LJUBLJANA, Slovenia (AP) â¿¿ Andrej Plut has always thought he was fortunate to live in Slovenia, at one time the most prosperous of the former republics of Yugoslavia and a star among the eastern European states that joined the EU after the fall of communism.
The 55-year-old dentist can't figure out what went wrong with his tiny Alpine state, which now faces one of the worst recessions and financial system collapses among the crisis-stricken 17-country group that uses the euro.
"We used to live so well," Plut said. "Now, we don't know what tomorrow brings."Slovenia's crisis could lead it to become the sixth member of the eurozone, and the first among the bloc's ex-socialist members, to seek an emergency bailout to avoid bankruptcy. The immediate cause was rampant lending by state-controlled banks to the real estate market and unprofitable companies that are now unable to repay their debt. But experts see an underlying reason: Despite the appearance of modernizing its economy, Slovenia never really made the transition from socialism to free markets. Instead of privatizing factories and other assets, state companies largely remained in public hands, or with a murky ownership structure. And foreign investors were kept at bay. "Slovenes," said Niko Tus, Slovenia's leading sociologist, "never really embraced capitalism." When the former Yugoslavia started disintegrating into a bloody civil war in the early 1990s, Slovenia was the first to break from the federation and did so with little damage. It undertook economic and social reforms, while Croatia, Bosnia and Serbia were fighting each other. Slovenia's export-oriented economy experienced a boom in the late 1990s and the early 2000s. It joined the European Union in 2004 without much hassle, modernized, built infrastructure and modern roads and swiftly adopted the euro in 2007. It led the other former communist states that entered the EU with it â¿¿ the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia â¿¿ with the highest wages and living standards.