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Political Economics of Secession : BARCELONA REPORT: PANEL ONE Panel One
Jonathan Stein, Research Associate at the Prague Centre of the East-West Institute, argued that economic factors were not the cause of Czechoslovakia's split, but did catalyze Slovak nationalism. He outlined two important lessons about nationalism offered by the dissolution of Czechoslovakia. First, the success of nationalist programs is conditioned by political, not economic, factors. On the other hand, policies intended to reduce economic difference, whether they succeed or not, do little by themselves to influence the corresponding cultural and political boundaries. Secondly, even when economic factors exist that may contribute to "mobilizing" support for secession, the resulting support may in fact "fall far short of demanding independent statehood." Popular and elite support for the breakup of Czechoslovakia was low right up to the last days of the unified state. Stein used O'Leary's three variables of fear, confidence, and recognition throughout the history of Czechoslovakia to explain the state's split. "Czechoslovakism," an ideology that held that the Czech and Slovak languages were two branches of the same linguistic tree, was popular during the first Republic (1918-1938), providing for widespread respect for Slovak language and cultural rights. In this environment Slovaks had little fear of ethnic domination by the Czechs. Moreover, they had little reason to believe an independent Slovak state would be prosperous. Stein attributed this lack of confidence to the effects of Hapsburg rule in which the Hungarian Monarchy distorted Slovak economic and intellectual development by forced modernization and cultural repression. In the free elections of 1946, the Democratic Party, an umbrella party for pro-democracy and separatist elements, won 60% of the vote. The Slovak Communist Party received only 35-36%. This meant that the Communists who had led the uprising against Tiso, the Nazi-installed leader of an independent Slovakia during World War II, and were pushing for an independent Communist Slovakia were forced to accept a unitary state in order to gain access to power. Following the reestablishment of a united Czechoslovakia, government policy towards Slovak lands was confined to economic development and modernization - ethnic and cultural considerations were eliminated from State policy. The result was a rise in the productivity and living standards of Slovakia (virtual economic parity was reached by 1989). Despite this, Slovak nationalist pressures continued. Slovaks felt unappreciated between 1948 and 1960 because Slovakia was "basically reduced to an administrative region." Stein said that even Slovak communists who shared power in Prague "chafed at this." It is not surprising then that Slovaks were some of the staunchest supporters of the Prague Spring and its reforms in 1968. This lack of recognition was more or less alleviated with the retention of Czechoslovakia's federal system after the crushing of the Prague Spring. It was the only element of the movement retained, allowing the Slovaks to play a greater role in government. However, the federal provisions were weakened by the Communist Party by 1970 and "the federal institutions were generally empty." So, largely symbolic federalization reforms little to assuage discontent among the Slovak political elite that remained under the surface for the remainder of communist rule. Stein minimized the role economic factors played in causing the breakup of the Federal State. He attributed the split of the country to two overarching factors: the retention of largely symbolic ethno-federal institutions combined with a resurgence of Slovak nationalist discourse and backroom elite maneuvering. The existence of ethno-federal institutions became critical following the collapse of the communist regime. The realities of the tricameral federal assembly, in which 3/5 of members from each chamber had to approve constitutional amendments, allowed Slovak deputies to block even the most elementary reform. The combination of Slovak posturing and the "virtually insurmountable decision rules" caused growing frustration among Czech political elites seeking rapid economic and political reform. Stein said that nationalist tensions and nationalist "discourse" in Slovakia preceded the implementation of post-revolution economic reform in Slovakia. He stressed the high degree of symbolism in Slovak political discourse, which is common in secessionist movements. He said that the first appearance of symbolic Slovak nationalism was in April 1990 when the government attempted to eliminate "Socialist" from the republic's name. What should have been a simple vote turned into a complicated and heated debate because the Slovaks demanded placing a hyphen in the state's title to make it Czecho-Slovak Republic. It became apparent at this time that Slovak nationalist demands, although largely symbolic, were having a paralyzing effect on the government. Stein also emphasized the low recognition factor. He said that the question of whether or not the right to secede is an important institutional provision in raising the level of recognition, or at least counteracting the feeling of low recognition (O'Leary), is not applicable in the Slovak case. Even though Slovakia had the right to secede under the 1968 constitution, Slovak political elites still felt that Slovakia was not "being sufficiently recognized within Czechoslovakia as a separate state entity with certain collective rights." Finally, Stein underlined the "elite sector nature" of the state's breakup. Although Slovak leader Vladimir Meciar spoke of increased sovereignty, support for a separate state was low. He noted empirical