November, 2008 | SLEEPING WITH PENGOVSKY

Now This Is What I Call Good Television

The setting: Slovene state television, Monday night’s prime time slot.
The players: On one side, Boško Šrot of Laško Brewery and Igor Bavčar of Istrabenz and economists Bogomir Kovač and Jože Mencinger on the other.
Hiding in ambush: Zoran Janković, mayor of Ljubljana and former CEO of Mercator retail chain
The question: Are Šrot and Bavčar selling Mercator because they’re in deep financial doo-doo as a result of a credit crunch and should the state buy Mercator back.
Statement of the day: Boško Šrot: “I’m not blackmailing the state. It would be blackmail if I said that I’m selling Mercator to a foreign owner if the regulators continue to terrorise Laško. But I’m selling after a careful consideration, because regulators continue to terrorise Laško”

The fact that Boško Šrot and Igor Bavčar appeared on TV screens together speaks volumes. Either that the crisis is hurting them bad and they can no loger protect their position with money but have to resort to PR instead, or that they think that with Janez Janša gone, they’ll be operating in a friendlier media climate.

Well, the latter was definitely not the case. The show was interesting but not brilliant. The moderator held her own, but there was precious little being said that we did not already know about. And then she cued in mayor and former CEO of Mercator Zoran Janković, whose appearance visibly upset both Šrot and Bavčar. Zoki (who was implicitly labeled as a good guy in this story) did not say anyhing new either, but it was clear that neither Šrot nor Bavčar expcted him to be on the show. Even more: while I cannot say this for certain, I can totally imagine that both Šrot and Bavčar appeared under condition that Janković is nowhere near the studio. Well, he wasn’t. He was patched through via a videolink.

This is true television. Grill your guests on live TV and when they think they’re in the clear, drop a bomb.

Of course, the Mercator affair is highly political and yesterday’s show would not have been possible before the elections and quite possibly not after the new government is sworn in. Thererore it is only obvious that it was done during interregnum, when Janša’s goverment is no longer a factor and Borut Pahor‘s goverment still hadn’t become one. This is one of the better examples why RTVSLO should be purged of political influences: this way RTVSLO could actually produce wathcable and relevant content.

I want some more…

P.S.: Sorry about yesterday’s MMM (or the lack thereof). Things just kept – well – popping up!

Boško Šrot Regroups, Tries To Sell Mercator and Buy Večer

As you already know, Boško Šrot of Laško Brewery announced his intention to sell the 48 percent stake in Mercator he controls. But just to freshen your memory, allow me to re-post the two relevant paragraphs from Tuesday’s post:

Boško Šrot: What’s more important. Beer, retail or newspapers?

(..) Boško Šrot of Laško re-entered the limelight, apparently seeking to cash in on the change in governement as well as on the economic crisis. As you might know, he and his dependant companies own as much as 48 percent of Mercator, the largest reatil chain in Slovenia. Šrot got hold of Mercator for a below-market price in exchange for ceeding control over Delo newspaper to Janez Janša and his SDS. He later double-crossed Janša who, in respoce, started his famed “war against tycoons”, the only real result being that Šrot, his Laško Brewery and Mercator are being investigated for alleged cartel agreements.

Now, Šrot is “threatening” to sell his 48% percent stake in Mercator if the government agencies do not back off and hinted that he would be willing to sell it back to the state. Hopefully the new PM will not fall for the same trick his predecessor did and will not finance Šrot’s MBO of Laško by buying back Mercator at a markup price. Pengovsky smells an out-and-out foul play here (..)

There’s more, however. Only hour after pengovsky published the above, Delo newspaper announced that it bought almost 80 percent of Večer newspaper. Now, Delo is owned by Laško, meaning that if Delo indeed takes over Večer, Laško would control three out of four most influential daily newspapers: Delo and Slovenske Novice (a tabloid), both published by Delo, as well as Večer, whose influence in Štajerska region is unparalleled.

