2018 Parliamentary Election: Gifts That Keep On Giving

T-14 days and the election campaign in Muddy Hollows is now seeing increased use of heavy artillery, pengovsky did some punditizing on the telly and the debates are about to start coming in thick and fast.

Debate on POP TV on Monday night (source: screencapture)

But before we go into all that, the story that dominated the past week was one this scribe had briefly covered here and has to do with Slovenia turning out to be much more of a banana republic than its indigenous population is willing to admit

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Gold Rush

In a development that surprised a grand total of zero people, Marjan Šarec, mayor of Kamnik and erstwhile presidential candidate announced yesterday that he will take part in the parliamentary election. This comes on the heels of a host of new political parties announced or already formed and ready to enter the already-crowded arena. And with the vote six months out it is high time pengovsky takes a closer look at the lay of the land .

Slovenian ballot box (photo by yours truly)

Although reguraly decried by their more established and/or traditional cousins as attempts to con and defraud the good citizens of Muddy Hollows, new parties are by no means a purely Slovenian phenomenon. Case in point Czech Republic (or Czechia, as it now wants to be called in English) where a large majority of parliamentary parties have yet to celebrate their tenth birthday and one was established only two years ago. Or neighbouring Slovakia where two parliamentary parties were non-existent as little as three or four years ago. Or even France, where the right wing is currently billed as Les Republicains but used various acronyms throughout the decades as its (originally Gaullist) platform evolved. All this and we haven’t even mentioned Emmanuel Macron’s La Republique En Marche which was but a figment of imagination as little as eighteen months ago but has since opened a can of whoop-ass on the French political establishment.

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Lunatics Have Taken Over The Asylum (Policy)

It takes a special sort of naiveté to look at the last ten days in Muddy Hollows and see it as anything but a shameless run for cheap political points. The matter at hand is the issue of one Ahmat Shani, a Syrian refugee who ended up in Slovenia where the state is refusing to process his asylum application and is now facing deportation to Croatia.

Ahmad Shami (source)

Ahmad Shami was a part of the 2015 refugee exodus which – despite numerous warning signs – caught the EU more or less unawares and scrambling for stop-gap solutions, hobbling the Schengen area and inducing levels of panic and overreaction not seen since, well, the eurozone crisis. But Ahmad Shami probably cared less about that than getting to safety and making sure his immediate family could follow in his footsteps.

Continue reading Lunatics Have Taken Over The Asylum (Policy)

Playing To Lose, Cerar Goes About Saving Private Mramor

Yesterday, finance minister Dušan Mramor offered to resign over a bonuses scandal that’s been overflowing for about two weeks now. In what was a somewhat unexpected move, PM Cerar did not accept the resignation. Instead he subjected Mramor to a mere slap on the wrist and then proceeded to extol Mramor’s track record at the ministry. Although the affair involved relatively modest amounts, the public and the media were indignant and the pundits were near-unanimous that Cerar will let Mramor go. Since he didn’t, the overall sentiment is that Cerar committed political suicide and will never be re-elected again. The truth, in pengovsky’s view, is somewhat different: Cerar has long since become unelectable, most likely on Day 2 of his tenure. It just took him over a year and two pan-european structural crises to come to that conclusion. Thus in terms of his own political future he has little to lose. He can, however, make the remaining three-and-a-half years count. And for that, he needs Mrarmor more than Mramor needs him.

Miro The Man and Dušan The Man’s Man, some time ago. (source)

The gist of the story is that Mramor, while serving as dean of the Faculty of Economics in 2008, OK’ed use of special clause in labour legislation that provided for a 24/7 standby bonus. The clause was meant to be used to augment paychecks to various branches of first responders and similar services, but in mid-2008, apparently to circumvent the havoc wrought by the across-the-board austerity at the time, the faculty came up with this clause and, well, bent over backwards to expand its interpretation to cover university professors as well. The move worked so well that it was copied by nine out of eleven faculties, members of University of Ljubljana (Faculty of Theology and Faculty of Law being the notable exceptions).

