Now There Are Two of Them

Slovak Prime Minister Robert Fico seized the anniversary of the Velvet Revolution to declare ambitious intentions to influence European politics and the upcoming presidential elections in his country in spring 2024. He echoed Russian narratives about the war in Ukraine and expressed a few Eurosceptic reflections. Furthermore, Fico made it clear to local media that he wouldn't be taking them into account. Riding high on the success of parliamentary elections, Fico's party, Smer, is in powerful euphoria, enjoying a political carte blanche within the country. Meanwhile, in the EU, the new Slovak premier is gradually building a reputation as a troublemaker, a role previously attributed only to his Hungarian counterpart.

Robert Fico's party, Smer (Slovakia), took advantage of the 34th anniversary of the 1989 Velvet Revolution to make significant statements important for this political force. This is despite certain contradictions between Smer's Eurosceptic slogans and the pro-European slogans of the Velvet Revolution, which put an end to the pro-Soviet regime in Czechoslovakia.

The Guests Were Symbolic

This was not a state event but a party celebration, so protocol could be somewhat relaxed. The solemn session was attended by ambassadors from the United States, Hungary, the Czech Republic, China, and Cuba, but Poland and Ukraine, the two largest neighboring countries, were absent. The event also saw the participation of State Secretary of the Ministry of Justice Pavol Gaspar and the well-known Member of the European Parliament from the Smer party, Monika Benova.

"At the outset, I want to make it clear that this is a party congress, not a government meeting, so stop being so serious," Fico urged his party supporters to applause. "We won parliamentary elections for the fifth time," he added.

Euphoria and More Euphoria, that could sum up the general mood.

And why not be euphoric if Fico has objective reasons to boast about election success. "We are absolutely the most successful party in the history of Slovakia, and we want to remain so," noted Fico. He reminded how after 2020, Smer was supposed to be written off, and Slovak social democracy split into Smer and Hlas. According to Fico, both sides have now, logically, come together again.

But the year 2020 was not mentioned in vain, as in that year Hlas, led by Peter Pellegrini, broke away from Smer due to a corruption scandal. Shortly before that, Fico almost faded into political oblivion due to the same horrific corruption scandal. Until now, he held the position of prime minister three times, most recently in 2018 when he resigned amid a high-profile corruption scandal and the related murder of a local investigative journalist.

So, the triumphant euphoria serves as a kind of political painkiller and a preventive measure against uncomfortable questions from the opposition.

And this is the moment to consider the economic condition of Slovakia, which, for such a mood, provides no grounds whatsoever.

PHOTO: Robert Fico's(on the left) party Smer took advantage of the opportunity of the 34th anniversary of the Velvet Revolution in 1989 to make statements crucial for this political force. Euphoria from the recent election victory prevailed on the stage and in the hall. Source: video screenshot Startitup

Challenges from the pocket

Slovakia wrapped up 2022 with a budget deficit of $2.333 billion, equivalent to 2% of the GDP. While seemingly not bad, it's two to three times smaller than the deficits of the previous two years. Accumulated economic issues are partly a consequence of the COVID-19 crisis and partly linked to the government's less-than-ideal decisions. However, this year is expected to see a budget deficit of nearly 7% of the GDP. This is even more than in 2020 and 2021 when funds were allocated to support an economy hit by COVID-19.

According to Slovak legislation, the government must formulate a program after formation, which the parliament must approve within a month. This could grants the government a vote of confidence from parliamentarians. To secure such a vote, 76 votes are needed, but the coalition backing Fico's government has 79. Therefore, there shouldn't be significant problems, although the opposition is currently fiercely criticizing Fico's program, presented by the government on November 13.

So, what does the team of the populist and Eurosceptic Fico declare? There's a rather odd mix of increased taxes and expanded social payments.

