Ján Počiatek: "sentiment is important"

WHEN he was appointed finance minister, his former colleagues from the Norwegian telecoms firm Telenor were as surprised as the Slovak expert public - pleasantly surprised, but nonetheless surprised.

photos: Jela Priehradníková

WHEN he was appointed finance minister, his former colleagues from the Norwegian telecoms firm Telenor were as surprised as the Slovak expert public - pleasantly surprised, but nonetheless surprised.

Now, with his euro-friendly budget in parliament and the surging Slovak crown reflecting confidence in his macro-economic management, Finance Minister Ján Počiatek is no longer regarded as such a wild-card choice for the Fico's government's economic architect.

Young, at 36, but no longer surprising, Počiatek gave The Slovak Spectator an interview on October 26.

The Slovak Spectator (TSS): What kind of family do you come from?

Ján Počiatek (JP):I come from a harmonious family. Perhaps the most interesting thing about it is that my father was a diplomat for many years, and because of that he had a very deep relationship with Indonesia, where he eventually rose to be ambassador. Our lives were intimately connected with Indonesia as well, and just after the revolution I spent a year working there, which really opened my eyes. I was 18, a typical teenager interested in everything except what was happening at that moment in history.

I think the last few years of communism were ideal for teenagers, because we didn't really lack anything, no one was really leaning on us, and there was more or less equality. We didn't have to deal with such absurd things as we do today. I remember those times in a very warm, nice light.

But it was also clear that our outlook was warped, and that year abroad really helped me to understand what life was all about. I understood that we had to start preparing for the future right away.

TSS: When as a university student you saw how the third Mečiar government was preparing for the country's future, what did you think?

JP: I didn't take any notice. I didn't really follow politics. I was more looking after myself, and focusing on getting an education.

TSS: But you were studying macro-economics. Didn't you even notice that the country was getting itself into economic trouble in 1997 and 1998?

JP: I noticed that, yes.

TSS: And what did you think about it?

JP: At that time I really didn't think anything about it. I'll repeat, I was focused on my education. I noticed it, sure, but everything we learned in school was so piecemeal, we were covering the basics, and we didn't even have enough study materials. It was comical, it was different than today. In those years the big themes were the split of Czechoslovakia, privatization scandals. It was a goulash. My memory of it is that it was a mass of stuff without any clear contours.

TSS: But for a great part of society, the contours were very clear. Slovakia was deeply polarized, and 84 percent of people turned out to vote in 1998.

JP: My memory of it is as a goulash. I didn't have everything divided up into pigeon holes, I didn't have a clear opinion on everything.

TSS: Did you have an opinion about the reforms that the 2002-2006 Dzurinda government implemented?

JP: They had an impact on the business environment and everything else, but the main thing I would fault the former government for is that in my opinion they did not make it a priority to think of the average citizen.

TSS: You say that as a university student you were absorbed in your own education. When did you become interested in serving your country as a government minister?

JP: It's a complicated process, but for me an important factor was that people around me began to pay attention to politics and drew me in to their discussions. I realized that to a great extent it was about management, whereas before it had seemed to me very abstract.

TSS: Why were you chosen as finance minister and not someone else?

JP: I guess because they thought I was the best candidate.

TSS: What were you the best at?

JP: I don't know. I can't speak for them.

TSS: Weren't you ever interested to find out? You are on first-name terms with the prime minister - didn't you ever ask him over a beer why he had chosen you?

JP: You asked what qualities I have that made me the best choice, and I just wasn't privy to such comparisons or evaluations.

TSS: To what extent did it have to do with your friendship and business relationship with Interior Minister Robert Kaliňák?

JP: That was certainly of fundamental importance. Mr Kaliňák is my contact not only to the Smer party, but to politics in general. He is the reason of reasons. He has been following politics for a long time, and he transmitted this to me and to our little group of friends.

TSS: One of the first things you did in office was to announce that the government was committed to introducing the euro in 2009 as planned. Why was that so important? What did it symbolize?

JP: Because in that one sentence we said everything - that this government will practice prudent fiscal policy. That's what it's all about, and for people who know what it means, you don't need to add anything else. It was important to communicate what our macroeconomic intentions were. Besides that, the euro in itself is very important.

TSS: Prime Minister Fico said at the same time that you would only adopt the euro if it proved advantageous for Slovak citizens. The theory has been advanced that Central European countries, in pursuing the inflation rate they will have to achieve in order to adopt the euro, could hurt their high economic growth. What is your view - do the Maastricht inflation goals make sense for countries with 6 percent growth?

