Slovakia and the institutional future of the EU

1. How does the future of the EU after the Irish ‘No’ look like?

 

In recent months in Slovakia there has been very little discussion on the fate of the Lisbon Treaty. Since the negative result of the Irish referendum, Slovakia’s politicians have repeatedly emphasised that the future of the Lisbon Treaty was in the hands of the Irish politicians. In expert circles there have been several public events in which the ability of Czech politicians to ratify the Lisbon Treaty while the Czech Republic holds the EU-presidency in the first half of 2009 was questioned. However, on the whole debates on the Lisbon Treaty specifically and the institutional architecture of the EU more broadly have been overtaken by the deepening financial crisis.

Preparations for elections to the European Parliament have so far been overshadowed by Slovakia’s direct presidential election whose first round is scheduled to take place on 21 March 2009. Slovakia’s elections to the European Parliament will take place on Saturday 6 June 2009. In the previous elections to the European Parliament in 2004 Slovakia recorded the lowest turnout of eligible voters in all EU member states when only 16.9 percent of voters took part in those elections. Hence, this year there is a general expectation that the turnout should be higher. So far, public opinion polls suggest a low turnout again. According to a Eurobarometer survey conducted in the fall of 2008, only 15 percent of Slovakia’s voters (compared with the EU-27 average of 28 percent) said that they would definitely take part in the European elections.[1]

According to Slovakia’s law on elections to the European Parliament[2], political parties have to register their candidate lists at the very latest 65 days prior to the date of elections to the European Parliament. Since Slovakia’s elections to the European Parliament are scheduled for 6 June 2009, candidate lists will have to be registered by 2 April 2009. By the middle of March 2009, most relevant political parties in Slovakia have completed their candidate lists with the exception of the largest governing party, the Social Democrats,[3] and one of their junior coalition partners the People’s Party – Movement for a Democratic Slovakia.[4] Slovakia’s political parties will compete for 13 seats in the upcoming European elections. The selection of candidates by most parliamentary parties for relevant positions on a party list (places 1-3 on the list) is centralised on the national level. Regional bodies in political parties also nominate candidates but these are relevant mainly in the case of the main opposition party the Slovak Democratic and Christian Union – Democratic Party[5] because of its system of primaries in selecting the party’s candidates for the European Parliament. Generally, candidates selected by regional structures of political parties end up on unelectable positions on party lists. Political parties currently present in the European Parliament decided to nominate most of their current MEPs again because of their experience and established contacts. Young candidates are reaching lower positions on candidate lists whereby young candidates should gain experience joining the election campaign.

Elections to the European Parliament are clearly second order elections in Slovakia, they are still likely to have some testing relevance for domestic politics in Slovakia as the dominant governing party, SMER-SD, continues to be very popular. According to a recent opinion poll, if parliamentary elections were held in February 2009, SMER-SD would get 46 percent of votes whereas the main opposition party SDKÚ-DS would receive just 12.9 percent of votes.[6] Since SMER-SD is unlikely to replicate these numbers in elections to the European Parliament due to the expected low turnout, Slovakia’s currently strongest political party may decide to ignore the European Parliament contest to some extent.

Negotiations on the EU climate and energy package in 2008, together with the gas crisis in early 2009, have underscored the rising importance of the energy portfolio in the European Commission. In December 2008 Prime Minister, Robert Fico, suggested in which seat he would like to see Slovakia’s next member of the European Commission when he stated: “I would like energy policy but it is perhaps not going to be easy since all member states will fight for energy portfolio.”[7] Prime Minister Fico also expressed his preference to nominate as the future EU-Commissioner a professional diplomat rather than a politician when he argued “I cannot quite clearly imagine that we would just pick someone like a rabbit out of a hat and say that this is going to be Slovakia’s new Commissioner. I shall propose a professional who is familiar with the structures and who knows what work in such an organization entails but I do not think it should be a rank politician.”[8] While Prime Minister Fico did not specify who specifically should become Slovakia’s nominee for the next EU-Commissioner, there are widespread speculations that this fall, ambassador Maroš Šefčovič, the permanent representative of the Slovak Republic to the EU, could replace Ján Figeľ, Slovakia’s current member of the European Commission who is planning to return to Slovakia’s national politics and run for the chair of the opposition Christian Democratic Movement[9].[10] There has been no discussion in Slovakia on the appointment of the High Representative for the Common Foreign and Security Policy.

