DGAPanalyse Prof. Dr. Eberhard Sandschneider (Hrsg.) Otto Wolff-Direktor des Forschungsinstituts der DGAP e. V. May 2014 N° 6 Slovakia in the EU: An Unexpected Success Story? by Milan Nič, Marek Slobodník, and Michal Šimečka This paper is published as part of the research project "Central European Perspectives – Integra- tion Achievements and Challenges of the V4 States after Ten Years in the EU", supported by the strategic grant of the International Visegrad Fund. Project Partners: Central European Policy Institute (CEPI), Bratislava|Slovakia Asociace pro Mezinárodní Otázky (AMO) / Association of International Affairs, Prague|Czech Republic Eötvös Loránd Tudományegyetem, Társadalomtudományi Kar (ELTE TÁTK) / Eötvös Loránd University Budapest, Faculty of Social Sciences, Budapest|Hungary Fundacja im. Kazimierza Pułaskiego (FKP) / Casimir Pulaski Foundation, Warsaw|Poland The German Council on Foreign Relations does not express opinions of its own. The opinions expressed in this publication are the responsibility of the author. DGAPanalyse 6 | May 2014 Summary Slovakia in the EU: An Unexpected Success Story? by Milan Nič, Marek Slobodník, and Michal Šimečka Slovakia has emerged as an unlikely success story of the 2004 EU enlargement. The country’s first decade as a member state was marked by robust growth – spur- red by pro-market reforms of the early 2000s – and relative economic resilience and political stability during the global economic crisis. Thematic priorities on the EU level have included cohesion policy, energy, EU enlargement, and the Euro- pean Neighborhood Policy (ENP). Slovak diplomacy has seen regional groupings – above all the Visegrad format – as the most effective way of pursuing its policy preferences. As the only eurozone member in the Visegrad Group (V4), Slovakia remains a reliable if somewhat passive supporter of deeper European integration, supporting a fiscally responsible approach. This policy course reflects a broad pro- European consensus among relevant political actors in Bratislava and continued public support for EU and eurozone membership. Going forward, Slovakia faces steep structural challenges (high unemployment, regional disparities, social exclu- sion of Roma), and needs to recalibrate its export-led and industry-heavy growth model toward higher added value and innovation. 1 DGAPanalyse 6 | May 2014 Contents 1. Retrospective Overview ..............................................................4 1.1. The trauma of being left out ............................................................4 1.2. Champion of market reforms ...........................................................6 1.3. Qualifying for the eurozone ............................................................7 1.4. National controversies .................................................................8 2. Perspectives .........................................................................9 2.1. The formation of national preferences ...................................................10 2.2. EMU, EU institutional affairs, and fiscal integration .........................................10 2.3. External policies . 12 2.4. Regional dynamics . 12 2.5. Energy policy.......................................................................14 2.6. Economic partnerships ...............................................................16 Conclusions ...........................................................................18 2 DGAPanalyse 6 | May 2014 Slovakia in the EU: An Unexpected Success Story? by Milan Nič, Marek Slobodník, and Michal Šimečka Slovakia has had a good first decade in the EU. Unlike its Visegrad neighbors, Slovakia managed The country had initially been counted among to embed itself in the innermost tier of European the more troublesome of the post-communist integration, joining the eurozone in 2009. Lately, transition states, owing to the authoritarian abuses Slovakia has also been playing a stabilizing role in and incompetence of Vladimir Mečiar’s cabinets the region. Bilateral relations with Hungary, bur- in the 1990s. In 2004, it barely scraped into the dened by a difficult past, have never been healthier. cohort of acceding states. Ten years later, however, In contrast to the recent government instability in Slovakia stands out as a success story of the 2004 Prague and the centralization of power in Budapest, enlargement. It has exacted tangible benefits from membership while being, with few exceptions, a politics in Bratislava remain stable, centrist, and lar- stabilizing element amid the eurozone crisis. Popu- gely free of anti-European populism. lar support for the EU remains strong, with a recent Eurobarometer survey noting that support This relatively benign context has allowed succes- for the