Thursday, October 12, 2006

gloom

Central and eastern Europe

Shadows at Europe's heart

Oct 12th 2006 | BRATISLAVA, BUDAPEST, PRAGUE AND WARSAW
From The Economist print edition


The ex-communist countries have been an economic success—but risk becoming political failures





MANY countries would love to have the problems of the EU-8, the eight once-captive nations that joined the European Union in 2004. Sheltered by NATO and locked into the legal architecture of civilised Europe, they are flourishing in a way that seemed hardly possible when they leapt to freedom in 1989. Their economic growth is enviable: Estonia's is a breakneck 12%.

But a more disturbing picture, of livid discontent, declining competitiveness, sleaze and subversion, is lately more prominent. That overshadows not just the fate of the 73m-odd people in the EU-8, and the 30m in Romania and Bulgaria who will join the EU at the year's end. It could dash, disastrously, the EU's already flagging enthusiasm for expansion.


It is tempting to ignore post-communist politics. The countries are mostly small, the names of the politicians as unfamiliar to the outside eye as the differences between their parties. Sides switch, and coats are turned, with bewildering rapidity. Is the ruling People's Party, re-elected in October 8th's election in Latvia, rightwing or leftwing compared with the New Era, which may join it in coalition? Why is the party led by King Simeon of Bulgaria in coalition with the (not very) ex-communists, whose forebears exiled him and murdered his followers? Which Kaczynski twin is president of Poland? Is it the less batty one who is prime minister? Without a patient guide and a large glass of plum brandy, it all seems too intricate and unimportant.

So here is one striking fact. Not a single country of the EU-8 has a strong reformist government. Minority or caretaker governments run the Czech Republic, Poland and Lithuania. Estonia and Slovenia have administrations that are stable but do little. In Slovakia, a new coalition government unites the sleaziest and nastiest parties in the country. Hungary's government is wobbling after the prime minister admitted systematic lying.

In the past three months, the politics of central Europe have turned turbulent. The biggest failure has been in Poland, the most important ex-communist country in the EU. The main governing party, Law and Justice, has ruled for 11 months in a series of shaky coalitions.

It is quarrelsome at home and abroad. Its two leading figures, the twins Lech and Jaroslaw Kaczynski, are respectively president and prime minister. They have repeatedly insulted Germany—which did more than any other country to get the EU to overlook Poland's manifest political and economic weaknesses in the run-up to membership. Now phone calls are not returned, meetings cancelled, cheap historical jibes commonplace. On the flimsiest evidence, Poland's rulers seem determined to believe that Germany is revanchist and hostile.

Sticking up for national self-interest is no crime. Like any other member state, Poland has every right to haggle with the EU. But the tone is amateurish and counterproductive. The former president, the ex-communist Alexander Kwasniewski, made Poland a trusted Western ally and sounding board, notably in Ukraine. The Kaczynskis sneered, with some justice, at his communist past, glitzy lifestyle and chummy ties with businessmen of all descriptions. But they have turned the diplomatic powerhouse they inherited into a laughing-stock.

There have been unnecessary fights at home too, chiefly with the central bank. Its governor, the peppery Leszek Balcerowicz, may be no loss to diplomacy, but he epitomises the radical economic reform and financial stringency that lies behind Poland's hearty economic growth. Law and Justice is also mystifyingly estranged from its potential coalition allies, the liberal-conservative Civic Platform. No political differences divide them, only a series of petty feuds that should have long ago been buried in pursuit of power.

Unsurprisingly, the government's record is rather thin. It has set up a large and perhaps overmighty anti-corruption unit. Much energy has gone on reform of the military-intelligence service, the WSI, which was certainly a rum outfit. But for many Poles, the issue pales in contrast to other problems. Signally, the government has failed in the fiddly but vital task of applying for and administering the €60 billion ($75 billion) that Poland is due to receive from the EU from 2007 to 2013.

That money—contrary to what some Polish politicians seem to think—does not come free. It is doled out only to properly drawn-up projects, where the home country is sharing at least a bit of the cost, and with audited results. Money misspent one year is clawed back the next. So far only the smallest and best-run countries, Estonia and Slovenia, have learned what to do.

