With a collation agreement signed and the new 18-member cabinet approved by the National Assembly, several weeks if spirited debate and intense negotiation have come to a close.

For a time, even the composition of the new government looked uncertain, largely because of the demands of the Retirees' Party (DeSUS) and its head Karl Erjavec. DeSUS had made it clear that it did not want to be treated as a junior partner by the centre-left trio, consisting of the Social Democrats (SD), the Liberal Democrats (LDS) and Zares. One of Erjavec's most vocal demands, that he retain the position of Minister of Defence, turned out to be unacceptable to the centre-left trio. In the end, Erjavec had to settle for the position of Environment Minister. Still, DeSUS managed to obtain an important concession from its coalition partners in the form of a sizeable increase of the lowest pensions.

In this and other respects, the government has emphasized its commitment to the welfare state, in line with its centre-left philosophy. The collation agreement specifically emphasizes the need to make high-quality education, public health, social security, culture, housing and sports more accessible to everyone.

The Era of Big Government Isn't Over

These plans have led some analysts to speak out about the potential dangers of excessive government spending. Writing in the daily Delo, University of Ljubljana lecturer Milan Balažic pointed out that an increasingly Keynesian, anti-free market public mood "exposes the new left-leaning government to temptation to resort to state intervention and nationalisation." According to Balažic, the implementation of the promises from the document may lead either to a substantial budget deficit or higher taxes. Balažic argues that necessary reforms have been halted and that Slovenes are likely to end up paying the price "in the form of economic slowdown and decline in the standard of living."

Indeed, even though some had expressed hope that a centre-left government may be more successful in tackling economic reforms begun and later abandoned by Janez Janša's centre-right government, there were few initial indications that such a course of action is likely. Because the coalition parties' key constituencies include demographic groups that look to the state for financial support, plans for substantive free market reforms seemed unlikely at first.

Nevertheless, the new Economy Minister, Matej Lahovnik, stated that high welfare contributions are a problem for Slovenia's economy. "We will not achieve anything by merely cutting taxes," said Lahovnik during his confirmation hearings. He suggested boosting the economy by reducing social security contributions and placing a stronger emphasis on free markets, but he also made it clear that any moves in this direction would be subject to dialogue with social partners. However, according to Delo, former presidential candidate and incoming Development Minister Mitja Gaspari is likely to play a much bigger role in economic decisions than any other cabinet member, including Lahovnik.

Pahor stressed that Slovenia's economic performance during the global economic crisis is a priority for his government. He explained that he plans to respond to the challenge by creating a competitive tax environment, encouraging up-and-coming companies, disburdening others and enhancing oversight. To the reassurance of free marketers, Pahor also made it clear that he views state bailouts with scepticism. "When it is perfectly clear that, despite state aid, a company would not withstand the pressure of competition, the state will not put in any money," Pahor told Delo.

The new government also announced plans to cut defence spending, a move that will counteract increased welfare spending to a limited degree. The current defence budget, consisting of 1.8% of GDP, will be reduced to 1.5% GDP. While this falls below the 2% guideline established by NATO, the government stresses that the cuts will be achieved in part through better and more cost-effective management of the defence system.

New Faces, Old Problems

The new Defence Minister, Ljubica Jelušič, is a defence studies professor, is one of five women in the 18-member cabinet. She has announced a possible revision of the controversial Patria deal if irregularities are proven. However, in an editorial largely praising Jelušič and her plans, Delo expressed some concern about her lack of experience.

The same concern was also raised when LDS head Katarina Kresal was chosen to head the Interior Ministry, which, among other things, oversees the country's police. However, the weekly Mladina argues that Kresal's status as an outsider could turn out to be a net positive since she will not be a part of the police establishment. Kresal emphasizes that independent supervision of the work of the police the fight against white-collar crime are going to be top priorities during her term. Perhaps more controversially, she announced plans to quickly restore the full status of the "Erased" - about 18,000 people from the former Yugoslavia who had lost permanent residence after failing to apply for Slovenian citizenship and may now be entitled to financial compensation.

At least two new ministers will face immediate challenges in office. New Justice Minister Aleš Zalar, a former president of the Ljubljana District Court, has promised to resolve the judges' ongoing strike by the end of the year. Meanwhile, Transport Minister Patrick Vlačič will need to reassess Slovenia's toll sticker policy in the wake of a EU order that requires Slovenia to introduce short-term stickers, which generate less substantially revenue.

Fewer changes are expected in the Foreign Ministry, where Samuel Žbogar, a former ambassador to the US, is now in charge. Žbogar says that he expects no major changes: "Slovenia's foreign policy is in a good shape. The results show that and there is no doubt that as a small country, we are relatively active in international relations." Even before former Foreign Minister Dimitrij Rupel was named Pahor's foreign policy advisor, Žbogar indicated that Slovenia's policy towards Croatia isn't likely to see dramatic changes.

The new government as a whole, however, may encounter some rough waters as it navigates between a faltering economy and still ill-defined, ambiguous expectations of change. So far, the Slovenian public appears to be giving Pahor the benefit of the doubt: In a survey conducted by Delo, most people approved of his team.