Perils of post-communism
Slovakia’s road to a market democracy was bumpy. Upon gaining independence in 1993, the ruling coalition of left-wing provincialists, workers party and nationalists headed by Vladimír Mečiar quickly reversed the budding liberal democratic order. Purging all opposition from the nascent institutions of public oversight, politicizing the state and media, and making mockery of key democratic institutions, such as the rigged 1997 referendum 1 on entry to NATO, marked a decisive break with the ideals of 1989.
Indeed, Slovakia during 1990s became the regional laggard. The US Secretary of State, Madeleine Albright, famously referred to Slovakia as the ‘black hole in the heart of Europe’, 2 while Fareed Zakaria included it among the world’s illiberal democracies. 3 It was the sole Visegrad country excluded from EU accession negotiations in 1997, and the only one in Eastern Europe refused on political grounds.
Still worse, Slovakia could have been rejected from the EU accession talks for the extent of Mečiar’s economic mismanagement. Under the guise of a ‘gradualist’ strategy of economic transition aimed at creating Slovak capitalists, Slovak economy became a textbook example of a bloated and inefficient public sector, cronyism, corrupt privatizations, soft-budget constraints in overstaffed state-owned enterprises (SOEs), and worsening external balance. 4 Politically half-way to Belarus, by late 1990s no Western politician or investor would set foot in this renegade country on the brink of default.
From laggard to regional star
The 1998 general election – mobilizing all segments of civil society and attracting the highest turnout to date – proved a turning point comparable to 1989. Although Mečiar’s party won, a broad pro-European coalition dominated by centre-right SDK party (Slovenská demokratická koalícia; the Slovak Democratic Coalition) led by Mikuláš Dzurinda formed government.
With IMF experts and World Bank loans, Dzurinda went on to implement fundamental public sector reforms and economy-wide restructuring, as most state funds were eliminated, the SOEs and banks privatized – the latter initially requiring a bail out of 12% of GDP – thus eliminating some of the old sources of corruption. 5
Some of the laws, such as on transparency, were advanced even by European standards. The effort did not go unnoticed in Western policy circles, with Slovakia admitted to the OECD, invited to sit at the table with other EU applicants, and ultimately joining the EU and NATO in 2004.
In a spectacular U-turn, Slovaks have turned to the West, and the West embraced them.
Eliminating political risk and transplanting EU’s regulatory regime, Dzurinda signalled to the outside world that Slovakia is ready for business. Heralding a new growth model, the country entered the competition with Visegrad peers for inward foreign investment. Boasting a cheap but skilled labour force together with generous investment incentives, special economic zones, and global marketing campaigns, Slovakia began to appear on the radar of Western multinationals.
The 2002 general election resulted in a purely centre-right formation led once again by Dzurinda, as he convinced the electorate of being the most competent in locking Slovakia firmly in Europe. The second Dzurinda government embarked on a programme of radical reforms consistent with the neo-liberal orthodoxy. 6 Welfare, pension and healthcare systems were overhauled, the labour market liberalised, flat income tax introduced, and taxes on corporations slashed, as the reformists sought to make up for the fallout during Mečiar years, economically catch up with Western Europe, and comply with EU’s strict ERM II criteria for entering the Eurozone.
Between 2000 and 2007, Slovakia’s public expenditure dropped from 52% to 36% of GDP – the largest fiscal retrenchment in OECD on record. Rewarding Dzurinda’s reform zeal, foreign-led re-industrialization – particularly in the automotive and electronics sectors – gripped Slovakia, transforming it into one of world’s most open economies. Amid stellar, yet balanced, economic growth and rapidly decreasing unemployment, Slovakia was crowned the ‘Tatra Tiger’ by renowned international periodicals and in 2005 named the world’s top reformer by the World Bank. 7
What the second Dzurinda government delivered amounted to a fundamental redefinition of the role of the state and the market, and the results were staggering.
