Central Europe Review - Slovak News Review

News from Slovakia
All the important news
since 10 May 2000
Michael J Kopanic, Jr

Dismantling missiles on the path to NATO entry

On 10 May 2000, Slovakia started the six month process of dismantling its medium-range tactical missile system, the SS-23. The former Czechoslovakia had obtained the missiles from the former Soviet Union 15 years ago, but the system is already out-of-date. As part of an agreement between the US and Slovakia, the United States is subsidizing the process with a grant of SKK (Slovak Koruna) 16 million (about USD 370,000). The newest NATO entrants - Poland, Hungary and the Czech Republic - previously dismantled similar missile systems countries.

The move represents another attempt by the Slovak government to show it is serious about entering NATO as quickly as possible. It has launched an aggressive drive to convince the US, its NATO allies and Slovakia's population as a whole that belonging to NATO is in the best interest of the alliance and the Slovak Republic. Thus far, the effort has shown positive results, as more than half the population has expressed its approval of NATO membership for the first time in recent years. Slovakia needs to show NATO and the US Congress that the current government and future governments will be totally committed to the Alliance. A one-day visit to Slovakia by NATO Secretary General George Robertson on 11 May signals that Slovakia is making substantial progress in meeting pre-conditions for Slovakia's future membership in the Alliance.

Attempts to stimulate foreign investment

The Slovak government has moved to facilitate an increase in foreign investment in the country. The government approved a simplified system of incentives to entice foreign investors. It offers tax breaks for up to ten years (previously set at five years) for investors and firms that invest considerable capital and commit themselves to long-term relationships in the country. In order to save on taxes, investors have to commit SKK 100 million (USD 2.1 million) in direct foreign investment, instead of the previous figure, which was over double that amount.

The process of obtaining the tax breaks has also been simplified. The government will merge state-supported SNAZIR agency, which assists with Foreign Direct Investment (FDI), with the Fund for the Support of Foreign Trade. The two bureaus will join in a newly named Slovak Agency for Investment and Trade Development (SARIO). The government aims to set up a one-stop shopping place for prospective foreign investors.

In order to qualify for a tax holiday, firms no longer have to introduce new production or export 60 percent of what they produce. In areas where unemployment exceeds ten percent, investors receive a tax break if they invest at least SKK 50 million (USD 1.16 million). The government has also offered to contribute SKK 40,000 to 160,000 for every new job which is created in areas with high unemployment. The moves should especially help small and mid-sized businesses to invest in Slovakia's hard-pressed regions in the east, northwest and south, where unemployment looms higher than 20 percent.

The new proposals are scheduled to be in effect by the third quarter of this year. The government must first amend the current tax and employment laws.

Having lagged far behind its Visegrád neighbors, Slovakia has been attempting to carve out a new image as an investor friendly country. It possesses a highly skilled workforce, which works for very reasonable and competitive wages. With the prospect of EU entry on the horizon within the next five years, an extension of the tax break to ten years becomes even more appealing to potential investors. Products and services from Slovakia would enjoy a competitive profit advantage with the EU countries and a level playing field with neighboring countries, which have been more aggressive in offering incentives to foreign investors.

Belgium offers to help Slovakia's Romany leave

The Belgian government has offered Slovak Romany who sought asylum in the country a chance to leave by offering free air tickets. Those who do not leave voluntarily may very likely face deportation or could acquire the status of illegal aliens. The Slovak government would like to see the Romany immigrant issue settled. Belgium recently imposed visa restrictions on Slovak citizens. The move has even forced Slovak negotiators to shuttle to the EU and NATO offices in Belgium to obtain visas. Solving the Romany issue remains an important hurdle to jump in Slovakia's effort to join EU.

Mečiar's HZDS is boycotting Slovakia's Parliament

On 9 May 2000, representatives of former Prime Minister Vladimír Mečiar's Movement for a Democratic Slovakia (HZDS) decided to start a boycott of the Slovak National Council, the Parliament of the Slovak Republic. Although initially present at the parliament's opening, they unfurled banners of protest and proceeded to leave the chamber. The protest aims to challenge the legality of the Interior Ministry's decision to break forcefully into Mečiar's villa on 20 April and whisk the opposition leader away to Bratislava for questioning. Although Mečiar was released after several hours of interrogation, his supporters in parliament accuse the Dzurinda-led government of abusing police powers for political purposes.

While police action against Mečiar has not enhanced his reputation, it has called into question the tactics of the current government. A month earlier, Jozef Migáš, the former chair of parliament and the leader of the Party of the Democratic Left (SDL), and four of his party colleagues withdrew from supporting the current government and supported a no-confidence vote in parliament. A meeting scheduled for 14 and 15 May was set to discuss the possible formation of a new cabinet and coalition.

Migáš may very well be setting himself and his party up for a power play, as Prime Minister Dzurinda's popularity has steadily eroded since the fall 1998 elections. But according to his close aide, Ivan Šimko, Dzurinda remains confident he can remain in office until the regularly scheduled elections in 2002.

Michael J Kopanic Jr, 12 May 2000

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