Social Democrats Between Cerar And Veber-y Hard Place

in 1994, then-defence minister Janez Janša, refusing to quit office over Depala Vas Affair was removed from office by a parliamentary majority in what was probably one the most tense periods of Slovenian statehood. A defence minister using military spooks against civilians to his own needs is never a good idea, let alone in a fledgling democracy. And in an ironic fuck you by Mother History itself, twenty-one years later, almost to the day, Slovenia is again faced with a defence minister running amok and refusing to stand down. This time, however, it’s not Janez Janša, the now near-fallen leader of the SDS, but rather Janko Veber, of Social Democrats (SD) who directed OVS, the military intelligence service, to poke around the sale of Telekom Slovenije. Namely, he defied PM Miro Cerar and refused his calls to resign. AS a result, the PM will now ask the parliament to replace Veber.

20150331_sd
Picture related

Now, drawing parallels between Janša and Veber only goes so far, although a nasty one pops up on a seemingly unrelated question of handling the issue of Roma family Strojan some years ago. This time around, there is no danger of the select army units being deployed to “secure key installations”, no thousands of protesters in front of the parliament sporting pitchforks and shovels and threatening to do generally unpleasant things to deputies if defence minister goes. But one would think that the political class would have advanced both in style as well as content in the past twenty-odd years. Especially political veterans such as Veber who definitely have enough mileage to know better.

As a result, a clusterfuck of reasonable proportions is now brewing inside the ruling coalition. The SD is, for the moment, standing firm behind Veber with party boss Dejan Židan (who doubles as minister of agriculture) going on and on about Veber doing nothing inappropriate and that SD will defend ministers who do their work. On the other hand, Cerar’s demand Veber step down won him a round of applause from the opposition NSi and SDS, while coalition member DeSUS is apparently still calculating how to profit from this as of today on the same boat with Cerar.

The thing is that although technically his boss, PM Cerar cannot simply dismiss Veber. Because constitution. The ground law namely states that ministers are nominated by the PM but appointed to office by the parliament, hence it is only the parliament which can dismiss them. This stipulation has caused trouble more than once, with mixed results. Amazingly, back in 1992, during his second administration, Janez Drnovšek tried to replace Jožica Puhar of what is now the SD (!) but failed. Puhar later resigned of her own accord, while Drnovšek went on to become one of Slovenia’s iconic political leaders.

The same conundrum, albeit with much more melodrama attached, was faced by PM Borut Pahor in 2010, when he demanded that DeSUS leader Karl Erjavec resign as minister of environment due to a damning report by the Court of Audit. Teflon Karl refused, forcing Pahor to call upon the parliament to remove Erjavec from office. Only then did the man give in and resigned, saying he wanted to spare the PM further embarrassment.

And this is quite possibly the scenario we are facing today. Not unlike DeSUS in 2010, the SD in 2015 can, despite reportedly a strong faction in the party to do so, ill afford to quit the ruling coalition. Because resources. You see, the party is but a mere shadow of its former self. It won 30 seats in the parliament in 2008. Six years later it hardly mustered six. And it fared only marginally better on municipal level. The only asset it really still has is its organisation and ground network. But that needs to be supported somehow, mostly by influence exerted on various levels to either bring in financing or to please the right people. Preferably both. And you can not do that when in opposition.

So while PM Cerar might be faced with an undesirable prospect of a single-vote majority in the parliament (SMC and DeSUS combined can put together 46 votes), going back to square one, reopen coalition negotiations and try to lure Alenka Bratušek’s ZaAB to join in on the fun or even give a shot to a minority government rule, the SD is faced with a much more fundamental question of its survival. Of the party as a whole, not just survival of its current leadership set and the gravy train attached to it. The on

The only thing going in favour of the SD is the vast amount of experience it can draw from. The SMC is still well-versed in the intricacies of political maneuvering and is prone to trip over things that need not being tripped over. One such thing is the SD trying to shift the blame for the current situation on the SMC, saying the PM is not adhering to the coalition agreement by speeding through the motions to replace Veber. But Cerar really doesn’t have any other option. Even before the whole thing escalated to boiling point it was clear the PM can not simply let this one slide. There he was, faced with a minister who clearly stepped is bending over backwards trying to explain why, of all the possible agencies, bureaus and directorates did he have to pick army spooks to assess the sale of Telekom. Furthermore, why the bleeping bleep did that he, while claiming to have acted in the interests of national security, exposed the inner communication of military intelligence which – if nothing else – showed that the service was just as divided on the issue as the rest of the country. I don’t know about you, but I’d call that a security risk. And Veber trying to explain all that was a textbook definition of a shitty job.