Unmitigated disaster

Now, ever since the story broke, it has been an unmitigated PR disaster for Mramor and everyone else involved. This includes Minster of Education Maja Makovec Brenčič, former SD heavyweight and incumbent dean of the Faculty of Economics Metka Tekavčič and several other public personae. Especially daft was the feeble defence mounted by the faculty, now with Tekavčič at the helm, which only reinforced the perception of entitlement on the part of the academic elite. The fact that the whole issue centered on about half a million euros across nine faculties, did little to ausage the problem. Quite to the contrary. It is a known quirk of the Slovenian voter that the more he or she can relate to a number, the more emotional their response will be.

Case in point being Mramor who, over the years, accumulated around 45k euros in “standby bonuses”. 45,000 euros is not an unreachable amount of money. It’s about three-years-worth of average Slovenian wage. To put it another way, 45k will buy you an mid-to-upper-range BMW. Which is what makes the people so mad. They have an approximate idea about how much 45k euros actually is and they base their judgements on that. To put in perspective, only about a week ago, Slovenia was forced to pay 42 million euros (almost a thousand times more) to Croatia as damages for electricity not delivered from Krško nuclear plant between 2002 and 2003, when a political decision was taken to punitively and unilaterally withhold electricity from Croatia, even though the neighbouring country owns a 50% stake in the plant. Point being that the voters will more likely and more furiously take issue with smaller amounts of money. Doubly so if the payouts are legally dubious, as they are in this case.

Now, in the end Mramor has promised to pay back the whole amount, but only after being prodded by the media and – presumably – by the PM himself. Before that he somehow came to the conclusion that he would only pay back some 3000 euros. As if we learned nothing from the case of Gregor Virant in 2011.

Do-Goodnik becomes unelectable

But enough about Mramor. What he did was wrong, regardless of the motives. And while he’s not off the hook just yet, he does get to live another day or so and in politics a week is a lifetime. What is equally interesting, however, is why Cerar bailed Mramor out in the first place and squandered what little remained of the ethical platform the SMC ran on in 2014.

First, the already mentioned fact that Cerar has, in fact, been unelectable for some time. At the very least from the onset of the refugee crisis where he alienated a substantial part of the progressive vote by raising a razor-wire fence on the border with Croatia and empowering the military to police civilians. On the other hand, he only infuriated the right-wing which – although clamouring for these measures – predictably deemed them to little, too late, when finally passed. But in all likelihood, Cerar’s political demise began soon after he began his term, when the high-flying ethical do-goodnik platform met the bleak politcal and economic reality of Slovenia. After kicking ministers out for much smaller transgressions and having seen himself and Mramor brush with a similar affair, Cerar finally realized that it was in effect he himself who was pulling the rug from under his feet. Others were just helping.

Not that there was any lack of help. During yesterday’s press conference, Cerar took a swipe at SDS and SD, more or less saying that he will not have the composition of this government being dictated to him. That the SDS is making life difficult for Cerar is hardly news. After all, they’re the opposition, even if they’re being strangely blunt about that as of late. Namely, according to one source, the party openly threatened the SMC with making their life a living hell if the largest party does not support the SDS nominee for a vacant post at the European Court of Human Rights. The SMS refused to oblige. Hell did in fact commence.

SD ante portas

But the slap across the face of the SD was much more telling. The party, although still in relative ruin after its electoral flop, was given a new lease of life by Cerar’s strategic mistake of making them coalition partners. It soon started to re-establish its economic base and soon enough found itself in a massive brawl with the SMC over the sale of Telekom Slovenije. The SD lost that particular battle but stalled the whole thing just enough to derail the sale. Then came the beheading of the bad bank where SD gained a whole new range of informal power and – not unimportant – where Mramor lost. Which sort of made him the next target. And since he was apparently vunerable in the bonuses department… well, you now know the story.

From this point of view, had Cerar accepted Mramor’s resignation, the SD would have practically owned the government. They’ve squeezed a number of consessions out of Cerar as it is. The latest one being a shamelessly brazen creation of a party fief. officially known as the State Forest Company, it centralizes forestry management and falls under the purview of – yup, you guessed it – minister of agriculture, forestry and food, headed by leader of the SD Dejan Židan. Had Cerar allowed them to go any further, he would relinquish what little control he has on the home front.

