SLOVENIA: CABINET RESHUFFLE LEADS TO NEW

UNCLAS LJUBLJANA 000349

SIPDIS


DEPT FOR EUR/NCE, EUR/SCE, EUR/ERA, EB
USDOC FOR 4232/MAC/EUR/EERIS/CEEBIC/BURGESS/ROGERS

SENSITIVE

E.O. 12958: N/A
TAGS: ECON EAGR PGOV PINR SI
SUBJECT: SLOVENIA: CABINET RESHUFFLE LEADS TO NEW
MINISTERS OF ECONOMY, EUROPEAN AFFAIRS, JUSTICE,
AGRICULTURE, AND TRANSPORTATION

REF: A) LJUBLJANA 292
B) LJUBLJANA 333 AND PREVIOUS

Sensitive but Unclassified. Please protect
accordingly.


1. (SBU) SUMMARY: On 20 April, five new ministers
were sworn in as "caretakers" for the remainder of the
year. The new ministers include three professors:
Matek Lahovnik, Minister of Economy, Marko Pavliha,
Minister of Transport, and Milan Pogancnik, Minister of
Agriculture, and two technocrats, Milan Cvikl, a bank
executive and Zdenka Cerar, General State Prosecutor,
as Minister for European Affairs and Justice,
respectively. [NOTE: Biographic information provided
starting on paragraph 5. END NOTE]. We do not
anticipate any substantive policy changes as the major
political parties prepare for parliamentary elections
to take place in the fall. The government will focus
its efforts on a smooth transition into the EU.
However, intra-party quarrels such as FoMin Rupel's
criticism of Cerar to lead the Justice Ministry preview
an electoral campaign where party leadership will be
challenged -- ushering in a new cadre of leaders. END
SUMMARY.


2. (U) It was not until the early hours of 20 April,
that the National Assembly approved the five
nominations (presented as a package) with 51
parliamentarians voting in favor, and 25 against. The
approval was never in question, as the ruling coalition
had secured enough votes. The anticipated cabinet
changes to replace departing Ministers for European
Affairs, Janez Potocnik (Slovenia's EU Commissioner
designate) and of the Economy, Tea Petrin (slated to
become Slovenia's Ambassador to the Netherlands) turned
into a full cabinet reshuffle as Slovenian People's
Party (SLS) ministers stepped down after the ruling
coalition decided to expel it from the decision making
process. The power play was prompted by SLS support,
albeit tepid, of the opposition's attempt to remove
both the Ministers of Health and Interior (ref A).


3. (U) The reshuffling, however, took an interesting
turn when FoMin Rupel sent a letter to Parliament
criticizing the Government's decision to appoint Zdenka
Cerar as Minister of Justice. In the letter, Rupel
claimed that Cerar's appointment was a defeat to
"European principles of justice." [NOTE: Some in the
media speculate that Cerar's decision to investigate
and to press charges against Rupel over the opening of
a Diplomatic Academy prompted the FoMin's comments (ref
B),where other sources observe that he is positioning
himself as someone who could also work under a new
opposition-led government, particularly now as some
polls indicate the Social Democrat Party (SDS) leading
the ruling LDS Party. END NOTE]. With the exception of
Mr. Lahovnik, whose credentials have been challenged by
some business executives and criticized by the media
over comments he made during the nomination process,
the other nominees have received positive assessments.
The new ministers assumed their duties immediately.
Senior ministry officials (State Secretaries) will
submit their resignations, though no major changes are
anticipated.


4. (SBU) COMMENT: With elections coming in less than
six months, the new ministers will be asked to "hold
down the fort" until a new government is convened later
this year. The current interplay among the various
party factions will determine the type of government,
and the possible alliances that will be required to
establish a coalition strong enough to survive. The
inner LDS struggles -- highlighted by Rupel's comments
against Cerar's appointment -- have sent a strong
signal that the elections are wide-open this year. The
intra-party squabbles are not limited to LDS, however.
The opposition parties are also trying to define their
own platforms, thus confounding their own aspirations.
END COMMENT.