If Cerar ignored the issue or even supported Veber, he would have not only condoned Veber’s actions but – just as importantly – empowered the SD to the point of near-invincibility, because if you can get away with abusing military intelligence for political purposes, you can get away with anything. And before the faithful jump citing Veber’s concern for national security, we should not forget his party chief Židan who yesterday more or less plainly told the newsmedia the true casus belli was not national security as such but rather control of the Telekom. And this evening, Veber upped the ante, echoing Židan and even implied that while he was working in the interests of the country, Cerar wasn’t. Which is stopping just short of accusing the prime minister of high treason. And that’s a statement that’s very hard to walk away from. So the question do jour is whether the SD will walk away from Veber or from the government.

If pengovsky were a betting man, he’d bet on the former. Especially since there are other big companies for sale as well and if the SD quits the government, they relinquish what little influence they will have over the issue after the dust settles.

 

 

Eurothings Slovenly But Syrizaously Going South

Since Greece and the rest of the Euro zone gave each other the finger the other day, a few things need to be said before things go syrizaously wrong in this neck of the woods. What was expected to be the day of another euro-compromise, brokered in the wee hours of the morning, the whole thing fell apart, seemingly with Greece and its new government on one side and he rest of the Eurozone on the other.

20150218_blog

But in reality, what we have here is not a game of playing chicken, with Greece and the Eurozone counting on each other to blink first. Rather, what we are witnessing is a Mexican stand-off of gigantic proportions where almost every member of the Eurozone is holding a gun to the head of most other members and at the same time virtually all Eurozone governments are held at gunpoint by their electorate, something they’ve only themselves to blame. Namely, by bailing out German and French banks with their taxpayers’ money and now trying to make the Greeks foot the bill, they’ve found themselves in exact opposite of Greek Syriza: while Tsipras and Varoufakis promised to end the vicious cycle of more cuts for more money, leading to less growth which creates the need for even more cuts and the need for even more money (and so on ad nauseam), the governments of Germany, The Netherlands and even Slovenia (to name but a few) are under increasing pressure to make sure the taxpayers get their money back.

Thus, a clustefuck of gigantic proportions was created, where legitimate positions of all governments involved preclude one another and are starting to resemble the old joke about an irresistible force and the immovable object. There rarely was a greater need for the (black) art of the European compromise.

The position of Slovenian government is especially interesting in this case. Apparently, finance minister Dušan Mramor more or lees told his Greek colleague Yanis to go Varoufakimself with his ideas of increasing public sector employment and expenditure while everyone else – including Slovenia – is slashing costs to make ends meet. Not that the ends are anywhere near each other – Slovenia will have to raise 1.5 billion, 15% of the budget, in loans in 2015 alone.

Reassuring Mramor

Mramor was apparently indignant over the fact that in per capita terms Slovenia is among the most exposed member states in the Greece omnishambles but was having no say in the matter as Tsipras and Varoufakis were negotiating with the big boys (and girl) only. As if Mramor way trying primarily to reassure himself by lashing out at Greece rather than trying to find some middle ground or even support Greece in its, well, “need for more time“.

But reassuring himself or the Slovenian taxpayer Mramor is not. It is more than obvious that most (if not all) money loaned to Greece will never get repaid and that Franci Križanič, FinMin in the Borut Pahor government (2008-2011) was talking bullshit when he said Slovenia will make money with the loan.

Mramor’s going after Greece suspiciously coincides with feces coming dangerously close to a mechanical air ventilator in the case of 3-billion-heavy bailout of Slovenian banks in late 2013.

Junior bonds extinction

Namely, accusations were made by Tadej Kotnik (curiously, a biophisycist and vicedean of faculty of Electrical Engineering) that recapitalisation of the banks and especially the accompanying extinction of subordinated bank bonds (in effect, complete nationalisation of Slovenian banks) was illegal, pre-arranged and non-transparent. But the gist of it, it seems, lies in the allegation that the Bank of Slovenia (this country’s central bank, aptly shortened to BS) back-dated a key measure to cover up the fact that eradication of junior bonds was agreed-upon in advance with the European Commission and was not some sort of a last-ditch measure to save the banks.

Now, Kotnik, a private individual and a member of the Association of Small Shareholders, apparently invested heavily in subordinates and thus lost quite a substantial amount of money. He also challenged the bond extinction at the Constitutional Court but the court deferred to the European Court of Justice as the bailout measures were coordinated with the European Commission and under EU law directly.

