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Feb 28, 2013 | 15:26 GMT

Slovenia: Another EU Government Falls

Slovenia: Another EU Government Falls
Jure Makovec/AFP/Getty Images
Summary

After weeks of political uncertainty, the Slovenian Parliament on Feb. 27 ousted the government led by Prime Minister Janez Jansa, making Slovenia the third EU country within one week to experience political turmoil. The Slovenian crisis resulted directly from a political scandal involving Jansa, but it also stemmed from the same economic stagnation and austerity measures that are destabilizing countries throughout Europe.

The fall of the government in Slovenia closely follows the resignation of the Bulgarian government and paralyzing elections in Italy. The European Union will closely follow the situation in Ljubljana both because Slovenia risks becoming a bailout candidate and because political paralysis in the country could delay Croatia's EU accession, which is scheduled for July.

Similar to the situation in Italy and Spain, a corruption scandal fueled popular opposition against the Slovenian government and political elite. Calls for Jansa's resignation had been mounting since January following accusations that he misreported his wealth. Jansa refused to resign despite a loss of support from his coalition partners. On Feb. 27, a joint effort from opposition and former coalition parties brought Jansa down with a no-confidence vote. The government had held power for little more than a year.

The parliament has given Alenka Bratusek, a lawmaker from the center-left opposition Positive Slovenia party, the mandate to form a new government within two weeks. If she does not succeed, President Borut Pahor will likely call for early elections. It is currently expected that Bratusek will be able to form a government with the support of some of the center-right parties that had been a part of Jansa's government. However, similar coalition attempts after the 2011 elections were fruitless, eventually resulting in Jansa's fragile government, and considering the parliament's political fragmentation, a government led by Bratusek would be unstable.

The scandal involving Jansa was probably only one factor in the government's fall. The administration was losing popularity as a consequence of austerity measures and the deepening economic crisis. In 2012, the economy contracted by more than two percent, and a similar contraction is expected in 2013. Unemployment is expected to continue rising and in December stood at 13 percent — above the eurozone average — according to the Slovenian statistical office.

As is the case in other countries throughout Europe, austerity measures installed by the government have met growing public opposition and are viewed as deepening the crisis. Protests against the government and austerity measures turned violent in November 2012, and grew especially over the last month. On Jan. 23, 100,000 public sector workers went on strike to protest austerity. The public deficit is expected to be 4.2 percent of gross domestic product in 2012, and in order to meet the EU deficit target of three percent of GDP, the government pushed wage cuts and layoffs in the public sector, as well as pension and labor reforms.

Leaders throughout the troubled eurozone countries are under pressure to cut spending and apply structural reforms in order to comply with EU rules and to please financial markets. However, at the same time governments are under domestic pressure to ease reforms in order to mitigate popular discontent.

Bratusek has promised to end the extreme austerity measures and to boost economic growth, but easing austerity could increase the pressure from the European Union and financial markets. The inability to fulfill the people's wishes by coming up with a quick fix to the economic troubles will likely prolong the period of political instability in Slovenia. 

As in Spain and Cyprus, deep troubles in the financial sector compound Slovenia's economic crisis. Ljubljana has already provided extensive financial aid to its banks and is in the process of setting up a bad bank to reform the financial sector while increasing government debt levels. Slovenia will have to seek new credit from financial markets by mid-2013. Therefore, discussions regarding a potential bailout will intensify, especially if borrowing costs rise because of political uncertainty and stalling reform efforts. In the case of a bailout, the pressure to apply further austerity measures would also increase.

Slovenia is important beyond its collocation within the eurozone's political turmoil: The country's instability could affect the European Union's expansion efforts.

Croatia is expected to become the European Union's 28th member by July 2013. However, bilateral tensions between Slovenia and Croatia coupled with political paralysis in Slovenia risk delaying the accession. So far, the parliaments of 24 countries have ratified Croatia's accession. Only Slovenia, Denmark and Germany have yet to do so. In recent weeks, bilateral talks between Slovenia and Croatia have stalled because numerous meetings had to be canceled as a consequence of Ljubljana's domestic troubles. However, should Bratusek be able to form a government, negotiations will likely pick up soon. All political parties agree that solving the bilateral dispute with Croatia in order to ratify the country's accession are top priorities. A call for new elections in Slovenia would likely cause the most disruption.

Instability in Slovenia is not as great a concern for the European Union as troubles in Italy or Spain, but it still has repercussions. If Slovenia has to request a bailout, this may engender domestic opposition in donor countries, and Ljubljana's political instability could delay a key EU foreign policy prerogative. Above all, Slovenia's case illustrates how a combination of mistrust against the ruling parties, dire economic conditions and anger against austerity measures is causing the crisis in Europe to spread. 

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