CHAPTER FIVE
Substantive Democracy
Slovenia’s Transition in the 1990s
No concern at all. Most of our savings and reserves are in Austrian schillings.
SLOVENIAN OFFICIAL IN 1991, UPON BEING ASKED IF THERE
WAS ANY CONCERN ABOUT THE BELGRADE BANKS HOLDING
THE RESERVES OF THE YUGOSLAV FEDERATION.
The Road to Liberalism: Favorable Initial Conditions
Economic viability underpinned the procedurally and substantively liberal regime that guided Slovenia’s post-communist transition in the 1990s. Favorable initial conditions enabled the repeated success of liberal political configurations in elections and contributed to a broad consensus among varying social groups on a liberal project of reform and European integration. A strong economic base allowed democratic transition to proceed without becoming bogged down in issues of the nation. Slovenia had not only the most favorable structural starting conditions among the Yugoslav successor states but indeed some of the most favorable initial conditions of all transition economies as well. These conditions included its geographical location, skilled human capital, and significant trade links with the West that had been established and strengthened during the 1970s and 1980s. With an economic structure in which industry contributed 43 percent and services 51 percent to total output, Slovenia’s level of development resembled many West European economies. As a result of these advantages, Slovenia quickly was able to redirect its vanishing inter-republican trade to the West, thereby generating a fast economic turnaround. Throughout the transition, economic success lent credibility to liberalism and prevented voids in legitimacy that could be filled by radical populism.
The story of Slovenia’s transition is not about “critical junctures” but rather a strong structural foundation for liberalism. However, there is little support for the notion that deeply internalized liberal political values—or demonstration of a strong democratic political culture—can explain both the procedural and substantive liberal qualities of Slovenia’s post-communist regime.1 Transition did not instantly produce democratic attitudes. Favorable economic prospects and the positive inducements of joining Europe helped to shape a pluralist orientation on the part of elites and masses and, ultimately, to create and reinforce democratic attitudes in the long run.
However, Slovenia’s liberal political order was not guaranteed, nor has its transition from communism been without its bumps and diversions. Besides initial conditions that favored liberalism, the external inducement of EU membership was a powerful force constraining the influence of radical populist groups in the Slovenian polity. Thus, what began as an instrumental recognition on the part of elites that Slovenia’s economy and state survival depended on positive relations with the West led to a process in which the substantive beliefs of both elites and masses were shaped in such a way that liberalism became the “only game in town.”
The regime that consolidated power in 1990s Slovenia, however, was not without illiberal blemishes in areas such as elite continuity, transparency, and minority rights. These shortcomings notwithstanding, the prominence of liberal political forces and programs since the outset of transition and an elite and mass consensus on democracy as the appropriate political order for the country set Slovenia apart from the other three cases examined in this study. From the earliest days of transition, both elites and the public built a consensus on the appropriateness of seceding from Yugoslavia, pluralism as the organizing principle of political life, the European integration policies of all governments, and a pragmatic concern for the economy. Slovenia’s economic success reduced the level of potential conflicts that were translatable into nationalist issues. It precluded divisions over basic questions about the state, its borders, and the people within those borders.2
Nationalism, Liberalism, and Legitimacy in Post-communist Slovenia
Nationalism
Slovenia’s post-communist regime was substantively, and not just procedurally, liberal, in large part because it was not pervaded by illiberal nationalism and because liberalism itself and the project of democratization and European integration were seen as legitimate by the vast majority of Slovenians.
Independence in Slovenia started not only in the name of the nation, but also in the name of democracy (Harris 2002: 66). Secession was pursued as the means to rejoin Europe and establish a democratic system. In Croatia, FRY, Lithuania, Slovakia, and other post-communist states, the political and economic dimensions of transition were subordinated to the national question, which had negative repercussions for the process of democratization. By contrast, in Slovenia democratization and independent statehood formed a mutually compatible dynamic. Nationalism did emerge as a defense, especially during the tumultuous period following Slovenia’s secession from the Yugoslav federation, but it never translated into a legitimizing principle for the regime.3 Nor was the Slovenian transition cast as a struggle against internal or external enemies. From the beginning, it was characterized in terms of themes such as “democracy,” “human rights,” “Europe,” and “freedom.” Certainly Slovenia’s higher degree of ethnic homogeneity mattered, but relative homogeneity does not necessarily preclude the appearance of illiberal nationalism. There were potential targets inside and outside Slovenia for ethnic nationalist entrepreneurs to exploit, and to some degree and at certain times there were attempts to exploit them—but never to the extent that this occurred in neighboring Croatia.
Ethnic nationalism was also tempered by the early pursuit of Western markets and political support from the EU. The strong pro-European orientation among leaders of varying political stripes and the conscious recognition that displays of nationalism would seriously hurt Slovenia’s standing in the eyes of the EU also constrained nationalism. Even the overtly nationalist Slovenian National Party (Slovenska Narodna Stranka, SNS) in its program mentioned Slovenia, albeit independent, in European structures as its first point (Harris 2002: 198–99). Slovenia’s aspirations toward Europe, of course, were not merely economic but political and cultural as well. They were fortified by events in other parts of the failed SFRJ: to be pro-European was to be anti-Yugoslav and anti-Balkans. In the end, Europe itself embraced Slovenia’s brand of pro-European separatism, “not least because it was anti-Yugoslav— that is, anti-Miloševi
Minority Rights
The topic of minority rights can be quite sensitive in Slovenia. There was never any discrimination in terms of deficiencies in the legal framework. In contrast to the other successor states, the Slovenian constitution starts with the premise that Slovenia is the state of Slovenian citizens and not the “state of the Slovenian nation” (Kuzmani
On the Legitimacy of Slovenia’s Democratic Order
Democratic transition in Slovenia rested on a broad consensus about vital issues of national interest and a commitment to democracy (Harris 2002: 154). Thus, Slovenia’s post-communist regime in the 1990s was characterized by high degrees of the kind of legitimacy outlined in chapter 2. The overwhelming majority of the Slovenian population recognized the state within its existing borders and consented to the authority of the government. Radical elements were neutralized by the momentum toward liberalism and Europe before they had a chance to succeed. Democracy in Slovenia, then, was legitimate, making it likely to succeed in the long term.
