Situation in Greece widely discussed: strict adherence to obligations demanded

The eco­nom­ic and finan­cial cri­sis in Greece has been among the most often dis­cussed issues in Slove­nia, not only by the media, but also by a num­ber of econ­o­my experts as well as by trade unions and politi­cians. Regard­ing the finan­cial aid pack­age for Greece from the EU, the gov­ern­ment of the Repub­lic of Slove­nia, along with oth­er Euro­zone mem­bers, sup­ports the motion to assist Greece in order to ensure the sta­bil­i­ty of the Euro area, in which Slove­nia has recog­nised and realised its vital eco­nom­ic and export inter­ests. The Sloven­ian gov­ern­ment sup­ports the assis­tance, because the country’s key mar­kets are in the Euro area, hence the desta­bil­i­sa­tion of this area would be par­tic­u­lar­ly detri­men­tal to the small, open and inter-con­nect­ed Sloven­ian econ­o­my. How­ev­er, Slove­nia has not yet decid­ed to grant its assis­tance to Greece uncon­di­tion­al­ly; name­ly, as part of the Greek pro­gramme, Slove­nia calls for strict adher­ence to the oblig­a­tions aris­ing from the aid pro­gramme and a trans­par­ent time­line that will be ver­i­fied by the Euro­pean Com­mis­sion. Indi­vid­ual amounts of finan­cial assis­tance released by the Com­mis­sion should be sub­ject to Greece meet­ing its oblig­a­tions.11Gov­ern­ment of the Repub­lic of Slove­nia: Government’s posi­tion on finan­cial assis­tance to Greece, 6 May 2010, avail­able at: http://www.vlada.si/en/news/press_releases/press_release/article/5/9537/c2838d536e/ (last access: 17 May 2010).

Sloven­ian polit­i­cal par­ties are even more scep­ti­cal about the finan­cial aid pack­age for Greece. One of the coali­tion par­ties, Zares, called on the Sloven­ian gov­ern­ment to care­ful­ly delib­er­ate the finan­cial assis­tance to Greece, since it will rep­re­sent a major finan­cial bur­den for Slove­nia. Zares also believes that the rea­son for the Greek finan­cial cri­sis is its irre­spon­si­ble behav­iour. This is why Zares called for “respon­si­ble mutu­al sol­i­dar­i­ty.” The oppo­si­tion par­ties are even more crit­i­cal in this respect. The leader of the Sloven­ian Demo­c­ra­t­ic Par­ty (SDS) and for­mer PM, Janez Janša, assessed the finan­cial assis­tance to Greece from oth­er Euro mem­ber states as inef­fi­cient and unfair if com­pared to Sloven­ian, Slo­va­kian and oth­er Euro­pean work­ers that have low­er aver­age salaries than work­ers in Greece. In addi­tion, the Sloven­ian Nation­al Par­ty (SNS) is strong­ly opposed to the “gen­er­ous” finan­cial aid of Slove­nia for Greece, since Slove­nia is itself fac­ing a bud­get deficit and increas­ing pub­lic debt. The Pres­i­dent of the Sloven­ian People’s Par­ty (SLS), Radovan Žer­jav, is also opposed to the aid for Greece, if giv­en with­out “dras­tic sav­ings, imme­di­ate reforms and an end of street van­dal­ism” in Greece itself. Accord­ing to Radovan Žer­jav, the loan to Greece is extreme­ly risky and could fur­ther strain the already poor state of Sloven­ian pub­lic finances and pub­lic debt. The SLS high­light­ed that Slove­nia has no bud­get funds to help Greece, assum­ing that the Sloven­ian gov­ern­ment will seek out addi­tion­al bor­row­ing, to which the SLS is strong­ly opposed.22Dnevnik: Obdob­je krize ali priložnos­ti za EU? Finanč­na pomoč Grči­ji sproža mešane odzive (The peri­od of cri­sis or oppor­tu­ni­ty for the EU? Finan­cial aid to Greece rais­es mixed reac­tions), 5 May 2010, avail­able at: http://www.dnevnik.si/novice/eu/1042357229 (last access: 18 May 2010).