The motivation behind the move to sell Mercator is still being questioned. Is Boško Šrot running out of money to finance the MBO of Laško, trying to pre-emptively dicsipline the new government or pull the same trick twice:

Officially, Šrot says that he is selling Mecator because the regulators are “terrorising his company” and that he’s had enough of it. Were the new government to put a leash on regulators, however, Laško might be persuaded not to sell half-a-billion-euros-worth of Mercator stock, quite possibly to a foreign owner. The last sentence resurrects the debate of national interest in economy. Interestingly enough, when Laško and Interbrew were locked in a battle for Union brewery in 2002, it was Boško Šrot who lauched the theme, saying that it was waaay better for Slovene companies to be owned by Slovene capital – that this was in our national interest, so to speak.

Boško Šrot won the “brewery wars of 2002”, but this time around, it seems the “national interest” will be a tough sell. Namely – The state does not own either Laško or Mercator anymore, meaning that it has little or no interest vested in Mercator. Some say that the new (foreign) owner would drastically reduce the number of employees and limit access of Slovene food and drinks producers to Mercator’s shelves, threatning an entire branch of Slovene economy.

Which is a load of bollocks (I seem to be using the phrase a lot lately)

Mecator has a 36% market share in Slovenia and the number of employees is by now no doubt “optimised”, i.e.: overworked and underpaid. There will be precious little a new owner will be able to do in that department. As far as Slovene food and drinks producers are concerned, things are even more simple. If the new owner wil indeed try to squeze Slovene products out, it will soon be faced with declining sales and in turn declining profits, not to mention the fact that other retail chains will be more than happy to re-employ the old “Buy Slovene!” approach and increase their market share.

So, why should the government fork out half a billion euros to finance Šrot’s MBO of Laško, just to reacquire Mercator. Should this happen, Mirko Tuš, owner of Tuš retail chain would rightfully ask “what about me!”. Mercator is not a company at peril (not yet, at least) and there is absolutely no reason for the state to cough up the money. There are more pressing issues for the new government to address with taxpayers’ money.

The presumptine new minister of economy, Matej Lahovnik, already said that there is no reason for the state to buy Mercator:

“I don’t see a reason for the state to buy [Mercator] back at the same price it sold it three years ago. Even if we did buy it, we’d be faced with the question, what to do with it in the coming months (…) We’d have to sell it again. Are we to buy it back again in four years at a higher price? It makes no sence, so the state will not buy Mercator back. Unless the price would be lower. In that case the purchase might be possible”

As far as Delo’s takeover of Večer is concerned, however, things are both clearer and a lot more murky at the same time. The takeover is definitely illegal, as Delo did not get an approval to increase its share in Večer above 20%. The approval is issued by the minister of culture and under pre-2005 legislation it was automatically rejected if the combined media companies exceeded certain limits in terms of market share and/or reach. When Janša’s government changed the Law on media, it also changed this particular article. Under current provision the decision whether or not to allow media concentration or not is made solely at the minister’s discretion. Which naturally opens the road for some heavy lobbying and even top-level corruption.

The presumptive new minister of culture Majda Širca (like Lahovnik, she too is a member of Zares) did not take a position on this issue, but I would expect her to uphold the decision of the outgoing minister Vasko Simoniti, who rejected any possibility of allowing the concentration and even filed criminial charges, and notified the Market Protection Office.

And after she does that, she might want to re-examine the media conentrations that were allowed under tenure of Vasko Simoniti. And those before him…

BTW: If you’re interested on how the new minitster sees the new role of RTVSLO, click here (Slovene only)

Pahor’s Cabinet

Only hours after pengovsky posted on the new PM-designate, leaders of the Quartet finally put specific names to specific portfolios, thus enabling Borut Pahor to propose his cabined. Here is a quick rundown of the candidates, based on my meagre information about them.

Five out of eighteen. More will follow

Prime minister: Borut Pahor (but you knew that)

Minister of foreign affairs: Samuel Žbogar. A very skillful diplomat, perhaps lacking in colour a bit. Apparently more of a technocrat. Will make a nice change after the omnipresent Dimitrij Rupel, but Žbogar’s nomination shows that Pahor intends to bask in the limelight of foreign policy and need Žbogar as someone who runs the show but doesn’t take all the credit.

