Slovak Republic Country Brief

Introduction/overview

The Slovak Republic was formed on 1 January 1993 after the Czech and Slovak Federal Republic was split on 31 December 1992. The Slovak Republic (increasingly referred to as Slovakia) is land-locked and borders the Czech Republic, Poland, Ukraine, Hungary and Austria. It covers an area of 49,039 square kilometres (about two-thirds the size of Tasmania), much of which is mountainous. The population of Slovakia is 5.4 million (July 2008 estimate). The Slovak Republic celebrates its National Day (Constitution Day) on 1 September. The capital of the Slovak Republic is Bratislava.

Political Overview

The Slovak Republic is a parliamentary republic with legislative power vested in a unicameral parliament (the National Council of the Slovak Republic or NRSR) which holds responsibility for most areas of government policy. The NRSR is made up of 150 deputies elected for four-year terms. The head of government is the Prime Minister, who is appointed by the President and is accountable solely to the NRSR.

Slovakia's current Prime Minister, Robert Fico, was appointed on 4 July 2006, following general elections on 17 June 2006. Fico heads a three party coalition Government. He is the leader of the senior coalition party, the populist, left wing SMER-SD. Other parties forming the coalition are the far right Slovak National Party (SNS) and the centre left People's Movement for a Democratic Slovakia (HZDS) of former Prime Minister Vladimir Meciar.

The President of Slovakia is elected for a five year term by direct popular election. While the President's powers are largely representational and ceremonial, the office also holds some important legal powers, including the appointment of the Prime Minister and the ability to veto legislation. However, the President's veto can be overturned by a simple majority in parliament. The current Slovak President, Ivan Gasparovic, was sworn in on 15 June 2004 and was re-elected to a second five year term on 5 April 2009. Mr Gasparovic will commence his second term on 15 June 2009.

Slovakia became a member of the OECD in 2000, NATO in March 2004 and the European Union in May 2004.

Economic Overview

Over the past 20 years, the Slovak Republic has made a successful transition from a centrally planned economy dominated by heavy industry to an open market dominated by a steadily growing services sector. It is now among the best-performing in the European Union, with a GDP per capita of approximately 70 per cent of the EU average.

Slovakia has achieved consistently high rates of economic growth over the past decade, with real GDP growth peaking at 10.4 per cent in 2007. Growth remained strong at 6.4 per cent in 2008, though it has slowed in 2009 with the onset of the global financial crisis. As an export-oriented economy, Slovakia's GDP growth is expected to slow to between 2 and 3 per cent in 2009, as demand from foreign markets declines. Unemployment, which had been steadily declining since 2004 to a low of approximately 8 per cent in 2008, is accordingly expected to rise as economic conditions become more difficult. As of March 2009, registered unemployment in Slovakia officially stood at 10.3 per cent.

Slovakia introduced the Euro on 1 January 2009. The Euro has been useful in maintaining liquidity and stability in Slovakia's domestic market and lowering Slovakia's exchange rate risk against other currencies, helping it to weather the global financial crisis. Sixty-two assistance measures to combat the effects of the global financial crisis have been approved by President Gasparovic since January 2009, bringing the Slovak Government's total anti-crisis spending to €332 million (A$581 million).

Bilateral Relationship

Australia and Slovakia enjoy warm, albeit modest, bilateral relations. Bilateral trade and investment links remain limited, but are expanding gradually. Slovaks constitute a relatively small ethnic group in Australia, with approximately 8500 people living in Australia identifying themselves as being of Slovak origin.

Responsibility for diplomatic relations with the Slovak Republic rests with the Australian Embassy in Vienna. Visa and migration issues are handled by the Department of Immigration and Citizenship's office in Vienna. Australia's Austrade office in Prague is responsible for fostering trade links with Slovakia. The Slovak Republic maintains an Embassy in Canberra and Consulates in Melbourne and Brisbane.

Australia and Slovakia are jointly committed to the International Security Assistance Force in Afghanistan, where Slovak soldiers serve alongside Australian troops in Oruzgan Province.

A delegation representing the Trade Sub-committee of the Joint Standing Committee on Foreign Affairs, Defence and Trade, led by the Hon Bruce Baird MP, visited Slovakia in April 2003 as part of an inquiry into Australia's trade and investment relations with Central Europe. Australia's then Minister for Immigration and Multicultural Affairs, the Hon Philip Ruddock MP, visited Slovakia for official talks in August 2002. A Parliamentary Delegation, led by the Hon Neil Andrew MP, visited Slovakia in April 2001.

The Slovak Foreign Minister, Mr Ján Kubiš, visited Australia in October 2008. Other senior visitors from Slovakia to Australia have included the then Foreign Minister, Eduard Kukan and Slovak Secretary of State, Peter Brno, in 1999. The then Chairman of the National Council of the Slovak Republic, Jozef Migas, visited Sydney in 2000 for the Olympic Games. Jan Figel, State Secretary for Foreign Affairs, also visited Australia in 2000.

Bilateral economic and trade relationship

Slovakia is one of Australia's smaller trade and investment partners. However, two-way trade has increased rapidly in recent years and stood at $217 million in 2008, heavily in Slovakia's favour. This was mostly due to a large increase in passenger vehicle imports from Slovakia over that period. Other imports from Slovakia included furniture, glassware and rubber tyres. Australia's exports to Slovakia (worth $6.6 million in 2008) were mostly made up of specialised machinery and parts, but also included pigments and paints, integrated circuits and computer parts and wool. Exports in a range of service sectors such as education have been increasing. There were around 1600 enrolments in Australian education institutions by Slovak nationals in 2007, increasing to 1950 in 2008.

A Double Taxation Agreement and the bilateral Agreement on Trade and Economic Cooperation provide the legal framework for Australia's commercial relations with the Slovak Republic.

While Australian investment in Slovakia remains low, several Australian companies have expressed interest in entering the Slovak market. With increases in the level of foreign investment as a result of ongoing privatisation, further opportunities may arise for Australian businesses, including in the services, automotive, electronics, IT, engineering and infrastructure development sectors.

QBE insurance is the biggest Australian business operation in Slovakia. Australian Bronx International is in partnership with Kovozink Dobsinne, a Slovak company to produce a galvanising plant.

The Australian company Crown Energy is carrying out a uranium survey near the Slovak villages of Zemplin and Vitartovce, while the Perth-based company GB Energy was granted uranium exploration licences for areas in eastern and south eastern Slovakia in November 2007. GB Energy is also exploring for oil and gas in the neighbouring Czech Republic.

Howe Leather has a manufacturing facility in Koscice, Eastern Slovakia, producing leather seats for luxury motor vehicles.