Halt demanded to privatisation

Fearing that the outgoing Mečiar government would use its last days in office to sell off valuable state properties, the newly elected parties of the former opposition have appealed for a moratorium on privatisation until a new government can be formed.
"We are appealing to the government, the [privatisation agency] National Property Fund [FNM] and all competent organisations not to privatise any company or institution," said Mikuláš Dzurinda, leader of the largest opposition party, the SDK, at a September 27 press conference.
Dzurinda, who has been tapped as Slovakia's next Premier if the four former opposition parties can arrange a coalition, said he was most worried that important state-owned banks and other lucrative companies would be sold for a song by the outgoing government.


The opposition has asked government deputies like A.M. Húska (left) not to sell state property.
Vladimír Hák-Profit

Fearing that the outgoing Mečiar government would use its last days in office to sell off valuable state properties, the newly elected parties of the former opposition have appealed for a moratorium on privatisation until a new government can be formed.

"We are appealing to the government, the [privatisation agency] National Property Fund [FNM] and all competent organisations not to privatise any company or institution," said Mikuláš Dzurinda, leader of the largest opposition party, the SDK, at a September 27 press conference.

Dzurinda, who has been tapped as Slovakia's next Premier if the four former opposition parties can arrange a coalition, said he was most worried that important state-owned banks and other lucrative companies would be sold for a song by the outgoing government. "The opposition parties will use any means possible to cancel any such contracts after the new government is formed," Dzurinda warned.

But Brigita Schmögnerová, an economic expert with the reformed communist SDĽ party, said she doubted that Dzurinda's appeal would carry weight with the government. "Sure, it was a good move, but it won't stop them at all," she said, adding that according to current legislation, sales conducted by the FNM might be legally invoilable. "You can't simply terminate the contracts," she said.

In his appeal, Dzurinda made specific mention of prized state properties like Slovak Telecom and the Slovak Savings Bank (SLSP), which, according to opposition sources, had already been scheduled for sale in the period between elections and the formation of a new government.

Schmögnerová, for her part, said she had received reliable information about a planned fusion of Slovakia's two largest banks, the General Credit Bank (VÚB) and SLSP. "By doing that, they would skirt the law on non-privatisation of strategic companies," she said. "The groups who are behind it are the regional HZDS offices in Banská Bystrica [central Slovakia] and Trnava [western Slovakia]," added Schmögnerová.

Ivan Mikloš, an SDK economic expert and a former member of the Property Fund's Supervisory Board, backed up Schmögnerová's allegations. "Yes, there have been clear signals that this privatisation was about to happen," he said. Mikloš resigned on his FNM post on September 14, two weeks before elections, citing his inability to influence FNM decisions.

But the Slovak Privatisation Ministry denied all allegations. "We have not privatized anything for a long time. The only field left for privatization is health care," said Miroslav Lupták, the Ministry's spokesman. However, Lupták said, Dzurinda's appeal would not go unheeded. "I can declare that the Privatization Ministry will stop any kind of new privatisation projects until the new government takes over," he said.

Opposition politicians are not the only ones convinced that the privatisation moratorium is necessary. Vladimír Zlacký, an equity analyst with ING Barings, said the move was a "logical attempt to avoid the situation we had in March 1994 [when a previous Mečiar government was defeated by a no-confidence motion], when Prime Minister Vladimír Mečiar, who had already been dismissed, helped to privatize the giant VSŽ steel mill."

"Yes, that is exactly what we wanted to prevent," agreed Mikloš.

Since the HZDS is likely to end up in opposition, both economic and political observers suspect that the government may use its last days to take a final run through state coffers. "They wouldn't care about the future of the bank, or of the telecom company," said Zlacký. "Their goal would be just to suck out as much money as they could and then leave the business."

Although talk of interference with privatisation normally sends a shiver down the backs of foreign investors, Mikloš said he was convinced that investors would see the sense of the moratorium and respect it. "If the projects [they are involved with] have been correct, they have nothing to lose if they wait until the new government is formed," he said.

David Brown, principal adviser with Slovak Agency for Foreign Investment (SNAZIR), said he shared the same opinion and believed that foreign investors on the verge of signing a contract would back off. "I think that every foreign company that has negotiations on the way will accept [Dzurinda's appeal]," he said.

Brown also didn't think the moratorium would hurt the flow of foreign investment into Slovakia. "The privatisation process was never really favourable towards foreign investors, so it will make little difference," he said. "The fact that the shutters are coming down at the moment is just a logical step."

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