Latest / Gunther Fehlinger Podcast / Ex-Slovak Finance Minister Ivan Mikloš: The Flat-Tax Playbook Europe Needs to Compete

Transcript

Ex-Slovak Finance Minister Ivan Mikloš: The Flat-Tax Playbook Europe Needs to Compete · Gunther Fehlinger Podcast

0:00
The screen in a moment, it's Ivan Miklos who is, yes, very
0:06
good. You are back here.
0:07
Very good, Ivan. Thanks.
0:10
Mr. Mikosh is a very prominent European economic reformer, the
0:14
father and implementer of the flat tax in the Slovak Republic.
0:18
The man who was reforming his country, the Slovak Republic,
0:22
like nobody else and has transformed it into a very
0:25
successful country, economic magnet for FDI, has let his
0:30
country prepared it also for the Eurozone and has achieved a lot
0:35
of things, has also helped to reform Ukraine, Moldova and many
0:39
other countries is and is a very important European personality.
0:43
I'm very happy even Mr. Miklos, that you are here with us.
0:47
Maybe you want to start with a short introduction for our
0:50
international audience and then we discuss about European
0:53
economic reform. Thanks a lot, Ivan, again for
0:56
joining the going to failing a podcast.
0:58
You're welcome. Yeah.
1:00
Thank you. First, I'm not sure if it is
1:02
recorded because I have here some sign.
1:06
Yes, it's fine. It's fine.
1:07
You're alive and OK, we are actually you can follow it later
1:14
shared. We are on all platforms live and
1:18
it's a wonderful tool. Riverside.
1:20
I make some advertisement now for that one.
1:22
I can broadcast simultaneously to Facebook, to YouTube and to
1:25
X, and I will upload it on TikTok and on Instagram
1:29
afterwards in this afternoon. And you are very welcome.
1:34
OK. Thank you.
1:35
Thank you, Ginther. Thank you for inviting me.
1:39
Say a few words about me. I spent some time in Slovakian
1:46
governments. I was four times in Slovakian
1:49
government as Minister of privatization, Minister of
1:52
Finance, Deputy Prime Minister, and we did some reforms,
1:56
especially in those governments from 98 to 2006, which have been
2:04
also internationally recognized. And then I spent also about five
2:10
years in Ukraine advising the Ukrainian ministers and prime
2:16
ministers between 20/15/2020. And then I spent also some time
2:22
in Moldova advising Moldovan Prime Minister Natalia
2:26
Capitalita, which means I have some experience from doing
2:32
reforms in, especially in post communist countries, usually
2:37
structural reforms. One of the most important well
2:41
known reform was tax reform during second during this
2:44
government. But also I coordinated also
2:47
other reforms like social system reform, public finance reform,
2:52
fiscal decentralization, pension reform and other structural
2:56
reforms. Even you are very modest in
3:00
saying that you helped. You are basically the father of
3:02
the flat tax movement before. Because of you, Slovakia,
3:05
Romania, Bulgaria, many other countries have really performed
3:09
so excellently the last 20 years.
3:12
And you can oversee basically the economic reform debate of
3:15
the last 25 years. We are head of the European
3:18
Council. And again, we are talking about
3:22
this is the European moment. It's the time to wake up.
3:25
We are under immense pressure, competitive wise and of course
3:28
from the Russian aggression against Ukraine and all of us.
3:32
What's your advice to the current political leaders
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assembling later this week in Brussels, in Belgium, at this
3:39
famous castle, to really reform the European Union?
3:43
What needs to be done today? Yeah, I think the most important
3:49
thing which is necessary to do is to be really united and
3:54
politically united in doing necessary changes to have much
4:02
stronger voice, one voice of Europe and European Union as the
4:08
most important part of Europe. But of course in cooperation
4:11
with UK, Norway, which means the most important thing because we
4:16
know what is necessary to do. It was later reported drug
4:20
report, which again reminded us what is necessary to do.