They promise to cut down the "fat cats", if it's necessary. Specifically, there's a proposal for a special tax on bank profits. But at the same time, measures are supposed to be implemented to reduce mortgage interest rates. How to reconcile the simultaneous implementation of two measures that narrow the financial base of banks is unclear. This is risky and could potentially lead to systemic problems in Slovakia's banking system.

The program includes a point about special levies on windfalls in other unspecified sectors. It seems that these levies will be introduced on an ad-hoc basis, not in advance. There are also grounds for concern about the state of the economy.

They promise to introduce special taxes on people with higher incomes, as well as taxes on real estate, especially on second, third, and subsequent houses. It's worth mentioning separately the increase in excise duties on alcohol and tobacco, and also on sugary drinks.

Why all this? Because of problems with the state budget (a deficit of nearly 7% of GDP is expected). So, they will gradually start reducing that deficit—by 0.5% of GDP in 2024. Why so slowly? To avoid further deterioration of the standard of living, which is one of the lowest in the European Union, according to the program.

Nevertheless, the government plans to establish an additional 13th pension. This means paying pensioners an extra pension per year, in addition to the regular 12 monthly pensions. Social Affairs Minister Erik Tomas also stated that this year, the government will provide a one-time assistance of 150 euros to each pensioner.

Fico also promised that the government would provide tax breaks of up to 1800 euros to households whose mortgage rates spiked in 2023. The government will also start partially covering some costs of mortgage interest rates from 2024.

Perhaps the Kremlin will be pleased with the program point that cancels Slovakia's official military aid to Ukraine.

About Brussels and Bratislava

Besides purely economic aspects, the government program also includes significant foreign policy plans. For instance, the Slovak government will seek an end to military actions, while recognizing Ukraine's international borders. This is a rather peculiar desire, considering that a substantial part of Ukraine's territory remains occupied at present. So, in reality, the Slovak government advocates for freezing the conflict.

Given that the national veto power of EU member states allows some new EU countries to manipulate Brussels when it comes to their selfish interests, the Fico team has announced plans to counteract the cessation of this veto right or the transition to majority voting in a majority of cases.

A glaring example of the not-so-appropriate use of the veto occurred at the end of October. During discussions on the EU budget, including a €50 billion aid package for Ukraine next year, Slovak Prime Minister Robert Fico supported Hungarian Prime Minister Viktor Orban, and they both stalled the approval of this package. Of course, they justify their positions by claiming concern for taxpayers' money, but it's worth noting that both countries are not donors to the European Union but them are recipients of funding from EU common funds. Additionally, both countries face scrutiny from Brussels regarding the state of human rights, in particular. The human rights situation in Slovakia, in particular, shows signs of deterioration. During official gatherings, Fico has strongly criticized independent media.

Opposition expresses concerns about potential retaliation, meaning possible actions by the current Slovak Prime Minister against those who contributed to the investigation of the corruption scandal surrounding Fico and his circle in 2018. If these intentions regarding the media and the events of 2018 start to unfold, there will be even more questions from Brussels.

As we can see, both Bratislava and Budapest use the veto right as tools to bargain over their own issues unrelated to the veto subject. Therefore, the prospects of abolishing or reducing the scope of veto rights in Brussels are quite realistic. Thus, strengthening the presence of his country and his political allies from other countries in the European Parliament is crucial for Fico. The elections to the European Parliament, I remind you, are scheduled for 2024.

Another set of elections is in the focus of Fico's team for the next year. The presidential elections in Slovakia are set to take place in March-April 2024. Slovakia is a parliamentary republic, but the position of the president still holds some influence. Currently, Zuzana Caputova holds this position, elected in 2019. Prior to her election, Čaputová had been the deputy leader of the Progressive Slovakia party, which is presently in opposition. In the summer of 2023, Zuzana Caputova announced that she would not participate in the 2024 elections and has not declared any other position on the matter so far.

As of now, the situation looks like Brussels has gained another "difficult teenager," the first being, as many consider, Viktor Orban.