CIPE Worldwide Update: Central and Eastern Europe

Explosive Political Rivalry
Threatens Slovak Reform

Entrepreneur Association of Slovakia (EAS) (1995-1996)
Private Sector Development -- A Guarantee Of Democracy

Despite the problems occurring after the division of the Czechoslovak Republic, the economic reform process has not stopped. However, the process has slowed. Further, the last elections installed a government whose commitment to implementation of private sector oriented reforms is questionable. Prime Minister Vladimir Meciar and President Michal Kovac remain locked in an explosive political rivalry which threatens expression of dissenting political opinion and has raised concerns in the EU and US about Slovakia's progress.

The status of privatization provides a microcosm view of the basic problems with the country's economic and democratic process reform. Three troublesome issues are involved. First, masses of potential investors not linked to the present government are virtually excluded from the process. Second, in violation of democratic principles basic information is not available to the public, with tenders which are supposed to be public often not even written out, thus blocking transparency of the process. Third, the government maintains control of strategic companies in water, energy, telecommunications and refining, and restricts open participation in the process.

Clearly, reforms cannot be successful and a free market economy built up without the support of the private sector -- a condition absolutely necessary to the democratic evolution in any Central and Eastern European country still experiencing the challenges of transition. Projects proposed by the Entrepreneur Association of Slovakia (EAS) address these issues by pressing for greater transparency in policymaking processes, strengthening the business community's input, increasing the public debate on reform measures, and providing information services otherwise lacking for their constituencies.

Methodical Program. To reach its program goals EAS has devised a highly detailed work plan that identifies and measures targeted activities necessary for successful completion. The plan is divided into four quarterly program periods, beginning with October-December 1995, each with its own specific action initiatives, checkpoints and deadlines.

Under the general plan EAS is intensifying its efforts to position itself as one of the premier umbrella business associations in Slovakia in the defense of private sector interests -- efforts that are already succeeding. To this end one of its critical activities is that of strengthening its government relations program. The EAS Advocacy Group is taking the lead in this endeavor, reviewing and proposing modifications and amendments to laws currently in need of revision, ranging from the income tax code to privatization and VAT. Proposed amendments are submitted to the government and the parliament in writing and in person. The group also reviews laws and acts affecting social security and the trading and business code, and their respective impacts on the speed of privatization. The group met 27 times during the first quarter of 1996 and covered more than a dozen topics ranging from the value-added tax to a bill for the minimum wage. Recently it began a case study on the private enterprise environment in Slovakia covering the period 1994-95. Meanwhile, as a direct result of EAS advocacy efforts the Slovak government has agreed not to impose price regulation. It has also agreed to a gradual lowering of the tax and fee burden of entrepreneurs and a new law amendment lowering the VAT for non-alcoholic drinks.

New Memberships. In order to further strengthen its capability to act as a responsible voice of business, EAS is seeking to expand its membership base by adding at least three new collective members or 2,000 new individual members.

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