2. Transatlantic relations renewed after President Bush: top priorities

 

Slovakia and the future of EU-US relations

Since 26 January 2009, Slovakia has a new Foreign Minister. Following his appointment by UN Secretary-General, Ban Ki-moon, former Foreign Minister Ján Kubiš left for Geneva to head the “United Nations Economic Commission for Europe” and he was replaced by Miroslav Lajčák, former high representative and EU special representative for Bosnia and Herzegovina. In his remarks on debates at the 45th “Munich Security Conference”, Foreign Minister Lajčák underlined the importance of EU-US relations whereby he stressed that the new US administration would expect a more active European Union in resolving the world’s problems. According to Slovakia’s Foreign Minister, the new US administration would place greater emphasis on partnership with the EU than its predecessor. Lajčák perceives the US under Obama as more keen to communicate with problematic partners, such as Russia or even Iran.[11] The global economic financial crisis will certainly test the endurance of the transatlantic partnership. In addition, Slovakia’s geographic priorities of foreign policy – the EU’s Eastern neighborhood and the Western Balkans – are going to necessitate transatlantic cooperation and joint EU-US solutions, especially in light of the recent crisis with deliveries of natural gas from Russia via Ukraine and in light of potentially explosive situation in both Bosnia and Herzegovina and in Kosovo. Afghanistan remains the top priority in terms of Slovakia’s physical and material contribution to US-European military cooperation. In a public interview Lajčák reiterated Slovakia’s commitment to doubling the number of its soldiers in Afghanistan by June 2009.[12] According to Defense Minister Jaroslav Baška, Slovakia plans to have 280 soldiers, including fighting units, in Afghanistan by 2010.[13]

3. Financial crisis and challenges of global governance: the EU response

 

Slovakia and the financial crisis

Slovakia experienced considerable economic growth in 2008 and first estimations did not expect very considerable influence of financial crisis on our financial sector. Generally, banks owned by foreign investors (mainly Austrian and Italian) in Slovakia are very conservative and considered as healthy but Prime Minister Fico promised Slovakia’s citizens that the government would pay attention to any possible outflow of capital from Slovakia to a troubled mother bank[14]. Another factor that brought comparable stability to Slovakia’s financial sector was the finalisation of Eurozone entry. In comparison with the weakening Czech, Hungarian, and Polish currencies, the Slovak Koruna in the latter half of 2008 recorded a stable rate vis-à-vis the Euro. As the National Bank governor expressed in an interview that – the Euro is already protecting our stability.[15] The National Bank analysis from December 2008 noted that the influence of the financial crisis was in decreasing profits mainly in insurance companies and in a reduction of the sector’s activities. Clients’ revenues are more vulnerable and banks are expected to cut back in offering credit but financial institutions in Slovakia are stable. Banks’ earnings from the beginning of 2008 actually rose by 10 percent.[16] Unlimited deposit guarantee was introduced in Slovakia immediately after the proposal by the European Commission. Several possibilities were discussed as alternatives to unlimited deposit guarantee, but the overpowering explanation for the unlimited deposit guarantee was a similar reaction of other EU countries and thus an attempt at sustaining Slovakia’s competitive edge.[17]