However, a lack of adequate debate in Slovenian society on certain issues and a passive acceptance of elite continuity and lack of transparency on the part of the electorate signals “thin democracy” to some.4 On the lack of debate—I disagree in light of the intense debates that have taken place in both the Slovenian Parliament and in public discourse about issues such as the role of the Roman Catholic Church. The kind of consensus that did exist, such as an unequivocal commitment to EU accession and democracy, is the kind that stabilizes and guarantees, rather than threatens, liberalism. The alternative, deep political divisions over fundamental issues about the state, has precluded substantive democracy in the other three cases being examined here.
Formal Democracy: The Record
On 23 December 1991, Slovenia adopted a new constitution that proclaimed the country to be a democratic republic governed by the rule of law.5 Just two issues aroused serious controversy: abortion rights and the structure of the Parliament. In the end, the right to an abortion was guaranteed, and the constitution also enacted a parliamentary system with a bicameral legislature, the National Assembly (Državni Zbor).6 In addition, the constitution mandated a National Council (Državni Svet). It was to serve as an advisory body with members representing key social, economic, local, and professional interests—a clear legacy of communist-era corporatist arrangements. In all areas, democratic rules were codified in the Slovenian constitution, and the institutions that are mandated by the document functioned as prescribed in the 1990s. For example, elections were held regularly, no violations of electoral rules were noted (Lukšic 2001: 44), and there were no difficulties relating to the separation of powers.
The new constitution mandated a parliamentary system, similar to that of Macedonia but in sharp contrast to the semi-presidential systems adopted in Croatia and FRY to serve the ambitions of Presidents Tudman and Miloševic, respectively. Unlike the other successor states, the electoral system was highly proportional. This system, however, also produced intense battles among parties in the Parliament. Just two years into independence, Slovenia had a new constitution, a politically pluralist landscape with ten parties in the Parliament, a free press, and an independent judiciary (Ramet 1993: 869).7
However, progress was slower in some notable areas. The media was often subject to political influence. Ambiguity emerged over the status of civil-military relations, with allegations of misuse of the military by defense minister and former leader of the Slovenian youth movement, Janez Janša (Van-kovska and Wiberg 2003: 160–82). Police and security services, however, were fully reformed and enjoyed a high level of trust among the public (Kuzmanic 1999: 127).
Civil society thrived in the 1990s, though ironically not with the same vibrancy as it did in the 1980s: as Gantar notes, after 1990 civil society retreated back into the “semi-public, semi-private sphere” (1994: 359). Trade unions were increasingly independent, but business associations were just appearing and lacked such independence (Kuzmanic 1999: 128). A number of NGOs working in the area of human rights made important accomplishments. Yet, in general, political parties took the place of what was previously “political society” and dominated public discourse.
In sharp contrast to all of the other successor states, the rule of law seemed to take root in Slovenia. Legal business practice restrained the grey economy, which was estimated to account for only 10 percent of Slovenian GDP (Lampe 2000: 403). Levels of corruption were much lower than in the other three cases, and indeed much lower than in most post-communist states. Thus, on the criteria of procedural democracy identified by Kaldor and Vejvoda (1998: 6) as inclusive citizenship, the rule of law, separation of powers, free and fair elections, freedom of expression and alternative information, associational autonomy, and civilian control of armed forces, Slovenia placed quite high.
The First Elections
Slovenia’s advanced economic status was unquestionable when it was still part of the SFRJ, but nothing suggested that free elections would appear. On the contrary, the leadership in Slovenia maintained relatively tight rule by Yugoslav standards into the 1970s (Bukowski 1999: 76). Apart from the increasing activity of “new social movements” (NSMs) and independent publications in the late 1980s, concentrated chiefly in urban areas and dominated by young people, there was little evidence of burgeoning democracy in Slovenia.
Free elections, instead, were largely a by-product of local elites seeking to legitimize their struggle against an ever more oppressive Belgrade.8 This made the start of transition in Slovenia different from other communist countries: indeed, the transition to pluralism in Slovenia was begun for reasons having little to do with the broader processes occurring in the region (Ramet 1993: 869). No pacts or “round tables” stimulated the democratic transition. In fact, the Slovenian government conducted no formal talks with opposition groups (Bukowski 1999: 85). Yet by 1990 a broad consensus existed among the regime and opposition groups on the direction in which Slovenia should go, that is, away from Yugoslavia and toward democracy and Europe. This was a result of the need for a united front in identifying an alternative approach to that of Miloševi
In between Slovenia’s economic viability and its liberal regime outcome lay an important intervening variable—the democratic transformation of the League of Communists of Slovenia (Zveza Komunistov Slovenije, ZKS) at the end of the 1980s. At its eleventh congress, the group declared itself to be a modern political party of the left and a supporter of democracy, basic human rights, and the market economy and changed its name to the Party of Democratic Renewal (Stranka Demokraticne Prenove, SDP) (Bukowski 1999: 82). The activist League of Socialist Youth also became a political party: the Liberal Democratic Party (Liberalna Demokratska Stranka, LDS).
Thus, a decisive step toward liberalism was taken when the liberal faction of the ZKS took control in 1986 and ousted conservatives from the party leadership. The ascent of the liberal wing was a key development in the Slovenian “proto-transition” that shaped later reforms, and its subsequent decision to pursue multiparty elections was the contingent choice that shaped the path to liberalism. It was the ability of liberals to consolidate power within the party that created the possibility for change.