Bond…. Sovereign bond

Ditto for the foreign front. Had Cerar relieved Mramor of his duties, Slovenia would in all likelihood start raising many-an-eyebrow of various investors all over the world. Until now, these were more or less happy to buy Slovenian debt precisely because Mramor and his predecessor Čufer handled the post-bailout situation adroitly and took the country of various watch-lists in Brussels, Berlin and Washington, even though (in all honesty) the pace of reforms and privatization has been glacial, at best. Bottom line, with the to-do list still being more or less the same as it was under Bratušek tenure, Mramor is Cerar’s best insurance against the possibility that the humanitarian and political crisis (in terms of EU issues) is joined by a resurgent financial crisis, too.

Thus, by protecting finance minister Mramor, Cerar conceded that he’ll lose the next elections. ironically, to win them, he probably has to play to lose, anyhow.

Bad, Bad Bank. Heel.

As both readers of this blog know, the government of Miro Cerar decapitated the management and the board of the BAMC – Bank Asset Management Company, a.k.a. the “bad bank“. With dismissal of Lars Nyberg as head of the board and Torbjörn Månsson as CEO, the rest of the international team left, as well, leaving a power vacuum at the top of the institution tasked with making the most of bad loans that hobbled the Slovenian banking sector and the economy in general.


Since its conception, the bad bank has been an unloved child, more or less forced upon the government(s) by the looming troika back in the days when shit was getting real and Slovenia was teetering on the brink of the bailout abyss. Now, the bank had its fits and starts, with outside consultants being heavily relied upon to turn the legal mandate into a reality while the political turmoil was reaching new peaks and the mandate itself was frequently changed. The management of the bad bank also changed quite a bit, finally settling down with Nyberg as head of the Board and Månsson (who served as a consultant during the conception of the bank) as CEO.

The bank and its management were never far from centres of controversy. Be it the way they managed assets, or the very nature of the assets they were given to manage, they always irked somebody. And since the top execs were outsiders (with Slovenians serving in non-executive management roles), there was a noticeable unease and even apprehension with the institution across the political spectrum. This of course did not prevent the political parties bashing each others’ brains out with whatever shit the bank dug out on any given day, depending on whose daily agenda the issue at hand served best. But the thing was that during the last 25 years enough dubious business moves were made and/or politically ordained on both sides of the aisle, that no one was coming out of the cesspool clean. There was no guarantee that politically sensitive issues will be kept at bay, that names will not be named and that clout will be kept.

This is one of the reasons the bad bank was under intense scrutiny from the very beginning. Leading the charge was the Court of Audit which, understandably, wanted to keep an eye on how state’s assets were being managed. Turns out that the management had a hard time putting legal provisions in practice and that not all decisions were up to standards. Accounting and otherwise. To put it plainly: in 2013, the first year of operation, money was spent lavishly but to little effect. Månsson defended his work saying that the mandate was changed frequently and that a lot of that money went for adapting to the new circumstances. And, to be honest, in 2014, the bad bank did come up with results, selling some debt (transferred at a discount) for a profit. On the other hand, managing real estate left a lot to be desired, to put it mildly. So the results were there, albeit not spectacular . But still. Since the bad bank was chartered for five years with the understanding that it would get another five, things were seemingly moving in the right direction.

Wag the dog

Not everyone was pleased with that. Local economic chieftains, once considered pillars of society (aren’t they all, until they come tumbling down), were quite unhappy with outsiders basically showing them they know jack shit about running a business when the going gets rough. With the downfall of economic powerbases a number of different informal networks, consisting of politicos, moneymen and opinion makers began to unravel which again, was an unwelcome turn of events for many. Which is why the bad bank was under a near-constant stream of accusations of wrongdoing. Most of these accusations were based on the audit for 2013, while others, more populist ones, included the claim that “foreigners were lining their pockets on account of the Slovenian taxpayer” and scandalisation over salaries of the BAMC top brass. A classic wag the dog moment.

