Economic reform is key to EU door

Date: 08/05/1997

“THE European Union would be a little stronger with us, though not a great deal,” says Janez Drnovsek, in the spirit of understatement he has adopted for the day.

Meeting Slovenia's prime minister is a refreshing experience. An economist rather than a politician by training, there is a relaxed confidence in his words, but without bravado. A slight and serious man, Drnovsek has the air of a world-weary accountant who does not suffer fools gladly.

In power since 1992, with three election victories under his belt, he is now fighting a campaign for membership of the Union and has at least a fair chance of succeeding.

“I think that we can join without too many problems for ourselves or the EU,” he announces matter-of-factly, almost surprised to be asked why western Europe should let his country into the club.

“It is not a big country, that is true. But Slovenia is quite developed - very similar to other EU member countries in infrastructure - and has a relatively good economic performance compared to other candidates.”

This tiny nation with its 2 million people is hot on the heels of Greece and Portugal in terms of gross domestic product per capita and has long been the darling of economists touting the benefits of transition in the East.

Independence from Yugoslavia in 1991 may have lost Slovenia the 'soft markets' of Communism, but it earned the country some prime economic cuts and scarcely a scratch in the process.

Ever since, it has been moving rapidly into western European markets, rekindling old ties with Italy and forging substantial markets in Germany.

Although wage rises have chipped away at the country's international competitiveness, and considerable structural reforms are still needed, “Slovenia has the most impressive macroeconomic indicators of all the transition economies and is beginning to resemble its Alpine neighbours”, said a recent report from European credit rating agency ICBA.

The influence of this western adulation, and the semi-official 'front-runner' status it has given Slovenia's bid for Union membership, is all too apparent in Drnovsek's manner as he casts some not too well disguised aspersions on other EU hopefuls.

“In the end, what will count will be the real capability of a country's economy to adopt or accept the acquis [EU law], or to survive. Here there will be some differences between candidates,” he says, warning that those who begin negotiations next year are certainly not guaranteed membership.

“Now it is much more of a political discussion, dependent on who is a better lobbyist or has better public relations in international circles. But in the end we will come to economic reforms.”

His confidence could be premature. Although Slovenia has undoubtedly done well, and should achieve growth of around 4&percent; this year, there are an increasing number of questions about whether the pace of reform will continue.

Many of these come from within the country, as its citizens begin to ask whether they might be giving away too much.

Although a recent Eurobarometer survey suggested more than twice as many Slovenians would vote in favour of Union membership than against, the country is increasingly wary of what accession might mean in practice - such as allowing foreigners to buy its land, industry and services.

“We have Eurosceptics and there is some influence coming from Austria, where there is much criticism,” admits Drnovsek.

“There is a lot of debate about EU issues in Slovenia, especially about the property market and other liberalisations. We might have to work more on the advantages. Sometimes it seems the EU is becoming a goal in itself without discussing what it really means.”

The trouble is that, at the moment, no one knows what the Union will be like in 2002, the year when it is most likely to enlarge.

After a spate of general elections and with the Intergovernmental Conference likely to end in the next two months, the shape of western Europe half a decade from now is anyone's guess.

“We follow developments within the European Union with interest and with a little caution. There are a lot of uncertainties there,” says Drnovsek.

“We do not know exactly what the EU will look like in a few years and whether it will be ready to accept new members. There is the question of how the Union can manage this process. It must consolidate itself and become an efficient organisation. It should not become some uncontrollable association of many countries. These decisions now are extremely important for the future of Europe.”

For many candidate countries, which are generally smaller than the average EU member state, the Union's institutional shape will be a crucial factor in their decision on whether to sign away their sovereignty.

Drnovsek, from one of the smallest applicants, explains: “We do not know what the position of smaller countries will be. It is important to observe how the EU evolves and to see what position we would have inside it; what it will mean for our sovereignty.

“There are also questions about the bureaucracy. Will it expand too much and how will this influence life in the member states? We will have a wide political debate on these issues when we decide about our accession.”

Nevertheless, he accepts that there is little he can do from the sidelines, saying: “We cannot influence it now. In this context, we proceed with our basic orientation, which is membership.”

In the meantime, the sheer quantity of legal and administrative reform facing Slovenia is proving challenge enough.

Although the country comes off lightly in its efforts to adopt EU agricultural and environmental rules, passing and enforcing the Union's corpus of single market legislation will be no mean feat for its diminutive government.

“There really is a lot of work on legislation - a lot of expert work and a lot of work for our parliament,” says Drnovsek with a sigh. “We have not even finished changing our legislation following independence. We had to adopt hundreds of new laws then, and now we have to change them and adopt them all over again.”

The consolation for Euro-enthusiasts is that Slovenia would probably have to adopt EU standards whether it joined or not.

“Generally, we are already in European markets - the EU is our major partner. We have to accept the rules of the game. After the completion of the Europe agreement in the year 2000 we will be practically integrated economically anyway,” says the premier.

However large the challenge may seem, it is seen as an inevitable one.

“In the context of globalisation, the EU probably will enlarge and should enlarge. Europe will somehow have to organise itself economically and, it seems, also politically,” muses Drnovsek.

He has little sympathy for those who wonder whether the Union is already big enough without bringing in new members.

“Certainly someone could ask these questions. But they could also have been asked at the beginning, and the European Union did enlarge. There was never a limit. Why should we include 15 members and not 20? If new countries are interested and capable of joining, it is difficult to find a serious argument against it.”

Whether the European Commission agrees with him when it passes judgement on the eastern applicants this summer is another matter.