common currency is at 78 percent.1 Greater sive Slovak governments to pursue a pragmatic but EU integration is still seen as a guarantor of the responsible EU policy, grounded in the strategic country’s prosperity and stability. imperative of sticking to the EU mainstream and eurozone integration. Save for the dramatic parlia- Before the global economic crisis, Slovakia enjo- mentary vote on the bailout package for Greece in yed a period of rapid economic growth (2002–08), November 2011, Bratislava backed all of the crisis averaging approximately 6 percent of GDP annu- response measures – from the European Stability ally – triple the eurozone average at the time. The Mechanism (ESM) through fiscal compact to the boom, which earned the country the nickname banking union – without much controversy or even “Tatra Tiger” (after the local Tatra mountain range), public attention at home. The current prime minis- can be traced to the structural reforms undertaken ter, Robert Fico, signaled in late 2013 that he would before joining the EU and to the foreign direct investment that those reforms attracted. The Slo- welcome even tighter integration in fiscal and eco- vak economy, shielded from currency volatility nomic matters; that a leader in today’s Europe can and trusted by foreign investors, proved resilient make such a statement without fears of a nationa- enough to rebound from the 2009–10 downturn list pushback is a telling sign of just how robust without inflicting irreparable damage to public Slovakia’s domestic consensus on European affairs finances. has become. 3 DGAPanalyse 6 | May 2014 In fact, a broadly pro-integration agenda is 1. Retrospective Overview espoused by almost all main parties, regardless of ideological persuasion, and underpinned by voters’ 1.1. The trauma of being left out continued trust in the European project and euro- zone membership. This has engendered a degree The analysis of Slovakia’s European policy cannot of continuity and consistency in European policy be divorced from a consideration of its dome- unseen in any other Visegrad country: Slovakia’s stic politics. Following the peaceful breakup of bid for eurozone membership, for instance, was set Czechoslovakia in 1992, internal political polariza- in motion in the mid-2000s by the center-right coa- tion was starkly reflected in Slovakia’s international lition of Prime Minister Mikuláš Dzurinda and duly position. Between 1992 and 1998, the populist completed (with credit duly claimed) by the first prime minister, Vladimír Mečiar, and his party, the government of Robert Fico, Dzurinda’s arch-rival, Movement for Democratic Slovakia (HZDS), made who otherwise worked to undo his predecessor’s a series of undemocratic decisions. These led to signature neo-liberal reforms. The downside of the country’s growing isolation in Europe. Slovakia the tacit domestic consensus on Slovakia’s Euro- quickly fell behind its neighbors in the integration pean policy is that it choked any meaningful public process. Its accession to the OECD was postponed debate on the country’s place in Europe’s changing in 1996 due to a lag in the market reforms. In 1997, institutional landscape. There is also a lack of reformist opposition leaders and a large part of society were dismayed to watch as Slovakia’s three interest in EU issues among a large part of the Visegrad neighbors were invited to join NATO, country’s political and intellectual elites, a sort of and later to start accession talks with the EU. The passive consumerism of EU integration that may European Commission pointed out a long list yet come back to haunt the country’s instinctively of deficits in the area of democracy and human pro-European establishment. rights.2 Out of all ten applicants, Slovakia was the only one that did not satisfy the so-called “Copen- The first part of this paper will provide a retros- hagen political conditions” for EU membership pective overview of Slovakia’s EU membership and talks. Being left out of EU and NATO enlarge- focus on the main turning points in its relations ment in 1997 was one of the main sources of the with the EU, including in the pre-accession period. country’s soul-searching and identity crises, which It will also examine the determinants of Slovakia’s eventually culminated in political change.3 predominantly pro-European outlook. Two issues will be discussed in more detail: 1) the trauma The turning point came in the October 1998 elec- of “being left out” from the initial accession pro- tions. A broad democratic coalition, unified by cess and the extraordinary effort of “catching up” opposition to Mečiar and the fear of falling further behind the region’s integration mainstream, defea- with the rest of the Visegrad Group in the early ted the HZDS party.