The following document is intended to provide the authors of the CAS Progress Report for the Slovak Republic, which is under preparation, with recommendations of organisations associated in the Friends of the Earth Slovakia concerning the 2004-2006 Bank’s operations. Detailed comments regarding specific sectors will be provided to the Bank during consultations with civil society stakeholders pre-scheduled for January 2004, as a reflection on draft proposal of CAS Progress Report.

General comments on the recent development in Slovakia: We recommend to the World Bank team preparing CAS Progress Report to note and implement into the report the following facts: - Strong decline in the public support to the Government coalition political parties (as measured by the representative opinion polls) was caused by the fact that structural reforms were not adjusted to the situation of the majority of citizens of middle and low classes. - Corruption and clientelism is not sufficiently combated, and many processes (such as privatisation and decentralisation) started before institutions capable of counteracting to misuse of power and corruption were established. - Decision-making on many essential governmental strategies are made in non-transparent and non-participative manner, and no strategic environmental, social and regional impacts assessments (consulted with public) are conducted before decisions are taken (e.g. programming of 2004-06 structural operations for EU funds, strategy for transformation and modernization of Slovak railways, etc). - Harsh interventions into social nets, declared as a necessity in order to put public finance under control, sharply contrast with ineffective increases of direct and indirect subsidies for large corporate private foreign investors. - Increase in real new jobs was in fact not the major factor for decline in the official percentage of unemployed. - Many measures of the Government (e.g. FDI incentives) foster still growing regional disparities. - No progress was made towards environmental and social sustainability in the energy and transport sectors (for example the ambitious program of highways and expressways construction, unjustified by present and future expected traffic density and demand, is completely financed on debt). Recommendations regarding future Bank´s activities in Slovakia: The 2004-2006 Bank’s operations defined by the CAS Progress Report should respect and implement the following: Building public sector capacity and improving governance Democratic, transparent and competent institutions represent a basic pre-condition for any structural reforms. These qualities are the weakest point of the public institutions in the country and therefore is necessary to take this fact into serious consideration before providing them with new powers and responsibilities (e.g. through de-centralization or creation of new authorities). Technical assistance is important, twinning with institutions in countries where the system works well should be preferred to inviting “secret” experts into the country. More transparency in the technical assistance projects is essential. Combating unemployment This is the most urgent task for the recovery of Slovak economy and reaching sustainable economic development. Measures aimed at creation of new jobs, however, have to respect strictly the principles of sustainability. Creation of new jobs must focus on economically and socially problematic regions, most importantly the rural regions. Instead of supporting highly-centralized export-oriented projects in urban areas which increase dependency of the regions on one major source of labour, the priority must be given to decentralized system of job-creation in rural areas. In addition, new jobs should be created on the basis of supporting using local resources to supply local needs. Unjustified concentration of new job position in export-driven companies should not be supported at all. The Bank’s support, such as grants and favourable loans via credit links to commercial banks, disbursed with help of public agencies, could positively substitute missing public funds for co-financing of development of the rural regions from European funds, on conditions that transparency and involvement of local stakeholders would be in place. Creating conditions for transformation processes Before “risky” economic reforms take place, corruption and clientelism must be significantly eliminated. Creation of favourable legislation and reform of the juridical sector must be successfully implemented and results acknowledged and sustained, before structural reforms such as privatisation of strategic state assets, privatization of public services such as water or reform of pension schemes take place. Concepts of reforms “involving severe risks” must be a result of transparent and participative process, which will include public consultations with all stakeholders involved (including citizens associations) and which will have clear binding rules and will not be driven by a time stress. Prevention principle Social inclusion and poverty reduction strategies should be introduced and implemented prior to transformation processes begin. Rather than developing ex-post measures to alleviate social impacts of specific operation that already emerged, a system of prevention of social and environmental impacts should be established before the operation is implemented. The Bank should respect and actively implement principles of sustainable development in its future operations defined by the CAS Progress Report. On one hand the Bank should not support unsustainable energy projects or unsustainable highway construction program; on the other hand it should actively support renewable energy projects or public transport. The Bank should not actively promote export-based economy while it should actively promote measures to increase rate of economic self-sufficiency through activities based on local resources to cover local needs. The Bank should not condition it’s support to Slovakia by fulfilment of specific economic conditions. Instead, the Bank’s operations should be conditioned by assuring the fulfilment of principles of transparency, partnership, sustainability and by implementation of strategic environmental and social impact assessments. As a separate part of CAS Progress Report, the Bank should design a process of complex independent and evaluation of past and ongoing structural reforms in Slovakia, which were initiated or supported by the Bank (including operations related to the 2001-03 CAS implementation). The evaluation should be done by authorities independent from the Bank, in an open, democratic and participatory process, which would include consultations with wide range of civil society stakeholders. The Bank should assign separate resources for such independent evaluation. We invite the Bank’s team involved in drafting of Slovak Republic CAS Progress Report for 2004-06 to contact us in case there would be an interest to provide explanations of our above written statements.


With regards, Juraj Zamkovsky, CEPA Executive Director in the name of Friends of the Earth Slovakia