However, it was structural conditions that ultimately shaped the strategies of the reformist wing of the Slovenian communists. Their counterparts in the Serbian League of Communists (Srpski Savez Komunista, SKS), after all, were also undergoing an internal struggle in which a younger, reformist wing prevailed, except that “reform” in the Serbian case came in the form of Miloševisocial agenda, urban areas, and younger strata of the population. Structural conditions, particularly those economic factors that dictated a pro-European orientation, mattered most in determining ZKS strategies.
During this internal party turnover, Milan Kucan, the liberal communist, became president of the Slovenian League of Communists and “the de facto arbiter of Slovenian political life” (Ramet 1993: 869). It was Kucan’s wing of the party that led the drive for the introduction of a multiparty system in their republic, and it was also Kucan’s wing of the party that began to use the slogan “Evropa Zdaj!” (Europe Now!) to argue that Slovenia’s political interests could only be advanced in Europe, and thus that Yugoslavia, and in particular Serbia, represented everything that was anti- or un-European (Jovi
Events in Belgrade arguably had saved the Slovenian communist leadership from complete delegitimization and helped stimulate their pro-Western strategies. On the former point, the ability of the communist leaders to portray themselves as defenders of Slovenian interests against threats from Belgrade was an important source of political capital. On the latter point, the logical response to Miloševi
The first elections were held in April 1990; as the first multiparty elections in the still-existing SFRJ, they were a “showcase” for the entire country (Cohen 1993: 89). About twenty political parties participated in the parliamentary elections, and presidential elections were held at the same time. Kucan, who had recently stepped down as the head of the communist party, easily won election as president of Slovenia. To the surprise of many observers, the reformed communists were unable to prevail in the legislative elections. The SDP was the major vote getter, but could not overcome the combined strength of a broad anti-communist coalition calling itself DEMOS (an abbreviation of Demokraticna Opozicija Slovenije).
The DEMOS coalition was headed by Jože Pucnik, a former philosophy professor who had spent the previous twenty years living in exile in West Germany. Lojže Peterle, the leader of the Christian Democrats (one of the largest DEMOS members) assumed the post of prime minister after the victory. In reality, DEMOS was not all that united but was rather a “hodgepodge of social democratic, Christian democratic, agrarian, and ecological ideas along with a commitment to parliamentary democracy and a free market economy” (Cohen 1993: 90). The unifying theme, of course, was to defeat the ruling Communist Party, and all DEMOS members agreed on the fundamental principles of democracy and market reform. Cohen writes: “For Slovenian voters, the election contest essentially boiled down to a choice between reform socialism and post-socialism. On several other important matters, however, the positions of the competing parties were not that far apart. For example, all the major parties favored Slovenia’s closer association with the European Economic Community as well as a loose confederation of Yugoslavia’s republics that would allow Slovenia full sovereignty over its internal affairs and require only a limited commitment to other areas of the existing federation” (1993: 90). However, calls for confederal arrangements were clearly failing, and the DEMOS coalition began hinting at full Slovenian independence, saying “Yugoslavia as a concept is exhausted. Slovenia simply wants to join Europe and is not willing to wait for the rest of Yugoslavia to catch up with it” (quoted in Cohen 1993: 90). On this point, the former communists were more cautious.
However, like many coalitions initially united by opposition to a common adversary, this one found that staying together once in power was much harder than staying together in opposition. The loose DEMOS coalition endured a stormy eighteen months in power, with intense criticism over its privatization policies. Ultimately the Peterle government fell in the face of battles over privatization and a deteriorating economic situation. Their shortcomings aside, Slovenia’s first leaders were clearly committed to democratization and European integration, and set newly independent Slovenia firmly on the path of both.
Subsequent Elections and Party Politics
Peterle’s coalition began to come apart by early 1992 when three parties left the government over disputes about privatization and abortion (Lampe 2000: 392). Peterle’s calls for Slovenian society to return to traditional Catholic values did not resonate with much of the population, and general public dissatisfaction opened a window of political opportunity for the LDS to form a new coalition. The LDS was led by Janez Drnovšek, at one time a member of the SFRJ’s collective presidency; he made Peterle the foreign minister in return for the support of the Christian Democrats (Slovenski Kršcanski De-mokrati, SKD). In April 1992, after withstanding two votes of no confidence, the Peterle government fell, and Drnovšek became prime minister and put together a left-oriented interim government. New legislative elections, as well as presidential elections, were held in December 1992 with high voter turnout. Kucan easily won reelection as president. In the legislative elections, the LDS prevailed with 23.3 percent of the vote. The right-of-center SKD came in second, with 14.5 percent and the SDP third, with 13.6 percent. The radical right SNS, headed by the fascist-leaning Zmago Jelincic, received 9.9 percent of the vote, which has been attributed by many analysts to the economic difficulties surrounding the initial transition.9 The SNS vote came heavily from disaffected rural areas and included protest votes from unemployed persons and national chauvinists. It was the strongest showing that any radical populist, anti-systemic party would ever have in post-communist Slovenia. The SNS was ultimately discredited and marginalized and was even forced to accept a pro-European orientation.
This government survived until the 1996 elections, after which Drnovšek barely managed to eke out a center-right coalition when a member of the SKD switched his affiliation to Drnovšek’s renamed Liberal Democracy of Slovenia. Drnovšek managed to forge an agreement with the center-right Slovenian People’s Party. Thus, what had been a center-left coalition from 1992 to 1996 became a center-right coalition after the 1996 elections. The nationalist SNS’s share of the vote was just a third of what they had received four years earlier, due no doubt in part to accusations that its leader, Jelincic, had worked with the Yugoslav-era Interior Ministry. But, it was also in no small part due to advancements in the EU accession process prior to the election. Drnovšek and his program of liberal reform were fortified by an economic picture that was mixed to some extent but on balance quite reassuring (Ramet 1997a: 214). Drnovšek’s personal approval rating stood at around 60 percent in late 1996 (Gow and Carmichael 2000: 165), and he managed to survive until 2000 through sheer political acumen—but at a cost to reform. Meanwhile, Kucan was easily reelected as president in 1997.
