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EDITORIAL

Investing in Slovakia: Glitches keep life interesting

The Victorian adage that 'there's many a slip 'twixt the crouch and the leap' just about summed up Slovakia's week in investment at the end of February.
At a New York investment conference on February 26, Slovak officials had trumpeted opportunities in this country and generally acquitted themselves admirably. After three droning introductory speeches by the Deputy PMs of Hungary, the Czech Republic and Poland, which drew hoarse moans of boredom from delegates, Slovakia's Ivan Mikloš came up with a fluent, candid address that won a loud round of applause. The rest of the day, as Mikloš sauntered around exuding a kind of James Bond charisma, people remarked on what a dashing-yet-sober image he gave investing in Slovakia. At one point, a teenage boy even ran up to thank Mikloš for what he had done for his country, and to beg to be allowed to attend the droning behind closed doors.

The Victorian adage that 'there's many a slip 'twixt the crouch and the leap' just about summed up Slovakia's week in investment at the end of February.

At a New York investment conference on February 26, Slovak officials had trumpeted opportunities in this country and generally acquitted themselves admirably. After three droning introductory speeches by the Deputy PMs of Hungary, the Czech Republic and Poland, which drew hoarse moans of boredom from delegates, Slovakia's Ivan Mikloš came up with a fluent, candid address that won a loud round of applause. The rest of the day, as Mikloš sauntered around exuding a kind of James Bond charisma, people remarked on what a dashing-yet-sober image he gave investing in Slovakia. At one point, a teenage boy even ran up to thank Mikloš for what he had done for his country, and to beg to be allowed to attend the droning behind closed doors.

Sleepy-eyed Gabriel Eichler, the Slovak-American former president of steel maker VSŽ, gave if not the best presentation then certainly the shortest. In little more than five minutes he summed up the situation at the firm as he had found it in 1998 ("it was essentially bankrupt, running at half capacity, with $450 million in debt and in cross default, with 44 banks involved, and a 10% trade union shareholder who also held an exclusive contract to supply scrap metal"), and stressed it had been turned around and sold to U.S. Steel in two years without foreign assistance. Wearing his traditional bow-tie and expression of weary amusement, Eichler was virtually high-fived out of the panel session by admiring delegates and business pals.

So far, so good - until some of the Slovak delegation returned home on February 28 and picked up that morning's issue of the daily paper Sme. At the bottom of page three, a small piece described how the managers of U.S. Steel Košice were working in Slovakia without the necessary permits (ie. as tourists, not permanent residents), and that an audit might be launched of the firm by the Košice Labour Office.

This kind of thing doesn't exactly help. After putting so much effort into a splendid show at the World Trade Center, Mikloš now has to explain to conference panelist John J. Connelly, the Vice President of U.S. Steel Group, why his people haven't yet been given work permits in Slovakia. Not that U.S. Steel employees should be given kinder treatment than the average foreigner, but given U.S. Steel is the biggest FDI catch yet, the fact its managers still can't legally work here tends to highlight in rather dramatic fashion how little coordination there is between those who make policy and those who hamfistedly carry it out.

Aye well, these things 'appen, and no one has ever pretended that Slovakia has ironed out all its investment wrinkles ("Oh, it has work to do," said Eichler emphatically when asked). But just as the positives of the New York conference far outnumbered the glitches, investment is one cup in this country that should be seen as half full rather than half empty.

Inwest Forum itself got off to a rocky start when organisers arrived at 6 a.m. to discover that janitors had thrown out all the printed material which had been prepared for delegates. It all had to be (and was) printed out again, and project manager shook his head later when asked how his crew had managed it.

Mikloš, too, had faced some ticklish negotiations before the Hungarian delegation agreed to cancel an investment conference it had scheduled on its own for shortly after the Inwest Forum date. In return for Hungarian participation in Inwest Forum, organisers had had to give the Hungarians an afternoon seminar hall to themselves, while the Czechs, Slovaks and Poles crowded into one room for a series of joint discussions.

But it was here that Slovakia really made its impact. With panelists restricted to five or ten minute presentations, and the three countries vying for floor time, Poland and Czech delegates began stretching out speeches, ignoring calls for them to be ended, and then sneering at each other from the microphone. Slovak speakers, on the other hand, stuck to their time limits, while Coke Slovakia head Ivan Štefanec raising a laugh by noting that Slovaks drank 98 servings of Coke products a year, "which, by the way, puts us ahead of both the Czech Republic and Poland".

And when Štefanec was asked by a Coke shareholder to describe what he was doing to raise concern for shareholder value among Slovak workers, Eichler jumped in with the observation that few American workers, or any labourers for that matter, set out to work thinking how to increase their bosses' profits.

There were many fine moments in New York in which Slovakia outshone its regional neighbours in preparation, delivery and flair; many occasions on which the inherently patronising nature of occasions like this was diluted by tart reminders that Slovakia is competing for investment, not begging for it.

If only such performances weren't disrupted so often by clangers from home.

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