The Kaczynskis' one real advantage was a reputation for integrity. Like many ex-dissidents in power, they made up in honesty and patriotism what they lacked in political savvy or experience. But a new scandal has dented that. Covertly recorded videos showed their party's representatives trying to win over a deputy from the Self-Defence party. “You want a senior position? We've got lots,” says a prime ministerial envoy. He also offers to “sort out” the deputy's legal problems.

Jaroslaw Kaczynski is again trying to put a new coalition together. Early elections are still possible. It is hard to see any strong and sensible government emerging.



The wages of lies
In Hungary, the government has also seen its credibility collapsing—though it arguably had less to start with. Whereas Poland's politics are buffered by strong growth and fairly sound finances, Hungary's are aggravated by the consequences of five years of spendthrift rule.

The prime minister, Ferenc Gyurcsany, was caught on tape telling party colleagues that his government, re-elected in June this year, had lied, screwed up and done nothing. That led to an eruption of public anger, and big losses in local elections this month. Mr Gyurcsany hung on—but this weekend another tape leaked, on which his local government minister, Monika Lamperth, can be heard assuring party chieftains that planned spending cuts will spare Socialist-controlled regions.

The opposition, led by the mercurial and opportunistic Viktor Orban, is little better. Its election campaign was as nonsensical and populist as the slippery ex-communists it affects to despise. Mr Orban and his colleagues seem to have a worryingly soft spot for the racists and ultra-nationalists who took part, sometimes violently, in last month's demonstrations.

Yet Hungary is crying out for good government. Once the reform star of the post-communist world, it is awash with debt, with a government deficit now revealed to be over 10% of GDP—by far the highest in Europe, and more than twice what the government was admitting at the time of the election. Amid the smell of cooked books, foreign investors' confidence has shrivelled. A run on the Hungarian currency, the forint, would mean default and devaluation: a national humiliation, and a disaster for the millions of Hungarians who have borrowed euros and Swiss francs to pay for houses and consumer durables.

The story is little better in the Czech Republic, where an election in June produced a result tied between a conservative-green coalition and the leftist opposition. That has brought four months of political deadlock. A right-of-centre caretaker government failed to gain a confidence vote last week, starting a new round of bickering and arm-twisting. Tomas Lebeda, a political scientist in Prague, says this may go on for a year. Meanwhile no one is even thinking about reforms to the country's creaking pension system. Next year's budget may not be passed on time.

The squabbling takes place against a background of worrying misuse of the security and intelligence services for political advantage. Just days before the general election in June, Colonel Jan Kubice, a senior crime-fighter, presented to a (supposedly) closed session of parliament a report claiming that members of the governing Social Democrat party had been interfering in investigations of organised crime. It also contained gossipy accounts of alleged sexual misdeeds. This leaked to the press, apparently thanks to conservative deputies. Wiretaps in a subsequent leak investigation have prompted even fiercer rows.

All that seems benign compared with next-door Slovakia, where a majority government of racists, populists and authoritarians is beginning to undo the work of the past eight years. Under the rule of the authoritarian populist, Vladimir Meciar, Slovakia had become a playground for crooks and spooks. The government that ousted him in 1998 flattened tax rates, liberalised the labour market, and won billions of dollars of foreign investment.

Elections in June produced an ambiguous result. A reformist coalition was possible, but instead the largest party, Smer, a populist outfit calling itself social democrat, teamed up with Mr Meciar's party and the outright racists of the Slovak National Party. On paper, the government seems committed to free-market policies. In practice, it sounds muddled—and clumsy. At a foreign investors' conference there last month, a senior government figure, Peter Ziga, addressed a roomful of bewildered foreign executives in Slovak, without translation. Worse, public institutions are again being politicised.

There are some slivers of good news. Lithuania's minority government is proving tough-minded and competent. In the presidential election in Estonia, the electoral college, by a perilous single vote, chose Toomas Hendrik Ilves, a brainy and eloquent American-educated émigré, over a candidate backed by an unscrupulous populist party closely tied to Russia.



Voting with their feet
If post-communist countries cannot raise living standards to western levels, and improve radically the quality of their public services, more people will vote with their feet. Since barriers to movement within Europe were largely lifted in 2004, more than 2m have headed west. Most don't want to emigrate permanently. But almost all complain that as workers and as citizens, they feel poorly treated at home, ill-paid, and frustrated by economies where connections matter more than talent.