Thus, in terms of the principal leadership posts, there was much continuity in the 1990s, with Kucan and Drnovšek enjoying strong support and prevailing in multiple elections. In the context of a parliamentary system, however, Ku10 “While the system encouraged cooperation and coalition government,” write Gow and Carmichael, “it also required sufficient harmony and consensus between a number of parties for there to be an effective government: thus the character and platform of each of the main parties were important” (2000: 146).
The Main Political Parties and Their Orientations
Compared to the other three cases in this study, research indicated a general stabilization of the Slovenian party system in the 1990s (Lajh and Fink-Hafner 2001: 129). By the end of the decade the political scene was dominated by a few key parties with relatively clear and stable positions, half occupying the center-left of the political spectrum (mostly with roots in the communist party) and half the center-right (with roots in the non-communist opposition). All were strong supporters of Slovenia’s integration into the EU and collectively captured well over 80 percent of the vote. The most important of these parties on the center-left was the LDS, led by Drnovšek. The roots of the LDS were in the reform wing of the ZKS, and it inherited certain advantages such as the organizational know-how and resources of its predecessor as well as perceptions of the positive role of the ZKS in its final years. In terms of policy orientation, the key elements of the LDS program were “its outward-looking program of integration with international, and particularly, European organizations, such as the European Union and NATO—as well as a domestic program focusing on measures such as privatization and economic stability to facilitate European integration” (Gow and Carmichael 2000: 147). In this sense, it laid claim to the “traditional inheritance of the Liberals in Slovenian politics: serving the national cause through integration in a wider framework which inter alia allows the development of business” (Gow and Carmichael 2000: 147). The other center-left parties included the United List of Social Democrats (Združena Lista Socialnih Demokratov, ZLSD), the Democratic Party of Slovenia’s Pensioners (Demokraticna Stranka Upokojencev Slovenije, DSUS), and SNS. The ZLSD (formerly the SDP), like the LDS, had its roots in the former communist party, but in the party’s less radical, though certainly not conservative, elements (Gow and Carmichael 2000: 147). Its platform was to the left of the LDS and included calls for social justice and social provision, as well as social ownership and protection of jobs, rather than privatization and full economic reform. The DSUS emerged from the LDS, maintained close links with it, and effectively became something of an interest group for a rapidly growing group of retirees (Gow and Carmi-chael 2000: 148). The SNS, while also a product of the former communist party, adopted a program that was staunchly nationalist and anti-communist and yet on some points quite leftist in its economic orientation—much like Zhirinovsky’s party in Russia.11
The parties to the right of center focused more on Slovenian identity and the protection of Slovenian national interest, but all were pro-European and pro-market by the end of the 1990s. The Slovenian People’s Party (Slovenska Ljudska Stranka, SLS), led by Marjan Podobnik, claimed to derive its legitimacy and inspiration from the interwar party of the same name, but its ideological orientation was much more European in nature. The SKD, led by Lojže Peterle, was very similar except that it reflected a more clerical orientation. Both parties were more cautious on the point of European integration than the LDS, though as integration moved forward they tempered much of their Euroskepticism.12 The final prominent center-right party was the Social Democratic Party of Slovenia (Socialdemokratska Stranka Slovenije, SDSS), led by former Mladina correspondent and political prisoner Janez Janša. Its ideological orientation was often unclear except for Janša’s increasing use of the party as a platform to criticize other leaders and advance his personal ambitions, thus marginalizing the party. It is notable that aside from Jelincic ’s SNS (completely marginalized after 1996), no parties put forth a serious challenge to Western liberal norms. Put differently, in post-communist Slovenia, no antidemocratic alternatives seriously challenged the prevailing liberal order and Western liberal agenda.
Loci of Conflict in Slovenian Politics
The level of consensus among Slovenian parties on issues of national and international integration was almost paradoxical given the intense competition in domestic affairs. That foreign policy never became a prisoner to domestic affairs showed the strength of the EU impetus. Tonci Kuzmanic observes that “however important the differences between and conflicts among the Slovenian political parties, they are always framed by a strong view of the “national interest,’ meaning those relating to Slovenia’s democracy and future in Europe” (1999: 124). The remarkably cohesive response to Italian opposition to Slovenia’s bid to join the EU is a case in point. Surprisingly, the greatest debate over foreign affairs has revolved around a number of contentious issues in Slovenia’s relationship with Croatia.13 Moreover, Slovenian anti-communism certainly contained anger, but not in the same way as in Poland, and in general less divisive disagreements over evaluations of the Yugoslav period allowed for political compromises and coalitions of various stripes, such as the liberal-right coalition that governed after the 1996 elections.
Moreover, some domestic issues generated intense and even divisive debate among parties, at times destabilizing the government, leading to frequent shifts in the composition of ruling coalitions and impeding the passage of legislation. Yet none reflected the kinds of divisions that preclude the building of a liberal order.
One locus of conflict was over the appropriate role of the Roman Catholic Church in society, with the SKD in particular lobbying for a clerical social agenda. Interestingly, the Slovenian Catholic hierarchy itself has not been united, though as elsewhere in the post-communist world it certainly saw the end of communism and Yugoslavia as an opportunity to reassert its “traditional” role. The re-privatization and restitution issue was closely connected to the clerical one, as the Roman Catholic Church was a major landowner in the interwar period. On balance, the anticlerical forces prevailed in the 1990s, but with some major concessions to the Church. Some of the other most politically contentious issues were over privatization, in particular the rights of foreigners to buy land. Widespread resistance to foreign ownership was tempered only by the realization that a complete ban would not be in accordance with the EU’s acquis communautaire, and both political elites and the public ultimately gave in.
