Despite the generally positive assessment of Slovenia's progress in EU membership preparations over the past year, the regular annual report released on 8 November by the European Commission also includes criticism of the country, which inter alia concerns the country's progress in denationalisation, privatisation of state property, public administration reform, efficiency of the court system and the level of foreign investment. Despite criticism, the trend of returning nationalised property has increased in Slovenia, new steps have been taken towards speeding up the privatisation process, a strategy to improve the administrative capacity and acts related to public administrative reform have been sent to Parliament. Court backlogs are being cut in Slovenia and a series of measures have been adopted to improve the investment climate.
Despite the Commission pointing to the slow pace of denationalisation, the trend of returning nationalised property has increased in recent months, which is a result of measures taken in the past two years in order to speed up these procedures. Moreover, this is also the result of the efforts of the Andrej Bajuk Government to speed up and conclude the denationalisation process. At the end of August, decisions on 53.7% of the effected property were made, while four months earlier this figure was 49.6%. Thus, two years after the denationalisation act was adopted, 53.7% of the nationalised property in the overall value DEM 2.431 billion has been returned. By the end of August 2000, 44.6% of nationalised agricultural fields were returned, as well as 62.8% of forests, 75.5% of residential units, 72.3% of business premises, 41.2% of building grounds, 59.1% of companies and 65.7% of movable property, according to data provided by the Government Denationalisation Office. The overall value of claimed property is said to have totalled DEM 4.528 billion, according to data available at the end of August. This is almost DEM 1.5 billion less compared to last year's assessments.
Privatisation under EU Standards
In the Report, Brussels criticises the country's slow progress in privatisation, in particular of banks and insurance companies. According to the Commission, the role of the state in some areas of the economy remains too strong, especially in the financial sector where the state-owned banks are hindering development and competition. Privatisation of state property includes transport infrastructure, telecommunications, the energy network, public services and special companies which are still state-owned, such as banks and insurance companies. The ownership restructuring of 17 insurance and assurance companies in Slovenia is being managed by the legislation on the privatisation of insurance companies, which was adopted by Janez Drnovšek's government and took effect in spring this year together with the new legislation on insurance. The task of the two bills is to bring Slovenian standards in the field of insurance in line with those of the EU.
The privatisation of insurance companies should conclude by the end of this year. This, however, will not occur since the Constitutional Court has suspended implementation of the bill. It is also not known when the privatisation of both state-owned banks - Nova Ljubljanska banka (NLB) and Nova Kreditna banka Maribor (NKBM) - will occur. The privatisation of electrical companies is also governed by legislation adopted last autumn. The Bajuk Government drafted a bill on the privatisation of state property for its second reading in Parliament on 10 July and on 31 August it adopted a bill on the exchange of ownership certificates for substitute property. The bill envisages that the privatisation gap valued at SIT 84.3 billion (EUR 407 million) will be closed with a final public tender. On 26 October, the Government adopted an ordinance on extra assets to be given over to the First Pension Fund of the Republic of Slovenia. On 21 September, the Government adopted the Slovenian Steelworks Restructuring Programme, envisaging EUR 210 million in state aid up until 2003. The Programme prescribes the privatisation of the core companies of the system by 2002, with all inactive companies in the Slovenian Steelworks system being abolished and non-core companies being privatised by the end of this year. . Training Strategy for Public Administration
Slovenia continues to meet all political requirements for membership, the Commission believes, but again warns of insufficient progress in the public administration's improvement.
To achieve efficient administration, a strategy to improve the administrative capacity before joining the EU has been passed by the Government in recent months. While most acts related to the public administration reform have been sent to Parliament by Bajuk's Government, they have not been discussed as yet. Constitutional amendments on the formation and the work of the government were also proposed. New solutions are to simplify the formation of the government and increase the responsibility of the Prime Minister as well as introduce a flexible number of ministries. The administration act will also regulate the formation of government bodies, while the public agencies act will provide the legal basis for their establishment. Some tasks of the state administration are expected to be transferred to public agencies. The strategy to increase the administrative capacity before Slovenia's accession to the EU was launched in autumn. The strategy is to provide training and additional qualification of administrative staff in European affairs, so that Slovenian administrative workers will be qualified to carry out tasks brought about by EU membership. The first stage of the strategy will be implemented in the period between 2000 and 2002 or the target date for EU accession, whereupon the second stage will begin. The strategy also foresees the implementation of the fast-track programme for administration workers who have worked in the administration for five years and are below the age of 33.
The Government among other things prepared a review of the current situation of administrative capacity for implementation of the acquis on 29 chapters which are being negotiated between Slovenia and the EU. It was established that the administration system for the implementation of the acquis has been fully set up in 18 areas, while the situation is not satisfactory in eleven areas.
Herkules against Court Backlogs
In its report the Commission shows a wariness of reforms of the judiciary. Brussels maintains that Slovenia has in fact made progress, but adds that it is still too early to assess the efficiency of the steps taken to do away with delays in the court system. A total of 543,916 unresolved cases remains before Slovenian courts as of the end of June 2000, a 4% decrease on a year-to-year comparison. According to the data provided by the Ministry of Justice, the number of important unresolved cases is decreasing at all courts in Slovenia. In 1999 the number of important unresolved cases fell by four percent as compared to 1998. A substantially greater fall was seen in the first half of 2000, when the number of such cases dropped by 8.6 percent to 184,796. Since the end of 1998 the number of such cases has fallen by as much as 12 percent. More important matters include criminal matters and lawsuits, lawsuits concerning business matters, bankruptcies and inheritance matters, among others. The increase of backlogs during this year has only been seen in matters concerning the land register, mainly due to changes to relevant legislation.
In an attempt to further reduce the number of unresolved court cases, in September the Government adopted a SIT 100 million (EUR 478,000) per year Supreme Court project entitled Herkules. The project is to be implemented next year and is a short-term measure aimed at resolving backlogs mainly in the district courts, but may be used by regional courts as well. The first to be implemented in the project will be the Ljubljana District Court, where the situation is most critical. According to the proposal, a total of ten judges would be appointed for two years in a bid to resolve backlogs in that court.
FDI Encouragement Programme
The Commission points to the low level of foreign investment in Slovenia which is, according to the Commission, connected particularly with slow privatisation and rigorous business conditions
Last year, Slovenia recorded a mere USD 90 million of the FDI inflow. While the FDI inflow is expected to increase this year, the growth will not be as substantial as in other EU associated countries. Drnovšek's government last year adopted a series of measures which somewhat improved the investment climate. The act on foreign exchange operations was adopted, according to which companies owned by foreigners have the same rights as domestic companies. The Trade and Investment Promotion Office (TIPO) provided the finances and personnel so that certain promotional activities have been launched to attract foreign investors. Thus, the Office has offered several free services and tried to improve Slovenia's image as an FDI location. In addition, the Europe Agreement came into force, which foresees a series of liberalisation measures in regard to the FDI.
The Government also adopted the 2000 FDI encouragement programme in spring. The programme, which aims at improving Slovenia's competitiveness as an FDI location, is focused on three areas: clearing the administrative obstacles, improving the offer of building grounds for industry and adjusting the system of economic encouragement to rival countries.