For all the strides made in past years, the sad truth is that no ex-communist country has fully reformed its public administration. Voters may be richer, but they also feel cheated and put upon by bossy bureaucrats and snooty politicians. The optimism of 1989 seems sadly distant.

The danger now is that even the bravura economic performance of the past few years may fizzle. Russia and Ukraine offer great supplies of cheap labour, not much farther away. Romania and Bulgaria make the EU-8 look expensive. Emigration tightens the labour market still more.

So brainpower in the service industries, rather than cheap, nimble fingers in manufacturing, should be the new wellspring of wealth-creation. But education systems are rigid and rife with cheating. Most universities are disgracefully old-fashioned and introverted, run by self-interested bureaucracies, mediocre to their roots. Research and development spending is under 1% of GDP—worse even than the puny 2% average of western Europe.

If competitiveness is one worry, financial stability is another. The World Bank said recently that fragmented and populist governments were not only hampering reform but “complicating fiscal and macroeconomic stabilisation”. Bloated public administration makes most ex-communist governments chronically spendthrift. So far, booming tax revenues disguise the problem; that could change all too quickly.

None of the seven ex-communist states outside the euro (Slovenia squeaked in and will adopt it on January 1st) is likely to join this decade. Yet small open economies cannot have an independent monetary policy (indeed, several have currency boards) and are vulnerable to external shocks and speculative attacks.

Discontent and populism may now form a vicious circle, both causing economic failure and worsening it. Ivan Krastev, a Sofia-based political scientist, believes that a political model based on clear ideological differences, mass memberships and strong party loyalties may have once worked well in “old Europe” but has signally failed to transplant to “new Europe”. The gulf between the political elites and the people is growing, and it is hard to see what will bridge it.

If global financial markets tighten, the extraordinary willingness of foreign savers to finance the consumers and bureaucrats of post-communist Europe could shrivel almost overnight. That vulnerability is now matched, dangerously, by unlovability. Western countries might be prepared to bail out their eastern neighbours, financially or politically, when they are seen as valiant, fast-reforming success stories. When run by incompetent and prickly populists, it may prove to be another story altogether.

10 comments:

Pawel Dobrowolski said...

Edward,

You write "No political differences divide them (PO and PIS parties), only a series of petty feuds that should have long ago been buried in pursuit of power."

I beg to differ. Below you will find two salient examples:

1. PiS abhors privatization. Under their leadership privatization has all but ground to a halt. PO thinks privatization crucial to severing the muddy links between business and politics.

So far this year PiS has generated 10-15% of the planned privatization revenues.


2. PiS wants a centralized super state. They beliebe checks and balances to be detrimental to efficient government. According to PiS all power must be held by the government.

PiS has recently changed the banking supervision law. Under the old law politicians directly nominated 3 out of 7 members of the body responsible for supervising banks. This meant that there was an important check on the power of politicians over banks. The new body
responsible for supervision of banks will have 6 of 7 of its members nominated directly by politicians.

Further exemaples can be provided with ease.

Best,
Pawel

Edward Lucas said...

but there are people in PiS who are quite free-market minded (eg Szalamacha) and those in PO who are not. It would have been quite possible to have a coalition with reasonable leaders, wouldn't it?

best
Edward

Nate Espino said...

That sentence about "no political differences" leapt out at me, too. In addition to the examples Pawel cites, I'd point out PiS's hostility to Balcerowicz.

I wouldn't call Szalamacha free-market-minded. He was one of the leaders of the attack on the BPH/Pekao (Unicredito) merger.

You can argue that a lot of the differences between PiS and Platforma are differences of style, not substance - that there are plenty of things wrong with Germany, and Balcerowicz, and the state-owned media, and it's just a question of the incompetent, steamrolling methods the twins use in dealing with them. But after a while, the differences of style get so big that they become differences of substance, too.

Anonymous said...

I am an investor in Slovakia so I can talk about Slovakia so I ll analyse your reporting on Slovakia and add my comments in between your lines:

"(...Shenanigans in CZ) ...All that seems benign compared with next-door Slovakia, where a majority government of racists, populists and authoritarians

George says: I would like you to define populist please just so i understand.. So far the problem is the partners of the main SMER party not Fico or SMER themselves...

