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A failing economy sours mood in newly independent Slovakia

Published Oct. 9, 2005

When Slovakia was born at 12:01 a.m. on Jan. 1, the joyful strains of the Blue Danube waltz filled National Uprising Square in the capital, Bratislava.

Three months later, a dirge might be more appropriate.

Europe's youngest country could prove to be stillborn. Since Czechoslovakia split, Slovakia has become a disaster area. Its government is disintegrating and its economy is in tatters. Embittered Slovaks are calling the split the "Sandpaper Divorce" as they remember the "Velvet Revolution" that overturned communism.

Last week Slovakia's inept government reeled from further blows when two key ministers left office.

A power struggle between Prime Minister Vladimir Meciar and Foreign Minister Milan Knazko, his putative successor, reached its climax with Knazko's firing. Knazko, a charismatic, Western-minded former actor, disagreed with Meciar on many issues, and relations between the two reached rock bottom when Knazko called Meciar a liar in an interview.

"The battle was over which direction Slovakia should take," said a Western diplomat. "Is Slovakia to be part of the West, or is it to have more in common with Ukraine, its eastern neighbor? While Knazko likes to talk to Western statesmen and to NATO officials, Meciar is happiest meeting Ukrainian generals."

A day earlier, Economy Minister Ludovit Cernak, an internationally respected figure and the only trained economist in the government, resigned.

Cernak's departure is likely to prove the more damaging after his announcement that he would take his Slovak National Party into opposition. He said the "last drop in the glass" had been the appointment as defense minister of a former senior military officer and ex-Communist accused of having tried to thwart Czechoslovakia's "Velvet Revolution."

Almost all the members of Meciar's government are former Communists, which may be why the government shows great reluctance to abandon the state control economy.

Underlying the political turmoil is a deep economic malaise. Even before independence day, the economy was going downhill. In the first month, the National Bank of Slovakia lost 70 percent of its foreign exchange reserves as investors abandoned the Slovak crown. Prices have risen 40 percent and unemployment is up to 12 percent. Ninety percent of agricultural companies are in the red, and 90 percent of the hospitals have no money for drugs.

The International Monetary Fund, called in to try to stabilize the economy, walked out of a meeting and cut short a planned 12-day stay when Meciar refused to devalue the crown on the grounds that he didn't know what his country's balance of payments figure was.

Many ascribe the republic's woes to Meciar, a political bruiser who brooks no opposition. He has gained himself a bad press abroad through his heavy-handed treatment of the Slovak media. While protesting that no bias is practiced against Slovakia's Hungarian minority he has banned Hungarian place names from Slovak TV.

Slovakia's chances aren't being improved by the behavior of the new Czech Republic. Prague is busy erecting customs and immigrations barriers and increasingly looking West.