Slovenia - The Star Pupil

The most exciting event in Slovenia last week was when a group of young army recruits spat on the national flag and sang the anthem of the now defunct former Yugoslavia. They were sent to a military psychiatrist for observation. Indeed, economically speaking, a preference for any other part of the late Federation over Slovenia would indicate mental deformity.

Slovenia is by far the most prosperous and pacific of the lot. Income per capita increased by 7% between 1995-2000 and reached 75% of the EU's average. Yugoslavia and Macedonia would require half a century to reach this level at current growth rates. Slovenia's public debt is negligible (c. 26% of GDP), its unemployment rate is almost American (less than 7%), its budget deficit a mere 1.4% of GDP. Slovenia's gross national savings is almost a quarter of its GDP - as is its gross domestic investment (28%).

It is a respected member of both the World Bank and the IMF. The former has disbursed c. $250 million for purposes such as structural reforms and environmental cleanups. The latter praises its monetary targeting, the managed float of its tolar, and the lack of major (budget and current account) imbalances. This, despite erratic monetary management by the Bank of Slovenia, which, together with the introduction of VAT, the oil price shock, and a totally CPI-indexed financial environment, led to escalating inflation (c. 9% annually, up from 6%).

Thus, should Slovenian officials fail in their efforts to secure agricultural and regional development concessions from their counterparts in Brussels, Slovenia runs the risk of becoming a net creditor of the EU. Slovenia, contrary to most other current members, is openly unhappy with the "Big Bang" enlargement of the Union. It has successfully concluded 22 out 29 chapters to be agreed with the EU prior to accession and it is afraid of being held back by an unrealistic, politically motivated, process of enlargement which will stress the EU's deficient institutions to their breaking point.

Slovenia is small. It is the size of pre-1967 Israel or New Jersey. With less than 2 million citizens (88% of which are ethnic Slovene), its population grows by a paltry 0.14% p.a. Still, had it not constituted the northern boundary of a war prone and unstable region, Slovenia might have attracted more FDI (it has one of the lowest rates among the candidate countries), bordering as it does and integrated as it is with the (relatively) large and disinflated economies of Italy, Hungary, and Austria. Many Slovenes actually live in Jorg Haider's part of Austria (Carinthia). Italians owned property (confiscated by the communists) in Slovenia before the Second World War (the source of a simmering grudge in Italy). Italians, Austrians, and Germans invest in Slovenian banks, insurance companies, and industry. Together with Poland, Hungary, and the Czech Republic (among others), it is a member of the now reawakened CEFTA (Central European Free Trade Agreement). Only 4% of Slovenia's GDP derives from agriculture (vs. 61% from services). Still, Slovenia, to its great ire, is often associated with the Balkan.

But the bad neighborhood is not the only obstacle. Slovenia's privatization was as crony-infested as elsewhere in the Eastern Bloc and its legislation still incorporates investment-deterring anachronisms (restricted land and media ownership, an over-regulated labour market, lack of corporate governance). Capital account liberalization was implemented only recently. Close to half of the economy (including a chunk of the favoritism-ridden and inefficient banking system) is in the hands of the state. The private sector, though, is thriving. Growth rates (4% this year) are double the European average and GDP per capita is almost equal to Greece's or Portugal's.

Slovenia's international trade amounts to 60% of its GDP. Two thirds of it is with the EU (half of this with Germany and Austria, the former colonial mater). Its trade with Russia, the USA (3% of the total each), and even with other republics of the disintegrated Yugoslavia is marginal. It still purchases raw materials from Macedonia and Yugoslavia - and sells back to them the finished products (as it used to do in former Yugoslavia). But this does not amount to much. The decoupling is intentional - Slovenia considers itself an integral part of Western Europe. All it inherited from Communism, it feels, was polluted rivers and coastal water, acid rain, and depleted forests. Still, such exposure to the EU makes Slovenia susceptible to the Union's business cycles. Shortsightedly perhaps, it does not have a trade representation or an economic attaché in the USA.