"is beginning to undo the work of the past eight years. "

George says: Consider this, the man who created these reforms is on record saying that the new government has just done cosmetic adjustments to his reforms, Dzurinda seems underwhelmed as an opposition given how cautious SMER is... He contradicts your reporting completely on the finances and I quote from parliamentary reporting: "Dzurinda insisted that the new government has made no rapid changes and has only altered reforms here and there. The government has no solutions and just pretends to make changes, according to the former PM.

Dzurinda emphasized however, that thanks to the deep reforms that were launched in the previous election period, Slovakia's economy is in good condition and is one of the soundest in Europe. "The economy is so strong that the government cannot destroy it," Dzurinda said."

Now clearly the new government is not changing much in the way of economic policy. Although Dzurinda took some very good measures and generated growth, he took some bad ones too, he was cultivating an anti-employee ethic in some parts of Slovak business, and the distribution of new wealth was very unequal, I can write for hours on this but i am happy to offer staggering examples on request.

The interests of Slovakia is to have a balanced society economically with no 3rd world (+USA)-style huge gaps in wealth that cause division and resentment in society, particularly dangerous in a young democracy with sizeable minorities (it makes strategic sense too).

Reasonably flexible economy yes, Argentina type gaping rich-poor divides no...

Robert Fico PM kept the central bank independent and drafted a budget that keeps all of Slovakia's obligations to the EU intact and has the excellent central bank chief's blessing and meets the extremely stringent criteria for the EURO (you know the ones that half of EU's economies are struggling to match...). Slovakia is up there with Estonia getting ready to join the euro in the end of 2008 unlike Czech republic Poland and the rest who will achieve it sometime this century..

What Fico has moved to stop is exploitative legislation in favour of employers. New permanent jobs started becoming a rarity in Slovakia because there was simply no legislation stopping employers firing and hiring almost day by day for no reason and with little notice! This is not the kind of employment you would wish for for yourself so its unfair to effectively say that it is appropriate for Slovaks unless of course you think of Slovaks any less that you think of british employees. Fico's changes brought slovakia closer to the EU mainstream but its still probably more liberal that ireland!

Some Dzurinda privatisations were very badly handled, and they created private monopolies. Market failures that benefit certain individuals are not a good deal. Energy prices that keep rising are starting to affect everybody. The slovak winter is harsh -30C is commonplace, you cannot have people dying from the cold because they cannot afford to heat their meagre little rooms (mostly elderly) so some shareholders can enjoy the benefits of market failure. This is indefensible if one is a full member of the human race.

SPP and some other badly privatised entities need to be placed in situations where there is intense competition. I REPEAT INTENSE COMPETITION.

If it cannot because of the nature of the business then it should be reformed but kept with a short leash.

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Under the rule of the authoritarian populist, Vladimir Meciar, Slovakia had become a playground for crooks and spooks.

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George says: On Meciar we agree, he is a dangerous idiot, and an abysmally corrupt one. However Meciar is not in government itself he only participates by proxy and has no economic ministries under his control (agriculture and justice ministries). His party is imploding and i think he is at 8% and heading below the 5% limit for representation in parliament in the next election. So the democracy of slovakia is maturing and slowly cleansing the past.
------------------

The government that ousted him in 1998 flattened tax rates, liberalised the labour market

George says: again, liberalised the labour market so much so that for example sexual harassment protection is very weak, and generally an employee is discarded if they are old or sick... But that is alright because its nice and flexible, whatever happened to ethics?
Are we advocating a return to the times of the robber barons?
Again please define exactly what you mean by flexible. If flexible means an employee can be treated like dirt then apply this type of flexibility on yourself first and we will join you shortly afterwards...

-------------------

and won billions of dollars of foreign investment.

George says:
-----------------
That it did but it has more to do with the very well educated workforce particularly in IT in which i work, and the strategic location of the country. Whoever in the IT world has come across slovak technologists, they are surprised by the innate ability they have to grasp tech. Michael Dell decided to make major investments in Europe, and specifically Bratislava partly because of this.

