US embassy cable - 05BRATISLAVA618

C O N F I D E N T I A L  BRATISLAVA 000618 
 
SIPDIS 
 
 
E.O. 12958: DECL: 06/02/2025 
TAGS: ECON, PGOV, PINR, LO 
SUBJECT: PAVOL RUSKO: THE SLOVAK BERLUSCONI WANNA-BE 
 
 
Classified By: Charge d'Affaires Scott N. Thayer for reasons 1.4 (b) an 
d (d).  Contains Business Proprietary Information. 
 
1.  (C)  Summary.  The leader of the New Citizens Alliance 
Party (ANO), Minister of Economy Pavol Rusko, has been a 
controversial figure within Slovakia's ruling coalition 
government and is the leading cause of its internal tensions. 
 His continued dominance of the largest private broadcaster 
in Slovakia, TV Markiza, has brought him political influence, 
powerful enemies, and clashes with the American majority 
shareholder.  As Minister, Rusko enjoys criminal immunity and 
has considerable influence over a variety of business 
dealings.  His ministry has been successful in attracting 
foreign investors to Slovakia, and he is quick to claim 
credit for the country's impressive economic performance. 
His critics give the credit to others, saying investment 
comes not because of Rusko, but in spite of him.  On the 
domestic scene, Rusko's strained relations with coalition 
partners and falling popularity poll numbers have led to 
speculation that he will seek to merge ANO with another party 
to stay in politics.  End summary. 
 
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MEDIA IS THE MESSAGE 
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2.  (C)  Rusko began his career as a sportscaster for state 
television during the socialist period.  When Central 
European Media Enterprises (CME) -- an American media firm -- 
sought local partners to participate in its establishment of 
a private TV network in Slovakia named Markiza, Rusko and 
three partners were recruited.  They put up very little 
equity and receive relatively little of Markiza's 
considerable profits, but control the license, which expires 
in 2007. 
 
3.  (C)  Rusko's influence over programming and staffing at 
Markiza has produced skewed favorable coverage of Rusko and 
ANO that has fed his political fortunes.  Independent media 
analysts and the Media Council confirm the bias, and the 
station has been fined several times as a result.  License 
renewal is, as a result, very much in jeopardy.  Rusko was 
forced in 2003 to transfer his shares to a front man to avoid 
conflict-of-interest appearances, but retains de facto 
control of the shares and the station. 
 
4.  (C)  CME has sought to buy out Rusko and his partners for 
several years, fearing his political antics will lead to 
denial of the license renewal and thus a complete loss of 
their considerable investment.  Several times CME and Rusko 
have reached agreement on terms, conditions, and price, only 
to have him back away at the last minute.  His partners are 
eager to sell but are barred through interlocking agreements 
from doing so.  CME has told us they will begin this fall to 
publicly distance themselves from Rusko in hopes of either 
forcing him to truly divest or to convince the Media Council 
to somehow grant them exclusive control of the license. 
 
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ANY PARTY WILL DO 
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5.  (C)  ANO has been referred to as a one-man political 
party operating within a four-party coalition government. 
Ivan Svejna, Chairman of the Board of the Hayek Foundation, 
the most important Slovak economic think tank, commented that 
the media-mogul-turned-politician does not care if the 
government is rightist, leftist, or in the middle as long as 
he is in it.  ANO came to power as a pro-business, socially 
liberal party, but seems to favor a stronger central 
government now that Rusko is a minister.  Jan Oravec, 
President of the Slovak Entrepreneurs Association, said that 
Rusko wants to remain as the Minister of Economy above all 
else, and if that meant joining another political party he 
would certainly do so.  Slovak MPs and cabinet members enjoy 
criminal immunity, and rumors of shady dealings in his 
business career prior to politics suggest Rusko has other 
reasons to remain in government. 
 
6.  (C)  Months ago there were rumors that Rusko sought to 
merge ANO, which has suffered a mass exodus of MPs and is now 
precariously close to the five percent of voter support 
necessary to remain in parliament after 2006, with Prime 
Minister Mikulas Dzurinda's Slovak Democratic and Christian 
Union Party (SDKU).  In meetings with emboffs, coalition MPs 
from both the Christian Democrat Party (KDH) and the 
Hungarian Coalition Party (SMK), were convinced a deal was in 
the works.  However, ANO MPs Beata Brestenska and Eva Cerna 
confided that although they had individually received offers 
to "defect" to other parties, they planned to stay with ANO 
and try to resuscitate poll ratings.  They believed that as 
"liberals" on issues such as religion, abortion, social 
issues, and education, ANO filled a void on the Slovak 
political scene.  In March, SDKU secretary Kamil Homola told 
 