Minister of internal affairs: Katarina Kresal. As predicted, president of LDS got the internal portfolio, which seems right up her alley. She’s a lawyer (albeit a corporate one) and her party specifically emphasised human righst abuses during the campaing – most notably rulings of the consitutional court which have yet to be enacted. The most infamous of these rulings is the decision to restore The Erased to their former status. Katarina Kresal (the first ever female minister of internal affairs) will now get her chance to make good on her promises. Besides, her portofilo covers police forces as well. I can already picture her in a uniform. Ahhhh….

Defence minister: Ljubica Jelušič. A defence expert and a professor on Faculty of Social Sciencies. She is very well known and respected in the academic circles, but little is known of her managerial ability. If and how she handles the continuation of Patria affair will be a tell-tale sign of her competence. Like Katarina Kresal, Jelušič is the first ever female Slovenian defence minister and hers is a difficult task, as Slovene army is facing a rather disturbing shortage of fresh flesh.

Minister of higher education, science and technology: Gregor Golobič. Again, as (sort of) predicted. Arguably the man with the broadest horizons in the government, the leader of Zares got a portfolio where he will be able to combine his various interests and backrgounds and yet leaving him ample time and maneouvering space to do some serious politics, without being too much in the limelight.

Minister of enviroment and urban planning: Karl Erjavec. The man who went for broke and almost lost everything. President of DeSUS may have been stripped of 24/7 armed bodyguard, a bullet-proof Audi and a police escort, but as Slovenia goes about revamping its aged railway system, there will be more than enough opportunities for Teflon Karl to make speeches and cut ribbons, while talking about “his pensioners”.

The next five. Eight to go.

Minister of education and sports: Igor Lukšič. Pahor’s right-hand man and lovingly known as party idelogoue. A professor of political sciencies on Faculty of Social sciencies in Ljubljana. He always maintained that repressive and ideological apparatuses are two of the most important sub-systems of any given state, with eductation being the prime agent of a state’s ideology. A generaly likable guy, who earned his Ph.D. at the age of 29 will finally get to show what he’s made of. His research into ideologies will probably make him a prime target of opposition attacks (something along the lines of reintroducing Leninism to schools, I imagine)

Minister of economy: Matej Lahovnik. Apparently it took some arm twisting for Lahovnik to take this post. There are at least two reasons for that: If there ever was a crappy job in the world, this is it. Along with labour and finance porftolios, minister of economy will have all the shit in the world thrown at him as soon as recession hits this side of the Alps for real. Secondly, it was Lahovnik, who advocated that fresh people take the helm, counting himself out of the equation on multiple occasions, not in the least because he once already held the very same portfoilo. Talk about putting a foot in one’s mouth…

Minister of finance: Franci Križanič. A widely respected macroeconomist, who was once already nominated for a ministerial post (in 1996, when Janez Drnovšek was inches away from forming a left-wing government). Recently he already worked with the outgoing govenment, when the latter drafted Slovenian bail-out legislation, which allocates 12 billion euros to secure interbank lending. But first Križanič will have to clean up state finaces, which are kind of muddled ever since the government claimed to have created a surplus, while the court of audit found a deficit instead.

Minister of labour, family and social affairs: Ivan Svetlik. Another professor at the Faculty of social sciencies. An expert in the field, but it remains to be seen how well he does as a minister. Officially a DeSUS nominee he is believed to be without actual party affiliation. The list of his immediate worries is long and distinguished: pensions, wages, unemployement… No wonder ministers of labour tend to have a short political life span

Minster w/o portforilo for development and European affairs: Mitja Gaspari. A boring sounding title hides the powers of a super-minister whose chief task will be to coordinate efforts of the above three portofolios and ensure that everybody will be on the same page at all times. Picked personally by Pahor some time before the elections, Gaspari will have almost unprecedented influence in the economic area of Pahor’s reign, as Pahor himself leaves a lot to be desired in this respect. Gaspari, however, already held the finance portfolio and was Governor of the Slovenian Central Bank. He also ran for President in 2007, narrowly losing second place to Danilo Türk in the first round.