Very cheap labour you can get in the 3rd world but it comes with other problems, in Slovakia now you get similar standards of employee to Germany but at a better cost in my industry, and people are good and smart. Rising costs are good, it means Slovakia is converging to the EU average, it means good salaries for good productive people adn eventually austria-like living standards. That is what i want. Capitalism is the method through which the necessary government spending to build a decent society is created. Countries and people do not exist to make some people extremely rich, and get peanuts in return.

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Elections in June produced an ambiguous result. A reformist coalition was possible, but instead the largest party, Smer, a populist outfit calling itself social democrat,

George says:
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Largely because of the pigheadedness of the christian party, which also caused the fall of Dzurinda... but it did so to be popular...

As for SMER after 100 days in government it has so far done exactly what it says on the tin, moderate social democrat party, won't screw the economy, but will tackle issues like regional inequalities after 8 years of a very neo-liberal government that was the right medicine at the time but not right now. Very much like Tony Blair and new labour 1997 basically. What is your problem with a stable alternating between left and right in Slovakia, should we make the right the only goverment possible and stop elections, or have 2 flavours of right wing parties to choose from like you have in the USA?
-----------------


teamed up with Mr Meciar's party and the outright racists of the Slovak National Party.

George says:
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Yep Slota/SNS is a moron we agree. But like Jorg Heider of Austria by occasionally including the far right in a government it gives their popularity the kiss of death, as they become ensnared in serious politics and they cannot be radical enough for their moronic racist supporters. I think Schussel the austrian ex-PM got this right after all. Isolating the extremists gives them power, in goverment as minor partners their support collapses.

This did happen in Austria, far right (at dizzying heights a few years ago) support has collapsed and this phenomenon exists also in Britain with UKIP/BNP and needs to be tackled, in France LePen is strengthening and its the legitimising power of the enemy of the status quo, etc etc...
-----------------


On paper, the government seems committed to free-market policies. In practice, it sounds muddled—and clumsy.

George says:
-----------------
Sounds? Much of Slovak news is not translated into english, understanding Slovak is pretty useful or knowing some slavic languages helps in this respect. I do business here and i have bothered to learn the language, being able to read the local media might help in this respect. The PM and finance minister were clear, there will be policy continuity but the harsh reforms will be made more digestible, this was said on several occassions including in english. The government is not very media savvy, that is true, but being media savvy is not what governments are elected for and personally political non-entities like Blair who are good at media but nothing else are annoying, they are elected to implement the will of the people. The slovak consensus is that reforms should be made more easy to live with while keeping them overall and correcting any excesses/right wing corruption(of course now there is left wing corruption which is why the next time round there should be a right wing government).

If you are trying to understand the politics of a country without speaking its language you will obviously have a hard time. If you were covering Japan do you think you would penetrate the deeper trends of japanese politics armed only with english, and translated press releases? Why should this be different in Slovakia?
-----------------

At a foreign investors' conference there last month, a senior government figure, Peter Ziga, addressed a roomful of bewildered foreign executives in Slovak, without translation.

George says:
-----------------
Shock horror the slovak government speaks in Slovak! Come on Ed, you are going out of your way to be negative here. The slovak republic is not turning into Belarus because the ministry official had the audacity not to speak english or the translator didn't turn up. That is hardly worth the very negative tone on Slovakia in your posting, lets keep to questions of substance, you can raise corruption but democratic deficit? no..
-----------------


Worse, public institutions are again being politicised."

George says:
-----------------
They were politicised before too. Dzurinda's electoral acrobatics forced him to make very serious concessions (sometimes tragic ones) to right-wing crooks like ANO's Pavol Rusko and other interests etc.. Transparency international is a good guide on that.

I am sorry i am an avid fan of the economist but this article is just sloppy reporting on Slovakia, and i know that because i live and work here. You are writing stuff that reminds me of Grigorij Meseznikov who is a very one-sided commentator... I remember when he gave this presentation in the US about the new government where he almost predicted the end of the world, and none of that "research" was worth the paper was written on...

Slovakia is humming along nicely with a goldilocks economy and is hopefully destined to be a even more pleasant country than neighbouring Austria within the next 20 years, it will not become texas, Slovaks and EU citizens such as myself that work here, want to join the civilised mainstream european consensus that affords a very pleasant life to the average european.

