In Autumn 2002, legislative elections will be held. You declared that Slovakia's integration into NATO and the EU means more to your party than its participation in any government. However, EU and NATO observers tend to have some concern about your commitment to meeting the criteria that would enable Slovakia to access those 2 organisations. What have been the main steps undertaken so far by your party to ensure the international community that those criteria will be met?
There is no other way for Slovakia than to be a participant of NATO and the European Union, that's the only way to be. When it comes to NATO integration we have done our best to help out the government in situations when the government wasn't able to keep up, that means we recruited people for support and these days more that 50% of the citizens are supporting the NATO integration. We are also preparing people for positions that the NATO integration would require, that means in military and official positions. We also initiated a contract among all political parties that would ensure the fact that no matter what is the result of next autumn's elections, the pro-NATO and pro-EU orientations wouldn't change, we initiated that the EU and NATO integration issues don't be questioned by pre-election campaigns. We initiated an agreement that all parties would join in an effort to improve the image of Slovakia so that we be accepted at the 2002 Prague summit as a member. I signed the NATO application and all my efforts are leading towards NATO integration. The reason the integration of Slovakia at the Madrid summit was postponed is quite understandable, Slovakia had been a young state, the independent country existed for three years only at that times and that means that we also had some weak spots. The whole party program is based on an integration program, that means the entire political effort for the years 2002 up to 2006. We have to keep in mind that Slovakia is close to the EU market when it comes to market terms, major banks and firms are part of international companies. Slovakia needs investments and know-how from EU countries. When it comes to internal support of Slovakia's EU-entry, 70% of citizens are in favor of integration, we expect very positive results. We also announced that we are not going to repeat the mistake we made in the years 1994-1998, we are not going to participate in a government formed by parties that are not in favor of integration. The announcement I made was because it could open up the doors for all negotiations after the elections, which means that the integration means more than government participation because government stands only for four years but integration will stand for ever.
However, you seem to be perceived as a controversial person by the international community. How do you intend to ensure a sustainable cooperation with foreign observers?
When it comes to integration, it's the integration of the State, not the integration of HZDS or Vladimir Meciar, these days we are the most stabilized and strongest political party, unfortunately, the only one with such a support of citizens. If we are in favor of the integration, that means that Slovakia is in favor of integration, too. When it comes to NATO, many European observers say that the decision depends on the attitude of the United States, and when it comes to the EU, the result usually depends on the NATO result. I personally feel that we have a right for collective protection that means the membership and because the Russians don't have the right to veto, than nobody should veto either. When it comes to the Slovak side there should be no worries that a government that wouldn't fulfill the requirements could not last here for more than three months.
In order to give Slovakia an EU-compatible economic structure, the privatization process started in 1991 has continued after your term in 1999, focusing on the privatization of strategic companies and monopolies. Knowing that the privatization process will not be fully completed by the elections, if you were to be elected, what would be your priorities and timeframe for the completion of the major privatizations?
It is clear, privatization is inevitable, there's no other way, and internal political disputes are about the methods of privatization. We turned down the first method, the voucher privatization, which turned out to be unsuccessful. The second method we applied after the independent country was created when the privatization process wasn't of much interest here but it took place, was the method of privatization of joint-stock companies by their employees whereas the strategic companies weren't privatized. We had different opinions as compared with the ones of this government when it comes to removing the debts of banks. It isn't sure if this government is going to finish the privatization of networks and this process will be completed after the elections. Slovakia has extensive debts and privatization is one of the ways to decrease them. No matter what government, these steps have to be taken. When it comes to those (investors) that acquired property we guarantee them exclusivity of it and based on a mutual agreement with them we would like to prepare an investment program.
The gas utility privatization has to be completed,
energy sector, other sectors represent minor
parts for privatizing. The companies that
were privatized during our government decided
to get privatized the other way, the owners
sold them, not the State. |
The fiscal deficit seems to give concern to multilateral partners, with the EU emphasizing on the "strict expenditure control" needed to achieve the budget deficit target of 2% of GDP by 2005, and especially through a deep reform of health and pension systems. If you were in the government, which measures would you undertake to ensure a sustainable development of the budget deficit?
