Growth, jobs and more

The landslide winner of snap elections in Slovenia is the “Party of Miro Cerar” that six weeks before the elections did not even exist. Its members and candidates are rather unknown, its policies are unclear. It is named and lead by a law professor and legal consultant with zero track record in executive politics. Strongest opposition party SDS with its leader jailed after an unfair trial just three weeks before the elections came in second. Half of the parliament belongs to two brand new political parties.

The results are a culmination of economic, financial, social and political crisis in Slovenia and, one can always hope, a step towards its resolution.

From poster child …

Slovenia was a poster child of the former communist countries. It achieved independence almost without violence that tragically marked the breakup of Yugoslavia. Even before 1989 it had open borders, elements of market economy and substantial exports to the West.

Its independence was a success story. It joined the EU and NATO in 2004, adopted the Euro in 2007 and was the first of the new member states to hold the rotating presidency of the European Council in first half of 2008. It entered the economic crisis with low unemployment, a budget surplus and one of the lowest public debts in the EU. Since independence it has been catching up economically. In 2008 it reached 92% of the EU average in terms of GDP per capita.

… to sick man of Central Europe

Since the beginning of the crisis in late 2008 everything went sour. Neither the economic nor the political system was able to handle it.

The crisis exposed the lack of reforms that Slovenia failed not make since independence that would complete the transition towards market economy and rule of law. Because of open borders and a softer version of socialism Slovenes were led to believe that not much needs to change after democratization – except to have more than one political party and to hold elections every few years.

Slovenia failed to make an overhaul of the institutions and of the economic systems that enabled some other former socialist countries with much worse starting positions to develop faster. As a result, Slovakia is buzzing with foreign investments, Prague is a cosmopolitan metropolis, Poland avoided recession altogether and is living its historic golden age, the Baltic states grabbed with both hands the opportunity to be independent after a long occupation and Estonia, for example, is now the E-capital of Europe.

Slovenia, now one of the worst performers in the EU, remembers with nostalgia the 1970s and 80s when it was the richest and most democratic part of Yugoslavia and the entire Eastern Europe, and the 1990s when bright European future was ahead of it.

Buying time with borrowed money

During the last six years Slovenia had three different governments, center right for a bit over a year, center left otherwise. It was holding two elections that, due to a complicated political system, bring the government activities to a standstill for almost a year. During the brief interlude of the second Janša government in 2011, efforts to reduce the budget deficit and modest reforms were met with violent protests in the streets and resistance in the left-dominated media.

Except during that brief interlude, Slovenia was buying time and was doing so with borrowed money. Since 2009 the public debt almost tripled, unemployment more than doubled. In 2013 Slovenia was running the highest budget deficit in the EU. The 2014 budget spends more on interest payments than on entire primary education. From 92% of the EU average Slovenia slid back to 85%. The educated youth is leaving the country en masse. Poster child is no more.

State of fear

For a citizen, the years of the crisis were characterized by uncertainty about her economic prospects, jobs instabilities, looming dangers of reductions of salaries or cutting down public services. It was speculated that Slovenia will be forced to look for external help and face a Greek scenario. But actually there was not much of a belt tightening. The public debate reflected this nervousness and sense of powerlessness. It was fierce, everyone against everyone on anything; except the debate on what would matter – about key structural and economic issues.

This is the general context in which the snap elections took place. The existing left wing parties could not expect much support because of a rather poor track record of handling the economy and internal skirmishes. The economic message of center right were sobering but sometimes unpleasant; especially for those on the receiving end of government spending that would need to be reduced to bring the budget deficit at least closer to the Maastricht criteria.

The public debate over the last couple of years was not about economy, jobs and reforms but about corruption, allegedly corrupt politicians, and spiced up with ideological debates about the continuation of the totalitarian regime in a democratic setting.

The most prominent (but not the only) case was the alleged bribery in the purchase of the armored vehicles for which leader of the opposition Mr. Janez Janša was tried and convicted on charges of “accepting a promise of a bribe”. He was sent to jail just three weeks before the elections. That he did not have a fair trial (to say the least) is argued by most Slovenian legal experts regardless of their political affiliation.

This case dominated the discourse of the strongest opposition party SDS. They were pushed it into a corner where the battle was about the legal problem of its leader, about politically motivated judiciary and about ideology. They made little effort to break out of the corner and appeal to moderate less opinionated voters. They came out second but lost a fifth of their seats.

Enters Mr. Cerar

In this heated political atmosphere the Slovenian people chose a person, who ran on a ticket of ethics, who seems to be a nice guy, who was not bringing any bad news, never said anything that one could disagree with and did not take part in the political quarrels of the last years.

Mr. Cerar was not the only one who was calm and moderate. The EPP affiliated Christian Democrats and the People’s Party as well chose constructive, tolerant, moderate language and had a modern pro-European program. And largely failed in these elections. They were not brand new and lacked the enthusiastic support that Mr. Cerar was getting in the left dominated national media.

The voters in Slovenia turned their backs to political quarrels. They chose not to face reality but to look the other way. And there was Mr. Cerar with a sober face and (according to some media) an aureole of honesty not tainted by a history of political involvement.

The day after

Unfortunately reality is still there. Debt is mounting. Economy will have to open up to foreign investment and privatization, budget will have to be balanced, public services reformed, business environment will have to get more flexible and friendlier to entrepreneurs.

I am sure Mr. Cerar is aware of all this and is well intentioned to address some of these issues. The problem is, however, that in these elections he did not get a mandate to do anything specific. Should he ever push any of his supporters out of her comfort zone, she could rightfully argue this was not what she chose at the elections.

Grand coalition?

Since 2008 I have been advocating grand coalitions. One reason for this is the deep ideological divide that is hampering Slovenia and is rooted in the Communist Revolution during World War 2. A grand coalition could bring a remedy to this. The practical reason is that only right and left combined could move things in Slovenia.

The left, not being a modern social democratic left, is lacking ideas to reform the country. They would like to continue the pre-1989 system with democratic means. They don’t seem to include a reformer like Mr. Schroeder.

The right faces hostility of the informal power structures that remain strong in Slovenia – the trade unions, the media, many academics and the professionals in the civil service. But together, left and right could bring about change.

The elections did not give us the result that could support such a coalition. Indeed the Cerar party and the SDS have the numbers but not the will. Mr. Cerar would not get into a coalition with SDS because he claims that by questioning the Janez Janša’s verdict they are not supporting the rule of law. The SDS would not work with Mr. Cerar, because it is not yet clear what he stands for. The culture of political dealmaking in Slovenia is not very high.

The SDS is also questioning the legitimacy of the entire elections, due to the fact that the leader of the opposition was unjustly jailed just before elections. In fact the elections in Slovenia have hardly ever been fair. Without any right-leaning national media they have always been an uphill struggle for a half of political spectrum.

Failure with a chance

If elections are about establishing trust in politics and government then not much trust was created this Sunday. Mr. Cerar’s voters were not offered a substance to project trust into. SDS voters do not trust the outcome of these elections in general. Half of the population did not go to the polls at all. And the remaining less than a quarter of the electorate voted for minor players catering special interests of farmers, pensioners, public employees and left radicals. And without much trust from the people, a government cannot do much good. Especially in a stormy weather.

On the other hand, elections always offer a chance for a new beginning. Not such a long time ago, Slovenia was a success story. Perhaps it could be again. Mr. Cerar may not have a substance but has the numbers – the seats in the parliament. Now is his task to turn the numbers into substance for the good of the country. He will need support in this, ironically, by those that are not in denial about the state of affairs in Slovenia.

 

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