4:25
But the most important is how to find political will to do this.
4:30
And I think in this regard, in this current, the new global and
4:35
geopolitical situation which is really changing, which the whole
4:40
system based on World War 2 development is, is really
4:46
changing. It is even not only more
4:48
important but even acute to have a stronger voice of Europe in
4:55
international politics, in geopolitics, in sustaining.
4:59
I mean, the, the, the most important is to sustain as much
5:03
as possible from the international order, which was
5:07
based not only on interests and power, but also on values,
5:12
values, especially the the same rights of all countries despite
5:18
of the, of the size of the country.
5:20
And European Union is very good example of the union which is
5:25
built on this principle and on these values.
5:30
And I think now what is, what is the most important, because you
5:34
know, all these economic challenges which are in front of
5:39
us, which have been very exactly defined by Draggy report last
5:46
time, which means that we need a real single market, which still
5:50
we don't have, that we need more investment, that we need more
5:55
innovation with, we need less bureaucracy.
5:59
Everything this, to achieve everything this, it is necessary
6:03
to have much, much stronger, let's say kind of federalization
6:08
and not only of the European Union and not only in the
6:12
economic area. Because it is simply impossible
6:15
to divide some kind artificially divide economic agenda from the
6:20
political agenda, which means now it is, it is clear.
6:24
And I think that the initiative EU6, which means initiative of
6:28
Germany, France, Italy, Spain, Netherland and and Poland in
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this regard is very important because if they they will show
6:40
strong will to go together and to do what is necessary
6:45
together, then of course other countries will follow them
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because the six countries represent more than 70% of of
6:54
European GDP. And then then of course, it will
6:58
be possible overcome the biggest, biggest obstacle,
7:03
biggest bottleneck in doing this necessary European reforms,
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which is lack of political legitimacy, which which is done
7:14
by this, that still national identity is felt much stronger
7:21
than common European identity, because Europe is the economic
7:27
power. But let's say measuring by GDP,
7:32
on the global GDP, measuring by by consumption huge market 4400
7:39
and 50 million people. But Europe doesn't have power
7:44
which could use and leverage. I mean this, this economic power
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in the geopolitics and to have this geopolitical power is
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really important, especially in today's changing world, which we
8:02
all know. What is the problem now?
8:05
Let me ask you, because the you very respectful to Mr. Letter
8:10
and Mr. Draghi, they are of course very serious European
8:13
leaders, but they're coming from a country like Italy, which in
8:16
many ways is still a very unreformed economy.
8:19
While you were, for example reforming Slovakia from the post
8:23
communist transition, then a second time in the 22,000
8:28
towards this Tiger economy, which was really very
8:32
attractive. Have you been consulted by the
8:34
EU leadership how to reform countries?
8:37
Because you really know how to do it.
8:39
You actually achieved it. You have done this structural
8:42
reforms in Slovakia and you have helped later in Ukraine in this
8:47
important things. So wouldn't it much be much more
8:50
meaningful for the European Union to have a real reformer
8:53
like you on the leverages of this reform debate than Italian
8:58
former prime ministers, with all respect to them?
9:02
No, no, I was not, I was not asked to participate on on their
9:06
reports. And this is yeah, this is maybe
9:09
paradox because not only letter and and Draghi, but at first
9:13
this kind of report was done under leadership of of Monty,
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which which was also Italian Prime Minister, which means free
9:22
Italian prime ministers, which means, yeah, you are right
9:24
country, which is not the the best, let's say modestly in in
9:30
doing reasonable economic policy.
9:34
But it doesn't mean, you know, that that those those economies
9:40
than politicians. And they reports are not
9:43
correct. Because sometimes also
9:46
politicians who want to do what is necessary, but political
9:50
circumstances don't allow them to do this, maybe can know even
9:55
better than than those who had also political possibility to do
10:00
to do this reform. But the most important is not
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who did it, But if there is, if this reports correctly
10:09
identified the, the, the problems.
