Identifier
Created
Classification
Origin
05BRATISLAVA602
2005-08-02 13:02:00
CONFIDENTIAL
Embassy Bratislava
Cable title:  

FINANCE MINISTER IVAN MIKLOS: POWER BEHIND THE

Tags:  ECON PGOV PREL PINR LO 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L BRATISLAVA 000602 

SIPDIS


E.O. 12958: DECL: 06/10/2015
TAGS: ECON PGOV PREL PINR LO
SUBJECT: FINANCE MINISTER IVAN MIKLOS: POWER BEHIND THE
SCENE

Classified By: CDA SCOTT THAYER for reason 1.4 (b) and (d)

C O N F I D E N T I A L BRATISLAVA 000602

SIPDIS


E.O. 12958: DECL: 06/10/2015
TAGS: ECON PGOV PREL PINR LO
SUBJECT: FINANCE MINISTER IVAN MIKLOS: POWER BEHIND THE
SCENE

Classified By: CDA SCOTT THAYER for reason 1.4 (b) and (d)


1. (C) Summary. The political team of Minister of Finance
Ivan Miklos and Prime Minister Mikulas Dzurinda has succeeded
in transforming Slovakia's political and economic fortunes in
a short amount of time. Miklos has won acclaim for his flat
tax policy, and he has also managed several years of reforms
that have turned Slovakia into an economic success story.
His influence stretches well beyond his own ministry and
someday he could be a legitimate challenger for the position
of Prime Minister. Miklos has had to withstand accusations
of corruption, and this issue could have a profound effect on
his political future. Regardless, Miklos is well-regarded
internationally and his future appears bright. End summary.

TEAMWORK
--------------


2. (C) Much of the credit for Slovakia's rapid progression
since 1998 from political outcast to EU member and economic
success story belongs to the policies of Minister of Finance
(former Deputy Prime Minister for Economy) Ivan Miklos.
Miklos, also a Deputy Prime Minister, has teamed successfully
with Prime Minister Mikulas Dzurinda to transform Slovakia at
a rapid pace. According to Jan Oravec, President of the
Slovak Entrepreneurs Association and Ivan Svejna, Chairman of
the Board of the Hayek Foundation, Miklos and Dzurinda work
very closely together and appear to have a close personal
bond that goes beyond politics. In fact, they need each
other in order to be successful in their chosen roles. While
Dzurinda is the public face of the Slovak Democratic and
Christian Union Party (SDKU),Miklos maintains a lower
profile and concentrates on the economic reform policies that
helped the party win reelection in 2002 and which they hope
will do so again in 2006. Miklos' achievements include
instituting a 19 percent flat tax rate, transforming
Slovakia's poor macroeconomic condition into one of strength,
liberalizing privatization, and encouraging foreign
investment. In 2004, Euromoney Magazine named Miklos the
Finance Minister of the Year.

THE FUTURE

--------------


3. (C) Because of this success, Miklos would appear to be a
likely successor to Dzurinda. Oravec and Svejna said there
was a "99 percent chance" that would happen eventually, but
not in the near future. We are somewhat more conservative --
Miklos enjoys being the Minister of Finance and he probably
wants to direct further reforms in the future. More
importantly, Dzurinda is not ready to step aside. Oravec
said the Prime Minister enjoys the game of politics and would
definitely seek a third term. (Note: SDKU party whip Milan
Hort, a close Dzurinda collaborator, confirmed this when he
told poloffs, "He's young, he's in great shape, and he's
ready to run," both in marathons and in election campaigns.)
Since Dzurinda is relatively young (50),he might even seek
another term in 2010 regardless of the outcome in the 2006
elections. Svejna speculated that at some point Dzurinda
might even seek to control the SDKU from outside of elected
office, and this would be impossible with Miklos, given his
considerable intellectual skills. Some believe that Miklos
is not a political animal and would be suited to a career in
an international institution such as the World Bank;
certainly he gives the impression of being more of a
technocrat than a politico. Miklos' time to lead the SDKU
could eventually come, but in the near future the more likely
move would be for Dzurinda to pick Minister of Defense Juraj
Liska -- often characterized as a "yes man" to the Prime
Minister -- as his heir apparent.

INFLUENCE
--------------


4. (C) Miklos will likely transform his role in the GOS in
the near term and maintain a considerable amount of
influence. The Ministry of Finance's (MOF) traditional role
could diminish because of fiscal decentralization, the
conversion to ESA 95 accounting principles when creating
budgets, and the successful completion of tax reform.
However, Miklos will exert additional influence over other
ministries by controlling their budgets through the MOF. He
recently blocked a landmark investment incentive deal with
Korean tire maker Hankook (although this may also have been
an opportunity to give Economy Minister Rusko a political
trip to the woodshed). He will also look for additional
reforms to pursue, such as education, the completion of
health care reforms, as well as leading the GOS's efforts
with the Lisbon Agenda, especially to increase information
technologies and competitiveness. Oravec and Svejna stated
that Miklos had influence over the Slovak Central Bank (NBS)
through his friend the Governor of the NBS, Ivan Sramko, whom
he championed for the position. Miklos has disciples
throughout the government and private sector; as a result,


although he is usually careful to cede publicly to Rusko,
smart investors make sure he is well-briefed on their plans
before moving ahead.

THE DARK(ER) SIDE
--------------


5. (C) Accusations of corruption have dogged Miklos for
years, although they have subsided since the 2002 election
campaign when opposition leader Robert Fico publicly claimed
the Embassy had told him of Miklos' corrupt activities.
Miklos sued Fico and won. (Note: Fico persisted in his
public statements despite being told the Embassy could not
and would not support him. Miklos wrote then-Ambassador
Weiser at the time to solicit his testimony for the trial.
When told the USG would not waive immunity, Miklos wrote
again to say that it would be impossible for him to meet Amb.
Weiser "under the circumstances" and never did again.)


6. (C) Miklos does have his legitimate critics:

--Within the business community, Miklos' decision to review
the MOF's SKK 1.35 billion (USD 42.2 million) fine for
abusing its monopolistic position against Slovnaft, the
Slovak refinery, is viewed negatively. Shortly after the MOF
announced the penalty against Slovnaft, the refiner appointed
Miklos' friend and outgoing Governor of the NBS, Marian
Jusko, to its Board of Directors. At the time, there was
speculation that Slovnaft was hoping to exploit the two men's
personal relationship to have the penalties reduced.
However, in the first review the penalties were only slightly
reduced and Slovnaft will likely appeal again.

--An advisor to Chairman of Parliament Pavol Hrusovsky (KDH)
told poloffs the SDKU was "persuading" independent MP's to
vote for its reform legislation by forgiving tax debts of
their family members, claiming "after a visit to the Finance
Ministry, their vote would be assured." (Comment: The
advisor did not like the method, but was not too critical
since KDH also supported the reform legislation. End
comment.)

PERSONAL
--------------


7. (C) Ivan Miklos is young, active (tennis and swimming),
handsome, well-dressed, and a good public speaker. SDKU
secretary Kamil Homola told poloffs that, "After Dzurinda,

SIPDIS
he's the best we have on the campaign trail." He speaks
excellent English. He and Dzurinda are obviously close--at
public social events they and their wives often sit together
and talk avidly.
THAYER


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