The Slovenia Times

Slovenia - Russia: the bilateral relationship


Due to a shortage of labour, the army used Russian prisoners of war for the construction. During the intensive work in 1916, an enormous avalanche buried a large number of people, among them about 170 Russians to whose memory the remaining prisoners built a small wooden memorial chapel. 28 July marks the traditional day when the remembrance of this event takes place. On the 100th anniversary of its inauguration, the President of Slovenia, Borut Pahor and Russian President, Vladimir Putin, will both participate in the ceremony in July 2016. Once again, the Vršič mountain pass may be of strategic importance, for Putin to visit a European Union (EU) country is a rare event and more-so since the imposition of EU economic sanctions on Russia in July 2014 for its annexation of Crimea.

Slovenia is among a select group of countries, including Germany, Greece, Hungary, the Czech Republic, Austria and Italy, whose leaders have advocated an end to the penalties imposed on Russia. During the 2015 visit of Russian Prime Minister, Dimitri Medvedev, to the Vršič chapel, the President of Slovenia, Miro Cerar, stated that Slovenia wanted the EU to lift economic sanctions on Russia as the sanctions were affecting trade between the two countries, which has decreased by 40 percent as a consequence. A year later, Germany is leading the efforts of countries increasingly in favour of easing the pressure on the trade relationship between Russia and the EU. German Foreign Minister, Frank-Walter Steinmeier, recently raised the idea of a phased removal of sanctions as progress is achieved through the implementation of the Minsk agreement on Ukraine.

The Slavic factor in bilateral trade

Enjoying a combination of different geographical features in a small area, Slovenia is often described as a microcosm of Europe. Although the country is not widely known in Russia, those who know Slovenia love it and want to move to this western-most Slavic country. As Andrej Stopar, a former Moscow correspondent for RTV Slovenija, puts it "the perception is that a small, cute, clean, environmentally-friendly Slavic country is a cozy destination for middle class Russians, mainly from the country's European part". The Forum of Slavic Cultures, established by Slovenia and Russia in 2004 with the aim to preserve and develop the cultural values and traditions shared by Slavic-speaking countries, is further testament to this. For all these affinities, Russians moving to Slovenia tend to integrate with local people. Furthermore, cultural contiguity also helps bilateral trade.

Top-level political dialogue was opened in 2001 when Slovenia hosted the Russian-American Summit in Brdo pri Kranju. Since that event, state-level meetings have been held on a regular basis. Russians are perceived as acceptable and silent investors in Slovenia, highlights Klemen Grošelj, a professor at the Faculty of Political Science of the University of Ljubljana and a Russian expert. Slovenia and Russia are traditionally strong economic partners. Russian interests in the metallurgical industry and tourism in Slovenia are significant, while Slovenia has been an investor in Russia, predominately in the pharmaceutical sector, and an exporter of wireless telecommunication equipment, electrical machinery, mechanical systems and coatings. As a member state of the former Yugoslavia, Slovenia manufactured good-quality products, similar to those of the west but for more reasonable prices. This was, and to some extent still is, important for Russian consumers who have always associated a positive, trustful sentiment to the country. As a result, Slovenian investment is focused on the consumer market. The 1998 ruble crisis forced some Slovenian companies to either leave or downsize operations, and then with the stability brought by Putin's first two terms in office, a number of Slovenian companies opened offices or set-up plants. Slovenian companies: Krka, Iskra and Riko are the top three Slovenian investors in Russia, each with different stories and traditions, making up the biggest chunk of exports from Slovenia. Krka recorded an impressive 13 percent increased turnover in Russia in 2015 (EUR 134m). Slovenia counts Russian tourists among its most important guests (4 percent increase in 2015), many of whom decide to buy a property in the coastal area. These figures make Russia in the top ten trade partners of Slovenia.

Imports from Russia include oil, gas and aluminum products, i.e. 70-75 percent of all Russian imports. The first significant Russian investment came with the privatisation of Slovenska Industrija Jeklo (SIJ) in 2007, recently coupled by the purchase of Perutnina Ptuj, which is testament of the acceptable-investor perception vis-à-vis Russia which is critical for future investments. Since 2006, Gazprom, the Russian energy giant, has been actively promoting the South Stream project to deliver gas to the southern flank of Europe, including Slovenia, by bypassing Ukraine. However, as the project stalled for political reasons, energy investments from Russia have come to a halt. Despite such a solid relationship, bilateral trade has been hurt both by the drop in energy prices and by sanctions. In its peak year of 2013, trade reached EUR 1.46bn, while in 2015 it accounted for slightly more than EUR 1bn, according to data from Izvozno Okno.


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