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Slovenia faces the future.

|Nothing will ever be the same as it used to be.' These were the words of Milan Kucan, president of Slovenia, after the Republic proclaimed its independence on June 25, 1991. The president himself was probably at the moment not fully aware of how true hs words would turn out. The event marked an end to the first stage of the painful process of Yugoslav disintegration. For many years after Tito died the impression was that something was in the air but the trouble was that nobody really knew what was going to happen and perhaps even more importantly when and how it was going to happen.

The 1981 Kosovo riots were the first notable sign that the federation was not as tight as it looked at first sight, but was the spectacular rise of Slobodan Milosevic to political power in Serbia (1987) and the implementation of his politics that made the blind see what the name of the game was. Milosevic combined communism and Serbian nationalism to achieve almost absolute political power in Serbia. In the so-called 'yoghurt revolution' he abolished Kosovo's and Vojvodina's autonomy. Both his goals and his methods were unacceptable to other Yugoslav nations. This was hardly surprising as his final ambition was to create some sort of a Greater Serbia which would comprise all of Yugoslavia but Slovenia and a small part of Croatia.

The Slovene communist leaders at the time would settle for any kind of loose confederation but they were pressed not only by Milosevic who left little doubt of who would be in charge in the new, third Yugoslavia; they had to confront also a completely changed situation in Slovenia. The mass resistance of Slovenes against the demonstration of power by the Yugoslav army in the trial of the Four (Jansa, Zavrl, Borstner and Tasic) in 1988 and the Committee which was formed for the protection of their rights in many aspects the level of mass political consciousness.

These events quickly ended debates of how far political democratization was allowed to go. The approach of the communists at the time was that everthing can ba allowed but political parties (apart from theirs of course.) The intensity with which Slovenes backed the Four and the antagonism they expressed towards the federal army later proved to be one of the turning in the developments that look place. The opposition gained in confidence while the communist authorities lost some of it. It did not take long for new political parties to register. The majority of the newly formed parties united under the coalition of Demos (Democratic opposition of Slovenia). The coalition won the absolute majority of votes in the free elections held in spring 1990. According to prior agreement -- that the party which wins the majority of votes inside Demos would name the premier -- the president of the Christian Democrats Lojze Peterle became the head of the new Slovene government. The fact that the former communist party leader Kucan was at the same time elected for the presidency of the Republic should that the Slovenes wanted step-by-step changes as well as a respectable level of his personal popularity. Many people believe that his role in the process of transformation of Slovenia from one party dictatorship to a parliamentary democracy was significant and a positive one.

What was important at the moment was that both Demos and the opposition tended to favour independence from Yugoslavia. This programme achieved its credible affirmation in the outcome of the plebiscite in which 88.3% of the citizens voted for an independent and sovereign Slovenia. In the meantime Yugoslavia was becoming more and more Serbian and therefore loosing its identity. With its last breath the federal army in an open act of war tried to halt the tide of events. In the short June-July war Slovenia also showed herself to be a country capable of surviving militarily. The war later flared to extremes in neighbouring Croatia and revealed its most gruesome and inhumane face. The international community realised that a certain historic period was finally coming to an end and a new beginning in the Balkans.

At the same time a very dynamic internal political life was going on. The Slovene assembly passed on the 23rd of December 1991 a new constitution which defined the basic characteristics of an independent and sovereign state of Slovenia and its internal order. The main concentration is now on individual important pieces of legislation which would in the future decide to a great extent social relations in Slovenia. Perhaps the most crucial is the package of laws on the privalization of public property and other questions in connection with the ownership law.

Internal political confrontations came to full power too. The point of demarcation was no longer identical to the line of separation between Demos and the opposition. This could be seen in the internal conflicts and even in the break-up of individual parties. As a consequence a new picture or right, middle and left was drawn on the Slovene political map.