Nevertheless, despite apparent success in turning the corner, a growing rift between those able to exploit the new economic opportunities – the urban, educated and internationally-oriented part of population – and those left behind – those with inadequate skillsets and dependents on state hand-outs – inevitably emerged. A major disappointment was that the Mečiar-era illiberal networks and elites who derailed the country’s development – and Mečiar himself – were allowed to flourish economically. Also, key sectors, such as education, remained neglected with Slovak teachers having the lowest relative pay in OECD. And patronage, nepotism and corruption were anything but over. 8
The emergence of Fico’s Smer
The growing social polarization and disillusionment provided fertile ground for Robert Fico, a young and versatile political opportunist. Born in early 1960s, he is remembered by fellow coursemates from law school as a very ambitious and hard-working student. Active in communist youth organisations and a promising Communist Party apparatchik, he was first elected to parliament in 1990 for reformed communists before going on to represent Slovakia at the European Court of Human Rights (ECHR) just two years later.
Having lost every single case during his eight year tenure at the ECHR, Robert Fico’s political comeback was very well timed.
Still an unknown and thus untainted figure at the turn of the millennia, his newly formed Smer (Direction) party became representative of a new strand of politics. After an alternation between left-wing (Mečiar-led) and right-wing (Dzurinda-led) governments, both disappointing too many people on too many accounts, Fico promised not to be preoccupied by ideological rivalries, but – in a textbook populist manner – focus on the real problems that people face, without clearly spelling out what those might be, or what the solutions to them may look like. Underscoring the fluidity of Slovakia’s political scene, Fico’s Smer, while still a minor force in 2002, won the 2006 general election.
Fico’s leftist-populist Smer formed an uneasy coalition with Mečiar and the nationalists, who harmed Slovakia so much domestically and internationally a decade ago, earning Smer the boot from the pan-European Socialist group. Deprived the comfort he enjoyed in opposition, Fico revealed that in terms of policies he is, in fact, absolutely hollow. Apart from cosmetic changes in the healthcare sector, Fico didn’t tinker with Slovakia’s political economy, by then firmly integrated in the Euro-atlantic political structures and global supply chains of predominantly German multi-nationals. A hallmark of the course set by Dzurinda, Slovakia joined the Eurozone in 2009, as the first and to date the only country among the Visegrad four.
Nevertheless, sponsors who funded Fico’s ascent to power demanded a return on their investment, as Slovakia became increasingly gripped in corruption scandals whose scope was reminiscent of the 1990s. 9 Slovakia’s institutional deterioration, the breakthrough of populist-nationalist and xenophobic forces in Poland, and the seeming ungovernability of Czech Republic at the time put in doubt many of the optimistic assumptions about the democratization process of the countries on EU’s Eastern fringe.
Then came the global financial and economic meltdown, hitting Slovakia, overspecialized in cyclical industries, particularly hard. Although Smer pocketed another electoral victory in 2010, the party found itself temporarily out of office, after a broad, incoherent anti-Fico coalition with a slim majority formed government.
The incoming centre-right government found itself in a similar position to the anti-Mečiar coalition of 1998, as it took on the task of mopping up the mess left by its incompetent predecessor, while that predecessor would emerge as an alternative, should the government fail in its uneasy endeavour. And indeed, despite moving swiftly in consolidating public finances and grand plans to improve the business environment, by October 2011 the ruling parties broke apart on the issue of Eurozone bailouts, when a junior member refused to support Eurozone’s permanent bailout fund, a vote linked to a motion of confidence.
In the ensuing snap elections, Smer secured, for the first time in post-1989 Slovakia, an absolute majority through promising a commodity that has traditionally been in short supply for a nation directly affected by all the major upheavals of the last century once again caught in global turmoil – stability. Going on to unravel Slovakia’s flat tax regime and increase the tax burden across the board, Fico never proposed a credible alternative vision for the future. Rather, corruption scandals and muddling through superseded earlier achievements.
