20/06/2006 11:44:53 am
Not the End of Slovakian Success. The elections in Slovakia a few days ago led to the leftist party Smer doubling its support in Parliament. Socialists and statists in general in Western Europe cheered. This was seen as an end to the era of market-oriented reform in Slovakia. (Why they want to end the famous Slovakian success in terms of growth, employment and rising living standards is probably a matter of ideological fundamentalism.)

Indeed, Smer promised to "end the gold rush" in Slovakia. No more paradise for foreign investors (something that made Slovakia the biggest car producer in the world, per capita). They promised to replace the flat tax at 19 per cent with a progressive tax and talked of adopting something like the European Social Model. In effect, an end to what has lifted Slovakia. (Perhaps, by the way, that is why the left in the West is cheering, with an end to the success story the old West would no more have a successful competitor in Slovakia and not the same demands for reform as today.)

Anyway, this miserable development is not likely to become reality. Smer only has 50 of the 150 seats in Parliament. Either they have to rely on nationalists and a corrupt former Slovak Prime Minister or parties from the outgoing government. And the left seems unlikely to re-introduce socialism with the support of nationalists and corruption. Thus, support from the reformist outgoing government remains the alternative. And that is likely to lead to most of the reforms to be left in place, thereby guaranteeing continued economic success.

Read more in the FT - >