Anyhoo, the thing is that the Bank of Slovenia, specifically Governor Boštjan Jazbec fucked up their initial response, hiding behind legal clauses and non-disclosure of financial information, thus giving credence to Kotnik’s accusations which are, it seems, mostly based on one or two sources within the BS.

obviously all hell broke loose, with MPs screaming for a parliamentary investigation, various political parties scrambling for cheap political points and Jazbec, after a press conference was finally held, fucking up further with a seriously distorted view of (non)accountability of the institution he heads and the office he holds.

Namely, Jazbec, after explaining that everything is OK and within the bounds of the law and that two wildly different appraisals of the state of the largest bank NLB are not all that unexpected decided to explain the matter further to… the government. As if it wasn’t the parliament who appointed him to the position and as if it wasn’t the parliament who represents the sovereign of this country, the people. Or, as they are more commonly known these days, the taxpayers.

While the government of course needs to be in the loop, Jazbec would do well to address the parliament first, since it was the people’s euros he spent on propping up the banks. But as things stand now, he is making one small(ish) mistake after the other and if he doesn’t stop digging soon, he may find himself in a hole too deep to climb out of. Especially since political parties are scrambling to put a daylight betweeen them and anything that might make them look responsible for the disastrous state of the banking sector. Which is why the Social Democrats are all of a sudden deeply worried about the situation. As if it wasn’t them who ran the financial portfolio in the ill-fated Pahor government (when things started going south for real) and who were junior partners in the Bratušek government which engineered the bailout. Almost the same goes for the SDS, which led the government during the pre-2008 spending spree and which performed a couple of smaller recapitalisations of the NLB (couple a hundred million a pop) and is now screaming bloody murder and demanding a parliamentary investigation.

The sad reality

The reality, of course, is much more prosaic. After Greece and Cyprus, Slovenia was to be next in line for the Troika Treatment. And since the political mantra in the Eurozone at the time was that individual stakeholders, not just the state as such must bear the cost of the bailout, it was more or less obvious that erasing junior debt was unavoidable. Even more. If there is one point where Tadej Kotnik is correct is that the whole process was most likely pre-arranged and coordinated with Brussels. You see, at the time Slovenia for all intents and purposes was under administration, with the European Commission pouring over every aspect of economic and/or fiscal policy, confirming some, rejecting others. And so it seems plausible that the bailout of the banks, the extent and the mechanics of it were approved by the EC before they were enacted by the Bratušek-Čufer-Jazbec trio. That the Commission formally approved the measures taken fairly soon thereafter only goes to strengthen the point.

The above seems to suggest that the problem was not so much in the execution of the bailout but in the definition of the problem. You see, at the time the fate of Slovenia was in the hands of a budget specialist (Bratušek), a higher-level bank manager (Čufer) and a macroeconomist (Jazbec). None of them were in office for a particularly long time, while the country as such was held at gunpoint, not to mention the political turmoil on the home front. For them to understand that the problem was one of policy concept and not (only) of numbers would demand an extraordinary insight. Even more – even if they had the insight (it seems plausible that at least some people advising them did manage a wider outlook), it remains doubtful if they had the room to manoeuver.

Which, not surprisingly, brings us back to the current Greco-German spat. Unlike the Slovenian government of Alenka Bratušek, the new Greek PM Tsipras and his FinMin Varoufakis fully understand the problem is political, even ideological. But they, too, have precious little wiggle room. Because just like Syriza is acting on a mandate by the people, so, too, are the Germans and the rest of the Eurozone. At some point they will have to explain to their voters why they used their money to prop up mostly German and French banks, overexposed in Greece. I’m sure it seemed a good idea at the time and in the panic that gripped the EU when Greece all but defaulted, the last thing anyone wanted was a bank run. But to bailout its banks, the Eurozone took out an even bigger loan with their voters and not being entirely candid on what the money was being spent on.

Extend and pretend

With this in mind, it is not only Greece that is – in the words of Yanis Varoufakis – resembling a drug addict. The (rest of the) Eurozone, too, is asking their voters trust and understanding they may not be ready to give anymore. Which makes the ruling centrist(ish) parties in Europe nervous which, by extent, leads to some uneasy moments of disturbing clarity, such as German FinMin Schäuble apparently saying the Tsipras government is acting irresponsibly. Patronising, even smacking of colonialism. But in reality most likely nothing more than a show of frustration at the realisation that even if the new Greek government does decide to play ball and continue with the established sparprogram, the game is more or less up and “extend and pretend” is from now on a two-way street.

And that no one knows how long the voters are going to continue buying it.