Such debates were played out in the party system and not in daily life. In fact, they were often exclusively in the domain of what Kuzmanic has called Slovenia’s “partitocracy” (1999: 123). In the 1990s, political debate in Slovenia moved almost entirely from the public sphere to the political system, both a cause and a consequence of public disillusionment with parties and politicians. But this cynicism with political institutions was no different than that recorded in other post-communist states. Make no mistake: endless decision-making and chaotic parliamentary disputes among various political parties impeded reforms and the functioning of state institutions, but they never threatened an elite commitment to democratic rules, cohesion on fundamental issues concerning the state, or a continuing belief in democratic institutions on the part of the public. Nor did they generate anything resembling political violence. Slovenians were critical of those in power (Toš et al. 1995:11) but not of liberalism itself, and the nature of the cleavages themselves resembled those in many developed Western democracies.14
The External Impetus for Liberalism
Liberalism in Slovenia would not have succeeded without Europe, meaning a consistent and credible promise of membership from Brussels, as well as the numerous ways in which a pro-Western, pro-European orientation defined the rhetoric and policies of the transition. As in many other post-communist countries, Europe created euphoria among Slovenians before most really understood what integration into Europe would entail, and, for that matter, before most really grasped the implications of parliamentary democracy and a free market. Europe, for its part, was not ready to welcome the Slovenians with open arms, and when Slovenians realized this, the euphoria turned into disappointment. In fact, the first cadre of post-communist leaders found that they had to engage in intense lobbying abroad to prove Slovenia’s democratic and pro-European intentions (Rupel 1994).
Yet, despite Europe’s initially cool reception of Slovenia, Slovenia’s leaders relentlessly pursued the goal of EU integration so that, after a while, a seemingly unshakable social consensus existed on the imperative of EU membership to assure stability, democracy, and prosperity in Slovenia. By the mid-1990s the public, for its part, was under no illusions about the drawbacks of membership. However, as Harris (2002: 199) notes, these kinds of attitudes were prevalent in EU member states as well, and 94 percent of Slovenians continued to believe that Slovenia would benefit from membership.
Regular EU Commission reports on progress were well publicized in Slovenia and, as noted below, often succeeded in realigning political forces and public opinion on certain issues. The EU, in other words, relied on a credible offer of membership to provide a strong enough impetus for reform. Since most major political parties and a majority of their constituents supported EU membership, the EU found that passive leverage was a sufficient strategy to motivate most elites to abide by EU demands (Lindstrom 2004). Moreover, though it is difficult to cite systematic evidence for this, the EU was willing to “tolerate” Slovenian transgressions at times because they paled in comparison to the authoritarian politics of the other Yugoslav successor states. The Slovenian leadership, for its part, used the threat of delay in admission to the EU to achieve compliance when difficult and unpopular issues were at stake.15
In terms of elite strategy, much of the early push for the EU was dictated by the simple fact of Slovenia’s small statehood and the need to establish markets for Slovenian exports with some haste to compensate for those lost with the dissolution of the SFRJ. Small states, as Katzenstein (1985: 25) has written, depend on big foreign markets, and Slovenia’s two million inhabitants could only provide a satisfactory market if the national economy exported more than 50 percent of its output (Brinar 1999: 245).
On 6 March 1995, after a long dispute with Italy over property restitution, Italy lifted the veto on Slovenia’s association agreement with the EU. This led to the Europe Agreement of 1996, which gave persons who had lived in Slovenia for more than three years preferential access to Slovenia’s real estate market (Sabic 2002: 106). However, this necessitated amending the Slovenian constitution in the face of strong public opposition. Amazingly, through a sustained pro-EU public information campaign and intra-party arm-twisting, the Parliament adopted Article 68 in 1997, which abolished the constitutional prohibition of the purchase of land by foreigners and was a prerequisite of the association agreement. The vote was 81 to 1 in favor. Soon Slovenian property rights laws were harmonized with those in force in EU member states, and on 10 June 1996, Slovenia signed an association agreement with the EU, the first Yugoslav successor state to do so. On 4 February 1998, Italy accepted $62 million from Slovenia in compensation for property seized from ethnic Italians who fled after World War II. As soon as the problem with Italy was solved, Slovenia was placed on EU’s “coveted list for accession” (Lampe 2000: 394). On 16 July 1997, the European Commission recommended that Slovenia open negotiations in early 1998 for entry to the EU. The invitation was formally approved at an EU summit in December 1997, and formal negotiations began in March 1998 (Jeffries 2002: 362).
The dispute with Italy and its solution shows the high degree of consensus with which an otherwise fragmented party system rallied around important decisions relating to EU accession. Second, it shows how the political party elite was able to rally support for unpopular measures when EU accession was threatened. Third, and most important for the discussion here, it demonstrates the “passive leverage” with which the EU succeeded in forcing the Slovenian leadership to fall in line. Finally, in a more general sense, it shows how the promise of EU admission was the key force that pushed certain reforms through at critical moments where disunity would have otherwise prevailed.
