VZCZCXRO6280
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHSL #0593/01 3041707
ZNR UUUUU ZZH
R 311707Z OCT 07 ZDS
FM AMEMBASSY BRATISLAVA
TO RUEHC/SECSTATE WASHDC 1298
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 BRATISLAVA 000593 
 
SIPDIS 
 
C O R R E C T E D  C O P Y - SENSITIVE CAPTION ADDED 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON ELAB LO
SUBJECT: FICO AND HIS COALITION PARTNERS: THE SHARK AND THE 
SEALS 
 
REF: BRATISLAVA 539 
 
BRATISLAVA 00000593  001.2 OF 002 
 
 
"To a shark, just about the funniest thing is a wounded seal 
trying to swim its way to shore, because, where does he think 
he's going?" -- Deep Thoughts by Jack Handey 
 
¶1. (SBU) Summary.  Prime Minister Robert Fico (Smer) and 
junior coalition partner HZDS continue to argue publicly over 
nearly every issue in parliament, including the recently 
passed health insurance, social insurance/pension, and mining 
reform laws.  HZDS threatened to vote with the opposition on 
each issue but Fico reasserted control at the last minute, 
reportedly threatening both HZDS and SNS with expulsion from 
the coalition if they did not vote for his proposal to 
eliminate the right of health care insurers to make a profit. 
 HZDS capitulated and likely will have to do so on future 
issues of genuine importance to Fico, since the party faces 
dubious prospects for survival outside the coalition.  Fico's 
high-stakes victory on health insurance has provoked concern 
that the Prime Minister will commit himself to passing a 
series of health policy initiatives that many believe would 
reduce individual liberties and damage the business 
environment.  End Summary. 
 
The Shark and the Seals 
----------------------- 
 
¶2. (SBU) On October 26, parliament voted along straight 
coalition lines to pass Smer-proposed legislation that would 
eliminate the right of health insurance providers to make 
profits for their owners/shareholders.  In the week 
preceeding the vote, prospects for the legislation's passage 
looked dim, since leading voices on health care legislation 
for HZDS (Milan Urbani) and SNS (Stefan Zelnik) were working 
actively with the opposition to craft a business-oriented 
counter-proposal.  Urbani's amendment had been scheduled for 
an October 26 vote.  In the early afternoon that day Zelnik 
called Poloff to assure that HZDS and SNS would vote for 
Urbani's proposal, not Fico's.  To restore order, Fico called 
an extended late afternoon coalition leadership meeting to 
twist arms, telling SNS leader Jan Slota and HZDS leader 
Vladimir Meciar that this was a make-or-break vote if they 
wanted to remain as coalition partners.  Slota caved 
immediately, Zelnik noted wearily in a follow-up conversation 
with Pol FSN.  HZDS attempted to negotiate with Fico for 
about an hour, but only secured minor commitments on other 
issues.  An hour after the meeting ended, the entire 
coalition voted for Fico's proposal.  (Note: Michal Meciar, 
Vladimir's son and also a HZDS leader, acknowledged to DCM 
that power politics always triumphs in such situations.) 
 
And on other legislation... 
--------------------------- 
 
¶3. (SBU) HZDS was more successful in its efforts to curtail 
Smer's mining law reform -- but only because Fico appears to 
have limited interest in the issue.  On October 29, 
parliament passed legislation along party lines that would 
limit the options of municipalities to oppose mining, leading 
the way for Canada's Tournigan Gold Corporation to begin 
strip mining gold in Kremnica and uranium near Kosice.  HZDS 
MP Zdenka Kramplova strenuously opposed Smer's original 
proposal, and offered a counter-amendment to preserve the 
right of refusal for individual land owners.  After a week of 
debate, Kramplova's amendment was passed on October 29, with 
all but six Smer MPs voting in favor, shortly before the 
final legislation was passed.  The night after the vote, 
Poloff met (by chance, at a NGO event) a lobbyist for 
Tournigan, who said that the final legislation still helped 
his client, though operations in Kremnica will be complicated 
and contentious.  The lobbyist (Peter Gazik/Candole Partners) 
added that he had worked directly on the legislation with 
high-level Smer appointees at the Ministry of Economy and 
with Smer MP Maros Kondrot, Chairman of the Economic 
Committee.  He conceded that that these contacts had little 
direct influence on Fico, which was probably why the Prime 
Minister let HZDS pass its amendment -- almost certainly as a 
concession made before the health insurance vote -- even 
though Kramplova trashed Smer on the floor of parliament the 
previous day.  Fico seldom takes direct, personalized 
interest in legislation proposed by Smer's business wing. 
 