evidence of this lack of significant popular support: in the 1992 elections, the Slovak National Party received only 9% of the vote and 14% of Meciar's own supporters voted for the maintenance of a unified state. However, Meciar was able to incite strong opposition to economic reforms being passed in Prague, which were having "a much more deleterious effect" on Slovakia than on the Czech Republic. Add to this the removal of Meciar from the Slovak National Council, the republic-level parliament, by a narrow group of pro-federalists. Meciar presented his removal as a Czech conspiracy. Stein noted that even in 1996 support for the breakup was extremely low and that support for the Slovak Government continues to remain very low. The breakup, according to Stein, was primarily due to the backroom maneuvering of both Czech and Slovak political elites. Due to the fact that two out of three of the choices by both Vaclav Klaus, the Prime Minister of Czechoslovakia, and Meciar were "diametrically opposed," the only option that remained besides continued constitutional deadlock was to break the country apart. Although support for the split was low, Meciar had sufficiently laid the groundwork for at least acquiescence on the part of the Slovak population. By appealing to nationalist sentiment by portraying economic reform as unjust and constructing a Czech political conspiracy and promising "a more socially- oriented reform path," Meciar created fear of rapid economic and political change that "proved decisive." Stein outlined three primary reasons for the peaceful separation of the two states. First, there was no history of violence between the two populations. Second, the two populations are generally ethnically separate. Only about 1% of the Slovak population is Czech and only about 3% of the population in the Czech Republic are Slovak. Lastly, the Czechs were generous with the division of Federal property and assets. Slovakia, which had been subsidized by the Czech economy, benefited from a 2-1 property, money, and liquid assets split. Although some contentious cases remain, the Slovak nationalists could not use this issue to incite hatred or resentment against the Czechs. Troy McGrath, Visiting Fellow at the Harriman Institute at Columbia University, presented the political and economic costs of Czechoslovakia's split on Slovakia. He supported Stein's theory that the Czecho-Slovak split was due to backroom elite negotiating, or a "high stakes poker game." Slovak elites, led by Meciar, did a cost-benefit analysis and came to the conclusion that it would be beneficial for them to establish an independent Slovakia, partly for nationalist reasons, but primarily to take advantage of leadership positions in the new state for personal gain (see Cohen and Abkhazia). For their part, Klaus and his Czech colleagues saw an opportunity to rid Prague of the Slovak political elite who had been threatening to hamper economic reform. Politics in Slovakia following the breakup were a "function of personalities and personal rivalries." Meciar and his coalition partners played a pivotal role in the period of transition, stoking fears of Czech exploitation. Slovak leaders believed that the transition process, and all the accompanying rewards, was unfair to Slovakia, that most foreign investment was going to the Czech Republic, and that this worsened the disparity in unemployment rates. Most of this was "more myth than reality," however perception, in McGrath's view, is more important than reality in the Czech/Slovak case. He stated, "...if you feel that you are being oppressed and you're being dominated, that's what's important for secessionists and nationalists." The result was a reliance on nationalist hype to form politically alienating and economically debilitating policies. Under Meciar's rule, Slovakia slid from the forefront of Central European successor states into isolation. The political costs of Meciar and his party's (Movement for Democratic Slovakia - HZDS) policies were numerous. They included the exclusion of Slovakia from consideration for NATO and European Union (EU) membership, lost opportunities for promoting bilateral cooperation with the Czech Republic, and subjugation of privatization policy to the government (leaving Meciar and his partners to reap the rewards of early investment deals). They also encouraged an institutional crisis related to the political status of Slovakia's Hungarian minority. The minority had been complacent before regional gerrymandering split the Hungarian population into several regions, thereby diluting their political power. As a result of these policies, the Hungarian minority began to demand more autonomy, cultural and linguistic rights, greater economic ties to Hungary, and a greater voice in the formulation of Slovak policy. The economic consequences of Meciar and HZDS policies were numerous, so McGrath decided to concentrate on the following areas: inflation, unemployment, foreign investment and trade, privatization, and competitiveness. The one silver lining in Slovak economic policy has been a remarkably low level of inflation: a drop from 23.2% in 1993 to 6% in 1997. According to Stein, this is partially due to the restrictive monetary policy of the Slovak National Bank. Stein attributed this low inflation to the fact that the Slovak government had delayed key market reforms that would have resulted in higher inflation. The consumption basket remains regulated, therefore, success in taming inflation is primarily illusory. The vulnerability of the Slovak centrally planned economy will only increase if the necessary reforms are not made, including the establishment of bankruptcy laws and banking reform. The "clientalist tendencies" of Meciar and the HZDS have served to constrain competition and increase the