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And I think these reports are correct in identifying what is
10:17
necessary to do. But again, the the most
10:20
important problem, this is my all all life experience is that
10:24
the biggest challenge for doing reforms are not the technical
10:27
challenges or technical questions.
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But the biggest challenge is political a part of the of the
10:33
job, which means how to have political power, real courage
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and ability finally to do what is necessary to do.
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Because problem is that every reform is politically difficult
10:48
to to impose or to implement, as we can see in any European
10:54
country. And in this regard, yeah, that's
10:56
true that both communist countries have been, have had
11:02
maybe better chances to do this because they had to change
11:07
system much, much more fundamentally than the countries
11:10
which had market economy even even before.
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But I think I you know, the most important as I said, is if the
11:20
the the the reports are correct and I think they are correct.
11:24
Now we are under twin pressure from this Russian genocidal
11:27
maniac Putin who is attacking Ukraine now four years and also
11:31
with Trump's bullying against Europe.
11:33
What else we need is a kind of wake up moment to crystallize
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the political will to really unite Europe and reform the long
11:41
overdue structural issues which we all know they exist since 25
11:45
years. What else we need in order to
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really do what is needed? No, we need, we need leadership,
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we need vision, will and courage of, of politicians to do things
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despite the political risk connected with this.
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And in this regard, you know, we are saying in selected that
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everything bad is good for something.
12:08
And of course Trump's policy is disaster is disaster for world,
12:13
for US itself, for for international order.
12:17
But it is good for wake up of Europe, wake up in all areas, of
12:22
course, in, in, in, in defence and safety, but not only also in
12:28
necessity to be stronger a player, I mean global player.
12:32
Because as Finnish President Alexander Stubb named it, What
12:39
we need is, is kind of pragmatic values or, or a realism, which
12:46
means to, to accept that world is changing, but to do as much
12:51
as possible to, to sustain from this old international order as
12:56
much as possible. But for that we need to be
12:59
strong not only as consumption market, but also as strong
13:04
global player and in this region.
13:07
And Putin's war against, against Ukraine is another example why
13:12
and how it is important that Europe is strong, is strong
13:17
militarily, is strong economically, because this of
13:20
course, very interconnected. Why it is necessary to be strong
13:23
economically, why it is necessary to increase
13:26
competitiveness. To do increase competitiveness
13:29
means to do necessary reforms, which means in this regard it is
13:33
clear. But still it is it is very big
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political challenge, of course, because as you know, especially
13:39
in the in the biggest European countries, which means the most
13:42
important countries by public opinion polls, the leading
13:46
position now have have the the parties which are, let's say
13:52
so-called anti system. Yeah, look at Farage in the UK,
13:56
at the in in Germany, National Front in France.
14:00
But again, even here is finally Trump playing constructive for
14:05
for Europe, constructive and positive role because his policy
14:10
is such unacceptable that even those parties have to see and
14:18
expressed, even expressed explicitly that it is
14:21
unacceptable what he's doing. One of the big things the last
14:26
25 years, when you were constantly in power and many of
14:29
the times in Slovakia, was the issue of trade relations with
14:33
the other parts of the free world, especially with Mercosur
14:36
and with India. Now suddenly, after such a long
14:39
debate since the foundation of the World Trade Organization in
14:42
95, it was possible to conclude a free trade agreement with
14:46
Mercosur and with India. Suddenly even Australia seems to
14:50
be possible in March and things are really on the move with
14:53
Philippines and with Indonesia. Suddenly things are possible
14:56
which never before seem to be feasible.
14:59
How do you see this? Is there progress on the free
15:02
trade and opening of the European markets to the world
15:05
markets? Yeah, this is this is really,
15:08
really important that this is something what is at least
15:11
partially compensating the Trump's trade wars.
15:16
Because fortunately, I mean, Trump's policy of the tariffs
15:20
and other measures and and creating threats against allies
15:25
is really, really unfortunate. But it is pushing not only
15:30
Europe, but also other countries to to, to be active.