We do not want to become a guinea pig in a giant hayekian experiment, or have the social norms of texas or Las vegas. Canada or ireland is more our cup of tea, no matter how some special interests would like it to be otherwise. This is not america.

Edward Lucas said...

Thanks to Nat and to Macko Usko for their very sensible comments. I agree that style can eventually turn into substance. But I do think that the differences between PiS and PO are smaller than those inside eg the British Tories or the German CDU.

Macko's comments deserve a substantive response.

I don't take Dzurinda's panglossian comments about the new govt as definitive. I was in Slovakia and did a fair bit of reporting on this and I think the trends are rather ominous.

1) Fico is a populist. He is not as bad as his coalition partners. I did point all this out in a more extensive article about Slovakia called "Iffy and Whiffy" a few weeks back.

2) Dzurinda's govt was not perfect. It did some good things. More labour market protection may be a good thing--although on the whole Danish-style active labour mkt measures do more for social mobility and for lifting the living standards of poor people than bureaucratic and regulatory approaches.

I don't see how this govt will manage to keep both its spending and tax promises and also meet the Euro criteria. One or the other, I suspect, but not both.

I strongly agree that Slovakia needs more intense competition. Pawel D who posts above here has an excellent slogan "More competition, less privilege". But I doubt that this is what Fico is doing. Itis more credible coming from Miklos & Bruncko.

I sincerely hope you are right about Meciar. My feeling is that power sticks to his fingers and though he may have been on the way out before the election, he is now getting important again. To say he is not in the cabinet is to miss the point: the coalition council gives the political direction to the govt, or tries to.

I agree that it may end up being the right thing to to bring SNS into govt in order to tame them. But so far it seems to me that they are not being tamed. Again, I hope you will be proved right.

I think your weakest criticism is about the Slovakophone foreign investor conference. Sure, people should learn the language of the countries they deal with (I used to speak Czech pretty well, and I can still manage in Slovak). But this was a conference aimed at new foreign investors. Ziga was specifically asked to speak in English because there wasn't any translation--and he just didn't care enough to do so. He didn't even take questions in English. I was at the conference and talked to the potential investors; they weren't impressed. I don' tsay that will destroy Slovakia's FDI attractiveness overnight, but I do think it shows a worrying introversion and carelessnes.

I agree that Dzurinda used to give top jobs to his pals, but the intelligence and security services (which I was referring to) were relatively depoliticised compared to the Meciar era. Now there are some worrying early signs that this trend is being reversed.

Thank you again for your very comprehensive comments. I would be glad to discuss this again in a few months time--and I hope for Slovakia's sake that my pessimism proves unfounded.

Edward

mihkel said...

These are indeed very thorough comments. I even didn't read all of them. Eastern Europe is a complicated place with very diverse countries including their culture and languages. It's a good article - I'm sure Slovakia and my native Estonia should be criticized. The latter, as stated, for the lack of activity, although I might have preferred,that Toomas-Hendrik Ilves stayed on in active politics rather than being just a symbolic figure. That because our president's powers are very limited.

mihkel said...

Although, that too, as demonstrates Lennart Meri, depends on the personality.

Anonymous said...

Thanks I also find this synthesis interesting and thought provoking too. I think broadly we agree but we shouldn't let carried away by bunching up all EU entrants together, and especially not with Russia which is another thing completely. Some additional points if i may:

1. I am a firm believer in democracy's "creative destruction" (to borrow the economist's favourite string of characters :) ). The musical chairs of politics ensures that usually alternating changes disrupt the corruption that is prevalent in poorer countries. I am not an optimist by nature but the energy and the intelligence of the young people in Slovakia and elsewhere make me doubt that the country will just go off the cliff, although it is engaging in some "dangerous driving".

2. I really think that Robert Fico has a unique opportunity to create a serious social democrat party for the country and be remembered as a political dynasty builder, or be corrupt and irresponsible and build Villa Electra v.2 and invite Claudia Schiffer for a second visit (links take you to peppery cringe-inducing points of the internet :) ).


Also you said:

"I don't see how this govt will manage to keep both its spending and tax promises and also meet the Euro criteria. One or the other, I suspect, but not both."