There is a great deal of other evidence that shows not just that the EU mattered in realigning domestic political forces and public opinion but also that it mattered specifically in keeping the liberal project on track when it faltered. Requirements imposed by the acquis also acted as a powerful impetus to force governing elites to initiate reforms with little public appeal, such as minority protection laws for non-indigenous groups, which Slovenia finally adopted at the end of the 1990s. They marginalized the influence of radical populists like the SNS, whose influence began to decline with the imminence of the association agreement. Other parties of the more moderate right who were initially Euroskeptics tempered their rhetoric over time. Evidence exists that in the long run this was not just an instrumental acceptance of EU norms but rather a process in which attitudes changed. For instance, xenophobic and ethnocentric attitudes persisted despite early democratization, but data also show that they were tempered as the EU accession process continued (Bernik 1997: 67). The political elite was also transformed. One Slovenian legislator spoke to me candidly about the influence of the EU in intra-party affairs: “The EU, the acquis, always loomed in the background. At party conferences we were lectured on the next item on the EU agenda. We were encouraged to educate our constituents about the EU. Important decisions on party positions were never taken without first consulting with appropriate persons, and the EU reaction was always considered. In many cases this made further debate in parliament unnecessary. I didn’t always agree with this, but we were on a determined course.”16
Any sign that Slovenia was straying from the EU’s path—such as during the fierce party battles of the second half of the 1990s—would elicit warnings not from the EU itself but from President Kucan, who reminded warring parties that the EU accession process was at stake.17 Other domestic organizations issued similar warnings. For instance, Helsinki Watch, criticizing Defense Minister Janša’s misuse of the military and security services, wrote: “With that kind of behavior . . . Slovenia is setting up for itself a very poor recommendation for admission to the European Union and to Europe in general” (Ramet 1997a: 207). Needless to say, such statements were widely publicized and turned public opinion against Janša. The government also embarked on an ambitious public relations campaign to promote the EU and the benefits of membership and tried to appease those fearful that Slovenia would lose its sovereignty with the slogan “Slovenija Doma v Evropi ” (Slovenia, House in Europe) (Government of the Republic of Slovenia 2001: 50). The EU, for its part, issued mostly positive statements regarding Slovenia’s status, all of which were immediately cited by elites as evidence of the appropriateness of their policies.18
However, at the end of the 1990s, the EU also began to be more critical of slowness in certain areas of reform. A 1998 report in particular came as a shock to the leadership. There were no major complaints about corruption, as there were in other candidate states (Jeffries 2002: 370–71), but the report also cited slow progress in adopting certain parts of the acquis communautaire, mainly owing to the fractious coalition. According to the report, Slovenia lagged behind other candidate countries in administrative and economic reforms, especially in the area of competition in certain sectors and in the free movement of capital. Slovenia was no longer to be forgiven for its challenge to the neoliberal consensus in the economic sphere, a challenge that had kept living standards high but also, in the eyes of the EU and international financial institutions, eroded Slovenia’s international competitiveness. These reports had the effect of mobilizing the government to begin to pursue reforms so that subsequent reports were more positive in tone. By the beginning of the new millennium, Slovenia was among the applicant states that had made the most progress in negotiations.
Here we have focused on the EU as the primary external actor shaping regime change in post-communist Slovenia, but others should be mentioned as well. NATO membership was also a priority for Ljubljana, and 66 percent of the population supported the government’s endeavors to join (Bugajski 2002: 650). However, at NATO’s Madrid summit in May 1997, alliance leaders excluded Slovenia from the first round of enlargement, a devastating blow to the Slovenian leadership. Among the concerns raised by NATO leaders were Slovenia’s relations with other states in southeastern Europe. Nevertheless, at the same time Slovenia was singled out as a prime candidate for the second wave of expansion if it continued to pursue political and military reforms (Bugajski 2002: 651). The immediate effect of Slovenia’s exclusion was a decrease in NATO support among the public, but it also increased public support for, and thus the momentum toward, the EU.
Economic Performance
Favorable initial conditions notwithstanding, Benderly and Kraft recall that Slovenia’s size initially raised questions about economic viability given independence. They also note, however, that “far smaller states operate without difficulty in a European context” and that “the presumption that economic prosperity requires a large state makes less and less sense in a world in which the economies of scale of traditional manufacturing no longer matter, natural resources matter less, and economic integration makes borders less relevant anyway” (Benderly and Kraft 1994: x). In fact, despite a number of setbacks and problems, Slovenia’s economy marched steadily forward in the 1990s, justifying the strategies of those who designed the country’s independence and democratic transition. The first two years were, admittedly, difficult. During 1991 and 1992 Slovenia experienced a period of declines in income and production and a sharp rise in unemployment, which stood at 14.2 percent in 1992 (Zapp 1996: 61).19 New private firms were creating jobs rapidly, but not as rapidly as layoffs in the former state-owned sector were eliminating them (Zapp 1996: 62). This was due to a number of factors, most notably the economic shocks that resulted from the loss of former Yugoslav markets. Lost markets and, in many cases, lost assets in other Yugoslav republics created liquidity problems for a number of firms, since they had long subsidized their exports to the West with the generous profits they received from domestic sales. To find new Western business to replace the lost Yugoslav markets, producers had to sell at or below variable costs (Zapp 1996: 61). Losing the Yugoslav market, in fact, had worse consequences than the Slovenian government had anticipated (Zapp 1996: 61). Economic problems resulted also from unexpected pressures, such as the sudden influx of 60,000 refugees from the war in Bosnia and Herzegovina (Ramet 1997a: 208) and sanctions imposed against the entirety of the former Yugoslavia (Bojnec 2000: 1332). Slovenia’s tourism sector was also adversely affected.
