Slovenian politics - big problems for small country

By bne IntelliNews September 5, 2011

Guy Norton in Zagreb -

Embattled Slovenian Prime Minister Borut Pahor faces a make-or-break vote in parliament sometime in early September, which is destined to decide his immediate political future.

In a high-stakes game of political brinkmanship, Pahor - who has led an increasingly shaky coalition government since September 2008 - has opted to tie the approval of five new ministerial appointees to a vote of confidence. Pahor is banking on the fact that if he survives the vote of confidence, he will have the political clout to dictate the timing of the next election.

At present, the next parliamentary vote is scheduled to take place in September 2012, but with Pahor and his dwindling number of political allies only controlling a meagre 33 of the 90 seats in the National Assembly, there is the distinct possibility that there will be a vote before that date. If recent opinion polls are to believed, Pahor and his Social Democrats (SD) would almost certainly lose power.

Pahor is reported to be looking to push through a constitutional bill that would see elections scheduled for the second half of May 2012, which would give him much-needed breathing space to revive his own and his party's political fortunes. However, the same bill would also contain provisions for a popular vote at the end of this year or early in 2012.

The need for five new ministerial appointments follows the resignation in August of the interior minister, Katarina Kresal, president of the Liberal Democrats (LDS), which is the sole remaining political partner in Pahor's ruling coalition government. Pahor had already lost the support of the Zares and the DeSus parties that originally formed part of a four-way left-wing coalition that ousted the right-wing administration led by Janez Jansa and his Democrats (SDS) party.

Some commentators have questioned the need for a constitutional bill to fix the next election date. In a interview for Slovenian news agency STA, constitutional law expert Miro Cerar described Pahor's proposal as "unusual and radical," and ultimately unnecessary given that existing legislation already contained provisions for the calling of elections before the end of the constitutionally mandated four-year term. Cerar added that using changes to the constitution to solve the political impasse in the country was a highly questionable manoeuvre.

Pahor has stated that rather than to secure his own immediate future, he wants the confidence vote to give him the mandate to implement measures such as introducing a supplementary budget that he claims will help ensure that Slovenia will remain at "the healthy core of the Eurozone." For this to happen, Pahor has warned that Slovenia will need to rein in public spending, avoid excessive borrowing and improve the country's overall competitiveness. Avoiding these measures, Pahor told STA, would be "very bad for Slovenia in the long term, and unsolvable in the short term without the help of other countries, which would mean that we are no longer the masters of our fate."

Among the key challenges is trimming the country's budget deficit, which exceeds the 3% of GDP level allowed within the Eurozone. Pahor is looking to cut the fiscal gap to 3% in 2013, but that looks a stiff challenge given that currently the budgetary shortfall is set to hit 5.5% by the end of this year, versus the previously projected 4.8% level.

There are also concerns on the debt front, with gross government debt having hit 45.2% of GDP by the end of the first quarter, up from €13.7bn at the end of 2010. On the microeconomic front as well, the picture is also pretty bleak. According to the Slovenian Agency for Public Legal Records and Related Services, in 2010 Slovenian businesses racked up €250m of net losses, versus €550m of net profits in 2009 and €3bn of profits in 2007.

According to recent opinion polls, the majority of Slovenians are keen to see a speedy resolution to the growing political instability in Slovenia. A survey by Slovenian daily Delo showed that 56.7% of the electorate wants to see elections by the end of the year at the latest, while just 29.5% feel that elections should be held as scheduled in September 2012. Another poll conducted by pollster Ninamedia for Slovenian daily Dnevnik and commercial broadcaster Pop TV found that popular support for Pahor's Social Democrats has hit an all-time low, with just 10% of people polled intending to vote for the prime minister's party. Support for the main opposition Democrats (SDS) party, meanwhile, is running at around 23%. Overall, 86.7% of the respondents polled by Ninamedia believe the current government is a failure.

Pahor has been reeling on the political ropes ever since his government suffered defeat in a troika of referendums held in early June - relating to pension reform, the opening of the historical archives of the Yugoslav secret police and a law dealing with preventing strikebreaking. Whether his administration can limp on until the next election now looks highly questionable, so the proposed vote of confidence looks increasingly like a lost roll of the dice for the former male model whose political future is now looking decidedly ugly. "I think Pahor has tried to implement a better, less ideological, less cronyistic economic policy than his predecessors, but he has been severely limited in this effort by the fact that his administration is a coalition government and that Slovenia is a small country with many political factions," one local investment banker, speaking on condition of anonymity, tells bne. "Also, although much has changed in Slovenia in the last few years, there is still a strong belief that the state should play a dominant role in the economy, a belief that makes it very hard to conduct a more modern economic policy."

He adds that if Pahor could implement the economic reforms he has proposed, it would arguably be positive for the country if he stayed in power until September 2012. However, given his weak political position, the banker said that, on balance, it would be preferable to have new elections sooner rather than later if that led to a new administration with a strong political mandate to push through much-needed changes on the economic front.

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