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A nation must think before it acts.
Slovakia’s economy enjoyed rapid growth (averaging nearly 8%) in the four years before the global economic crisis hit. In 2009 the country experienced a sharp recession as growth rates dropped to –4.9% of GDP, however, recovery was quick, to the solid growth level of 4.2% in 2010. Although growth slowed slightly in 2011 to 3.3% and is projected at only 2.6% for 2012, the country’s economic outlook is reasonably promising compared to many of its EU-10 neighbors, such as Hungary, Czech Republic and Slovenia. Similar GDP growth rates are predicted to continue in 2013, with IMF growth predictions modest at 2.8%.
The recovery was a result of severe austerity measures, which included budget and, public spending cuts and tax increases. The recovery was export-led and supported by low government debt due to the fact that domestic financial sector is the main investor in Slovak government bonds, providing additional stability. The IMF cites Slovakia as a great example of economic recovery largely due to the effect of new automobile plants and an increase of exports. Nonetheless, Slovakia’s future is unclear because of the potential influence that struggling neighbors may have on Slovakia’s democratic and economic success.
Slovakia’s democracy ratings declined significantly between 2006 and 2010 under a coalition government led by Social Democrat Robert Fico, and influenced by two unsavory coalition partners, Vladimir Meciar and Jan Slota. Fico’s coalition pursued an agenda of broadened state interventionism, hostility to the independent press, marginalization of the opposition, clientelism in filling public service positions and spending public funds, and ethnocentrism.
When a reformist coalition government of Prime Minister Iveta Radicova took over in mid-2010, Slovak democracy quickly rebounded. Radicova exposed the corruption of previous governments and demonstrated a commitment to greater government transparency and respect for independent media and civil society. In October 2011, while pursuing an expansion of the collective European Union bailout fund, Radicova lost a vote of confidence as a result of the defection of one of her coalition parties unwilling to pay for a Greek bailout. Thanks to the political maneuvering of the opposition party led by Fico the Stability Fund expansion was finally approved, but only at the price of early elections. These March 2012 elections brought Robert Fico back in power as Slovakia’s Prime Minister, this time with an absolute parliamentary majority for his own party.
In May, Fico’s government presented their new policy program to Parliament. The program emphasized the importance of “going the European Way”, and regaining control of the country’s finances. However, the document was criticized for vagueness and its lack of data and tangible proposals. Notably, the flat income tax of 19% is unlikely to survive Fico’s governmental reforms. Fico also plans to subsidy unemployment of young people and introduce public housing projects in order to reduce Slovakia’s youth unemployment rate of 35.1% – one of the highest in the EU.
Some have feared that Fico’s government would exhibit similar authoritarian tendencies to those of Hungary’s Prime Minister Viktor Orban as in August 2012 Slovakia followed Hungary in nationalizing private pension funds in order to reduce government debt. Additionally, in October Slovakia elected to join the EU’s financial transaction tax initiative – a move widely criticized as many believe it will hurt the European single market. However, most of Fico’s behavior thus far has been surprisingly positive demonstrating that Fico, the second-term Prime Minister, has become a mature politician . He invited non-party members to advise and serve as government Ministers and he has collaborated with NGOs, trade unions, academia and churches in establishing a new consultative council.
During the recent political and economic unrests Slovakia has kept its status of a consolidated democracy and demonstrated improvement in democratic performance in 2011 and early 2012. In July 2012 the IMF announced that Slovakia is on track to bring their deficit below the EU limit by next year although the country has not yet returned to its status of the early 2000’s as one of the EU-10’s front-runners in democratization and economic reform. There are lingering concerns with corruption in Slovakia’s judiciary branch as well as with Fico’s commitment to instituting the touch policies that will be necessary for the country’s economic recovery. Although Fico’s behavior since the election in March has led the experts to become cautiously optimistic about Slovakia’s democratic future, it is still uncertain what kind of influence the country’s economic troubles and struggling neighbors will have on its democratic institutions and processes.
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