Slovenia’s first big crisis since independence
Beautiful but angry
Slovenes have always felt rather pleased with themselves. Their country is beautiful, they were the richest of the Yugoslavs and, after independence in 1991, they joined the European Union, NATO and the euro.
How different things are today. Slovenes are angry and confused. Their prime minister is on trial for corruption, unemployment is high, the country’s banks are teetering on the edge of bankruptcy and a series of painful structural reforms lie ahead.
In July Slovenia’s leading bank had to be bailed out to the tune of more than 380m ($478m) by the government. Janez Jansa, the prime minister, has talked of a “Greek scenario” and has warned that Slovenia will become the sixth European country to seek a bail-out unless his government’s reforms go through. The ratings agencies have downgraded Slovenia; many civil servants have had their pay cut by 7.5%.
Even though Slovenia’s demography is terrible, it has until now had generous pensions and a low retirement age. As only 40,000 signatures are needed to call a referendum, painful reforms are easily blocked. A referendum that defeated an attempt at pension reform in June 2011 was the beginning of the end of the then government. The current coalition (in which a party of pensioners plays a crucial role) has adopted draft laws on pension and labour-law reform, which will both be contested.
Mr Jansa, a political veteran, came to power in February. He is on trial for allegedly taking bribes from a Finnish arms company. On September 5th the former head of one of Slovenia’s biggest companies was convicted of fraud. The Catholic church has been rocked by financial and sex scandals.
In this febrile atmosphere quarrels have been breaking out about who did what in the second world war. These altercations may serve as distractions from the country’s economic woes, but they provoke much bitterness. In the political mythology of Slovenia’s right the ten-day war of independence in 1991 should take centre stage, not the tragic events of 1945.
On November 11th Slovenia will go to the polls to elect a president. The incumbent, Danilo Turk, looks set for a second term. Under united leadership, Slovenia could recover relatively quickly, says Sonja Smuc, who runs an employers’ association. It has several companies that thrive abroad and its public debt, at 47.6% of GDP, is growing but far from critical. Renata Salecl, an intellectual, is less optimistic though. Many of Slovenia’s problems are similar to those elsewhere in Europe, she says, and “soon we will reach deadlock.”