agriculture ministers in Brussels to press for cuts in Europe's 50-year-old farm-aid programs, seeking to free up money to promote high-tech industries and spur the European economy. The U.K., which took over the rotating presidency of the EU in July, has attacked the agricultural system since getting into the EU in 1973.'' The issue is, do we preserve the common agricultural policy in aspic as it is now?'' U.K. Secretary of State for the Environment, Food and Rural Affairs Margaret Beckett said in a July 12 interview in Brussels. 
The UK's drive to cut back agriculture subsidies has already stumbled after Prime Minister Tony Blair, backed by U.S. President George Bush, failed to get agreement among heads of the world's eight most industrialized nations on a date to scrap export supports. Convincing the more agriculturally dependent countries on the southern and eastern edges of the EU to back spending reductions presents another potential obstacle. 
''My gut feeling is they will support the protectionist side because they joined the common agricultural policy and one of the most important policies that could help them modernize will disappear,'' said Sophia Davidova, an agricultural researcher at Imperial College, London, and an adviser to the European Commission on the workings of farm policy within the enlarged EU. ''It won't be very easy to get them on side.'' 
The countries that joined the bloc last year say they need that guaranteed money to help develop a more competitive farm structure. The average size of a farm in Slovenia, where eight holdings close down every day, is seven hectares, compared with about 70 hectares in the UK, according to the Slovenian agriculture ministry. 
''Restructuring takes some time and we cannot aspire to undertake the same process in a few months or even years what took the old member states a few decades,'' said Slovenia's agriculture ministry in an e-mailed statement. ``EU member states have to abide by what they agreed at the summit of October 2002.'' 

Eastern Farming 
European Agriculture Commissioner Mariann Fischer Boel on July 3 accused the UK of trying to tear up that agreement while ''the ink is hardly dry.'' 
EU newcomers rely more heavily on farming than western European countries. On average 9 per cent of jobs in their countries are dependent on agriculture, compared with 5.1 per cent for the other 15 nations and 1.2 per cent in the U.K. 
''I can't see that Blair would get an outright majority to change the CAP straight away,'' said Andreas Schneider, a researcher at the Brussels-based Centre for European Policy Studies. A review of spending would need to take new countries' ``view into consideration and that might make reform more difficult.'' 

Slovenia well prepared for EU Presidency
Slovenia is the first among EU newcomers to assume the presidency, which it is to do in the first half of 2008. Given that it lacks experience, it plans to hold consultations with old member states. 
Ljubljana is particularly interested in the experience of small member states that have presided over the Union in recent years, namely Ireland, the Netherlands, Luxembourg, Finland and Austria. 
The government launched preparations for the presidency in January by appointing a strategic working group chaired by Prime Minister Janez Jansa and an operative working group. The Foreign Ministry and the Government Office for European Affairs (SVEZ) are due to draft by this autumn a list of issues that are likely to be topical in the first half of 2008. 
It is though not clear as yet whether the half-year programme should make part of the one-year programmes in practice now, or the proposed 18-month programmes. In the first case, Slovenia would have to harmonise the programme together with France, which will preside over the EU in the second half of 2008, while in the second case the programme would have to be drafted together with Germany and Portugal, which will be at the helm in 2007. 
According to Zivana Mejac of SVEZ, Slovenia is due to organise some 2,000 meetings in six months, including informal ministerial meetings and EU meetings with third countries. The meetings are planned to be held in traditional congress venues such as Ljubljana, Brdo pri Kranju, Maribor, Bled and Portoroz. 
The presidency will be an especially demanding task in terms of personnel. The government plans to hire extra staff of 300 people for the project, who will be offered contracts ranging from six months to one year and a half. The additional staff will notably be composed of translators and interpreters, and people in charge of state protocol, public relations and security. 
A total of 1,500 people are expected to work on the presidency project and should undergo adequate training. Similarly to other members states, the country is expected to spend in between 60 and 100 million euros for the presidency.