JP: Inflation always handicaps growth, because although the two are connected, inflation degrades growth. So for that reason I think the Maastricht criteria are good, because they are about stability, and a stable economy doesn't have high inflation.

TSS: So do you think that people who argue that killing inflation to adopt the euro could slow growth are wrong?

JP: Does containing inflation slow growth?

TSS: Usually, yes.

JP: I've never heard that. Maybe the people making those arguments meant that containing public sector consumption could slow growth. But it makes no difference, because we have growth, and other things are more important in terms of keeping it going.

In terms of euro adoption, all of the analyses we have support it, because Slovakia could become more attractive for investors, and we could gain a comparative advantage within the region. For a small, open economy like ours, this is a unique opportunity. Especially as within the Visegrad Four alliance we are the only one with our hopes still alive of adopting the euro according to plan.

TSS: This government often uses the word solidarity to explain its mission. What do you think voters wanted out of politics in these past elections?

JP: People just want someone to take care of them more sensitively, and that's what I said at the beginning. We don't have infinite possibilities, but it's important that we evaluate the possibilities we do have, and try to improve the lives of the widest possible group of people. We are here for the people, and that's how we're going to do politics. I could say that some measure is a mistake according to some economic theory, but I think the important thing is to pick a course, and then to be able to move to the right or the left as the situation demands.

For me, the most important thing is the basic framework. As you have seen, the measures we have taken are very cautious, but they have all been aimed towards the people, and under this government they always will be. As I said, I think it's important for people to have the feeling that we're doing the best for them we can in the circumstances. That feeling is very important. Sometimes, in a company, you can achieve an effect without actually doing anything, as long as people feel you are working for them. Sentiment is very important, and a general feeling of satisfaction is something that can have a very positive effect on an economy.

TSS: How confident are you that the budget that is finally approved by parliament will be the same as the one you submitted, with its 2.9 percent deficit in public finances?

JP: Very, very confident.

TSS: Even though Vladimír Mečiar has already he said he won't support it unless some changes are made?

JP: Yes.

TSS: You have said that one of the main ways of saving money is to fire civil servants, up to 20 percent of whom could lose their jobs, as well as to examine ministry phone contracts and rents and try to get better deals. Has anyone started to act on these ideas yet?

JP: We've only been in government three months, and so far this ministry has dealt exclusively with the budget. But we have a clear idea of how to proceed, and in the New Year we will immediately take it up, in order that the effect already be felt in 2008.

TSS: What has been the response of the other ministries?

JP: Well, there we will see who the real managers are. The response of course has so far been... (long pause) How should I put it... It's clear that it is a difficult task, and everyone is being very careful in what they say about it. But this government has said very clearly that we will do it.

TSS: You went into the cabinet meeting on September 28 with a very clear vision of tax changes as well, but some were altered during the meeting by Prime Minister Fico, and after the session, you were unable to say what exactly had been approved, and what the tax effect would be. How strong a voice do you have in government, and is it strong enough to see tough measures through?

JP: The government is not a government of one person, it is a consensual affair based on a coalition agreement. It's not as if one manager or one economist decides that things will be a certain way, and that's the way they are. For me it's important that we maintain the basic direction. That's why I really don't mind if a few minor changes are made to what I originally wanted.

TSS: How would you compare your position in this government with that of your predecessor, Ivan Mikloš, in the former administration?

JP: I wouldn't, because you can never see what happens inside the government. Outward impressions are irrelevant - I know that today, because I'm inside. There's a huge difference between how things are presented by the media and how they are in reality.

TSS: Do you agree with the widespread opinion within this government that it has been unfairly treated by the media?

JP: (Pause) Tough question. I think that the media often use very superficial analyses. On the other hand, I've read that our country is in eighth place in the world in terms of freedom of the media, which is very nice. I understand that the media are a part of every democracy, and we should be happy we have them. On the other hand, I would appreciate it if the line between yellow press and serious media was more clear.

TSS: Ivan Mikloš used to complain that his government was more popular abroad than at home. Your government is the opposite. Why?

JP: I think it's just because the former government was very successful in arousing a phobia regarding what this government is all about. In terms of finance, you remember how they were saying it would be a catastrophe and predicting all kinds of things. I think it's similar in other areas. I am convinced that if this government gets the room to pursue its goals and work normally, within a year these fears will be forgotten, and that we will gain international credit.

But I am a person who believes in achieving something first, and then talking about it. That's why I am bothered by all of these evaluations, because nothing has happened yet. And when something does happen - we have a good budget, we have higher ratings, the financial markets have faith in us - we still get criticized. It really just needs time for the phobia to evaporate, and for our government to be judged on a normal basis - on the basis of the facts.

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