Moreover, after eight years of Smer’s rule, all key institutions of the state are packed with allies and party loyalists. From the general prosecutor, who is Fico’s former classmate, through the highest placed judges, the public audit office, regulatory authorities, the public broadcaster to the central bank governor, Smer has gained unprecedented influence over all walks of civil and political life to the extent that no public institution holds Smer to account. Only Andrej Kiska, who beat Fico in his bid to become president in 2014 and thus achieve total control, posed a break to Smer’s political juggernaut.
Smer will probably never have the two-thirds majority needed to unilaterally rewrite the constitution, as Fidesz did in Hungary, or risk street protests and the watchful eye of Brussels by abrupt controversial moves, as Poland’s current government. Instead, Smer prefers a gradual proliferation of the state consistent with, even if not in the spirit of, the existing rules. However, Fico’s outright refusal to communicate with what he deems opposition media raises serious questions about his commitment to democratic norms.
Fico failed spectacularly to put his unprecedented mandate to good use, and used it to cement his grip on the country’s institutions.
Explaining Smer’s appeal
Smer stands and falls on Fico’s energy, charisma and political skill. It will win the coming election, though it may need a coalition partner to extend its rule. Three reasons account for Smer’s success.
First, Fico’s genius lay in constructing a party and PR machinery that appeal to the ‘losers’ of Slovakia’s post-communist transformation. Disillusioned by Mečiar’s bankrupt Slovak model of national capitalism and Dzurinda’s radical reforms, a large segment of the Slovak electorate that resents the pace of change after 1989 embraced Fico as the true champion of their cause. Fico made the correct calculation that the resentful would outvote the hopeful.
Second, Smer has proven very receptive, adaptive, and efficient at exploiting Slovaks’ anxieties of the day. From his anti-reform zeal, through being the guarantor of stability to the protector of Slovakia, Smer always found a convincing narrative that resonated strongly with the electorate. Indeed, the current migration crisis has been a blessing for Smer, whose popularity had been dwindling by summer 2015, and whose combative stance vis-à-vis the EU and strong anti-Muslim rhetoric in the name of protecting Slovakia has once again struck a cord.
Finally, Fico’s Smer benefits from Slovakia’s fractured and quarrelling opposition. Facing no competitor from the left, the Slovak centre and centre-right consists of at least a dozen micro to small-size parties who lack a Dzurinda-like consensus maker or a focal point of cooperation that Western integration once provided. Amid the multiple crises facing Europe and the Eurozone, Smer galvanises support by promising stability and security as opposed to the fragility and chaos that would allegedly ensue from any broad anti-Smer coalition.
However, Smer’s appeal is not limited to the general electorate. Its many shareholders, including Mečiar-era privatizers, financial sharks, and murky businessmen epitomise the shortcomings of Slovakia’s post-communist transition.
Smer is an idiosyncratic party hardly comparable with any other in Europe. Nominally progressive, it is socially conservative, opposed to LGBT rights and neglecting the inclusion of the Roma. Although proud member of the European socialists, it is distinctly nationalist, and deploys xenophobic rhetoric in the current migration crisis. And while Fico favours greater redistribution, he has shied away from increasing wealth and property taxes – the most redistributive instruments that don’t damage economic growth. A measure of its confidence, Smer had no election programme two weeks before election.
Few political parties in Europe are so full of contradictions as Fico’s Smer who exploits these to offer a tailored, populist, and meaningless political product with a single goal: to cling onto power.
It is likely that Fico – a power-hungry status-quo manager – would be in his current post had communism collapsed in 1989 or not. And another four years with Fico at the helm will be four years wasted. Yet nobody seems able to replace him.