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AUTOMOBILES

Unior-DaimlerChrysler JV gets off the ground 

Starkom, a joint venture between Unior and DaimlerChrysler, is expected to create 80 jobs over the next two years and generate sales of 10m Euro, Unior Chairman, Gorazd Korosec, told Slovene press agency recently. 
Meanwhile, Starkom Director, Harald Neff, said that in the next three to four years production will expand so the company is expected to employ up to 200 people. According to Volker Stauck, a member of the DaimlerChrysler management board, Maribor was selected as the site of the production facility because of good infrastructure and human resources potential. DaimlerChrysler considered dozens of locations in central and eastern Europe and shortlisted five, with Unior's proposal selected as the best option. 
Stauch also said the state and the local community have helped the best they could. The same opinion was shared by the keynote speaker, Slovenian Economics Minister, Andrej Vizjak, who said the government will continue to support foreign direct investment. The new facility is located on the site of the former automotive giant TAM, where Unior already has two subsidiaries. 

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PHARMACEUTICALS

Drug Maker Lek boosts half-year sales 

Drug maker Lek, owned by Swiss Novartis, generated sales of US$352.1m in the first half of the year, a rise of 8 per cent over the same period last year, the Ljubljana-based company recently said, Slovene press agency reported.
Lek is a member of Sandoz Group, the generics division of Novartis. It employs nearly 4,200 workers in different regions of the world, and posted sales of US$746.5m in 2004. The company reported half-year sales of US$247.6m in the markets of central, eastern and SE Europe and the former Soviet market, which is an increase of 13 per cent year-on-year. These markets accounted for 58.5 per cent of the drug maker's total sales. The sales growth is especially prominent on the markets of Russia and Poland, which alongside Slovenia rank among the company's traditional markets. Sales in Western Europe, the United States and other overseas countries accounted for 29.6 per cent of the total figure, while those on the Slovenian market amounted to 11.9 per cent. The company's management said in a press release that it is pleased with its balanced market structure.

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TELECOMMUNICATIONS

Simobil to expand its market position 

Simobil, the second mobile carrier in Slovenia has decided to strengthen its position on the Slovenian market and is quite confident about achieving this goal, the CEO of Mobilkom Austria, Boris Nemcsic, Simobil's majority owner recently said, Slovene press agency reported.
Nemsic plans to consolidate its position by increasing its market share and the number of customers as well as remain a price leader in Slovenia. Simobil's data indicated that the company, which has been in majority ownership of Mobilkom Austria since 2001, has a 23.3 per cent market share in Slovenia and around 363,000 customers.
Nemsic added that earlier Simobil used to complain about the poor liberalisation of the Slovenian telecommunications market but the scenario has changed for the better over the past few months. The agency for electronic communications has begun making efforts for liberalisation. "I'm very optimistic this process continues so that the Slovenian market is not only 'de iure' but also 'de facto' liberalised," he told Slovene press agency in Sofia, as Mobilkom recently took over Bulgaria's Mobiltel. 
While complaining about the old regulator, from which Simobil had no support, Nemsic said it was illogical to treat Simobil as an operator with a significant market share while it is "four times smaller" than Mobitel, the subsidiary of the state-owned Telekom Slovenije.
The group Mobilkom Austria has comprised of five members since July 12, besides the parent company and Simobil, it also includes Croatia's Vipnet, Liechtenstein's Mobilkom and Bulgaria's leading operator Mobiltel. 
Nemsic stated that his company aims to be one of the largest mobile services in south east Europe adding that Mobiltel is a major step in the expansion of the company as his company has obtained more than three million users and 2,300 employees.
Plans for southeast-ward expansion also include the purchase of mobile operators Eronet in Bosnia and Mobtel in Serbia. 
"We think we're in a good position," Nemsic commented on the current talks with relevant authorities. The chairman of the management board of Mobilkom Austria said that Mobilkom was also interested in Telekoma of the Republic Srpska, which is expected to be privatised.

Telekom Slovenije sell-off just round the corner 

The sale of 25 per cent of Telekom Slovenije, the fixed-line telco, is scheduled for this year, Slovenia's Economics Ministry said in a recent report on the state's financial investments that is awaiting government approval. 
Most of the anticipated proceeds of 66bn tolars (275.5m Euro) would be used for debt repayment, Slovene press agency reported. 
According to current estimates, Telekom Slovenije is worth about 264bn Euro. Part of the proceeds from the sale of the stake which is about 10bn tolars (41.4m Euro) would be in the hands of investors in the telecommunications network, while the remaining 56bn tolars (233.7m Euro) would be used to reduce the public debt.

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