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European Union reports on Slovakia's candidacy for membership

On July 17 the European Union (EU) released its report about all countries aiming for EU membership. Reprinted here in part is the summary and conclusion of the 125-page report on Slovakia.
Slovakia submitted its application for membership of the European Union on June 27, 1995. Its request is part of the historic process of ending the division of Europe and consolidating the establishment of democracy across the continent. Slovakia's situation presents a number of problems in respect of the criteria defined by the European Council in Copenhagen.
The operation of Slovakia's institutions is characterized by the fact that the government does not sufficiently respect the powers devolved by the constitution to other bodies and that it too often disregards the rights of the opposition.

On July 17 the European Union (EU) released its report about all countries aiming for EU membership. Reprinted here in part is the summary and conclusion of the 125-page report on Slovakia.

Slovakia submitted its application for membership of the European Union on June 27, 1995. Its request is part of the historic process of ending the division of Europe and consolidating the establishment of democracy across the continent.

1. Political Criteria

Slovakia's situation presents a number of problems in respect of the criteria defined by the European Council in Copenhagen.

The operation of Slovakia's institutions is characterized by the fact that the government does not sufficiently respect the powers devolved by the constitution to other bodies and that it too often disregards the rights of the opposition. The constant tension between the government and the President of the Republic is one example of this. Similarly, the way in which the government recently ignored the decisions of the Constitutional Court and the Central Referendum Commission on the occasion of the vote on May 23-24, 1997, directly threatened the stability of the institutions. The frequent refusal to involve the opposition in the operation of the institutions, particularly in respect of parliamentary control, reinforces this tendency.

In this context, the use made by the government of the police and the secret services is worrying. Substantial efforts need to be made to ensure fuller independence of the judicial system, so that it can function in satisfactory conditions. The fight against corruption needs to be pursued with greater effectiveness.

Apart from this the treatment of the Hungarian minority, which still lacks the benefit of a law on use of minority languages, even though the Slovak authorities had undertaken to adopt one, as envisaged by the constitution, needs to be improved. The situation of the Roma similarly needs attention from the authorities.

In the light of these elements, although the institutional framework defined by the Slovak constitution responds to the needs of a parliamentary democracy where elections are free and fair, nevertheless the situation is unsatisfactory both in terms of the stability of the institutions and of the extent to which they are rooted in political life. Despite recommendations made by the European Union in a number of demarches and declarations, there has been no noticeable improvement.

2. Economic Criteria

After a fall in GNP of nearly 25% between 1989 and 1993 Slovakia has seen positive growth since 1994 which in 1995 and 1996 reached high levels (6.8% in 1995, 6.9% in 1996), while inflation has fallen (5.4% in 1996). This has, however, been accompanied by an increase in budget deficits and in particular by a worsening of external accounts.

Slovakia has 5.4 million inhabitants and its GDP per capita is 41% of the EU average. The agricultural sector employs nearly 10% of the working population, and produces 6% of gross value added. Trade relations with the EU have grown considerably since 1989 and now represent 36% of Slovakia's imports and 41% of its exports.

On the basis of this analysis, the Commission's judgment as to Slovakia's ability to meet the economic criteria established at Copenhagen is as follows:

Slovakia has introduced most of the reforms necessary to establish a market economy. The price system has been liberalized and allocation decisions are decentralized by the advanced privatization process. Nevertheless, a restrictive Price Law has been introduced in 1996, and the draft Enterprise Revitalization Act would be a major step back from market mechanisms. The financial sector needs to be reinforced, and progress is needed in the regulation of the bankruptcy process and capital markets.

Slovakia should be able to cope with competitive pressure and market forces within the Union in the medium term, but this would require more transparent and market-based policies. For a number of years, the economy has grown rapidly, with low inflation. The country has low wage costs and a skilled labor force. However, enterprise restructuring has been slow, which is gradually undermining economic growth and external balance. The low level of foreign direct investment reflects these structural problems, which need to be tackled swiftly and in a transparent way.

3. Capacity to take on the obligations of membership

Slovakia has for the most part met its obligations under the Europe Agreement and mostly according to the timetable for implementation set out in it. The Agreement has operated in a satisfactory manner, but it has not been possible to resolve all the problems which have arisen in relation to both the democratic functioning of the institutions and commercial matters. In particular, the introduction by Slovakia of a system of import deposits is not in accordance with the Agreement. Slovakia has achieved a satisfactory rate of transposition of the rules and directives identified in the White Paper.

Significant progress has been achieved on transposing legislation related to key areas of the single market such as company law, banking, free movement of capital and taxation, even if further work is needed to achieve full alignment with EC rules. More substantial efforts are needed to apply the acquis in the medium term on standards and certification, industrial and intellectual property, competition, public procurement and insurance.

As for the other parts of the acquis, provided it continues its efforts, Slovakia should not have particular difficulty in applying it in the medium term in the following fields: education, training and youth; research and technological development; audio-visual; small and medium enterprises; consumer protection; international trade relations; and development.

For the environment, very important efforts will be needed, including massive investment and strengthening of administrative capacity for enforcement of legislation. Full compliance with the acquis could only be expected in the long to very long term.

In agriculture, provided there is progress on veterinary and phytosanitary controls, on strengthening of the structures needed to apply CAP and on re-structuring the agrifood sector, accession in the medium term should not cause significant problems for Slovakia in implementing the CAP in an appropriate manner.

As for energy, work is still needed on operation of monopolies, price fixing, access to networks and state intervention in the solid fuel sector. Slovakia has a nuclear power station at Bohunice which produces nearly 50% of the country's electricity; and is constructing a new power station at Mochovce. It must in the medium term modernize two of the units at Bohunice to bring them up to internationally accepted safety standards; and must take the appropriate measures to close the units which cannot be modernized. A long-term solution needs to be found for nuclear waste.

Conclusion

In the light of these considerations, the Commission concludes that Slovakia does not fulfill in a satisfying manner the political conditions set out by the European Council in Copenhagen, because of the instability of Slovakia's institutions, their lack of rootedness in political life and the shortcomings in the functioning of its democracy.

This situation is so much more regrettable since Slovakia could satisfy the economic criteria in the medium term and is firmly committed to take on the acquis, particularly concerning the internal market even if further progress is still required to ensure the effective application of the acquis.

In the light of these considerations, the Commission considers that negotiations for accession the the European Union should be opened with Slovakia as soon as it has made sufficient progress in satisfying the conditions of membership defined by the European Council in Copenhagen.

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