VZCZCXYZ0000
RR RUEHWEB

DE RUEHSL #0823/01 2841431
ZNR UUUUU ZZH
R 111431Z OCT 06
FM AMEMBASSY BRATISLAVA
TO RUEHC/SECSTATE WASHDC 0359
INFO RUEHZG/NATO EU COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS BRATISLAVA 000823 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EU KPAO LO PGOV
SUBJECT: EU FUNDS: SMER STRENGTHENS ITS POSITION VERSUS SNS 
 
 
¶1. (SBU) Summary: On October 8, the GOS cabinet announced its 
distribution plan for EU funds from 2007-2013.  The new 
government's basic funding priorities appear to remain 
consistent with EU fund priorities proposed by the previous 
government, but authority over more than 1.7 billion Euros in 
"knowledge-based society" funding was stripped from the 
Slovak Nationalist Party (SNS)-run Education Ministry, and 
transferred to Deputy Prime Minister Dusan Caplovic (Smer) 
and to the Smer-run Ministry of Economy.  SNS-led ministries 
still retain authority over more than 40 percent of the 
Eurofund budget, but Smer has clearly strengthened its hand 
at the nationalists' expense.  End Summary. 
 
Basic Data 
---------- 
 
¶2. (U) The 2007-2013 Eurofunds distribution plan breaks down 
funding levels by Ministry.  Key funding areas and GOS 
proposed amounts are listed below, with funding levels 
proposed earlier this year by the Dzurinda government 
provided in parenthesis.  Ministerial and party control is 
provided in the third column. 
 
- Transportation  3.2 bil (3.4 bil) Transport/Smer 
- Environment     1.8 bil (1.45 bil)      Environ/SNS 
- Regional Development  1.6 bil (1.47 bil)      Reg Dev/SNS 
- Information Technology      993 mil (0)       Dep. PM/Smer 
- Research and Development    883 mil (2.6 bil) Education/SNS 
- Employment/Social     864 mil (600 mil) Labor/Smer 
- Competitiveness 772 mil (0)       Economy/Smer 
- Education 600 mil (800 mil) Education/SNS 
- Bratislava Funds      447 mil (82 mil)  Various/Unclear 
- Health    250 mil (200 mil) Health/Smer 
 
It is worth noting that 11.5 billion Euro equals 
approximately 420 billion SKK, or 60 billion SKK per year. 
By comparison, planned expenditures in the 2007 Slovak 
federal budget are 343.4 billion SKK.  Eurofunds constitute a 
huge potential funding source for the Slovak government, and 
the ruling coalition's ability to fulfill its many campaign 
promises depends in part on its ability to spend Eurofunds 
quickly and effectively.  Note: HZDS-led ministries have no 
control over EU development funds. 
 
Background and Analysis 
----------------------- 
 
¶3. (U) For the past 100 days since the governing coalition 
was formed, Prime Minister Robert Fico's Smer party has been 
negotiating with Jan Slota's SNS party over control of 
2007-2013 Eurofunds.  While SNS received only three 
relatively obscure ministries when it joined the ruling 
coalition, those three ministries (Education, 
Construction/Regional Development, Environment) were slated 
to receive over 6.3 billion Euro based on the last Eurofund 
budget proposed by the Dzurinda government earlier this year. 
 The Education Ministry would have received the lion's share 
of the proposed funding, reportedly 3.2 billion, primarily 
for research and development and infrastructure improvements 
for schools and universities. 
 
¶4. (SBU) Smer officials had been critical of the Dzurinda 
government's slow disbursement of EU funds, but admitted to 
Emboff privately that they had no significant philosophical 
differences with the priorities outlined for EU funds.  Their 
main goal was to restructure funding programs so that SNS did 
not gain as much power over funding as Slota believed he had 
secured when forming the ruling coalition.  To this effect, 
Smer appointed Caplovic as Deputy Prime Minister for the 
Knowledge-Based Economy -- a new title created with the 
publicly unspoken assumption that funding for his office 
would be on the way.  Finance Minister Jan Pociatek also 
expressed strong interest in acquiring control over funding 
for knowledge-based society programs. 
 
¶5. (U) In the final agreement, over 1.7 billion Euro was 
transferred away from the Ministry of Education toward the 
creation of two new entities: the 993 million Euro 
Information Technology program run by Deputy PM Caplovic and 
the 772 million Euro Competitiveness and Economic Growth 
program, to be administered by Minister of Economy Lubomir 
Jahnatek.  In addition, Bratislava regional funds were 
increased significantly.  While the details of the Bratislava 
funds and the Jahnatek's new program are not yet concrete, it 
is expected that the former will be used primarily to upgrade 
educational infrastructure in the region, while the latter is 
said to focus on research and development strategies.  It 
appears that, after the restructuring, knowledge-based 
economy/educational programs will receive essentially the 
same funding levels as they would have in the previous 
government.  SNS-run ministries did not lose funding in all 
areas, however.  The SNS-run Ministries of Environment and 
Regional Development received budget increases that were 
offered to compensate SNS for the much larger cuts at the 
Ministry of Education. 
 
¶6. (SBU) Comment: Smer continues to consolidate control of 
policy and money by weakening the influence of its coalition 
partners on major governmental matters without completely 
starving them of funding or ability to deliver to their core 
voters.  It is too early to assess how Eurofund restructuring 
will affect the quality of GOS research and development, 
educational, or information technology programs, nor can we 
assess how it affects USG ability to work with the GOS on 
knowledge-based economy/educational initiatives.  In any 
case, the Education Ministry has traditionally been one of 
the least dynamic and effective ministries in the GOS, so 
transfer of responsibilities may be a welcome change.  At 
this time the Deputy PM does not have the staff to administer 
its newly acquired resources.  Nevertheless, if the GOS can 
carry out the organizational restructuring needed to deliver 
more effective EU-funded programs, the government's new 
proposal has potential to improve GOS policy implementation. 
End Comment. 
VALLEE