Following this period of economic decline, a period of recovery ensued. The decline in industrial production slowed from —13.2 percent to —2.8 percent, the rate of inflation was reduced thanks to the establishment of monetary independence, and an increase of 1.3 percent in GNP was recorded (Ramet 1997a: 207). This turnaround, however modest, was critical in keeping the reformers in power and the reforms on track and simultaneously keeping populist forces on the margins of the political scene.20 It was facilitated above all by a successful stabilization program that included a restrictive monetary and fiscal policy (Bojnec 2000: 1333). Moreover, the currency was stabilized, thanks in part to the efficacy of a fully independent Bank of Slovenia (Rupel 1994: 321) and the successful introduction of the Slovenian tolar, which marked the decisive break with the Yugoslav economy (Zapp 1996: 62). Throughout the 1990s, the tolar was remarkably stable (Zapp 1996: 62). A real testament to the currency’s strength, however, were Slovenia’s strong foreign currency reserves, about $2 billion in the mid-1990s, and the high share of exports in the GNP (more than 60 percent). In other words, the foreign demand for Slovenian goods and services kept the tolar strong. In a relatively short time the fledgling Slovenian government was able to achieve the kind of macroeconomic stability that federal authorities in Belgrade had attempted with no success prior to the SFRJ’s collapse.
By 1994 the economic recovery gained real momentum. That year, the growth rate was 5.3 percent, and industrial production increased by 6.4 percent (Ramet 1997a: 207). This growth contributed to stabilizing the unemployment rate and stimulating a rise in real income so that several years later Slovenia was one of the few post-communist states to register higher total aggregate income than in 1989. The country was able to solidify its standing in the global economic arena by acceding to the General Agreement on Tariffs and Trade (GATT) in the fall of 1994 and by coming to an agreement for cooperation with the European Free Trade Association (EFTA) in 1995. In September 1995, Slovenia was admitted to CEFTA.
Several trends in the early 1990s, however, indicated some long-term problems in the Slovenian economy. Supply-side and structural adjustment policies in particular encountered difficulties. Domestic investment declined steadily during the early 1990s, reaching its lowest point in 1993 (Bojnec 2000: 1333). The greatest criticism of Slovenian economic policy has centered on its inability to attract FDI, deemed crucial for firm restructuring and international competitiveness.21 The main reason for persistently low levels of FDI in Slovenia was the legal framework that governs privatization policy, which offered few opportunities for external participation in Slovenia’s privatization process (Bojnec 2000: 1334).22 The priority, instead, was given to internal management and labor buyout privatization schemes—in other words, “insider privatization.”23 These privatization policies, besides generating their share of controversy and scandals, were quite ironic, given Slovenia’s openness to external trade. They were, however, a result of a concrete legacy of the communist period: the self-management system that only really worked well in Slovenia as well as a general wariness among the Slovenian public of foreign ownership.24 Enterprise managers in particular assumed a politically powerful role during a period of ambiguity between federal and republican authority, creating new internal mechanisms to maintain the cooperation and support of their workers and working alongside political parties to defeat privatization proposals that threatened their interests (Zapp 1996: 63). Yet there were two sides to this coin: even as the workers’ councils and managers constrained the adoption of a privatization policy that would give a greater role to outsiders, they (especially the workers) consistently supported liberal political options, in stark contrast to their counterparts in FRY, for instance. This may be seen as a concerted effort to “pay of ” a potentially anti-European constituency rather than the result of certain policy constraints, but either way it is certain that the support liberal parties received from workers and managers in the social sector was crucial in building a liberal regime. Stano-jevic has argued that a “side effect” of Slovenian privatization was that it continued Slovenia’s tradition of corporatism, in which the political elite sought the support of labor, making labor an important partner in the privatization process (1994: 164).25 The macroeconomic fallout, however, was clear: due to delayed and contentious privatization, the share of FDI in Slovenia’s GDP remained substantially lower than the corresponding level of FDI in front-runner transition economies such as Hungary, Estonia, and the Czech Republic, leading some analysts to question whether the Slovenian economy would remain competitive in the long term.26 These problems with the transparency and effects of Slovenia’s policy of ownership transfer notwithstanding, privatization in Slovenia never became what it did in the other three successor states examined in this study: a non-transparent privatization process whose only beneficiaries were cronies of the ruling regimes. Nor did it prevent the restructuring of firms from taking place—unlike Croatia, FRY, and Macedonia, many bankrupt or loss-making industries were closed down (Bartlett 2000: 148). Ultimately, a compromise approach to privatization was approved, though it took several years to implement, so that by 1995, 868 Slovenian firms had their privatization plans approved by the Privatization Agency (Zapp 1996: 64). Despite evidence that significant assets were still held by managers and other insiders by the end of the 1990s, in general the government’s privatization plan was “met with both market and political acceptance” (Zapp 1996: 71).
Privatization, then, proceeded amidst intense parliamentary battles. Large-scale privatization was slow. By July 1998, 90 percent of privatization programs reached their final stage (Jeffries 2002: 380). The small commercial and service sectors were fully privatized at the end of the 1990s, but the state still held shares in around two hundred large companies, which were heavily criticized for their style of management (Jeffries 2002: 381). Minority shareholders were treated with contempt, further scaring away foreign investment. The involvement of workers meant that management could not resist demands for higher wages. In the area of restitution, most cases remained to be settled.
External trade, however, compensated for many of Slovenia’s economic deficiencies and consistently fueled growth. Slovenia’s primary exporters in the 1990s were a diversified group of internationally recognized firms, as shown in table 5.1.
Slovenia was able to establish most favored nation trading status with the EU in 1993. The aim of full membership in the EU, in fact, became the most important goal of Slovenian trade policy. The proof of this was how quickly its trade was reoriented toward West European markets: in 1987, 35.7 percent of Slovenia’s exports went to the rest of Yugoslavia. By 1993, this figure had dropped to 15.9 percent and by 1994 the EU was Slovenia’s largest trading partner, with around 66 percent of its exports going to the EU and 69 percent of its imports coming from the EU. Slovenian exchange rate policy was designed not only to reinforce macroeconomic stabilization but also to promote economic integration with the West (Rupel 1994: 316).