I think Fico is going to compromise both and try to keep this going as he is immnsely popular at the moment he might call fresh elections later on if Vlado the crook Dinosaur, or G.I.Slota don't behave themselves.

In a way its good that he is popular because a weak Fico under this government means powerful oddballs.


"I strongly agree that Slovakia needs more intense competition. Pawel D who posts above here has an excellent slogan "More competition, less privilege". But I doubt that this is what Fico is doing. Itis more credible coming from Miklos & Bruncko."

george says: the banks as well as electricity and heating, those companies are giving liberal economics a bad name through their monstrous greed.


"I sincerely hope you are right about Meciar. My feeling is that power sticks to his fingers and though he may have been on the way out before the election, he is now getting important again."

I think he is a has been for left leaning voters Fico provides a younger untainted alternative, still carrying mild nationalism, and higher pensions etc.. Meciar cannot top that either on the nationalism or the left-wingness


"To say he is not in the cabinet is to miss the point: the coalition council gives the political direction to the govt, or tries to."

I think you got it right there, Fico's control freakery is useful here, as in a way he will be busy restraining the two oddballs and not deliver the more extreme parts of his agenda (re-nationalisation).

The Yukos/energy situation is a special situation as is the airport, which would have allowed Vienna to twart competition (bratislava-vienna type cheap flights are making Bratislava airport a heaving buzzy place! and its business people as well as lagerheads)

"I think your weakest criticism is about the Slovakophone foreign investor conference. Sure, people should learn the language of the countries they deal with (I used to speak Czech pretty well, and I can still manage in Slovak). But this was a conference aimed at new foreign investors. Ziga was specifically asked to speak in English because there wasn't any translation--and he just didn't care enough to do so. He didn't even take questions in English. I was at the conference and talked to the potential investors; they weren't impressed. I don' tsay that will destroy Slovakia's FDI attractiveness overnight, but I do think it shows a worrying introversion and carelessnes."

My objection lies in the fact that you write in a very well read organ of the press, and i just feel that there can be a self-fulfilling prophecy element to all this, who knows, Jan Pociatek might be re-reading his economics syllabus in the evenings and taking notes as we speak :) If central europeans are starting to be branded as the black sheep they might start acting more like the part. The nationalism should be channeled in the country doing well and being proud, not through rejecting foreigners and taking the antieuropean huff ego-trip type of approach (e.g. tories)


"Thank you again for your very comprehensive comments. I would be glad to discuss this again in a few months time--and I hope for Slovakia's sake that my pessimism proves unfounded.

Edward"

Me too I am in London often, and would love to have a coffee and hear more, i am on george@geneza.com

Business is fine but politics is more stimulating a pursuit :)

Ending I would also say that the new european countries are tired, they have struggled and their middle-aged voting generations were locked in massive historical upheavals and free votes have large swathes of the population engaging in sequential protest votes about the massive gaps in living standards between the haves and have nots.

There are many people that feel they are too old to learn new tricks to participate in the new wealth, its wild west in some places and envy has set in these mostly egalitarian societies (whatever you think of communism artificially it created a kind equality that is lacking now. Especially when you see 19 year-old dodgy insurance salesmen with Mercedes and doctors in Skodas) Corporate thugs like Provident Financial (notorious in the UK are also firmly established)

A good question these world weary people ask is "what does the EU want from us in return" about accession, in the sense that they suspect horrible backroom deals that have negotiated away my healthcare for those BMWs to start popping around everywhere. And in a narrow or temporary sense they are right in places. There are big losers in this game, and when you are 55 what are you to make of advice like re-train and become a dynamic IT consultant and work designing databases.. It happened with the miners in UK, and in the end even Thatcher gave them a pension through sickness benefit distributed liberally in the mining towns (aka hobbling).

Lets be honest, some people will bethrown in the dustbin of society to build the new competitive tatra tiger. there is no such thing as a free lunch!

Pawel Dobrowolski said...

Edward,

The problem of a PO/PIS coalition revolves not around leaders, but about two distinct paths of development that Poland can take.

Poland has the choice of becoming more like UK, Holland, and the US, or more like France, Italy and Russia.

My friend Pawel Szalamach believes that the state should own and control a large financial conglomerate such as PZU. I belive that the sooner we privatize PZU the better.

Pawel

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