15:34
And I think I don't know if this this trade agreement with
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Mercosur and India could could happen if not Trump's policy,
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which means again, it is confirming that everything that
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is good for something. And in these new circumstances,
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it will be very, very important that all countries which are
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let's say, Western liberal democracies, which means
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European Union, Europe as as whole, Western and Central
16:03
Europe, Canada, Japan, South Korea, Australia, New Zealand,
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these countries, let's say Global West are cooperating as
16:15
much as possible and are trying to cooperate as much as possible
16:21
on the sustaining and even developing free trade with other
16:26
countries of, of Global South. And in this regard, I think it
16:30
is we can see that because US are the strongest economy and
16:36
strongest power in the world, but still share of US export on
16:41
the global export is only 9% and share of US import in global
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import is 13%, which means it is big but not decisive share,
16:52
Which means if others will cooperate more than it was
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before, then it could be compensated.
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This, let's say detrimental effect of the Trump's trade wars
17:05
and mercantilistic economic policy, which is nonsense
17:09
policy, which means in, in this regard, I think it is very, very
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important. Of course, specific issue and
17:15
specific problem is China, because on the one side, it is
17:20
important to have, let's say, pragmatic relations with China,
17:24
especially because China's Chinese position of China in the
17:29
world economy, the global economy is relevant, very
17:32
relevant. On the other side, it is
17:35
necessary to be very careful with China because China is also
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threat, I mean especially geopolitical threat and for the
17:45
for the future. Mr. Miklos, you are most famous
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for the reform you did in 2003. I think that you introduced the
17:53
flat tax of 19% and it has really changed your country.
17:57
It has changed central in Eastern Europe, but
18:00
unfortunately no Western European country has adopted a
18:03
similar system. What's your recommendation now
18:06
when we have Mr. Meyerz in power in Germany and there's a lot of
18:10
debate now about how to be competitive?
18:12
Should we also cut taxes similar like you did in Slovakia into
18:17
2003? Yeah, it is another confirmation
18:23
that reforms are more political challenge than technical because
18:27
technically it really worked and which means there is is not
18:31
theory. We can see it on the figures and
18:34
the hard data how it worked and it worked really tremendously.
18:38
It was much, much better than our best hopes have been at that
18:44
time, which means it brought economic activity, it attracted
18:49
investment, it created conditions for the highest
18:53
economic growth in Europe and so on and so on.
18:56
And it and we collected with lower taxes much more, much more
19:01
revenues for the state budget as well, also because reducing of
19:06
tax evasion, but mainly because higher economic growth and so on
19:10
and so on. Which means there is no doubt
19:13
that it was very, very effective.
19:16
Another important point is that it is not true that it was
19:19
unjust because some critics are saying that it was good for high
19:22
income and not for low income. It is not true the risk of
19:27
poverty was decreased after implementing of this reform.
19:31
And, and I can confirm it going on on strong data.
19:34
But of course, problem is political because politically it
19:37
is very easy. And by the way, there is story
19:41
about this with Germany when we implemented this new tax system
19:46
from the January 1st, 2004. In 2004, Angela Merkel, as at
19:55
that time chairperson of opposition CDU, was in the visit
20:03
of Slovakia. She met Prime Minister, she met
20:05
me as finance minister. We had.
20:09
I planned the meeting for 30 minutes.
20:11
She spent 1 1/2 hour with me. She was very interesting about
20:16
the details about about and I explained everything, what we
20:20
did, how we did, what are the results and so on and so on.
20:24
And she said that, wow, it is really interesting.
20:28
And then in CDU, they at the that time, Professor Kilgoff
20:36
was, was very well known economic professor and very
20:39
strong supporter of the flat tax.