¶4. (SBU) In its last act before recess, parliament voted 
October 30 by coalition lines to pass social insurance 
(social security/pension) reform, which will raise taxable 
income for social insurance from three times to four times 
the median wage, among other effects.  The issue featured 
prominently in the national conversation for months, 
especially in late September when Fico and Vladimir Meciar 
sparred publicly before coming to agreement on a compromise 
proposal to submit to parliament (see reftel).  Despite the 
agreement, HZDS MPs such as Urbani and Tomas Halecky 
 
BRATISLAVA 00000593  002.2 OF 002 
 
 
continued last week to publicly discuss possible amendments 
in alliance with the opposition.  After the October 26 
meeting with Fico, however, HZDS ceased all such talk, and 
declined to make any statements on the floor of parliament 
before the final vote.  A few days before Fico's coalition 
meeting, Smer MP Miroslav Ciz told Poloff that HZDS "needs to 
be happy to be where it is before the party disappears."  For 
the moment at least, HZDS seems to be internalizing the 
message. 
 
Analysis of Effects 
------------------- 
 
¶5. (SBU) Among the legislative initiatives passed in the last 
week, only the new social insurance law imposes significant 
costs on business.  US Steel, by far the largest U.S. 
employer in Slovakia, estimates that the new social insurance 
proposal will cost them 1.6 million dollars per year due to 
increased taxation on its upper income employees.  Opponents 
of the legislation nevertheless express a certain degree of 
satisfaction with the final result, since the bill passed by 
parliament represents a small fraction of what the Prime 
Minister originally wanted, and Fico sunk to the level of 
threatening journalists with legal action and involved 
himself in several ugly public arguments in order to protect 
a reduced initiative that was never broadly popular in the 
first place.  The opposition feels that they defended the 
core program, gained politically, and believe that no more 
serious forays against the social insurance law will be 
politically feasible in the near future. 
 
¶6. (SBU) The new law that bans profit for health insurers is 
far more worrisome for business because of its overtly 
socialist overtones.  Fico's bill imposes no discernible 
costs for business in general -- though it is a huge blow for 
Czech- and Slovak-based Penta Investment Group, which 
dominates the private health insurance market in Slovakia. 
(Private insurers are now preparing to sue the Government of 
Slovakia.)  Looking forward to 2008, the business community 
and opposition politicians believe that Fico's success on 
health insurance reform will encourage him to push through a 
series of poorly conceived, vaguely socialist health policy 
proposals that will be difficult to stop since health care 
providers are so widely unpopular in Slovakia.  Furthermore, 
health care reform was a major and successful campaign issue 
for Fico when he ran for Prime Minister, so it it is likely 
that he will feel personally invested in the outcome.  While 
no general health care initiatives have yet been proposed, 
Smer has already introduced a series of specific legislative 
proposals regulating the pharmaceutical industry.  These 
proposals, which deal with price controls, reimbursement for 
patent holders, and anti-competition rules, all may place 
international (and U.S.) pharmaceutical companies at a 
serious competitive disadvantage.  Slovak pharmaceutical 
companies, including generic drug manufacturers, are 
considered core Smer supporters. 
VALLEE