And, as usual in Slovenia, this worked pretty well. BAMC management was well paid. Extremely well paid, to be exact. 20k € before taxes is not peanuts in Slovenia, although one gets left with slightly more than 50% of that after the various parts of the state (welfare and otherwise) have taken their share. Still, not exactly what one would call a negligible amount of money.

But while your average Slovenian was scandalised over the numbers, what no one cared about was that these rates are more or less common in this line of business. For all intents and purposes, Månsson was the official receiver of the state and para-state assets. And if you want someone from an international market to run that for you, you pay international prices. Sure, the management of the bad bank in all likelihood was not top-tier, but then again, Slovenia can’t afford to pay top-tier prices. We got our money’s worth and still Månsson and his people were able to do more in a year and a half than the various local polit-economic brain trusts were able to do in a decade. Which begs the question who exactly was, in fact, overpaid.

Point being that the public outcry over paychecks is just a smoke-screen for taming a force that was wreaking havoc on the established order of things. Because regardless of the waste the 2008 meltdown laid upon the economic landscape of this country, the balance of power remained more or less unperturbed. Even the fact that the right-wing slammed the left-wing for undermining the bad bank, it only did so because it was not itself in power. And had it been, the left-wing would have slammed the right-wing for fire-selling state assets.

When Christmas comes early

Oh, wait, but this is exactly what the left-wing has been doing for the past year and a half. You see, from their point of view, PM Cerar and FinMin Mramor are little more than agents of the neoliberal locusts, while from the point of view of the right-wing they are nothing but custodians of the communist economic power structure. Both views are as much self-serving as they are wrong. Cerar and Mramor (the latter definitely being on the hawkish side of the austerity debate) are primarily concerned with rocking the economic boat as little as possible. And since the SMC is essentially a populist party, given its quick rise and patch-work platform, they could ill ignore the issue which, however misguided, enraged the people. It was therefore easier to cut Nyberg and Månsson loose than to pick a fight that could well bring down the coalition.

As a result, the Social Democrats, the most junior of the three coalition partners, have again gained in strength as they will no doubt drive a hard bargain in negotiating who gets to be the bad bank’s new top dog. Karl Erjavec of DeSUS, too, will strive to cash in on the situation, but his is a different playing field. Everyone else, too, will want a piece of the pie in return for not causing too much trouble. The only ones who will be left out in the cold nursing their hurt pride will be the ones who carried the anti-bad bank banner all those years: the United Left (ZL).

The ZL went all out against BAMC on ideological grounds. Pure as their motives were, the party somehow failed to notice that they are merely carrying bag for their left-wing competition. While the “only true left-wing party” was up in arms, the SD (bleeding voters and probably ripe for a trip to the Happy Hunting Ground) was sitting back and enjoying the ride and is now laughing all the way to the (bad) bank. To put it another way: Christmas came early for the SD and ZL was the Santa’s little helper.

And now, in the power vacuum, all kinds of shady deals can be made. Including the one which seems to have caused the downfall of the bad-bank management in the first place:

This seems to be the crux of the matter. The moment it actually started doing what it was supposed to be doing, the bad bank stepped on so many toes so fast everyone wants it to just disappear. Much of this was summarised in this must watch interview-cum-explanatory with BAMC project manager Janne Harjunpää (in English) ran last night by the RTVSLO (of all places 🙂 ). The present situation is nicely summed up in this six-minute clip, together with the explanation why both left- and right-wing want BAMC tamed.

And before someone goes ga-ga over yesterday’s CrimPolice raid at the bad bank, supposedly investigating consultants’ fees and board wages, let us not forget that a) these things rarely come to fruition and b) are probably nothing more than just a back-up plan in case the dismissed top brass claims severance pay.

It’s the power, stupid

At the end of the day, the government of Miro Cerar will have to choose a new board. The PM said this will be done by an international tender, but this means nothing if he and the finance minister fail to curb the greed and power grab of the traditional political parties. Not only are they used to this, they need such an economic backbone to plot their way back to power.

After all, that is what it is all about.