emboffs that SDKU was reluctant to absorb Rusko.  Homola 
wasn't sure adding ANO would boost SDKU's popularity, saying 
Rusko might be more of a liability than an asset.  Foreign 
Minister Kukan told Charge July 15 that he thought there was 
a "good chance Rusko will not be in the coalition" by 
October, and we have heard similar comments from within ANO. 
What is not clear is whether Rusko alone, or ANO altogether, 
would leave.  Given ANO's shaky poll numbers and Prime 
Minister Dzurinda's ability to create "coalitions of the 
willing" to pass legislation, ANO's departure would not 
likely result in the fall of the government and early 
elections. 
 
7.  (C)  Both Oravec and Svejna told econoffs that Rusko 
offered to merge ANO with the Free Forum Party (FF), a group 
of MPs that broke away from the SDKU, but that he was turned 
down.  In recent months FF has only polled between 1.6 and 
4.0 percent support.  Still another scenario has Rusko 
selling ANO, and theoretically its supporters, to SDKU 
shortly before the parliamentary elections in September 2006 
if the party's chances of winning five percent are too 
remote.  However, other analysts have challenged this idea, 
saying Rusko could not guarantee his supporters would follow 
him to SDKU, or conversely, many might decide to vote for 
SDKU anyway once they realized that ANO's chances of success 
were poor. 
 
8.  (C)  Eva Cerna described "our Palo" (an affectionate 
nickname for Pavol) as a good manager who takes quick 
decisions, but as a terrible judge of character.  She said he 
"holds on too long" to people who damage him and the party. 
He is not diplomatic enough to be a good politician; he still 
doesn't realize he can't run a party like a business.  Many 
of the appointments made by Rusko have been to staunch 
loyalists, including Slovak commercial officers throughout 
the world.  In turn, Rusko is excessively loyal and 
reportedly changed his stance on nuclear energy, a land 
dispute involving an investment by Hyundai/Kia, and the 
privatization of the Slovak National theater to help friends' 
business plans. 
 
9.  (C)  Some analysts claimed that Rusko's own business 
interests are his biggest motivation to remain in government. 
 Markiza is only the most obvious; as the Minister of 
Economy, Rusko has sway over several partially state-owned 
companies.  He was rumored to receive kickbacks on many of 
the contracts related to the Hyundai/Kia investment.  Rumors 
of corrupt practices in Rusko's ministry abound; an NGO 
specialist in writing EU grant applications on behalf of 
towns and cities told us it was not uncommon for Ministry of 
Economy employees to request up to ten percent to approve 
individual projects. 
 
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WITH PARTNERS LIKE THESE 
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10.  (C)  Rusko has increasingly been at odds with his 
coalition partner, Christian Democratic Movement (KDH), 
notably over social issues such as abortion, mandatory 
religious/ethics education, church property issues, etc. 
Recently, his party did not support education reform 
legislation with which it basically agreed because of animus 
toward the Christian Democratic Movement's (KDH) Minister of 
Education, Martin Fronc, who had numerous personality 
conflicts with the ANO State Secretary Frantisek Toth (now 
Minister of Culture).  Not only did the legislation fail, but 
subsequent tiffs over Fronc's suitability as minister led to 
a KDH threat to call for early elections.  Things have cooled 
down somewhat, but we predict more difficult moments as the 
election campaign begins and ANO focuses on church-state 
separation issues.  Milan Hort, the SDKU party whip, told 
poloffs in a discussion about the coalition that ANO should 
pick some principles and stick to them, rather than shifting 
around trying to gain a percentage point in Slovakia's 
monthly popularity polls. 
 
11.  (C)  Rusko at times seems to suffer from a lack of 
self-control.  At a major conference f automotive executives 
in April, Rusko spent his 15 minute speech rampaging against 
KDH Education Minister Fronc and the "inadequate" Slovak 
education system.  Similarly, at a press conference to 
commemorate the opening of the $500 million Ford transmission 
plant, Rusko ranted about the stupidity of the Cabinet's 
Hankook decision (see para 15), proclaimed he could "not be 
in the same room" as the Prime Minister, and said not a word 
about the plant opening.  The Ford official sitting next to 
him was stunned. 
 
