(story to published in tomorrow's issue, March 30)
The Organisation for Economic Cooperation and Development was overshadowed by the European Union and NATO after 1989, when Romania set forth its economic and political integration strategies. Even as the Czech Republic in 1995, and then Hungary and Poland in 1996 became OECD members, our country did not find any appetite for an organisation whose stated mission was "economic development, higher efficiency, improvement of the market economy, expansion of free trade and support in the development of industrialised and developing countries" - which are the stated goals of all countries in transition. For some states that are alongside Romania in its bid for EU membership, however, becoming an OECD member is a priority. Slovakia, beside the popular race for the European Union, plans to join the OECD as early as this year, after in February it received the generic assent and signed one of the three negotiation files. The Bratislava government has two more files to submit before the member states grant this September the status of full-fledged member to the second state that separated from Czechoslovakia after 1993. Slovakia has been seeking to join the OECD since 1996, after its neighbours - Hungary, Poland and the Czech Republic - were admitted into the club of the most developed states. But before the 1998 political change, the OECD has regarded the Slovakian economy as insufficiently transparent, and the Mikulas Dzurinda government was to make the first steps in the negotiations that led to the February accord in Paris.
Heir to the Marshall Plan
The Organisation for Economic Cooperation and Development was born out of the restructured OEEC (Organisation of European Economic Cooperation), an establishment founded by West-European states after the second world war to manage the resources supplied by the United States and Canada with the Marshall Plan. After almost four decades, the OECD widened its interest from member states into the world economy, using the experience it had amassed with emerging economies or with economies moving from a planned to a market system. Besides the 29 founding countries, those in Europe plus the United States and Canada, soon to join were Australia, New Zealand, Japan, Korea and Mexico, and later the three Central-European states. OECD requires its members to harmonise legislation, especially economic laws. Slovakia, for instance, had to amend laws on currency convertibility regime, those on collective investments, insurance, and financial instruments. The audit law will also be amended before the country is admitted into the organisation. Membership in the Organisation is not merely a legislative question; macroeconomic conditions are equally important. The OECD looks at the fiscal deficit, the current account deficit, the situation in the banking sector and in major companies.
Why OECD?
According to Eric Burgeat, director within the organisation, membership in the OECD will allow Slovakia to fit into the world economic environment. It will also increase foreign direct investment in Slovakia, and will stabilise the country's ratings, producing an environment favourable to borrowing from the foreign capital market. Jan Jursa, Slovakia's negotiator with the OECD, says: "We, the Slovakian Government, are expecting a growth in foreign investments after we obtain the membership." Jan Toth, analyst at ING Barings, adds that lending from foreign financial institutions will become more accessible because of the lower perceived risk. "Technically, banks and investors will have to establish smaller provisions when lending to Slovakia," says Toth. "On the other hand, Slovakia's OECD membership will reduce the amount of speculative capital on the market, which is good news," he continues. But the most important is how the decision expected in September will influence the Government's determination to continue the reforms it started.
Everyone is a critic
But there are also critics of the organisation, who bring up the international financial crises, beginning with the one in Mexico and ending with that in Southeast Asia, when the OECD did too little to stabilise the situation. They also say the advantages offered to OECD member states are discriminating for the new Central European members. One aspect of this discrimination is the amount of guarantees offered to member states. While the Organisation grants total guarantees to older members, the newly admitted do not benefit from this facility, which is valued by investors. Still, says Toth, although they lack total guarantees, newly admitted states are definitely better positioned than before being admitted. "This only means that new members do not have the same advantages as founding states. They will enjoy a 50% drop in the initial risk, which is still an advantage."
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