state's role in almost every economic and social sector. This has had a major impact on the level of unemployment (13.5% in 1997) and a rising state budget deficit. The unemployment problem has been exacerbated by the lack of economic structural reform and regional development, with some regions (6/38) of Slovakia showing over 20% unemployment. McGrath noted that Slovakia has all the necessary prerequisites to attract foreign investment: an educated work force, low labor costs, and a good location for export production. However, government policies have created an environment hostile to privatization and foreign investment. Slovakia suffers from a lack of capital inflow ($186 per person in 1996, "closer to the regional basket cases like Bulgaria and Romania" than to its neighbors, Czech Republic with $658 and Hungary with $1,518). The lack of external trade development has been exacerbated by Meciar's reliance on former COMECON markets since the majority of Slovakia's trading partners, especially Russia, cannot pay Slovak goods. Finally, McGrath stated that the effect of Meciar's policies, and the resulting corruption, can best be seen in the realm of privatization. Following secession, privatization came to a virtual stand still. Even the voucher program launched by Klaus for Czechoslovakia was abruptly halted. The National Property Fund (FNM), which was in charge of the privatization process, was placed under the Government's control and failed to offer sufficient transparency. McGrath summed up Meciar's economic policy: "[it is] characterized by direct sales at symbolic prices according to unknown rules and non-transparent methods; direct and indirect discrimination toward foreign investors...and illegal decrees and unconstitutional laws to secure benefits for a narrow group of entities personally connected with the government." It is due to the manipulation of nationalist sentiment for personal benefit by Meciar and his coalition partners that the economy of Slovakia suffers as much as it does. The economic costs are well known, but the political costs are still yet to be fully evaluated, as the new government may yet succumb to the legacy Meciar left it. Tunde Puskas, a Fellow at the National Studies Program at Central European University in Budapest, Hungary, analyzed the effects of the Czecho-Slovak divorce on Slovakia's Hungarian minority. Puskas established a direct correlation between the development of social nationalism, "largely determined by the preference of the government in power - nationalization or democratization," and the reorientation of Slovak economic policy to a combination of ethnic and economic concerns. The perception of growing inequalities between Slovakia and its former partner following the 1993 split intensified following the Czech Republic's "acceptance" into the Western fold and as investment and wealth seemed to flow into the Czech lands. Meciar used the fear of radical change to implement a policy that combined "economic gradualism and greater national equity," which was "...a structurally determined response, of the relatively underdeveloped Slovak economy and society, to the crisis evoked by the negative consequences of economic transition in Czechoslovakia." Therefore, one economic consequence of Slovakia's split was the subjugation of economic interests and rational economic choices to nationalist rhetoric and elite objectives. Puskas went on to discuss several economic costs, both in the external and real sectors. She reviewed McGrath's economic analysis of the severe drop in external trade, especially between Slovakia and the Czech Republic and Hungary. Foreign capital inflows practically ceased when it became apparent that Meciar was intent on pursuing a "xenophobic attitude" towards foreign investment and privatization. Puskas noted the relationship between nationalist policy and a decrease in privatization, investment, and development. One of the most important domestic political factors that resulted from the breakup of Czechoslovakia and the subsequent nationalist policies of Meciar was the ethnic polarization of the Slovak population. The nature of Meciar's policies, particularly the privatization schemes in which preferential treatment was given to the "majority nation," exacerbated ethnic divisions within the state. This threatened the interests of other groups, particularly the Hungarian minority from Southern Slovakia. The regions inhabited by the Slovak Hungarian minority have traditionally suffered from disproportionate economic development, per-capita state investment being 50-70% below the levels of districts inhabited primarily by Slovaks during communist rule. The "shortcomings" of Meciar's policies and the realities of the transition process made the economic differences worse. Puskas noted that investment and development plans for the region have been virtually nonexistent and regional gerrymandering has made the Hungarian population a minority in all districts. The political result of "assimilation-oriented minority" policies has been the creation of minority nationalism in Slovakia. The push for economic development in Southern Slovakia is now inextricably tied to the "ethno-cultural concerns" of the Hungarian population. So, instead of creating a progressive state that is ethnically and economically cohesive with the united goal of improving the standard of living for the whole State, Meciar has created an untenable economic and political situation. It remains to be seen, Puskas stated, whether or not the new, more liberal government elected in 1998 will be able to survive long enough to repair the damage already done. Ian Bremmer
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Political Economics of Secession :
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