RECENT WOES OF VLADIMÍR MEČIAR'S HZDS HAVE ENCOURAGED INVESTORS, SAY ANALYSTS

Crown rise linked to opposition party woes

CHANGING political tides, say analysts, are a big part of the Slovak crown's recovery from three-year lows last spring.
While other factors, including increased foreign trade this summer, undoubtedly play a part, the dramatic fall in popularity of the Movement for a Democratic Slovakia (HZDS) party of former Prime Minister Vladimír Mečiar has helped assuage foreign doubts over the credibility of Slovakia's European ambitions.
"Until recent political developments, investments in Slovakia were considered very risky," said Marek Senkovič, an analyst with Istrobanka.

CHANGING political tides, say analysts, are a big part of the Slovak crown's recovery from three-year lows last spring.

While other factors, including increased foreign trade this summer, undoubtedly play a part, the dramatic fall in popularity of the Movement for a Democratic Slovakia (HZDS) party of former Prime Minister Vladimír Mečiar has helped assuage foreign doubts over the credibility of Slovakia's European ambitions.

"Until recent political developments, investments in Slovakia were considered very risky," said Marek Senkovič, an analyst with Istrobanka.

"The crown is strengthening now, and developments in pre-election preferences [as indicated by polls] are stopping it from weakening. This is positive from the investor's point of view," he continued.

International fears stemmed mainly from the path Slovakia was seen as likely to take after September elections were the HZDS and its 1994-1998 coalition partner, the Slovak National Party (SNS), to form the next government.

European and US diplomats have repeatedly indicated that any government involving the HZDS or Mečiar would lead to Slovakia's not being considered for Nato or European Union (EU) entry.

"The HZDS confirmed [that it was not a suitable EU candidate] during their period in government. The SNS is also oriented against integration processes, a fact that can be shown by some of their unusual statements," said Grigorij Mesežnikov, a political analyst with the Institute for Public Affairs (IVO) think tank.

Through June 2002, public opinion polls had been giving the HZDS its traditional near-30 per cent public support, almost twice that of its nearest political competitor. The poll trends were accompanied by a drop in the value of the Slovak crown to three-year lows in July.

"If these parties entered government, it would complicate the integration process with both Nato and the EU," said Mesežnikov.

However, since former HZDS number-two Ivan Gašparovič left the party in July to launch the rival Movement for Democracy (HZD), taking a substantial number of disgruntled former HZDS members with him, Mečiar's party has dropped to second place in a number of recent polls, now enjoying around 17 per cent support.

The SNS, which won nearly 10 per cent support in the 1998 elections, has also split into rival factions since then, leaving neither it nor the splinter Real Slovak National Party (PSNS) with more than an outside shot of getting back into parliament, let alone a ruling coalition.

"In general, the crown started to strengthen after the split of the HZDS and HZD," said Senkovič, adding that the reduced popularity of parties unfavourable to the West had led to an increase in confidence among investors.

"Investors were more nervous before, but their nervousness is diminishing as the elections approach," said Senkovič.

Mesežnikov added that the increased likelihood of Slovaks electing parties with clear and credible integration ambitions would help Slovakia as a whole.

"It was a public service to the country that the HZDS [as an opposition party] had no power to decide matters of state under the current government," he said.

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