Slovenia, Somewhat Out of Step
the late 1980s, as economic conditions in the Federal Republic of Yugoslavia
worsened under the squeeze of IMF debt and Western destabilization efforts,
the more prosperous republics of Croatia and Slovenia increasingly resisted
having to subsidize the poorer ones. Given every encouragement from
Germany (and later the United States), the government of the Slovene Republic
opted for “disassociation” and a looser confederation in 1989, closing its
borders and prohibiting demonstrations by any of its citizens who opposed the
drift toward secession.
As the federal
government in Belgrade grew weaker, centrifugal forces grew bolder. In
June 1991, both Slovenia and Croatia declared their complete
independence (Croatia one day ahead of Slovenia). The German Bundestag
hastened to recognize both breakaway republics as nation-states, and the
Vatican quickly followed suit. Now the question looms: How has Slovenia been
doing as an independent nation? Indeed, how free and independent is it?
Often hailed as
a success story, even an “economic miracle,” the new Slovenia escaped the
hyperinflation that afflicted much of Yugoslavia. It also managed to redirect
the bulk of its foreign trade to greener pastures. In 1991, on the eve of
independence, nearly two-thirds of Slovenia’s commerce was with the other
five Yugoslav republics. By the end of the decade almost 70 percent was with
the European Union. Its per capita income of $10,000 was close to that of
Portugal and Greece. In 1998, it enjoyed a steady GDP growth of 4 percent,
while inflation remained in single digits. Slovenia’s currency was stable,
its budget balanced, and its public debt not a crushing one. Unemployment,
almost unknown during the socialist era, was 7 percent, still low compared to
the rest of Yugoslavia and most other Eastern European countries.
ascribing this economic performance to the wonders of the free market, we
should note that Slovenia resisted most of the drastic “reforms” avidly
pushed by Western free marketeers. Barely half of state-run enterprises have
been privatized, and the new owners are mainly managers and workers, rather
than large corporations. Foreign takeovers of industry and land—as was
happening in Hungary and elsewhere—were prohibited—at least until 1999.
In addition, pension and welfare programs remained reasonably good.
Wages were higher than in most Eastern European countries. Because state
welfare was generous and Slovenia had not subjected itself to the shock
therapy of the free market, the gap between the poor and the newly rich was
markedly less drastic.
Given all this,
one would think that Western leaders would hail Slovenia for having the good
sense to develop a relatively successful mixed economy, and for not leaving
itself open to the tender mercies of unbridled capitalist restoration. Here
was a country taking a somewhat different route from the buccaneer
profit-and-plunder road traveled by most other ex-communist nations, and with
good effect on the living standard of its people. But it was this very thing
that bothered the free marketeers, whose concerns have little to do with the
well being of any particular population, and whose focus is on investment
opportunities, cheap-labor markets, readily accessible natural resources, and
high rates of profit. It was Slovenia’s very success, its unwillingness to
go the neoliberal shock therapy route that incurred displeasure among big
investors. If Slovenia wants to join the European Union, warned the Economist
in 1998, it will have to drop “a lot of protectionist and nationalist
rules of its own. . . . [T]here is not enough shock in Slovenia’s economic
about Slovenia irritated the free marketeers. Companies were too slow to
revamp themselves. Pay was too high, driving out low-wage industries. It
was difficult to fire workers. Pension and welfare budgets had to be
“overhauled” (read, drastically cut)—-even though Slovenia’s budget
deficit was relatively small compared to many other countries caught in the
IMF debt trap. And—-Western consultants were adamant—-banking, insurance,
and utilities had to be privatized.
1999, under pressure from Western advisors, the Slovene government passed
legislation allowing foreign ownership of land and freer movement of capital.
But Slovenia would have to make still more “painful decisions,” said the
Western critics: fewer public protections, more unemployment to bring down
income, lower wages for the many, and higher profits for the few; in other
words, Third Worldization—the same plan that is in store for every nation in
the world, including the United States.
As of 2000, a
coalition consisting of the centrists Liberal Democrats and the populist
People’s Party ruled Slovenia. The government was eager to join the EU and
NATO. But the desire among the populace to join EU dropped from 80 to 60
percent by 1999, as people began realizing the sacrifices they would have to
make to “improve” economic performance—-not for themselves but for
As of mid-2000,
the new republic’s future did not look too bright. Once Slovenia’s
protectionist walls are completely battered down by the forces of free trade
and globalization, it is only a matter of time before its land—which is not
all that vast or that expensive—is bought up by a few giant cartels. This
could mean the end of Slovenia’s success in agricultural exports.
Furthermore, once in the EU, the country will have less ability to protect
itself from transnational corporate dumping. Slovenian markets will no
longer belong to Slovenian producers, and underemployment will climb.
As the economy
recedes, many younger people at the height of their productive years are
likely to migrate abroad to greener pastures, as has happened in other Third
Worldized nations. This brain drain, in turn, will have a further depressive
effect on domestic productivity, which only creates a still greater inducement
for migration. In time, as is already happening in Croatia, Bosnia, Russia,
and a half dozen other countries, Slovenia may start losing production,
markets, and population itself. This Eastern European variation of Third
Worldization seems to be what Slovenia’s erstwhile allies in the West have
in mind when they talk of a “more thorough reform program.”
There is one
area in which free-market “reform” in Slovenia has been going exactly the
way the Western interventionists might want. By 2000, the country was awash in
U.S. movies, music, and television shows—inundating whatever Slovene culture
that was trying to emerge. In keeping with its Westernization, Slovenia also
was experiencing a marked rise in youth crime. A Slovene woman, identified as
a “social researcher” with a degree from the University of Colorado,
complained about this cultural imperialism: “We want to develop Slovene
citizens who would care for Slovene citizens and not just sell their souls to
Beverly Hills.” She and her compatriots might never be given that choice.
‘s most recent books are History as Mystery (City Lights), and To
Kill a Nation: The Attack on Yugoslavia (Verso, forthcoming).