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Fico torn between tunnels and euro

SO HERE it is: Eurostat has cast doubts on last year's public finance deficit for Slovakia. Apparently it was 0.7 percentage points higher than reported and reached 4.1 percent of the GDP - much higher than the three-percent limit Slovakia must meet to adopt the euro.

SO HERE it is: Eurostat has cast doubts on last year's public finance deficit for Slovakia. Apparently it was 0.7 percentage points higher than reported and reached 4.1 percent of the GDP - much higher than the three-percent limit Slovakia must meet to adopt the euro.

The increase came simply and logically: Eurostat added into the calculations a few state bodies that were previously missing.

For instance, the National Highway Company (NDS). The NDS was established few years ago by the Mikuláš Dzurinda cabinet for exactly one purpose: the hope that debts created by the NDS would not be included in the public budget deficit. A short time later, Prime Minister Robert Fico's Transportation Ministry embraced this assumption with such enthusiasm that it prepared and pushed through government a plan to build 150 kilometres of highways and dual carriage-ways, including tens of kilometres of tunnels, using public-private partnerships (PPP) between the NDS and private companies.

For these 150 kilometres of roads, the government is expected to pay private developers Sk7 to 10 billion (€207 to 296 million) a year over the next 25 years.

The hope was that those funds would not be included into the deficit. Let's remember, the Finance Ministry did not share this enthusiasm and showed a much more sober attitude to this Sk250-billion transaction.

Slovak construction companies stand to benefit from the PPP arrangement even if they don't participate at all in the project - which is a highly unlikely scenario. Under the PPP system, private money from construction firms would build the most expensive tunnels and highways. That means tens of billions of crowns that would otherwise pay for these costly endeavours would be freed from the state budget and EU funds, and available to be used in road construction elsewhere.

One can expect most of those newly-available construction crowns would end up being directed to Slovak construction companies working on other projects. For instance, a Sk50-billion motorway in the northwestern Kysuce region that Váhostav has been building over the last 10 years or so.

Things are most likely going to get more complicated and Fico will have to choose between the euro - until now considered his top priority - and Smer party donors, to whom billions from motorway and tunnel construction are presumed to start flowing. According to Slovak MP Daniel Lipšic, a top Fico "Maecenas" (patron) is billionaire and former communist secret police agent Juraj Široký; some people reportedly consider him the shadow Prime Minister of Slovakia.

By a strange coincidence, Juraj Široký of Záhorská Bystrica, according to a listing from the business register of the District Court in Žilina, also happens to be deputy chairman of Váhostav's board of directors. According to the business register, Váhostav's key business is "development and construction of tunnels" and "manufacturing concrete construction elements".

It appears that the decision between the euro and tunneling will soon give us an answer to the question of who governs Slovakia, and who might be only a puppet on the strings of a rich donor.


Juraj Mesík works at the World Bank in Washington. The article expresses his personal opinion.

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