You are the Minister of Economy. The SDĽ [leftist ruling coalition party] claims that you are not doing enough to revive production. In a market economy, do you actually have the tools to do this?
Harach: Through legislation you can improve the business, institutional and regulatory environments.
But the SDĽ keeps insisting on "economic revival." Have they told you what they have in mind?
Harach: No. They have been satisfied with making general statements.
Are you in favour of privatising as much state property as possible?
Harach: Yes.
The SDĽ put through a law which hampers the privatisation of certain companies, because the party is afraid of allowing monopolies to slip out of state hands. Are you afraid of this as well?
Harach: As long as the regulatory framework is a good one, then no.
Are you in favour of the privatisation of gas utility SPP?
Harach: Of course. At the same time I respect the law leaving 51% of the firm in state hands. In the future, however, I see this percentage falling.
When should the SPP privatisation begin?
Harach: In the first quarter of next year.
The Russian gas giant Gazprom has also expressed interest in buying SPP. From the point of view of the state's interests, do you have any preferred buyers for SPP?
Harach: Yes, but that's subject to analysis.
The question has arisen of importing Norwegian gas through Poland. What's your opinion?
Harach: We need to diversify our energy imports, and that's actually part of the government's programme.
One possibility is hooking into Norwegian gas through Poland, and building a connection to the Krakow pipeline, and the second is using our existing transit route to the Czech Republic.
While state companies were buying up shares of VSŽ Košice [before a crucial May shareholders meeting which the state needed to control], private companies made a profit at the expense of the state.Why?
Harach: My job was to provide insurance for the entry of the investor [US Steel] into VSŽ. [State gas transit firm] Transpetrol was thus required to buy a medium sized package of shares. I gave them directions, they carried them out. Apparently, it made sense to buy these shares also from [private broker] Penta Group.
Why was Penta Group allowed to get a jump on the state [by buying VSŽ shares and then reselling them at a profit to state firms]? Surely the state could have bought these shares sooner?
Harach: I can't tell you, I'm not a stock market broker. I wasn't present for these strategic decisions. I was given a job and I did it.
But the state lost several hundred million crowns on the deal...
Harach: Analyses show that Trasnpetrol bought the shares at an average price of 209 crowns. Today we know that US Steel will buy them maybe at a higher price. Maybe we could have done things to keep the price down, maybe a few months sooner. But no one knew how VSŽ would develop.
The current coalition crisis was sparked by the recall of Štefan Košovan from the head of [electricity utility] SE. [SDĽ leader Jozef] Migaš is now angry at [Prime Minister Mikuláš] Dzurinda, even though according to law responsibility for the recall fell to you. Isn't this just further evidence that state bureaucracy posts are divided up politically?
Harach: I think that Migaš is angry with me too.
But if you look at the situation from the outside, it appears that you weren't responsible for Košovan's recall even though by law it was your job. So it must have been a political matter, one arising from the way the coalition parties divvied up the top posts at state monopolies after elections.
Harach: If we had done it differently [after elections], the former managements of those companies could have signed even more disadvantageous contracts for those companies than they did.
But surely you could have held professional job searches quickly?
Harach: They take a certain time. It's true that in building the government agreements were also reached on state companies, which isn't usual. The result is that we're now evaluating the performance of those nominated managements and making changes where necessary.
Migaš was right about one thing - the director who was recalled led a company belonging to the SDĽ, but Dzurinda didn't at the same time recall his people at the heads of other companies. According to the coalition agreement that was unfair. So why don't you recall the bosses of the SPP and other state firms?
Harach: What can I tell you? Time flies.
Time flies?
Harach: I can't just behave according to the a priori assumption that I will recall someone just because he is a political nominee.
Of course you can. And then you can hold job searches which even the current management can participate in.
Harach: Before recalling someone I want to know what the situation is. I would only agree with your model if we reversed the coalition agreement and said that the current model isn't working.
Why isn't this possible?
Harach: I don't know. It's out of my hands.
During the Nafta Gbely affair your predecessor [Ľudovít] Černák recalled SPP boss [Pavol] Kinčeš, but Dzurinda overruled him. In the SE case you couldn't have recalled Košovan unless Dzurinda had agreed. So what is the job of a minister all about if he can't exercise the powers he has by law?
Harach: In the Košovan case it was more or less my autonomous decision.
Are you trying to say you could have fired him against Dzurinda's wishes?
Harach: I would have told any politician who was involved that either Košovan gets fired, or I know what my course of action will be. I'm not that attached to the job of minister.
So as minister your independence depends on who you are?
Harach: That's right.
This interview, conducted by Štefan Hríb and Robert Žitňanský, first appeared in the weekly paper Domino fórum, June 15-21
Author: Interview with Economy Minister Ľubomír Harach
