SLOVENIAN CITIES HOPE TO BECOME "BOOMTOWNS"

UNCLAS LJUBLJANA 000057

SIPDIS

SIPDIS

DEPT FOR EUR/NCE (SSADLE)
USDOC FOR ITA/RUSNAK

E.O. 12958: N/A
TAGS: EAIR ECON EINV ELTN SI
SUBJECT: SLOVENIAN CITIES HOPE TO BECOME "BOOMTOWNS"

REF: LJUBLJANA 44


1. (U) Summary. After years of recession and high
unemployment as former socialist industries collapsed,
Slovenia's northeast now aims to become a "boomtown." The
cornerstone of the projected development is the strategic
cooperation between municipalities Maribor and Hoce-Slivnica,
Maribor Airport, and the PC Tezno Business Park. This
public-private partnership hopes to bring domestic and
foreign investment to the region by creating synergy through
linking individual strategies for economic expansion into one
comprehensive, regional plan. The stakeholders expect to
capitalize on Maribor's location at the intersection of the
fifth and tenth European transport corridors. What this adds
up to is a region that at least claims to be far more open to
foreign trade and investment than the capital city,
Ljubljana. End Summary.


2. (U) As part of a two-day visit to the region January
25-26 (Reftel),COM met with the new Mayor of Hoce-Slivnica,
Joze Merkur from the Social Democratic party (SD),Maribor
Airport director Matjaz Sonc, and director of PC Tezno
Business Park, Gorazd Bende to discuss the regional plans for
the development of the logistics center.

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The Sum Stronger Than Its Parts
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3.(U) Taking a lesson from last year's failed bid by
Hoce-Slivnica municipality to buy the airport for 3.1 million
euros, Merkur, Sonc and Bende believe that working together
will yield results not possible individually. The triumvirate
has hired the Economic Institute of Maribor and the Maribor
Development Agency to create a development scheme.


4. (U) In his meetings, COM stressed the need for Maribor and
its surrounding environs to develop "niche" businesses as
they seek to connect regionally and to the world economy.
Slovenia should meet its challenges: as a small country it
needs to work harder to generate foreign trade and
investment. Slovenia, however, also has some strong
advantages: membership in the euro zone, membership in the
Schengen zone by the end of 2007, and the EU presidency in

2008. Slovenia's municipalities should also capitalize on
these strengths.


5. (U) International access through Maribor Airport, a
public-private venture with the Slovenian Ministry of
Transportation, is one critical component of the development
plan. Currently, the business survives on regional cargo
contracts and some summertime charter flights, with no
regular commercial airlines flying out of Maribor. Sonc
agreed with COM's statement about the need for a niche. He
revealed that Ryanair, the Irish discount carrier, may start
flying out of Maribor Airport as soon as this summer, once
airport control procedure changes are approved by the airport
governing board. Also, the Ministry of Transport has
committed to refurbishing the passenger terminal in
preparation for Slovenia's entry into the Schengen zone by
the end of 2007. It will extend the airstrip to 3300 meters,
which is the required runway-length for long-distance
airplanes to land.


6. (U) Tezno Business Park is one of the incentives that
stakeholders believe will attract businesses to the Maribor
area. Tezno, which currently occupies 60 hectares of land, is
a combination of manufacturing companies such as car-parts
maker CIMOS, and high-tech companies like software company
Hermes-Softlab. With a 40-hectare expansion plan and an
established infrastructure, Tezno has recently attracted an
Austrian manufacturing company to Maribor. Currently at 60
percent capacity, Bende hopes to attract more international
companies to Tezno, especially once the initial airport
renovations are completed. There are several companies
currently in Tezno with a strong U.S. connection, and Bende
said he would welcome the opportunity to have U.S. companies
locate in Tezno.

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Comment: Maribor More Open to FDI
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7. (U) At every meeting, COM was met with open arms by
Maribor's business and institutional
representativesexpressing their aspiration for more
substantive contact with the U.S. This came as a welcome
development, since the general attitude toward foreign
businesses in Ljubljana is often one of caution or
disinterest. Historically, many of Ljubljana's institutions
have held an elite view of their position in Slovenia, and
rarely cooperate with other municipalities. This position as
the "second city" and its rough times in the late nineties
and recently, are further incentives for the Maribor region
to court foreign businesses. Maribor's development plan
leverages its lower average salary (80 percent of
Ljubljana's),the airport's passenger and cargo expansion,
its prime location at the intersection between the fifth and
tenth transport corridors, and the proposed Maribor rail
connection to the port city of Koper to carve out its "niche"
as the logistics center for Central Europe. The outreach to
foreigners and its collaborative regional plan could make
Maribor a more attractive investment area than it has been
since the dissolution of Yugoslavia. End Comment.
ROBERTSON