Worth of economic reforms depends on what they cost

DECADES from now - perhaps as Slovakia establishes yet another auto plant in France, or bars US workers from its high-wage labour market - historians may still be plagued by a single question about the second Mikuláš Dzurinda administration.

DECADES from now - perhaps as Slovakia establishes yet another auto plant in France, or bars US workers from its high-wage labour market - historians may still be plagued by a single question about the second Mikuláš Dzurinda administration.

Was it worth it?

Was the government's survival worth the corruption and parliamentary vote-buying needed to ensure it?

Was the country's spectacular economic recovery a more important story than the prevalence of corruption and organized crime?

Was it really all about the economy, and were people who questioned that article of faith truly stupid?

Whatever answer those distant historians come up with, there's no doubt that the 2002-2006 government has a great deal to be proud of in its economic record, and deserves all the credit for Slovakia's macro- and micro-economic recovery from the Mečiar years.

Without the millstone of "reformed" communists in government, and with the benign backing of the trans-Atlantic community, conservatives and neo-liberals in the cabinet proposed some breathtakingly progressive legislation, and managed to sneak it through parliament before MPs thought better of it.

The runaway deficit in the health care sector was virtually eliminated by closing down less frequented hospitals and requiring patients to cover a small portion of the costs of their care.

An overly-generous social benefits system was curtailed, and unemployed people were given greater incentives to seek work.

The pension system was overhauled, and a second "pillar" was introduced giving people the option to save money for their retirement in individual accounts, rather than having to rely on whatever standard pension the state would be able to provide.

The country's bemusing tax system was simplified, and income tax was dropped to a flat 19 percent rate. "Fiscal decentralization" gave greater powers to regional and municipal governments to raise their own funds, a key element in Slovakia's reform of its public administration.

Along with the many other important economic changes launched, these principal reforms gave Slovakia the reputation of a regional leader. Most impressive of all, they coincided with falling unemployment (down at least three basis points in the past two years alone, whichever method of calculation is used), low inflation (under three percent this year), reduced deficits in public finances and the balance of payments, and at the same time soaring real wages (over seven percent in 2005) and GDP growth (around six percent).

Nor was the good news all economic. Under the current government Slovakia joined NATO and the EU, and took a non-permanent seat on the UN Security Council. It hosted a summit between the US and Russian presidents, and for a time even George W Bush was able to distinguish it from Slovenia, give or take a nudge.

The judicial system was overhauled to shut down little-used courthouses and force appeal courts to actually rule on cases rather than send them back for retrial. Judges' assets were published on the Internet, as were some case verdicts, and everywhere the call was sounded for greater "responsibility" from these life-appointed arbiters of justice in Slovakia. The 1961 Criminal Code and Criminal Procedures were rewritten to speed up trials and give a greater role to attorneys and prosecutors in presenting evidence and fighting cases.

It's an impressive record, and even though it's regrettable these changes couldn't have been made sooner after the 1989 revolution, the second Dzurinda government has a great deal to brag about.

But it hasn't all been roses, very far from it. While "white knights" like Finance Minister Ivan Mikloš and Health Minister Rudolf Zajac received the room they needed to work, those parts of the political establishment furthest from the spotlight laboured mightily for their own obscure benefits.

The most worrying phenomenon has been the power wielded by organized crime - over the justice system, over politicians, over the media. During the second Dzurinda administration most of the leading lights of the underworld were shot dead: Ján Takáč, Jozef Surovčík, Róbert Pál, Peter Čongrády, Jozef Svoboda, and Peter Havaši are but a few of the names that wound up on extravagant tombstones. Many of the cases the police brought against their accomplices, however, were either thrown out of court or halted by state prosecutors.

Particularly ominous was the fate of the Takáč group, a Bratislava mob that the police claimed to have busted in 2004 for extorting money from over 300 businesses in the Ružinov district of Bratislava. Although a state prosecutor agreed with the charges and took five suspects into custody, by December 2005 the same prosecutor, acting in concert with the Attorney General's Office, had decided that no crime had been committed, and let all of the suspects out of prison.

Police allege that a man named Ľubomír Kudlička was one the founders and leaders of the Takáčovci, as the group was known. As reported by SPEX magazine, Kudlička was also a business associate of Igor Grošaft, the nominee of PM Dzurinda's SDKÚ party on the FNM state privatization agency, as well as of Juraj Minarovjech, a Finance Ministry appointee on the Slovenská konsolidačná debt clearing agency. Predictably, however, when First Police Vice-President Jaroslav Spišiak claimed in 2004 that the mafia had "tentacles" in the Slovak parliament, he was scoffed at and, although he won't say it publicly, had his wings clipped by his political masters.

The prime minister's continued use of the SIS secret service as his own private surveillance team was another very troubling phenomenon. The SIS appears to have continued its former practice of bugging and recording whom it pleased, and certainly its (blessedly brief) appointment of former SME journalist Peter Tóth as counter-intelligence chief did little to inspire confidence.

The utter failure of the court system to punish former high-level suspects, including ex-SIS chief Ivan Lexa, for alleged past misdeeds was evidence of either spectacular incompetence or shocking corruption, and neither is good news for the future of the country.

But in passing judgment on the good and the bad in this administration, historians will likely focus on what happens under the next government.

If economic reforms are consolidated, and the enormous task of addressing corruption and systemic crime is at least tackled, then the verdict will likely be - it was indeed worth it.

But if the greed and indifference to the welfare of others seen so often under this administration is not checked, or at least taken seriously, then all we will be able to say about these past four years is that we bought it - their story, their line - at a price none of us could have foreseen.

By Tom Nicholson

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