Elections in Times of Recession
Dessislava Dimitrova, 14 November 2012
"Pahor has succeeded, but will he make it in the coming three weeks?" This headline in the Slovenian Finance newspaper sums up in just a sentence the outcome of the presidential elections that took place in the country on Sunday (November 11th). If we follow up the events chronologically, they look like this: three candidates, among whom an incumbent president and a former prime minister, who according to the pre-election polls will meet in the second round with a lead for the incumbent head of state; exit polls that attribute victory to his opponent; first results that confirm the initial public opinion polls; and in the end – a small surprise. The Slovenians will have to choose between two familiar figures: current President Danilo Turk and former PM Borut Pahor.
Why is the issue about Slovenian elections important in the first place, given that the head of state in such a small country has largely ceremonial functions? Yes, this is neither Greece, nor Spain, but the country is a member of the eurozone whose banking system is collapsing and where political instability will not make it any easier for the economic recovery. Besides, among the largely ceremonial functions of the new president is his duty to nominate the new governor of the central bank, who in turn is to become a member of the governing council of the European Central Bank.
The outcome of the elections was awaited for another reason too: a possible referendum that would allow the government to adopt a plan to recapitalise banks in the country as demanded by the trade unions, which could increase the risk Slovenia to seek a bailout from the European Union. Pahor himself, having lost the premier post after a referendum on increasing retirement age failed, has already signalled that he would back the government's plan, led by his both predecessor and ancestor Janez Jansa.
So far the country has managed to buy some time issuing last month 10-year dollar-denominated bonds. According to the latest forecasts, however, the recession in the country will continue, while unemployment and inflation rates will increase, and on top of it Slovenia will have to pay its neighbours under the so called old currency savings in former Yugoslavia (more details soon to come on this website). The period when Pahor led the country coincided with the moment when it (and not only it) was hit by the economic crisis. During the election campaign, while admitting some of his earlier mistakes, Pahor said it was not reasonable for him to say that it was very hard to make a living with a prime minister's salary of 3,000 euros. How would he cope with a presidential salary and how will the Slovenians make it, given that the country is no longer the top economic performer in the region, we will have to wait to see.