- “A referendum in Slovakia, held on 23 May and 24 May 1997. Voters were asked four separate questions: on whether the country should join NATO, whether nuclear weapons should be allowed in Slovakia, whether foreign military bases should be allowed in Slovakia, and whether the President should be elected directly. The government left the last question off the ballot paper, leading to both referenda failing to meet the legally required turnout threshold.” accessed March 2, 2016, https://en.wikipedia.org/wiki/Slovak_referendum,_1997; Slovak Referendum Fails To Resolve NATO Issue, The New York Times, May 26, 1997, accessed March 2, 2016, http://www.nytimes.com/1997/05/26/world/slovak-referendum-fails-to-resolve-nato-issue.html. ↩
- Another direction. Slovakia’s election, May 20, 2010, accessed March 2, 2016, The Economist, http://www.economist.com/node/16167828. ↩
- Fareed Zakaria, “The Rise of Illiberal Democracy,” Foreign Affairs, Vol. 76, No. 6, 1997, p. 22. ↩
- 25 rokov slovenskej ekonomiky po Nežnej revolúcii/25 years of the Slovak economy after Velvet Revolution, UniCredit Bank, Special Notes, p. 7, accessed March 2, 2016, http://www.unicreditbank.sk/att/142691/K-17.11.2014_UniCredit_Bank_Special_Notes.pdf; Celkový dlh verejnej správy / The overall debt of the public administration, accessed March 2, 2016, http://www.statistics.sk/pls/eutab/html.h?ptabkod=tsdde410; Vývoj verejného dlhu Slovenska/The development of the Slovak public debt, accessed March 2, 2016, https://infogr.am/vyvoj-verejneho-dlhu-slovenska5; Balance of the current account, % of GDP, accessed March 2, 2016, http://ec.europa.eu/eurostat/tgm/table.do?tab=table&language=en&pcode=tec00043. For a different perspective on Mečiar´s era see for example David A. Wemer, “Europe’s Little Tiger?: Reassessing Economic Transition in Slovakia under the Mečiar,” The Gettysburg Historical Journal, Vol. 12, Article 7, 2013, accessed March 2, 2016, http://cupola.gettysburg.edu/cgi/viewcontent.cgi?article=1008&context=ghj. ↩
- For a general overview of the corruption in Slovakia see Transparency International in Slovakia, accessed March 2, 2016, http://www.transparency.sk/en/vystupy/publikacie/. ↩
- Sharon Fisher, John Gould, Tim Haughton, “Slovakia’s Neoliberal Turn, ” Europe-Asia Studies, Vol. 59, Issue. 6, 2007, accessed March 2, 2016, http://www.tandfonline.com/doi/abs/10.1080/09668130701489170?journalCode=ceas20. ↩
- Tatra tiger on the ropes, The Economist, October 12, 2011, accessed March 2, 2016, http://www.economist.com/blogs/eastern-approaches/2011/10/slovakia-and-euro-crisis; Matthew Reynolds, “Once a Backwater, Slovakia Surges,” The New York Times, December 28, 2004, accessed March 2, 2016, http://www.nytimes.com/2004/12/28/business/worldbusiness/once-a-backwater-slovakia-surges.html. See also Doing Business in 2005: Removing Obstacles to Growth, World Bank, International Finance Corporation, Oxford University Press, 2005, p. 1, accessed March 2, 2016, http://www.doingbusiness.org/~/media/FPDKM/Doing%20Business/Documents/Annual-Reports/English/DB05-FullReport.pdf ↩
- OECD (2014), “Indicator D3: How much are teachers paid?”, in Education at a Glance 2014: OECD Indicators, OECD Publishing, accessed March 2, 2016, http://dx.doi.org/10.1787/888933119815; http://www.oecd.org/edu/EAG2014-Indicator%20D3%20(eng).pdf. ↩
- Ivan Krastev, “Is East-Central Europe Backsliding? The Strange Death of the Liberal Consensus,” Journal of Democracy, October 2007, Vol. 18, Issue 4, pp. 56–63, accessed March 2, 2016, http://www.journalofdemocracy.org/article/east-central-europe-backsliding-strange-death-liberal-consensus. ↩