The government’s deci­sion to approve finan­cial aid to Greece has also caused a thun­der­ous response from the Asso­ci­a­tion of Free Trade Unions of Slove­nia. Dušan Semolič, the Pres­i­dent of the Asso­ci­a­tion of Free Trade Unions, is con­vinced that, in the case of Greece, the “dis­as­ter” is a result of irre­spon­si­ble, spec­u­la­tive and immoral behav­iour of those who have led and man­aged Greece. There­fore, trade unions strong­ly oppose the aid pack­age, since it is only intend­ed “to help those insti­tu­tions and politi­cians who have caused this cri­sis, while the Greek work­ers will not ben­e­fit from the aid.”33Delo: Grš­ki delav­ci od pomoči ne bodo dobili nič (Greek work­ers will not get any­thing from the aid), 7 May 2010, avail­able at: http://www.delo.si/clanek/105724 (last access: 18 May 2010).

On the oth­er hand, lead­ing Sloven­ian econ­o­mists do not entire­ly share this opin­ion. Bogomir Kovač, a pro­fes­sor at the Fac­ul­ty of Eco­nom­ics, Uni­ver­si­ty of Ljubl­jana, believes that it was a step in the right direc­tion, where the EU as an insti­tu­tion came to the fore­front and was able to devel­op its own agen­da for address­ing the prob­lem. In con­trast, Jože Mencinger, a pro­fes­sor at the chair of Legal and Eco­nom­ic Sci­ence at the Law Fac­ul­ty, Uni­ver­si­ty of Ljubl­jana, is not so sure about the appro­pri­ate­ness of the action tak­en. In his opin­ion, it was adopt­ed in pan­ic and aims to reverse finan­cial spec­u­la­tion.44STA: Odločitev finančnih min­istrov EU naj bi pomer­i­la trge, ekon­o­misti različnih mnenj (Deci­sion of finan­cial min­is­ters of the EU should reas­sure the mar­kets, econ­o­mists do not share the same view), 10 May 2010, avail­able at: http://www.sta.si/vest.php?s=s&id=1511350&q=EKONOMIS+O+RE%C5%A0EV+GR%C4%8CIJ (last access: 18 May 2010).

Lessons for a reform of the Stability and Growth Pact

Giv­en its expe­ri­ence regard­ing the Eurozone’s func­tion­ing in accor­dance with the Maas­tricht rules, the Sloven­ian gov­ern­ment has found that these rules have not been fol­lowed strict­ly enough. There­fore, Slove­nia is in favour of a reform of the Sta­bil­i­ty and Growth Pact as fol­lows: tighter con­trols must be put in place with­in the EU, par­tic­u­lar­ly with­in the Euro­zone, to mon­i­tor imple­men­ta­tion of the Sta­bil­i­ty and Growth Pact. This espe­cial­ly refers to the mon­i­tor­ing of mea­sures in order to sta­bilise pub­lic finances in Greece and oth­er coun­tries with exces­sive deficits and debts. This sit­u­a­tion calls for imme­di­ate insti­tu­tion­al changes to the Sta­bil­i­ty and Growth Pact, which must include both clear pro­vi­sions regard­ing the acces­sion of new mem­bers and mech­a­nisms for expul­sion from the com­mon cur­ren­cy area in the event of reg­u­la­to­ry breach­es. The fis­cal poli­cies of Euro­zone mem­ber states, par­tic­u­lar­ly in regard to indi­rect tax­a­tion, must be bet­ter coor­di­nat­ed. Pri­vate finan­cial insti­tu­tions, which are cred­i­tors of the Greek nation­al debt, should take on a pro­por­tion­al share of respon­si­bil­i­ty for ensur­ing imple­men­ta­tion of the Greek pro­gramme. The Euro­zone should estab­lish tougher mech­a­nisms to main­tain a sta­ble cur­ren­cy. As part of the Greek pro­gramme, Slove­nia calls for strict adher­ence to the oblig­a­tions and dead­lines aris­ing from the pro­gramme.55Gov­ern­ment of the Repub­lic of Slove­nia: Government’s posi­tion on finan­cial assis­tance to Greece, 6 May 2010, avail­able at: http://www.vlada.si/en/news/press_releases/press_release/article/5/9537/c2838d536e/ (last access: 17 May 2010).