Ministers 11 through 15

Minister of Public Administration (civil service): Irma Pavlinič Krebs. Once a MP from Koroška region, Pavlinič Krebs will take over from Gregor Virant who quietly but effectively ammased extroardinary powers under one title. The ministry handles most if not all of government tenders, coordinates the entire public administration (upravna enota, for all of you who’ve come in contact with Slovenian bureaucracy) and the system of wages in the public sector (some 300.000 employees)

Minister of Transportation: Patrick Vlačič. Another personal pick by Borut Pahor, Vlačič was/is the party’s chief expert in the field and has been a vocal opponent of practices under previous minsiters, all of whom came – without exception for the past 16 years – came from the ranks of SLS. Former finance minister Andrej Bajuk of NSi tried in vain to penetrate the shield SLS had created especially around the area of highway construction and maintainance and the full scope of the influence might (might!) become apparent only now. Vlačič’s first order of business will be to fix the “vignette fiasco”, where the European Comission demanded that Slovenia introduces a short-term vignette for transit vehicles. At the moment ther are only a 12- and 6-months vignettes available, and it seems that introducion a short-term one would break the financial model.

Minister of Culture: Majda Širca. A very important ministry, as it covers media as well. The ultimate test will be whether or not she will hold her party’s election promise to eject political interests from the board of RTV SLO, but her direction will become apparent almost immediately. Yesterday Delo newspaper bought Večer newspaper, in a move which violated the stipulation that any media cocentration above 20% of ownership must be pre-approved by the minister. As of 2005 the decision in minister’s alone and her decision will speak volumes. Hopefully she will a) deny the request to allow ownership concenctration and b) move to reintroduce legal requirements to approve or deny concentration, so that the decision will not be made at the discretion of the minister anymore.

Minister of justice: Aleš Zalar. Former president of the Ljubljana district court and a vocal opponent of the outgoing minister Lovro Šturm, especially ever since the two fell out over Zalar’s candidacy for another term as president of the court. Šturm went above and beyond the call of duty to prevent Zalar from getting another term and ever since the animosity is not just professional. Zalar will have to work closely with his party boss Katarina Kresal to enact overdue decisions of the constitutional court, but he is expected to take an up-close-and-personal look of the new penal code, which came into effect earlier this month and is according to some experts non-standard at best (and a piece of shit at worst).

Minister of agriculture, forestry and fisheries: Milan Pogačnik. Another former SLS-fiefdom, important especially because of the ridiculoslly large amoutns of EU funds which are channeled through here. Pogačnik will probably have to face the issuse of GMOs sooner rather than later, as well as other pressing issues, mostly to do with climate changes.

And the last three…

Minister of health: Borut Miklavčič. The recurring theme of Slovenian health system are queues. While health is not really my forte, it can be said that the new minister will be tasked primarily with wrapping up investment projects of past mandates and trying to optimise the health sector which in all honesty is not in all that bad a shape, were it not for endless queues and severely outdated diagnostics equipment. Miklavčič was until now CEO of The Health Insurance Institute of Slovenia, performing compusolry health insurance and as such handling vast amounts of money. Upon assuming that position, he reportedly had to have his office debugged. Twice.

Minister w/o porftofilo in charge of local self-government: Zlata Ploštajner. Noone saw this one coming. Almost completely unknow, she once headed regional development agency in Kozjansko (an underdeveloper region south of Celje). However, pengovsky did take a couple of her courses while at the university, where she was lecturing as an outside expert and I can tell you that she didn’t strike me as a ministerial type. However (and this is me being cynical) if the new PM has plans to kill the regional legislation for good, she is as good as anyone for the job.

Minister w/o portfolio charge of Slovene expatriates: Boštjan Žekš. Former president of Slovene Academy of Arts and Sciencies and is very much respected on the political right as well. Perhaps Žekš’s nomination is a token attempt to appease the opposition since noone really knows why the hell do we nees this ministry. But the outgoing government changed the law which now stipulates that the ministry must exists – and there it is.

BTW: Sorry for beign late in posting this. Things to see and people to do.

A New Prime Minister

As the world recupperates from celebrating the victory of the Big O., a quick recap of recent event this side of the financial crisis.