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DON'T TAKE IT PERSONALLY 
------------------------ 
 
12. (C)  Rusko appears to hold a grudge against the SDKU's 
 
influential Minister of Finance, Ivan Miklos.  According to 
Svejna, Rusko takes things very personally and was upset that 
the GOS preferred Miklos' proposal for achieving the EU's 
Lisbon Agenda of economic competitiveness over his own.  The 
Lisbon Agenda could be a major platform for the SDKU in the 
2006 elections and Rusko submitted his proposal well before 
Miklos.  Arguably, Miklos' proposal was a reaction to 
Rusko's, but Oravec, an advisor to the GOS on the subject, 
found Miklos' work to be far superior.  Oravec commented that 
Rusko's proposal was vague, had aspects similar to a command 
economy and depended on large amounts of state aid to 
companies that would be decided by Rusko.  In contrast, 
Miklos' proposal targeted future growth in research and 
development, information technology and education; and was 
not simply dependent on today's ideas.  Comment: Oravec noted 
that Rusko was angry with him for favoring Miklos plan, and 
it was obvious that Oravec relished the situation.  End 
comment. 
 
13. (C)  Svejna said that Rusko wanted to be the "star" of 
foreign investments coming to Slovakia, but he had a problem 
of talking too much.  He has announced investments to the 
media prior to their negotiations being completed and 
exaggerated the amount of potential investments coming to the 
country (he announced this week that "six to eight 
investments worth USD 2.2 billion" were on the verge of 
completion, and would need almost USD 400 million in 
incentives).  Oravec added that Slovakia was successful in 
winning the USD 1.2 billion Hyundai/Kia investment in Zilina 
in spite of Rusko, not because of him.  This investment 
remains mired in legal challenges due to the way that the 
Ministry of Economy managed the acquisition of the land 
required for the new plant.  A small percentage of land 
owners refused to sell their land at the independently 
determined price and demanded a price three times higher. 
Rusko repeatedly refused to negotiate with the holdouts, and 
then after more than a year he recommended that the GOS give 
in to their demands, which it refused to do. 
 
14.  (C)  Whirlpool is facing a similar situation.  When it 
sought Rusko's help in obtaining land next to its existing 
plant in Poprad, he suggested they use a particular assessor 
to "speed up" the project.  Instead, the assessment has taken 
months while several of the plots have mysteriously been 
reregistered to new owners.  The impression is that this is 
KIA all over again. 
 
15.  (C)  Miklos and Rusko have clashed most recently over an 
investment incentive package Rusko negotiated with Korean 
tire-maker Hankook to build a $500 million factory in Levice, 
an economically-depressed city in the Hungarian part of the 
country.  Rusko tried to slam-dunk the package, providing no 
data in advance and insisting the Cabinet approve the 
six-inch-thick proposal on the spot.  Led by Miklos, the 
Cabinet rejected the package's enormous cost per job created; 
even the Hungarian party rejected it.  A participant in the 
meeting said Rusko's proposal lacked credibility -- when an 
ally proposed lopping SK 1 billion off the SK 21 billion 
package, Rusko readily agreed, saying it would not be 
necessary to even consult Hankook!  As a result others were 
left wondering how much more could be similarly and 
unilaterally eliminated and whose interests Rusko was really 
pursuing. 
 
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CAR TROUBLE 
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16.  (SBU)  In an unfortunate bit of publicity in early 2005, 
Austrian police fined Rusko almost USD 3,000 for driving his 
car 248 kilometers/hour (156 miles/hour) in a 100 k/h zone of 
highway.  Rusko failed to slow down for several minutes and 
the police almost had to stop pursuing him because they said 
his rate of speed was too dangerous.  Devoid of remorse, 
Rusko's comment to the media was, "My car has great 
acceleration."  Reportedly, before entering politics, Rusko 
crashed a Porsche into a guard rail during a test drive and 
walked away from the accident without reporting it to the car 
dealer.  When the car dealer eventually contacted him, Rusko 
complained that the car was unsafe and that the dealer should 
feel fortunate that Rusko was not going to sue him. 
 
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COMMENT 
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17.  (C)  Rusko has been in the middle of numerous 
significant events, both good and bad, during his time in the 
GOS.  He is increasingly at odds with his coalition partners, 
but as the Minister of Economy has been able to claim credit 
for Slovakia's enviable  performance in attracting foreign 
investment.  Whether he deserves this credit is debatable. 
However, Rusko has enough savvy that he will likely convince 
a sufficient number of people that he deserves to be in the 
 
GOS, and with or without ANO, he will probably survive the 
2006 elections.  If he tried to become more of a team player, 
rather than maintaining a personality that reflects his 
driving style, his chances would no doubt improve 
dramatically. 
THAYER 
 
 
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