Euro area needs a serious shift in the way it organises mutual cooperation

By focus­ing on Greece and the finan­cial aid pack­age, the idea of “a stronger coor­di­na­tion of eco­nom­ic poli­cies in Europe” has not been pub­licly dis­cussed. But, accord­ing to the gov­ern­ment, Slove­nia believes that imme­di­ate insti­tu­tion­al changes to the Sta­bil­i­ty and Growth Pact are need­ed, and, more impor­tant­ly, they must include both clear pro­vi­sions regard­ing the acces­sion of new mem­bers and mech­a­nisms for expul­sion from the com­mon cur­ren­cy area in the event of reg­u­la­to­ry breach­es. Also, the fis­cal poli­cies of Euro­zone mem­ber states, par­tic­u­lar­ly in regard to indi­rect tax­a­tion, must be bet­ter coor­di­nat­ed.66Ibid.

Janez Potočnik, the Euro­pean Com­mis­sion­er for the Envi­ron­ment, has held the lec­ture “Cur­rent chal­lenges of glob­alised Europe” at the Inter­na­tion­al Forum at the Law Fac­ul­ty in Ljubl­jana on 7 May 2010, where he point­ed out that the Euro area needs a seri­ous shift in the way it organ­is­es mutu­al coop­er­a­tion. He stressed that more move­ment in the area of coor­di­na­tion of eco­nom­ic poli­cies (macro­eco­nom­ic, fis­cal and struc­tur­al) is need­ed at the Euro­pean lev­el. “Since we have the same cur­ren­cy, we have the same ori­en­ta­tion, or com­pass”, he illus­trat­ed. And, accord­ing to Potočnik, “the Greek trou­ble” is forc­ing every­one to rethink what is sus­tain­able and which sys­tems are required in order to main­tain sta­bil­i­ty.77Dnevnik: Potočnik o grš­ki krizi: Stan­je je v Evropi in na območju Evra zelo resno (Potočnik about the Greek cri­sis: The sit­u­a­tion in Europe in Euro­zone is very seri­ous), 7 May 2010, avail­able at: http://www.dnevnik.si/novice/aktualne _zgodbe/1042357736 (last access: 18 May 2010).

Europe 2020 Strategy: A step in the right direction

The Europe 2020 Strat­e­gy has, so far, not been much dis­cussed in Slove­nia. The Gov­ern­ment Office for Devel­op­ment and Euro­pean Affairs assessed the pro­pos­al for the new eco­nom­ic Europe 2020 Strat­e­gy as a step in the right direc­tion. It should add to the endeav­our of the mem­ber states and the Euro­pean Com­mis­sion to achieve the objec­tives that will enable the EU to com­pete with oth­er impor­tant eco­nom­ic areas in the world. In this respect, Slove­nia wel­comes the Europe 2020 Strat­e­gy and hopes that this Strat­e­gy will be more suc­cess­ful than the Lis­bon Strat­e­gy of the last decade. On the oth­er hand, Slove­nia has some seri­ous com­ments regard­ing its con­tent. It con­sid­ers the Strat­e­gy to be only the ini­tial pro­pos­al that the mem­ber states need to exam­ine care­ful­ly and, above all, estab­lish which ele­ments – of both the Strat­e­gy and the nation­al reform strate­gies of the indi­vid­ual mem­ber states – could lead to the actu­al imple­men­ta­tion of objec­tives and pri­or­i­ties. In order to achieve real progress, there is need for detailed spec­i­fi­ca­tion and mea­sur­a­bil­i­ty of the objec­tives, as well as a cor­re­la­tion and har­mon­i­sa­tion of EU objec­tives with the nation­al pro­grammes. As shown by past expe­ri­ences, the Lis­bon Strat­e­gy has been poor­ly man­aged. This is why Slove­nia expects that the insti­tu­tion­al arrange­ment for Strat­e­gy imple­men­ta­tion will be improved.88Gov­ern­ment Office for Devel­op­ment and Euro­pean Affairs: State­ment for the media by Min­is­ter Mit­ja Gas­pari on the “Europe 2020” Strat­e­gy pro­pos­al, 3 May 2010, avail­able at: http://www.svrez.gov.si/nc/en/splosno/cns/news/article/2028/2403/ (last access: 18 May 2010). Slove­nia does not expect to have prob­lems with the major­i­ty of pro­posed tar­gets, although not all of them can be achieved at the moment. Tar­gets that rep­re­sent major chal­lenges are: the “20/20/20” climate/energy tar­get, 3 per­cent of gross domes­tic prod­uct (GDP) invest­ment in R&D, 75 per­cent employ­ment rate of the pop­u­la­tion aged 20–64, 40 per­cent of the younger pop­u­la­tion with a ter­tiary degree, and a reduc­tion of pover­ty, espe­cial­ly the “at-risk-of-pover­ty” rate.99Gov­ern­ment Office for Devel­op­ment and Euro­pean Affairs: Strat­e­gy Europe 2020: A New Strat­e­gy for Jobs and Growth, 4 May 2010, avail­able at: http://www.svrez.gov.si/en/activities/strategy_europe_2020/ (last access: 18 May 2010).

