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Problems mount as EU sends warning

UNRESOLVED privatisation disputes, recalls of top ministers and financial scandals are affecting Slovakia's chances of entering the European Union, according to the Deputy Prime Minister for Integration.
Speaking just days after it was suggested Slovakia is viewed as a "problem" candidate state by some EU representatives, Mária Kadlečíková warned of concern in Brussels over the sale of gas giant Slovenský plynárenský priemysel (SPP), non-transparent transactions with state shares and the recent removal of Brigita Schmögnerová as Finance Minister.


The departure of the finance minister was another blow.
photo: Ján Svrček

UNRESOLVED privatisation disputes, recalls of top ministers and financial scandals are affecting Slovakia's chances of entering the European Union, according to the Deputy Prime Minister for Integration.

Speaking just days after it was suggested Slovakia is viewed as a "problem" candidate state by some EU representatives, Mária Kadlečíková warned of concern in Brussels over the sale of gas giant Slovenský plynárenský priemysel (SPP), non-transparent transactions with state shares and the recent removal of Brigita Schmögnerová as Finance Minister.

"We are not sending out a good signal to Brussels and abroad if we start changing privatisations around in the middle of the process, like we are with SPP. Then we have a finance minister recalled. There also needs to be transparency in the [December 2001] sale of shares in VSŽ.

"We have already seen concern expressed in the European Commission's annual report about corruption and a lack of transparency, and we need share trading to be transparent. We also cannot have non-transparency in privatisation processes," Kadlečíková told The Slovak Spectator.

In the last six weeks the privatisation of the second largest gas distributor in the world, SPP, has been put under threat by a proposal from the coalition Democratic Left Party (SDĽ) to change the size of the stake on offer to investors.

Selling off a 49 per cent stake in the firm is seen by many politicians and the majority of cabinet as crucial to the future liberalisation of the Slovak energy market and instilling wider confidence in foreign investors that the country is committed to economic reforms.

The SDĽ has proposed the sale of just a 24 per cent stake with a further 25 per cent of shares transferred to state insurance company Socialná poisťovňa.

The recall of Brigita Schmögnerová from the post of finance minister last month at the request of her own party is believed to have been connected to the SDĽ's proposal for SPP's sale.

The government has also been rocked by other financial scandals. In early January suspicions were raised over the sale last year of a 21 per cent state stake in steel firm VSŽ.

Suspicions were voiced among shareholders, including American company US Steel, that the government had sold the stake to the brokerage house SMD at a price far lower than other companies, including VSŽ itself, had offered (see story page 5).

Then at the beginning of February the non-bank finance and investment houses Horizont and BMG Invest appeared to have collapsed with billions of crowns of depositors' money lost. Police began a criminal investigation into the collapse, and the first charges had already been laid as The Slovak Spectator went to print.

The government has denied any responsibility in the affair, but some opposition politicians and market watchers claimed poor legislation on non-banking financial entities led to the crash of the two firms.

Kadlečíková said that the collapse of Horizont and BMG was probably viewed in Brussels as "purely internal matters".

But she said that the combination of the recall of the finance minister, the VSŽ share scandal and the uncertainty over SPP's future had probably contributed to comments made February 10 at a meeting of EU states' foreign ministers in Spain labelling Slovakia a "problem candidate state".

Reports from the meeting carried in various media quoted unnamed diplomats as saying that Poland, Cyprus and Slovakia have been marked down as problem countries, each for different reasons. Statements from diplomats at the meeting suggested the Slovakia's future direction after September 2002 elections was causing worries in the EU, as were Poland's slow pace of EU-related reform and problems related to the Greek-Turk division in Cyprus.

"The reports from Spain are unofficial and we are analysing why someone would say something like this at the meeting. But it is probably some concern about Slovakia and what is happening with SPP and VSŽ," she said.

But both Prime Minister Mikuláš Dzurinda and Deputy Foreign Minister and chief EU negotiator Ján Figeľ played down the reports from the meeting.

"The problem has been exaggerated. The news was unofficial and we have no such official information from Spain," said Dušan Chrenek, director of Figeľ's office.

However, some MPs involved in the integration process said that the unofficial comments were a warning that must be heeded.

Frantisek Šebej, head of the Parliamentary Commission for Integration, said the news could be seen as "gossip" but added: "It is sometimes wise to listen to gossip because it can indicate the secret direction of thinking in political circles in western Europe."

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