The Slovenia Times

New Deal



A quick glance at the components of Mr JanSa's Slovenian Democratic Party, the major parliamentary group, reveals the striking contrast between the neo-liberal and the social democratic economic standpoints held by different members of the party. How do the two camps reconcile their extreme differences? The so-called Economic Strategic Council was appointed at the end of 2004 in order to provide expert advice on macroeconomic policy, entrepreneurial liberalisation, privatisation, the withdrawal of state controls on the marketplace and the global competitiveness of the Slovenian economy. The neo-liberal tone of the council comes mainly from the views of the so-called young economists - MiCo MrkaiC, the council's chairman known for his provocative and sometimes aggressive ideas, Igor Masten, SaSo Polanec and Joze P. Damijan. The four, all highly educated at foreign universities, represent the core of the council. Other members of the "dream team" are Marko Kranjec, (former minister of finance and vice-governor of the Bank of Slovenia), Ljubo Sirc, Tomaz Prosen, Anton Jurgetz, Janez SuSterSic and businessmen Matjaz Gantar and Ivo Boscarol. The past and the present Economic councils have been around in Slovenia in one form or another since the early nineties. However, until now they never had any real power and were generally used for the public legitimisation of government decisions. This is largely because the former governments were structured differently. In particular, all premiers to date have had an economic education, as have many of the ministers. This is now not the case, which is why the new Strategic Council may actually become an important institution that could have a major bearing on economic policy. The members of the Council, however, emphasise that the body only has an advisory role; while it can provide expert advice, the government has the right to reject the advice if it so wishes. "We were not elected by the people and have no political responsibility. The government is responsible for its decisions and actions, not the council!" says Joze P. Damijan. Nevertheless, it is believed that the Council would resign if the government were to consistently make decisions contrary to the expert economic advice given. Court jesters or supraministry? Much has been said about the Strategic Council recently. Some see it merely as a bunch of court jesters (this was the expression used by some members of the Liberal Democratic Party of Slovenia), while others think it could evolve into a supraministerial body. Joze Mencinger, a senior economist and the Chancellor of the University of Ljubljana, is severely critical: "The Council seems no more nor less than a decoration - if this is the case, it will be harmless. However, if it does indeed have an influence, it will be a negative one, since the majority of its members do not know much about the Slovenian economy and only seem to repeat textbook teachings." Bogomir Kovac of the Faculty of Economics in Ljubljana has been a member of former economic councils and has a contrary opinion: "These are excellent young economists, proficient in their field, who aim to put theoretical solutions into practice." If you don't want to work, the Chinese will! The council advocates liberalisation, privatisation and deregulation of the economy and warns about the uncompetitive business environment in Slovenia. "Radical changes are urgently needed and all of us have to renounce some rights in order to achieve faster economic development," says Joze P. Damijan, who, until March, is the acting chairman while Mr MrkaiC is holding lectures in Pittsburgh. This neo-liberal approach scares many Slovenians used to gradual changes and a high level of social security. Mr MrkaiC does not mince his words - he has stated that if Slovenians refuse to work, then the Chinese will come, implying that there are plenty of hard-workers that might move in from abroad if the existing economic policy, which he believes is too lenient on workers, is not given an overhaul. In the Council members' opinion, the huge tax burden imposed on the workforce through social security is hindering economic growth. They believe that the labour unions are too strong and that it should be possible for workers to be dismissed more freely. Another problem, they believe, is the lack of imagination and versatility of workers faced with redundancy or dismissal. "The workers of Mura (the textile enterprise based in Prekmurje) could be retrained as waitresses, chambermaids, butchers or drivers. I don't see why not," said a Council member recently. Dilemma The dilemmas arising from the differences of opinion within the Slovenian government between social democracy and neo-liberalism seem to disorientate it. Which path will it choose? The premier, Mr JanSa, has always favoured social democratic ideas, but he was the one responsible for appointing the neo-liberal Strategic Council. He surely had his reasons. Was it the (na?ve?) belief in the magical powers of neo-liberalism - the wish to shape a radically different policy from that of the former government - or the wish to achieve a greater readiness for change in society? The fact that Slovenia needs to accelerate its development cannot be denied. This can either be achieved gradually, with reforms aimed at revitalising the economy (continuity approach), or by radical, almost Thatcher-like reforms (neo-liberal approach). But is there also a third way in social liberalism, a hybrid of the two main schools of thought? Whichever way is chosen, the government and its advisers will be judged on actual results, and not on theory.


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