    Footnotes

  • 1Gov­ern­ment of the Repub­lic of Slove­nia: Government’s posi­tion on finan­cial assis­tance to Greece, 6 May 2010, avail­able at: http://www.vlada.si/en/news/press_releases/press_release/article/5/9537/c2838d536e/ (last access: 17 May 2010).
  • 2Dnevnik: Obdob­je krize ali priložnos­ti za EU? Finanč­na pomoč Grči­ji sproža mešane odzive (The peri­od of cri­sis or oppor­tu­ni­ty for the EU? Finan­cial aid to Greece rais­es mixed reac­tions), 5 May 2010, avail­able at: http://www.dnevnik.si/novice/eu/1042357229 (last access: 18 May 2010).
  • 3Delo: Grš­ki delav­ci od pomoči ne bodo dobili nič (Greek work­ers will not get any­thing from the aid), 7 May 2010, avail­able at: http://www.delo.si/clanek/105724 (last access: 18 May 2010).
  • 4STA: Odločitev finančnih min­istrov EU naj bi pomer­i­la trge, ekon­o­misti različnih mnenj (Deci­sion of finan­cial min­is­ters of the EU should reas­sure the mar­kets, econ­o­mists do not share the same view), 10 May 2010, avail­able at: http://www.sta.si/vest.php?s=s&id=1511350&q=EKONOMIS+O+RE%C5%A0EV+GR%C4%8CIJ (last access: 18 May 2010).
  • 5Gov­ern­ment of the Repub­lic of Slove­nia: Government’s posi­tion on finan­cial assis­tance to Greece, 6 May 2010, avail­able at: http://www.vlada.si/en/news/press_releases/press_release/article/5/9537/c2838d536e/ (last access: 17 May 2010).
  • 6Ibid.
  • 7Dnevnik: Potočnik o grš­ki krizi: Stan­je je v Evropi in na območju Evra zelo resno (Potočnik about the Greek cri­sis: The sit­u­a­tion in Europe in Euro­zone is very seri­ous), 7 May 2010, avail­able at: http://www.dnevnik.si/novice/aktualne _zgodbe/1042357736 (last access: 18 May 2010).
  • 8Gov­ern­ment Office for Devel­op­ment and Euro­pean Affairs: State­ment for the media by Min­is­ter Mit­ja Gas­pari on the “Europe 2020” Strat­e­gy pro­pos­al, 3 May 2010, avail­able at: http://www.svrez.gov.si/nc/en/splosno/cns/news/article/2028/2403/ (last access: 18 May 2010).
  • 9Gov­ern­ment Office for Devel­op­ment and Euro­pean Affairs: Strat­e­gy Europe 2020: A New Strat­e­gy for Jobs and Growth, 4 May 2010, avail­able at: http://www.svrez.gov.si/en/activities/strategy_europe_2020/ (last access: 18 May 2010).

The reports focus on a report­ing peri­od from Decem­ber 2009 until May 2010. This sur­vey was con­duct­ed on the basis of a ques­tion­naire that has been elab­o­rat­ed in March and April 2010. Most of the 31 reports were deliv­ered in May 2010.

The EU-27 Watch No. 9 receives sig­nif­i­cant fund­ing from the Otto Wolff-Foun­da­tion, Cologne, in the frame­work of the ‘Dia­log Europa der Otto Wolff-Stiftung’, and finan­cial sup­port from the Euro­pean Com­mis­sion. The Euro­pean Com­mis­sion is not respon­si­ble for any use that may be made of the infor­ma­tion con­tained there­in.