May 9, 1995 CONGRESSIONAL RECORD — Extensions of Remarks E 969

to conduct additional CDRs. Under the proposal, the benefit savings from removing those

who are no longer disabled from the disability

rolls are credited to a newly established CDR

account in the disability insurance [DI] trust

fund. It would operate as follows:

No later than September 1 of each year, the

Commissioner of Social Security would estimate the present value of DI trust fund savings for all future years resulting from cessation of benefit payments during the prior

year based on CDRs. the Commissioner

would certify these savings to the managing

trustee of the DI trust fund.

Upon receiving the Commissioner’s certification, the managing trustee would transfer to

the CDR account from amounts otherwise in

the DI trust fund a portion of these estimated

savings. This amount would vary depending

on the CDR account balance but could not exceed 50 percent of estimated savings. No later

than September 15 of each year, the Commissioner would certify to the managing trustee

the expenditures required to perform mandated CDRs during the coming fiscal year.

These expenditures would include the cost of

staffing, training, purchase of medical and

other evidence, and processing related to appeals and overpayments.

Upon commencement of the fiscal year, the

managing trustee would make available to the

Commissioner from the CDR account, to the

extent that funds were available, the amount

that the Commissioner certified as necessary

to perform mandated CDRs during that year.

These funds could then be used by the Social

Security Administration to perform the required

CDRs.

SLOVENIA: A MODEL FOR

EASTERN EUROPE

f

HON. JAMES L. OBERSTAR OF MINNESOTA

IN THE HOUSE OF REPRESENTATIVES

Tuesday, May 9, 1995

Mr. OBERSTAR. Mr. Speaker, on February

16 I stood on the floor of this House, during

debate on the NATO expansion bill, and

asked that any efforts to bring Eastern Europe

into the Western community not ignore the

former Yugoslav Republic of Slovenia.

A country of just over 2 million people, independent for less than 4 years, Slovenia has

successfully thrown off the economic shackles

of the Socialist Yugoslav system and is leading the newly emergent countries of Eastern

Europe and the Balkan States in conversion to

a free and open market economy.

In per capita terms, Slovenia is the 20th

largest exporter in the world, exporting over $7

billion in goods each year, which accounts for

60 percent of Slovenia’s GNP. Slovenia now

enjoys a lively trade with the United States,

shipping $229 million worth of goods to the

United States each year and importing some

$180 million in United States goods annually.

It is with great pride, then, Mr. Speaker, as

a Slovenian-American, that I return to the floor

today to bring my colleagues more accolades

over Slovenia’s accomplishments. This time,

the praise comes from none less than the

Journal of Commerce, which headlined an

April 6 editorial ‘‘A Model for Eastern Europe.’’

I commend this article to my colleagues and to

the leadership of our various executive branch

departments. I ask that you remember to include Slovenia and its hard working, enterprising people when making decisions on our

country’s future relationship with the transitional economies and governments which

have replaced the former Communist regimes

of Eastern and central-southeastern Europe.

[From the Journal of Commerce, April 6,

1995]

A MODEL FOR EASTERN EUROPE

(By Timothy Ashby)

Eastern Europe has had its share of bad

news recently. Painful economic reforms and

factional strife in Russia, political turmoil

in Poland, continuing ethnic warfare in parts

of former Yugoslavia—all have made Western businessmen cautious about trade and

investment in the region.

Yet one small country, Slovenia, has

emerged as an economic and political model

for the old socialist bloc. Slovenia’s accomplishments over the past year read like a

wish list for its neighbors.

1994 exports were more than 14% greater

than the previous year, and now account for

60.4% of gross domestic product. Manufacturing production increased 6.8% last year while

unemployment fell 1.5%.

The tolar, Slovenia’s national currency,

appreciated 11% against the deutsche mark

in 1994. The country has a very low debt service ratio of only 5.5%.

At $6,957, Slovenia has the highest GDP per

head of all former socialist bloc republics in

Eastern Europe, nearly twice that of the

Czech Republic. GDP grew more than 5% in

1994 and the country enjoyed a healthy current account surplus of $2.6 billion at the end

of last year.

Foreigners made direct investments of

$72.3 million last year.

