At present, the total capital in Slovenia is worth approximately $30 billion of which $20 billion worth is still in government hands. It would be a paradox if Slovenian government continued holding so much wealth in its hands for economic reasons -- while proclaiming economic superiority of free enterprise. So, the reason must obviously be political: prevent any opposing party to acquire adequate financial support to successfully challenge the party in power.
We must remember that the main party in power during the last eight years has been made out of former communists. From 1945 they plundered all of Slovenia's private wealth and commanded it through 1990. At that time, the short-lived government with the predominance of non-communists, passed the Act of Denationalization which states that communist-seized property can be returned 1) in nature, 2) by handing over a substitute property, and 3) through compensation.
The implementation of the Act of Denationalization had not even begun when in 1992, the former communists, still holding all the nation's wealth, regained control of the government. Since then, they have been agitating against the restitution of property, realizing that as long as their managers held the nation's wealth it may be possible to remain in power. In fact, they succeeded in first suspending the restitution laws and than in changing them with retroactive validity. As a consequence, during the last nine years merely one third of claimed property value has been restituted to the rightful owners, mostly property that could be returned in nature: land, forests, dilapidated buildings and unprofitable businesses. This situation has not only led to considerable injustices, it also resulted in much weaker economic growth than the Slovenian people expected after they got rid of Marxism in 1990.
But the government simply does not want to part with any of the remaining wealth in its hands. It claims the excuse that it has no money to pay for physical property which cannot be returned, or to repay liquid assets which were illegally confiscated at the time of complete lawlessness in the 1940s.
The government's claim, that it may have to raise taxes to finance restitutions is sheer nonsense. While assets under government control amount to about $20 billion, the remaining restitution claims amount to no more than $2.5 billion. (Report by Slovenian Ministry of Justice, May 19, 1997: total claims $3.4 billion, restituted value $0.9 billion representing 26% of claims).
Obviously, the government of Slovenia has sufficient means to pay for all the remaining valid claims for compensation. It can do this by:
In fact, the government of Slovenia only needs to follow the good advice clearly spelled out in 1998 by the United States Secretary of State, Madeleine Albright:
But, these economic reforms, although firmly advised by Secretary Albright, were simply ignored by the Slovenian government. Not because Slovenia does not believe that in peacetime economy private citizens can manage business far better than government bureaucrats can, but because its government needs to hang onto its businesses to stay in power.
If just a fraction of Slovenian business as identified by Secretary Albright had been privatized, it would be a major step forward for Slovenia. By doing nothing, it set back Slovenia's economy as well as its international status, to say nothing about denying to uphold the rule of law to its citizens.
Communist-trained politicians have never allowed political opposition anywhere. In Slovenia too, they want to do nothing to strengthen it now - even when it has become obvious that such a policy can prevent this nation from joining respectable clubs, such as NATO, European Union, etc.
The United States and the European Union governments should certainly be concerned about any perpetuation of one-party dictatorships in the Balkans and Eastern Europe. No matter how small a country, in the modern times it can carry a big potential to disturb peace. It is therefore up to the member nations of such organizations to insist on the restitution of private property. For, with one party holding all the wealth, no free elections can possibly be indeed FREE.
Dr. Sirc was an Earhard Fellow at the Hoover Institution, is a Senior Research Fellow at the University of Glasgow, Member of the Mont Pelerin Society and the Director of CRCE, London. He is an editor of the journal Communist Economies and Economic Transformation. (fax: 441-41-357-4917).
Mr. Prah is a retired IBM executive and an officer of the American Owners of Properties in Slovenia. (e-mail: borut@ibm.net).