5. (SBU) START BIOGRAPHIC NOTES ON NEW MINISTERS:

MILAN M. CVIKL, Minister of European Affairs

Milan Cvikl was born on 20 March 1959, in the

coalmining town of Velenje (north-central Slovenia).
He received a Bachelors degree in Economics from the
University of Ljubjana in 1983. Six years later he
earned a Master's degree in Economic Analysis and
Planning. He studied in Canada and the U.S. for a few
months in 1983. Cvikl was the recipient of a
government sponsored academic scholarship for "talented
students." [NOTE: Active work in the Socialist Youth
Organization was a precondition to receive this
scholarship].

Cvikl joined the Bank of Slovenia immediately after
completing his Bachelors degree. Known for his hard
work and assertiveness, he soon became deputy director
of the Central Bank's Analysis and Research Center. In
1990, he joined a group of experts drafting monetary
legislation as Slovenia was seeking independence.

In 1990, Slovenia's first Prime Minister Lojze Peterle
offered him the Finance portfolio. He rejected the
offer because he did not feel the position was
"politically safe." In the 1990's, Cvikl worked for
Slovenia's largest commercial bank, Nova Ljubljanska
Banka (NLB),the World Bank, and the Ministry of
Finance. At the World Bank, Cvikl worked on several
World Bank projects related to central and southeastern
Europe. Starting in 1998 through 2000, Cvikl served as
a State Secretary for Budget and Public Finance at the
Ministry of Finance. He was one of principal drafters
of the public procurement legislation.

Cvikl returned to NLB in 2000 as Assistant Executive
Director, heading the Financial Management and Support
Department. In 2001, he became NLB's Chief Financial
Officer, but failed to join the board of directors in
2002 when Belgium's KBC Group acquired 34% of NLB.
Cvikl has often lectured at the Center of Excellence in
Finance (CFC) in Ljubljana.

Cvikl is fluent in English and Serbo-Croatian, and has
a passive knowledge of German. He is married and has
two children.


MATEJ LAHOVNIK, Minister of Economy

Lahovnik is 32 years old. He received a Bachelors
degree in Economics from the University of Ljubljana in

1994. In 1998 he received his Master's degree in
Business Finance. Lahovnik completed his PhD in
Business Administration, Management and Organization at
the University of Ljubljana in 2000.

Lahovnik has been employed at the Faculty of Economics
of Ljubljana University since 1993. He has been a
visiting researcher at Indiana University's Kelley
Business School, specializing in strategic management.
Lahovnik currently chairs the Business Administration,
Management and Organization Department at the Faculty
of Economics.

Lahovnik is young and has no prior business experience.
Although Slovenian business executives have declined to
make official comments about his nomination, some have
informally expressed concerns over his ability (or lack
thereof) to deal effectively with the country's
economic realties. Lahovnik wrote a study on
management buy-out for BTC, a leading real estate
company. Over the past twelve months, BTC has been the
focus of intense media scrutiny over its business
ethics conduct. Addressing his detractors, Lahovnik
explained that he worked on only one phase of the
business operation.

Lahovnik was a minor owner of defunct and bankrupt SIB
Bank. He sold his bank's shares in 2001, two years
prior to the outbreak of the SIB financial scandal. He
has been a frequent speaker at business events and
contributor to the leading financial newspaper,
Finance. In his articles, he has supported the listing
of state companies like Telekom Slovenia at the Stock
Exchange; establishing the second financial pillar;
developing comprehensive tax reform shifting the burden
away from the middle class; and reducing labor costs.

Lahovnik has indicated that as Minister, he would like

to focus his efforts on two issues: increasing FDI
inflows, and enhancing companies' competitiveness
abroad.

Lahovnik is not married. He is fluent in English and
German.