The proceedings in the Hague peace conference, especially the opinion of the Badinter's EC arbitrary Commission that in Yugoslavia's case break-up of the federal state look place rather than seccession of Slovenia and croatia which was Milosevic's point of new, but above all the pragmatic realization that things had changed for good, led to the diplomatic recognition of Slovenia by all European states and all other important countries with the notable exception of the United States. But recent hints indicate that we will not have to wait much longer for the formal US recognition. Yet diplomatic recognition by itself did not change very much the living standard of an average Slovene worker or peasant. It simply represented an entry ticket to the grown-up world. From now on how well we will perform will depend on ourselves without the troublesome tutorship of Belgrade. And there is enough reason to be concerned about that. The economic situation deteriorated markedly in the last year. GDP fell by a tenth, unemployment increased significantly, while average salaries diminished to the level aof a few hundred of deutsche marks. This was also expressed in the wave of strikes when teachers, doctors and workers in some companies tried to improve their material status or tried to force the government to implement collective contracts and thus ensure basic social and material security.

Nevertheless, there is hope that enough potential is hidden in the Slovenes which would help a young democracy stand on its own feet and would encourage creative forces in the economic sphere to pull the country out of the recession. Foreign capital investments could be a great help in the revival of the Slovene economy. It can justifiably be expected that after diplomatic recognition of Slovenia on the part of the USA (which will be of decisive influence for the entry of this young state into the International Monetary Fund and World Bank), Slovenia's political risks will be considerably reduced.

The decisive factors of foreign capital investments will primarily be ecoomic and financial ones, and in this sphere Slovenia has many advantages over the other ex-communist countries. Although Slovenia started to lose some advantages compared with Hungary, the Czech and Slovak Federation, and even Poland (the case of the former East Germany being different and therefore incomparable), they are still huge.

By advantages we mean primarily an inexpensive, but relatively well-educated workforce, adjusted to European working pratices, with a good command of foreign languages and sound management training. However, in order to exploit these comparative advantages, Slovenia will have to adopt proper ownership and tax legislation as soon as possible. As a result of uncertainties in this field, and especially because of the political events of the last few months, only poor results have been obtained in the inflow of foreign capital. A certain amount of fear on the part of the Slovene establishment towards foreign capital has been of decisive importance -- as if rich foreigners could not wait to invest their money in Slovenia -- while in fact money is being into the areas with a low level of risk and high probability of profit.

While (we hope) the first problem belongs to the past, a great deal of effort will be needed to solve the second. The above-mentioned comparative advantages of Slovenia are merely a good starting point.

Most foreign investments have so far come from Germany, followed by Australia and Italy. Foreigners have shown greatest interest in trade, financial services and consulting, and to a much lesser extent in industry. In the past, for every foreign investment exceeding DM 100,000, special studies outlining the influence of an investment on the entire infrastructure and economy in Slovenia needed to be carried out. This restriction has been abolished, with the exception of large infrastructural projects.

An analysis made by the Institute of Social Planning of the Republic of Slovenia has indicated that companies which have expressed greatest interest in foreign capital are in the fields of power, food-processing, metal and textile industries, iron metallurgy and automobile parts.

The majority of the companies surveyed believed that possibilities for faster economic growth and development which will ensue from the penetration into the European market outweigh the risks related to the competition in this market. However, it needs to be stressed that this opinion was shared primarily by those companies which are already strongly represented in this market. Approximately 40% of the companies were of the opinion that the European Community markets were more demanding and less accesible than others. In spite of this, 90% of the companies included in the survey expected that after penetrating the market they would their opportunities and also their own competitiveness. Production quality, innovations, better delivery terms and considerable reduction of costs are those elements which Slovene companies will need in their future battles for foreign markets.

Gorazd Bohte is a Research Fellow at the Centre for International Co-operation and Development (CICD), Ljubljana, Slovenia.
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Author:Bohte, Gorazd
Publication:Contemporary Review
Date:May 1, 1992
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