Slovakia has four major deficits, the debt of government in 2001 exceeded the 1998 deficit by 2,5 times. The foreign trade deficit at the end of 2001 was SKK100bn, when it comes to the State budget deficit and public financing deficit, they keep increasing whereas the transformation of health and social care came to a standstill. And the fourth deficit means that in Slovakia every fourth citizen is unemployed. So the solutions that have to be taken after the elections will have to be very much radical. On one hand, to undertake steps to stop the increase of foreign trade deficit and we cannot exclude steps in monetary area. On the other hand to stop the increase of public finance deficit, to achieve this we have to transform the state budget expenses that still continue to rise extensively, taxation system needs to be transformed, we have to reduce tax rates for legal entities and what we need is an unemployment development program for SME's and also a program for supporting FDI. This is interconnected with a development program for infrastructure, we cannot expect that investors will be attracted by problems, people will come because they expect to make some profit here and we are here to fulfill these expectations.
Some privatizations still need to be completed in 2002 and should ensure sufficient FDI to cover the external deficit in the short run. But how do you foresee the evolution of the current account deficit after the completion of the privatization process?
We can say that this is the main reason the current government is not going to win the ongoing elections. All the funds that were obtained through privatization were spent and we have a deficit. Every single government that comes will have to carry out restructuring of expenses. For transformation of social system you need funds, this government spent the money on budget deficit, there are no funds left. We need to develop public investments but this isn't happening, in order to maintain the health care you need funds as well, and despite the fact that almost everything has been privatized, health sector lacks money. The current government was successful when it comes to the foreign policy, enhancing the image of the country but it totally failed in economy and social policies, that's the reason for its failure.
Before 1999 Slovakia registered a low level of FDI. Since then, it has grown significantly. How do you envision the future development of FDI in Slovakia and its influence on the Slovak economy?
When it comes to FDI, aimed at development of economy, the year 98 posted more investments than 91. When it comes to purchase price obtained from property sold, this government was better, but unfortunately they don't know how to use this money, how to make more money out of it. Every single year the deficit of state budget and public finance rose, the major steps to restructure the economy weren't carried out, the primary and secondary debts of firms were not removed, that's why there's a huge difference between the internal and external views on this current government.
It seems like many investors are awaiting the elections' results before taking any major investment decisions. What are your party's guarantees that foreign investors will still benefit from the current government incentives and enjoy a stable investment climate after the elections?
Your question reminds me of a man asking a woman how she can prove her fidelity. Let's therefore move from the question of proving one's fidelity to proving one's necessity. We lag behind EU countries in the area of economic efficiency by 55%, when it comes to productivity per employee. If there is not any strategic development plan, Slovakia's development is going to lag behind. Slovakia lacks know-how, although it has professional workforce but doesn't possess the means for ensuring favorable development, so there's no other option than opening up for investment influx. Regarding the investments during our government (under Mr. Meciar), the rules were set and the mutual cooperation was favorable for investors, the situation was stabilized. We experienced the problems of every post-communist economy but here in Slovakia they weren't any greater than in any other country. On contrary, we avoided hyperinflation, we had the lowest inflation rate among all post-communist countries, we were able to keep a stable monetary situation and we were able to maintain a calm social situation. Questions of future investments were all treated, we have to keep in mind that these days when the government is highly indebted, speaking of foreign deficit and the foreign trade deficit they need a lot of funds to cover them. If the government wouldn't support and develop such investments, it wouldn't survive. Thus, the question doesn't go "what do you want" but rather "what can you do?". If we want only the best we have to look at what Slovakia really needs.
Note: World Investment News Ltd cannot be held responsible for the content of unedited transcriptions. |
V.I.P. INTERVIEWS 