MARKO PAVLIHA, Minister of Transport

Pavliha was born on 15 December 1962 in Ljubljana. He
received his Bachelors degree in Law in 1986 from the
University of Ljubljana. He obtained his Master's
degree from University of Split, Croatia, and McGill
University in Canada. He completed his PhD on Implied
Terms of Voyage Charters in 1991 at McGill University.
He passed the Slovenian Bar Examination in 1993.

Pavliha was a research assistant at McGill University
from 1989 through 1992. In 1993 he became an Assistant
Professor of Transport and Insurance Law at the
University of Ljubljana. In 1999 he was promoted to
Associate Professor. Since 1999, he has spent time as
a visiting professor at the University of Split,
Australia's Queensland University, Belgium's Catholic
University, and at the International Maritime Institute
in Malta. In 2004, Pavliha was promoted to Senior
Professor of Commercial, Transport and Insurance Law at
the University of Ljubljana.

In 2003, Pavliha was elected one of Ten Most
Influential Slovenian Lawyers, for the second time. He
has received several awards at home and abroad. He was
actively involved in preparing significant Slovenian
legislation dealing with infrastructure, natural
disasters, civil aviation, nuclear damage, insurance,
and maritime issues.

Pavliha is married and has two children. He is a
permanent English and French court interpreter. He is
also fluent in Croatian and German, and has passive
knowledge of Italian.


MILAN POGACNIK, Minister of Agriculture

Milan Pogacnik was born in 1946. He received a
Bachelors degree from the University of Ljubljana in

1971. He obtained his PhD in Pathologic Morphology at
the University of Ljubljana.

Pogacnik started his professional career at the Faculty
of Veterinary at the University of Ljubljana as
Assistant Professor. He was promoted to university
professor in 1985. In 1989, he became a head of
Institute of Pathology and Forensic Veterinary. In
1990 he became a Dean of Faculty of Veterinary at the
University of Ljubljana.

Pogacnik is a respected scientist, researcher and
policy worker in the field of veterinary and
agriculture in general. His contribution in preparing
Slovenian legislation on veterinary and cattle breeding
before and after country's independence has been
significant.

After accession to the EU, he anticipates that the most
protected agricultural sectors, such as diary
producers, will face serious challenges. He is aware
of his limitations, "I cannot solve all problems in the
remaining six months," but indicated that he will work
diligently to identify existing and potential
bottlenecks affecting Slovenian agriculture.

Pogacnik received the National Order of Highest Rank in

2000.

He is married and has two children. He is fluent in
German and English.


ZDENKA CERAR, Minister of Justice

Cerar was born on 17 September 1941 in Ljubljana, where
she completed her school studies. After graduating
from the Faculty of Law, she worked as a law clerk for

Ljubljana District Court. She passed the state bar
examination in February 1969.

In October 1969 she was appointed deputy municipal
public prosecutor in Ljubljana and has worked as a
prosecutor since that time. From 01 March 1969 to 30
September 1969, she was employed in the legal affairs
section of the Republic Secretariat for Finance,
handling appeals.

In 1974, she was appointed deputy district public
prosecutor in Ljubljana. Following the reorganization
of the judiciary, she was appointed deputy public
prosecutor in Ljubljana and head of the General Crime
Division in January 1979. She held this position until
January 1981, when she was appointed deputy High
Prosecutor. After a second reorganization, she was
appointed as High State Prosecutor (January 1995 to
September 1995). Following a successful candidature
under the new State Prosecutor Act, she became Supreme
State Prosecutor on 20 September 1995.

In 1999, the National Assembly appointed Cerar General
State Prosecutor. During her five-year period as a
deputy municipal public prosecutor in Ljubljana, she
was also head of the juvenile division and was actively
involved in this field in other institutions.

She is married and has three children. She was a
member of the national gymnastics team, and a coach and
referee after she ended her career. She was also one
of the co-founders of the Lawyer sports club in which
she has been active as an official and sportswoman for
over 20 years.

Cerar received the National Silver Star Order of Merit
in 1984.

END BIOGRAPHIC NOTES

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