Borut Pahor taking the oath of office (photo: Blaž Samec/Delo)

As of Friday, Borut Pahor is Slovenia’s new PM-designate. As expected, he won a vote of confidence with 59 votes out of 90. Only days before the final draft of coalition agreement was ratified by leaders of The Quartet, Borut Pahor (SD), Gregor Golobič (Zares), Karl Erjavec (DeSUS) and Katarina Kresal (LDS). Contrary to Pahor’s projections, the agreement did not include the division of portfolios, as Karl Erjavec continued to play hardball which in the end cost him dearly.

As you know, Erjavec demanded that he remain minister od defence, which Pahor rejected flat out, prompting Teflon Karl to walk out of negotiations. However, negotiations broke down yet again only days later, at which point DeSUS’s MPs came out of the closet, saying that they will support the government regardless of whether Erjavec is made a minsiter or not. By that time it was clear that leader of DeSUS suceeded in one of his two basic demands, that is that DeSUS holds a portfolio more than LDS, on account of it having more MPs that the party led by Katarina Kresal.

However, Erjavec seems to have overplayed his cards and crashed-and-burned in attempts of securing a high-profile portfoilo for himself. It is more or less a given that he would have achieved both goals had he struck a deal with Pahor upon resuming negotiations for the first time. It is quite possible that he would be able to secure himself the position of minister of internal affairs back then. However, fair’s fair and it should be noted that Erjavec did the right thing in steering his party away from ministry of labour and social affairs. Officially, no names are given as yet, but it seems that Erjavec will be made minister of Enviroment and Urban Planning. Taking the ministry of labour would be tantamout to political suicide, since the looming economic crisis will most likely hit the labour-intensive Slovenian economy pretty hard, resulting in surging unemployement and other social problems. The fact that DeSUS MPs (as a sidenote: it would be wise for the next minister of labour, upon taking office, to sit down and write two letters)

On the other hand, Pahor’s treatement of Erjavec shows that the new PM has the nerves to wait it out and doesn’t fall for provocations easily. I could be wrong, but it seems that what seems to have benn an all-round condescending attitude towards Borut Pahor even within the coalition has discipated at least temprorarily and if roumors of specific nominations are correct, the new PM seems to have managed to have the cake and eat it, mostly at the expense of Karl Erjavec personally. More on that tommorow, hopefully.

At the same time Boško Šrot of Laško re-entered the limelight, apparently seeking to cash in on the change in governement as well as on the economic crisis. As you might know, he and his dependant companies own as much as 48 percent of Mercator, the largest reatil chain in Slovenia. Šrot got hold of Mercator for a below-market price in exchange for ceeding control over Delo newspaper to Janez Janša and his SDS. He later double-crossed Janša who, in respoce, started his famed “war against tycoons”, the only real result being that Šrot, his Laško Brewery and Mercator are being investigated for alleged cartel agreements.

Now, Šrot is “threatening” to sell his 48% percent stake in Mercator if the government agencies do not back off and hinted that he would be willing to sell it back to the state. Hopefully the new PM will not fall for the same trick his predecessor did and will not finance Šrot’s MBO of Laško by buying back Mercator at a markup price. Pengovsky smells an out-and-out foul play here, but more on that in a couple of days as we get back on track.

Some Ironies Of The US Presidential Elections

Now that the inital frenzy is slowly giving way to real life, perhapse a couple of thoughts on election of Barack Obama for the next president of the United States of America:

(a disclaimer: please note that in this case I’m only an outside observer with a keen interest and may have as such overlooked important details)

OK, so political correctness was never my forte

First and foremost, election results show that US democracy is indeed alive and well. I’ve always maintained that democratic prinicples are implemented by attempts at breaching them. WMD-related-hide-and-seek, Guantanamo, Patriot Act, purging of voters, you name it… The last eight years made the USA anything but a beacon of democracy and at moments it seemed that “e pluribus unum” seemed just a waste of ink on an increasingly worthless dollar bill.

However, the system, which was almost-but-not-quite derailed, bounced back and reaifirmed the old truth, that Newton’s third law applies to politics as well. Every action produces an equal but opposite reaction. But the real proof of democracy being alive and well is the fact that the system can absorb such shocks and swings.

