10 countries are currently in the race towards EU integration, the next elections for its enlargement are in 2004. Considering the fact that Slovakia entered the integration process late in comparison to its neighboring countries, how would you assess the progress made by your Government regarding the adoption of the Acquis Communautaire?
Our Government has taken substantial steps and in just 17 months has caught up with other countries that started negotiations much earlier than Slovakia. The decision to allow Slovakia into the integration process took place at the Helsinki summit in 1999 whereas the decision about the other countries was made at the Luxembourg summit in 1997. Up until December 2001 we managed to close 22 chapters. We have already opened all the chapters, but there are seven more to be negotiated. If we are pessimistic we have a chance to close five chapters by next year or if we take the optimistic approach perhaps 6 or 7.
We hope to close the Transport and Taxation chapters after our final audit, everything depends on the European Commission, which is where the Joint Position is defined. We already know our position, but we have to follow the rules of the European Commission as well as the rules for a Joint Position. We would like to close the Competition Chapter, but this one is a little bit doubtful. The ones that are very difficult are the Internal Affairs and Justice Chapters because of what happened on September 11th. The question of security has now taken on new dimensions and become very important. This Chapter has already been prepared to close, but due to the difficult criteria may need some adjusting.
The Energy and Environment Chapters are due to be closed by the end of 2001, there are a few Chapters such as Competition that are due to be closed the next year. What do you think the timeframe for those Chapters should be? Do you believe the Chapters should be closed by the next elections in 2002?
We believe that the majority of them will be closed. Some may not be closed for example, Agriculture, as we are waiting for the forthcoming reform to be announced for EU countries in this sector. We may have to adopt a different position on this one, but I still believe it will be closed in September 2002, the month of our legislative elections. The Regional Policy Chapter will be very difficult, but in accordance with our strategy we hope to close it by the end of June 2002. The Budgetary and Institutional Chapter also proposes some difficulties. We predict this will be the remaining one open after the elections.
Legislation is your priority, especially concerning Public Administration. Can you tell us what have been the measures taken in this area?
We have taken some significant steps regarding Public Administration and we have created agencies to implement programs for agriculture and infrastructure projects. We are not overwhelmed with our progress within these areas, as we need to work on our administration capacities. Due to this the Government has decided to release a significant amount of money from the state budget for the creation of 1,100 post offices. In the Environment Chapter we require highly qualified staff. Within the Agriculture Chapter are required veterinarian and phytosanitarian controls at the borders. We need qualified staff for our customs and taxation offices. Our needs will increase significantly from the beginning of 2002. We have already received praise for our actions by the EU. The Slovak citizens sometimes criticize us but we are in need of dynamic development and of staff who speak foreign languages.
What are the major laws still to be approved?
We have approved a lot of important laws in 2001, for example the amendments to the Constitution. It was partly oriented towards topics concerning minorities. We have created a more acceptable approach to the EU and the legislation is easier to adopt, also not every act will have to be approved by complicated parliament procedures, so it will be possible to approve an act within the Government. We have also approved programs for harmonization within the EU, for example a new banking and investment incentives act as well as very important agricultural and veterinarian controls.
We have also created a possibility for the Supreme Control Office to control public incomes of the regions. Other important issues are minority rights and the transfer of competencies to the regional parliaments was also important. | How would you evaluate the cost of this transformation, and how do you intend to bear the necessary costs while targeting the economic criteria of the Maastricht Treaty especially the budget deficit requirement of 3% GDP?
It is not easy to question to answer. It is difficult to calculate the price, because you have to keep in mind not just the price, but also the social effects as they are connected with economic development. I can give one figure that is connected to the support of the Acquis Communautaire and pre-accession aid, which is 5 billion SKK. We can find this in our budget, as the state budget is around 200 billion SK. We want to make our agriculture sector more competitive within the European Community, we need support for the legislation and lots of support for social development. There are reasons for our high unemployment rate too as we don't have a substantial amount of small to middle sized companies, and many agricultural companies went bankrupt. We also had to close a military factory in Martin and that caused unemployment to rise. We have to find financial resources within the country. We have two priorities for the moment, the first is for the NATO accession in December 2002 in Prague and the second is for our EU accession. We have lots of public support, around 60%. At the moment we can't keep up with the 3% GDP, as presently in Slovakia it is about 3.8%.
How do you see the potential of the Slovak workforce in comparison to neighboring countries within the EU?
I believe it is our main advantage in Slovakia. The Austrian and German sides are afraid that there will be a huge influx from Slovakia. However people that are interested in working abroad are usually already there. About 80,000 Slovaks work abroad, this labor force tends to work in highly qualified environments usually in the Czech Republic or in Austria.
One of your main interests will be to have those people return to Slovakia.
It would be very nice if Austrian and German businessmen could create labor opportunities here. We know that they are interested in investing money into Slovakia. We are currently negotiating with the Austrian and German Chambers of Commerce. Slovakia could be a transport country for commodities as there is a huge market in the East.
Many new foreign investments have benefited from Government incentives, which will soon disappear due to EU requirements. How do investors react to that perspective and have you already planned the implementation of new incentives as substitutes to the previous ones?
We are still negotiating with the EU Commission. There are two strong foreign companies in Slovakia: US Steel and Volkswagen. We have had the taxation holiday period for 10 years and these incentives will eventually have to end. We are trying to find new incentives some of which are present in the new Competition Act. The most interesting one is going to be the price of our labor force as well as the price of production. We need to provide incentives to build new highways and invest into infrastructure. Tourism is also very interesting.
What impact on the Slovak economy and its labor market do you expect from joining the EU?
Positive economic change is going to simplify the administration of taxes and customs, market transparency would combine with business ethics and we will have to follow the EU legislation fully. Participation in EU programs and funds can also be an advantage, especially in eastern parts. The stabilization of the business environment and labor force mobility is important, too. Housing development is going to play a substantial part, as we will have better access to capital investments.
What is your feeling about the Slovak population and their willingness to join the EU?
They are determined to join the EU. The number of supporters for EU integration is constantly growing and is now at 74%. A good communication strategy is essential and we are doing a good job as we are trying to inform the public about all the advantages connected with the EU accession, through Television and the Internet. The transformation period is not easy, we have to have several development plans. We want to see a decline in the unemployment rate and keep the incentives for foreign investment for as long as possible.
Note: World Investment News Ltd cannot be held responsible for the content of unedited transcriptions. |
V.I.P. INTERVIEWS 
