The Next Bailout - Slovenia? Postcard From Portorož

Slovenia - not Venice

Never been to this country before, which is a shame because it's a really nice place. At least I made it here before it all falls apart: Slovenia seems to be on everyone’s shortlist for the next eurozone casualty. They are earnestly hoping to see the Troika here soon: they do not want to be behind Spain in the queue, for fear the EC/ECB/IMF will have nothing left by then. Also, they want to be sorted well before their southerly neighbour joins the EU (which makes matters rather urgent ...): Croatia, they say, will bring the entire show down for sure – a real basket case, deeply indebted, deeply corrupt and completely dysfunctional.

What will precipitate a Slovenian crisis ? It may be the impending loss of the Prime Minister, who has said she’ll resign if it can be proven that she copied-and-pasted her Masters dissertation. A panel of two professors armed with Google are convening. Google Maps has already brought down one minister, who claimed a non-permitted building development on his land was already there when he bought the site. It was the work of a few clicks to prove it wasn’t ... 

So what am I doing here ? Energy of course.  Slovenian energy users are suffering badly from the fact (previously unknown to me) that the single-market reforms in gas and power (which – despite what Budgie says – are working pretty well in most countries and really well in some) have passed them by. No-one can be arsed to bring EC sanctions to bear on the bad actors in a country as small as this (pop. 2 million). So, despite nestling between the fairly good market of Austria and the improving market of Italy, they are stuck in a pre-competitive, illiquidity time-warp. I can only offer a few palliative suggestions, and the unhelpful comment that it took more than a decade in Germany ... Hopefully, energy-market liquidity will trickle across their borders soon and they can break out of the state-dominated inefficiency trap with some spot-priced gas imports to undercut the ubiquitous Gazprom oil-indexed contracts. 

Winged Lion - omnipresent

Ah, but how will they transact in international energy markets if they go tits-up ? Well, for starters the private sector already uses Austrian banks for all significant deals, it’s only a short drive to the nearest Austrian town from wherever you are. Prepayment generally does the trick, however bad for the working capital. And they’ll need to do their business under an external jurisdiction, because you can’t get a Slovenian commercial-court judgement, bent or otherwise, in under three years.  But people will always need electricity ... well, right up until the point where it doesn’t matter anyway.

Anyway – it’s the weekend and just the weather for a bit of sight-seeing. This region was of course Venetian territory in years gone by, and Slovenia avoided the post-Yugoslavian fighting, so there are plenty of unspoiled things to see, overseen by the old winged lion. The country is still fixated by which side your family was on in WW2 – were you red or white ?  So - don’t mention the war ... Good luck to them: white and red, they are a pleasant bunch. 

ND