This election was about race and sex as much as it was about politics, yet both were aluded at only eliptically. The irony of Barack Obama’s election for the top job is, that – in order to become the first black president of the US – he had to play down the race card. Even more, he had to pretend that race was not the issue. He even went so far that in his victory speech he only made a passing mention of Martin Luther King, describing him as “a preacher from Atlanta who told a people that ‘we shall overcome'”. Until now it was up to leaders of black community to try to convince the white establishment that “race didn’t matter”. Yesterday, Barack Obama told the black community that race doesn’t matter.

The same goes for Hillary Clinton, who was up against similar mechanisms, only from a point of view of a gender. Had she won the Democratic nomination, she would have to prove to women that she did not run for office because she is a woman, just as Obama reiterated that he did not run for office because he is black, but because he can do a better job than the incumbent and his Republican opponent.

On the whole, the US electorate is (still?) pragmatic and can prioritize. Race could have mattered. Sex could have mattered. Experience in security issues could have mattered more. But as the voters got a sneak-peek of an economic and social Armageddon, they realized that all of the above doesn’t matter a pair of fetid dingo’s kidneys if they’re faced with a prospect of going down to the docks to see if there’s some work.

Negative campaigning aside, Republicans – be it willingly or unwillingly – played a huge part making race and sex a non-issue.. It was as if a spell was broken. What seemed impossible only two years ago, was suddenly perfectly logical. While it was somewhat logical that Barack Obama and Hillary Clinton did not trade blows on race and gender (it would, afterall be a case of the pot calling the kettle black), the fact that Republicans chose to ignore Obama’s weakest point – that they did not portray him as a “racial candidate” – contributed a lot to Obama’s becoming and remainig acceptable to a wide range of voters who might have voted Republican if the racial card was invoked.

And while the decision to ingore this issue might seem obvious, it was a very brave decision to do so. Going after Obama’s race would probably clinch McCain’s victory, but would poison – if not completely sever – itnerracial relations in the US, both politically and quite possibly in a society as a whole. But the Republicans went one step further. Not only they set a standard in term of race (or more acurately, reacting to a non-white opponent), but they also set a standard in terms of gender.

Although she may well be on her way to join Dan Quayle in the House of Political Horrors, nominating Sarah Palin for John McCain’s running mate single-handedly took care of the can-a-woman-ever-be-president dillema. In the words of Barack Obama: yes, she can. If the Democratic party made history, it was the Republican party which held the rear. And John McCain – especially his concession speech – was instrumental in this.

There. My fifty cents 😀

Hi! I’m Barack. This Is My Crib…

With thanks to rollo for the joke

So there is a chance… I mean, not that things will be different, but they can be different…

This morning’s read: Adventures in Wheelville, Piran Cafe, The Good Doctor and my favourite moose as well as some economic insight by Investment postcards from Capetown . Plus the usual.

EDIT: The Onion reports: Black Man Given Nation’s Worst Job. Love it!

EDIT 2: In response to dr. Arf’s comment, here are Obama’s victory speech and McCain’s concession speech. Indeed… Had McCain found it within himself to be himself throughout the campaign, it might have ended differently. Or not…. You might, however, want to watch for the crowd’s reaction to McCain’s mention of Sarah Palin.

Pahor Gets Nod As Obama, McCain Wait For One

As the world waits for the US voters to decide (failing that, for the US courts to decide, not that everyone is holding their breath), Slovenian President Danilo Türk formally nominated leader of Social Democrats Borut Pahor as his candidate for PM.

President Türk and PM nominee Pahor (source)

The Parliament will hold the vote on Friday, when Pahor is expected to win the nomination easily. He might have a bit more trouble with forming the government, though. Karl Erjavec of DeSUS is again playing maverick and demands one of the big portfolios for himself (foreign, internal, judicial or defence), whereas Pahor apparently made it clear that all of those are off the table and offered him social affairs instead (curioulsy, that is exaclty what DrSean was asking the other day) Erjavec rejected the portfolio flat out, much to dismay of DeSUS’ MPs.

In any case, Pahor will have 15 days starting Friday to come up with a cabinet and will – if successful – be sworn two months and five days before whoever succeeds Dubya on 1600 Pennsylvania Avenue