Of all its erstwhile confederates, Slovenia maintains tenuous political contacts only with Croatia. It just resolved a long standing dispute with Croatia regarding the Krsko nuclear power plant. Both countries agreed to continue discussions regarding the final demarcation of the hotly disputed (in Slovenia) border between the two countries as a prelude to the introduction of the Schengen agreement. Overtures are made to post-Milosevic Yugoslavia. Slovene legislation is eagerly copied by Macedonia. Gradually, albeit reluctantly, Slovenia comes to be regarded as a role model by its southern neighbors who strive to emulate its success.

About The Author

Sam Vaknin is the author of "Malignant Self Love - Narcissism Revisited" and "After the Rain - How the West Lost the East". He is a columnist in "Central Europe Review", United Press International (UPI) and ebookweb.org and the editor of mental health and Central East Europe categories in The Open Directory, Suite101 and searcheurope.com. Until recently, he served as the Economic Advisor to the Government of Macedonia.

His web site: http://samvak.tripod.com

---

The Internet Right ? Are They Doing It Right

It looks overall like the liberals are advocating for no... Read More

TABOR: The Growing Taxpayer Bill of Rights Movement and Economic Incentives for Industry

A governing.com report blast one of the major grassroots initiatives... Read More

Joseph Campbell - Permanent Human Values

At the start of the US involvement in WWII Joseph... Read More

Recycling The Mentally Ill

30 years ago, California, later followed by other states, decided... Read More

Constitutional Amendment Needed on Sodomy Laws

Many very nice and loving homosexual male couples want to... Read More

Mexicanizing America

A friend of mine, who lives in the thick of... Read More

An ROI on National Security

Do you find it interesting that people complain about the... Read More

The Distributive Justice of the Market

(1) Each person is to have an equal right to... Read More

Are We Serious About Fuel Alternatives?

As you can see from some of our previous articles,... Read More

The Senate Filibuster: The Hulk Plan and the Nuclear Option

The partisan feuding in the U.S. Senate over federal judicial... Read More

Secret Clandestine Facial Recognition Countermeasures and The Future of the CIA

Presently Universities and Private Enterprise are working to build more... Read More

The Pilgrims and Beacon Hill Mob

In 1966, Dr. Carroll Quigley, a professor of history at... Read More

Mexican Living: A Disabled Man Speaks for Terri

I am an incurably ill American male forced to leave... Read More

Government Backed Fraud in Academia

Contrary to the Hobbesian prediction of anarchy (freedom) and brutish... Read More

Bird Flu may kill you and your family

We have heard a lot about the coming bird flu... Read More

Ifs and VATs of Taxation in Macedonia - Should VAT be Applied in Macedonia?

To be justified, taxes should satisfy a few conditions:Above all,... Read More

Protecting Children From Porn

There's a new Michigan state register in the works... Read More

Dismal Performance of the NSA

The NSA failed the American people and allowed the attack... Read More

The Revolt of the Poor: The Demise of Intellectual Property?

Three years ago I published a book of short stories... Read More

An Environmental Voting Guide for US State Elections

In these times when states are suffering extreme downward pressure... Read More

Intelligent Design - Why are the Intelligent So Afraid of It?

Why are intelligent people so afraid of the idea that... Read More

The Reconstruction of Europe

The Second World War was the continuation of World War... Read More

Did 9-11 Change Everything for the Business Community

For the business community 9-11 changed everything. In our company,... Read More

Mr. Bin Laden: Tear this Wall Down

You say, you want to help the Palestinians, but most... Read More

Politicians Will Save Civilization

Most politicians are completely out to lunch and totally Machiavellian... Read More

Fuel Prices on the Rise

With gasoline prices at the pump climbing strongly into the... Read More

Great Melting Pot Indeed

An interesting conversation that I thought I must share with... Read More

California Car Wash Fundraisers and Environmental Law

Many non-profit groups are feeling upset that they are allowed... Read More

The Macedonian Lottery

Every conflict has its economic moments and dimensions. The current... Read More

Gun Control? How About Crime Control Instead?

The second amendment to the U.S. Constitution guarantees every American... Read More

History of the Media, Radio, and Television

When were the forms of media created? When did advertising... Read More

Political Correctness got you down?

I hear it all the time; you can't say that.... Read More

US Government Sore Losers in Not So Neighborly Dispute

I'm getting a little tired of being lectured by that... Read More