Bojnec (2000) finds that both older and newer enterprises were steadily increasing the share of their products and services they sold on international markets in the 1990s. The dependence of the Slovenian economy on exports was calculated to be 57.4 percent, while the measure of total dependence on international trade (exports plus imports as percentage of GDP) stood at 116.3 percent (Ferfila and Phillips 2000: 10). The economic imperative of EU membership thus aligned perfectly with the political one discussed in the previous section.
Driven by exports, economic growth thus marched forward in the 1990s, registering impressive growth rates (figure 5.1).
Despite, or perhaps because of, the lack of reform in key areas, Slovenia’s economy was growing. Lack of reform in areas such as capital liberalization and a worker buyout–dominated privatization model shielded many Slovenians from the kind of transition pains experienced by their counterparts in other post-communist states. Slovenia was not immune from demonstrations resulting from economic dislocations, but they were not disruptive, confrontational, or anti-systemic (Bukowski 1999: 90). Whether Slovenia’s rejection of many tenets of neoliberalism would hurt its international competitiveness in the long run remained to be seen. For the moment, negative economic legacies of political management and unaccountable social ownership could be overcome with a high level of development and a diversified economic structure as well as a relatively successful industrial policy (Petrin 1995).
Table 5.1 Primary Slovenian Exporters, 2001
By the end of the decade, some of Slovenia’s economic problems had been remedied with reform, in part forced by the EU. Privatization, albeit imperfect, was nearly complete. Capital flows were liberalized, and Ljubljanska Banka, Slovenia’s largest bank, was restructured to the satisfaction of domestic customers and international financial institutions, though the problem of uncompensated depositors from the rest of the former Yugoslavia remained (Lampe 2000: 334).
Hence, in 2000 the IMF submitted the following assessment of the Slovenian economy: “Slovenia is among the most successful transition economies of central and Eastern Europe. It has a functioning market economy, a stable macroeconomic environment with sustainable growth, the highest standard of living and investment ratings among transition countries, and has made significant progress towards convergence with the EU” (quoted in Phillips and Ferfila 2000: 179). However, structural problems were also noted by the World Bank (1999) and in an EU progress report:
Figure 5.1. Slovenia, Rate of GDP Growth, 1991–1999
Slovenia is a functioning market economy. Provided that it implements the remaining reforms to increase competition in domestic markets, it should be able to cope with competitive pressure and market forces within the Union in the near term . . . remaining restrictions to capital movements are progressively being removed, in the context of managed exchange rates. However, the persistent inflation, linked to widespread indexation . . . remains a concern. Labor markets are not sufficiently flexible. The authorities should now progress with the implementation of the announced structural reforms and privatization in a number of essential sectors such as banking and insurance.27
Inotai and Stanovnik (2004: 355) observed that slow privatization, low levels of FDI, and a weak banking sector made the Slovenian economy of the late 1990s substantially less competitive than the economies of Hungary, the Czech Republic, and Poland.
These deficiencies notwithstanding, the greatest testament to Slovenian economic success was the growth in real per capita income. In this respect, Slovenia was outperforming not only the other post-communist economies but also EU members Greece and Portugal, whose per capita incomes it overtook as the new millennium dawned. At $15,000, this figure represented 73 percent of the EU average.
Moreover, Slovenia’s budget deficit and public debt compared favorably with EU members. Among transition countries, it had the lowest inflation rate, the highest GDP per capita, and the lowest unemployment rate (except for the Czech Republic). It had settled all of its debts from the Yugoslav period and, according to investment risk analysts such as Dun and Bradstreet, Slovenia had the lowest level of risk among all transition economies (Government of Slovenia 2001: 54).
However, Slovenia’s level of development was evident in more than just aggregates such as income. Human development rates also testified to a high standard of living: for instance, at 4.9 per 1000 live births, the infant mortality rate was among lowest in the world (Government of Slovenia 2001: 76). On the Human Development Index global scale, it ranked 28th in 1997. The growth of income inequality was low in Slovenia: while the Gini coefficient rose 65 percent in Bulgaria in the initial years of transition, in Slovenia it rose by only 17 percent, the lowest of all the transitional economies. It registered a poverty rate of 13.5 percent, also lowest among Central and East European countries, where it was one quarter to one fifth of the population (Toš and Miheljak 2002: 21).
Slovenia embarked on its transition much better structurally prepared than the other three cases in this study. This chapter has demonstrated that favorable starting conditions characterized by high levels of economic viability shaped a liberal orientation on the part of Slovenia’s post-communist elites and public, and continued economic success reinforced the liberal project of reform. However, economic viability was merely a necessary—and not a sufficient—determinant of a post-communist regime that was both procedurally and substantively liberal. This chapter has also illustrated how the promise of EU membership reinforced the liberal project. For economic reasons, Slovenia was forced to nourish links with the EU, and in the long term the EU and the EU accession process became the guarantors of Slovenian liberalism by “coopting” most of Slovenian society into the acquis agenda. Cooptation was made possible, in turn, by economic conditions that underpinned pro-EU attitudes. In this sense, economic viability and EU incentives formed a mutually reinforcing dynamic that in turn legitimated democratic institutions.
If, as Pridham (1990) argues, the first decade is a crucial test of whether democracy will hold, then the prospects for Slovenian liberalism looked good at the end of the 1990s. There was little to suggest that the achievements of the 1990s could erode. No serious alternatives to democracy were on the political scene, and democratic institutions functioned smoothly. Yet, as Slovenia marched forward into the new millennium, several questions remained. Given its determination to reject many tenets of neoliberal market ideology, would it be able to maintain competitiveness internationally as globalization proceeded apace? Given its reliance on exports to the EU as an engine of economic growth, what kind of political fallout would there be if a sudden downturn took place in Western Europe? In many ways, economic success had made Slovenians more sensitive to gains and losses. Finally, could populism appear once EU membership was realized, that is, once elites no longer felt constrained?
Previous Chapter
Buy This Book in Print