Three factors account for Slovenia’s success. The first is its geographical location.

Lying at the crossroads of Western and Eastern Europe, Slovenia borders European

Union members Italy on the west, Austria on

its northern border, Hungary to the northeast and the Republic of Croatia to the east

and south. Slovenia also has a coast on the

Adriatic Sea, where the major Port of Koper

serves as a gateway for international seaborne trade with all of Central Europe.

The second factor is political stability.

Prime Minister Janez Drnovsek presides over

a Western European-style coalition government. Slovenia is a healthy young democracy, with parties in its Parliament running

the gamut from Christian Democrats and

Greens to reformist communists.

Despite rivalry between the parties, an unusually high degree of consensus over economic policy has been achieved, a fact foreign investors find reassuring. All sides are

committed to the transformation to a Western-style market economy, but also to maintaining a strong social safety net and to

forcing money-losing state enterprises to become competitive in the private sector.

Slovenia’s carefully conceived strategy for

creating a modern free market economy is

the third reason for its success. The government has adopted a gradualist approach to

economic restructuring, striking a pragmatic middle ground between the Czech Republic’s shock therapy methods and the meandering reforms undertaken by some former

Soviet republics.

To lessen the political and social impact of

widespread redundancies, privatization has

been undertaken at a slower pace than in

other former socialist countries. The government occasionally intervenes and provides

help to ailing companies by guaranteeing finance-for-debt rescheduling in return for

moderation in dividend distribution and

wage increases.

By the end of 1994, a quarter of all

Slovenia’s state-owned enterprises had been

privatized. The process will be accelerated

during 1995 to achieve the goal of placing

50% to 65% of public assets in private hands.

Preference is given to privitization via management and employee buyouts. While initially criticized by some as a method that

would do little to attract foreign capital and

technology, many privatized companies have

established joint ventures both domestically

and internationally. As a result, Slovenia

has not suffered from a lack of investment in

new plant and capital equipment.

Domestic savings play a major role in the

modernization of Slovenia’s industrial sector. The growth in all areas of demand has

stimulated a continuous expansion in industrial capacity. Much of this is fueled by the

capital city’s Ljubljana Stock Exchange,

which together with the rest of the private

financial services sector contributes 3.2% of

the country’s GDP. Slovenia’s growing number of financial institutions, as well as its

beautiful Alpine landscape, justify its nickname, ‘‘the Switzerland of Eastern Europe.’’

Compared to many of its neighbors, where

red tape can seriously impede foreign direct

investment, Slovenia has implemented one

of the least restrictive investment climates

in Eastern Europe. Foreign investments in

any form enjoy full national treatment—

that is, they have the same status as Slovene

legal entities. All sectors of the economy are

open to foreigners operating through joint

ventures. Legal entities established and registered in Slovenia, even if they have 100%

foreign ownership, may own real estate. The

Slovenian Parliament is considering legislation to change real estate and other business-related laws to harmonize them with

the EU.

With a 30% flat tax on corporate profits,

Slovenia has one of the lowest tax burdens in

Europe. The tax rate is further reduced to

20% in the case of reinvestment, which actually lowers the tax rate to 24%. All foreign

investors are guaranteed free transfer of

profits and repatriation of invested capital,

while no restrictions are placed on foreign

shareholders in Slovene enterprises who

want to transfer their profits abroad in foreign currency.

Germany, Austria and Italy now account

for 65.9% of all Slovenian foreign investment. Businessmen in these countries see

great profit potential in Slovenia because of

its proximity to major markets, its political

stability and the high probability that it will

become an early member of both the European Union and NATO. U.S. businesses,

which account for less than 1% of FDI in Slovenia, have not yet awakened to these investment opportunities. Even Australia,

which contributed 2.3% of the country’s foreign direct investment in 1994, invested more

in Slovenia—with a population of only 2 million—than in giant but strife-torn Russia.

Slovenia’s lesson for other developing

countries is that political and economic stability can only be attained by a true commitment to democracy and the creation of a

free market. As Slovenia rapidly approaches

the time when it will be ready for membership in the European Union and NATO, its

eastern and western neighbors can point to

it as an example of one of the world’s great

success stories.