The Ministry of Finance of the Slovak Republic counted during state budget preparations in the fall of 2008 with a prognosis of economic growth at 6.5 percent in 2009 but with the appearing impact of crisis, especially in car industry, its predicted growth was cut down to 4.5 percent in November 2008. In January 2009 the European Commission published new prognosis of GDP growth in Slovakia at 2.7 percent and the Finance Ministry after some previous reservations changed its prognosis to 2.4 percent and National Bank awaits even less growth of 2.1 percent.[18] Though the Commission considers Slovakia’s growth still the fastest in the EU, domestic bank analysts await further cut down in growth rate prognosis.[19] The prognosis done by the economic think tank, “INEKO” from expert surveys suggest not less than 1.4 percent.[20] Slovakia planned to continue reducing the budget deficit[21] but the worsening growth prognosis and the rise in unemployment that brings increase of state expenditures, spells some difficulties with future commitment to sound fiscal policy.

More serious are indirect impacts of the financial crisis on the Slovak economy. The government has been monitoring the situation but the growth in unemployment occurred only lately. Government expectations in addressing this issue are mainly focused on a support from the European Globalisation Adjustment Fund and possibilities to spend early structural funds allocated for later periods. Slovakia’s plan to manage the impact of the crisis includes investing into infrastructure, especially motorways within public-private partnership schemes and therefore, the government has been negotiating cooperation with the “European Investment Bank” and the “European Bank for Reconstruction and Development”.

In terms of a public discussion of the main long-term implications of the current economic and political situation, Slovakia’s politicians have been keen to emphasise the importance of the EU-rules, especially in the area of competition policy and with respect to the Maastricht criteria.

 

 

 

[1] See Special Eurobarometer 303: Europeans and the 2009 European Elections. Results for Slovakia, January 2008, available at: http://ec.europa.eu/public_opinion/archives/ebs/ebs_303_fiche_sk.pdf (last access: 18 March 2009).
[2] Law number 331/2003 adopted on 10 July 2003.
[3] SMER – sociálna demokracia (SMER-SD).
[4] L’udová strana – Hnutie za demokratické Slovensko (ĽS-HZDS).
[5] Slovenská demokratická a kresťanská únia – Demokratická strana (SDKÚ-DS).
[6] SITA Press Agency: “Prieskum: Preferencie Smeru aj HZDS vo februári klesli”, 17 February 2009.
[7] Renáta Goldírová: “Budúca Európska komisia”, Slovak Radio, 30 January 2009, available at: http://www.rozhlas.sk/ (last access: 18 March 2009).
[8] Ibid.
[9] Kresťanskodemokratické hnutie (KDH).
[10] EurActiv: “Črtá sa podoba novej Európskej komisie”, 7 January 2009, available at: http://www.euractiv.sk/ (last access: 18 March 2009).
[11] TASR: “Lajčák: USA očakávajú aktívnejšiu úlohu EÚ pri riešení svetových problémov”, 11 February 2009.
[12] Mirek Tóda: “S Ficom si vo všetkom rozumiem”, Sme, 16 February 2009.
[13] Miroslav Kern/Veronika Šutková: “Na vojakov číha najnebezpečnejšia misia”, Sme, 25 April 2008.
[14] Government Office: “Tlačová konferencia po skončení 113. (mimoriadnej schôdze) vlády SR”, 20 September 2008.
[15] SITA: “Šramko: Euro už tlmí dopad krízy na Slovensku”, 26 January 2009.
[16] SME: “NBS: Finančná kríza sa už jednoznačne prejavila”, 16 December 2008.
[17] SME: “Garancia sú na papieri. Banky sú zdravé”, 9 January 2009.
[18] The precise analysis by the National Bank will be available in March 2009.
[19] Webnoviny: “MF znížilo odhad tohtoročného rastu na 2,4 %, uviedol Počiatek“, 4 February 2009.
[20] ETrend: “Ekonómovia: Rast HDP spomalí na 1,4%”, 4 February 2009.
[21] Aktuálne.sk: “Fico: Výsledky summitu sú pre Slovensko úspechom”, 12 December 2008.