20:41
And after she returned in in Germany, he was appointed as
20:47
shadow Minister of Finance. And CDU put flat tax in their
20:51
pre election program. But SPD immediately started to
20:59
criticize CDU and arguing that it is good just for all for the
21:05
rich people that is against the poor people that is antisocial
21:11
and so on and so on. And preferences of CDU came down
21:15
and ICDU was afraid from this. They fired Kirchhoff and they
21:20
removed flat tax proposal from the program, which means it is
21:26
illustrating that politically it is risky.
21:30
What we did for instance in Slovakia, what we did, we didn't
21:34
have my party which was the strongest party.
21:36
Then in the second, during this government we didn't write for
21:40
the pre election program that we will impose flat tax.
21:44
But what we wrote there that we will really change the tax
21:48
system in such a way that the new tax system will be simple,
21:52
neutral, proactive, will, will be, will create strong
21:58
incentives for economic growth and so on and so on.
22:02
And then what we did after analyzing what is the best way
22:06
how to achieve these goals was the flat tax.
22:09
We, we implemented a flat tax. This is history.
22:13
But what to do for future? I think the IT could be very
22:18
good possibility now because I'm I'm not sure if it is
22:23
politically possible to implement this model in Germany
22:30
or in France. I'm afraid that not but what
22:34
should be possible. European Commission is now
22:36
working on so-called 28 system which will be system for the
22:42
companies which can voluntarily use this system.
22:45
And if companies are used this system of of business
22:48
regulation, tax, administrative tax system and so on and so on.
22:53
If companies are implementing this 28th system, they will not
22:58
oblige to use national systems, even if they are, if it could be
23:03
very attractive for the companies, especially middle
23:07
size and quickly growing companies which want to do
23:10
business in more European countries.
23:12
And not to have 28 or 20 or how many countries they want to be
23:16
involved different systems, but to use one common system.
23:21
And because this new 28th regulation system will be
23:28
effective only if it will be attractive, if it will be better
23:32
than national systems and then companies will have real natural
23:38
interest to use this system. And as more attractive this new
23:43
regulation system will be, more companies will go there and more
23:48
quicker way of unification. I mean creation, single market
23:53
and deregulation and so on. Some will be there.
23:56
I don't know if this idea of of latex is implemented there, but
24:06
one of key person who is participating on the preparation
24:10
is Ludovic Odor. Ludovic Odor is member of
24:13
European Parliament from Slovakia.
24:16
Ludodor was in 23. He was Prime Minister for short
24:22
time of this day, caring government.
24:25
But in when we did our tax reform, he was my advisor and he
24:30
was, he was head of Institute for Fiscal Financial Policy at
24:37
the Ministry of Finance, which means he is very, very, very
24:42
well informed and very good professional in this regard, in
24:47
this area. Which means I hope he will use
24:50
his experience also in the creation of this 28 system.
24:56
So we could have the flat tax in a via the back door of this new
24:59
European company, which then is having a simplified easy
25:04
taxation system for all European investors who want to use that.
25:08
Vehicle, yeah. Mr. Miklos, now we have a
25:12
different times because Mr. Trump has also done a tax reform
25:16
in America where he has cut the corporate taxes to 21% in 2017.
25:22
So my question is because many of the Western European
25:25
countries have now first time in history a much higher corporate
25:29
tax rate like Germany with 30% for example.
25:32
And there is now talk for cutting the corporate tax in
25:35
Germany and other Western European countries.
25:38
What is your thinking giving our lower productivity and less
25:42
attractiveness to foreign capital capitals in the European
25:45
Union? What is the optimal tax rate for
25:48
corporate tax? Where should we be in the
25:50
European Union on average? What's your recommendation for
25:54
our corporate tax rates given the American competition?
25:59
Not only given American competition, but the problem of
26:03
comparing tax rate is that just comparing tax rate doesn't
26:10
doesn't speak anything. Because we have to speak not
26:14
only about tax rate but also about tax base.
26:18
And problem of this tax system like German system and other
26:23
system is that they have very high tax rate but very narrow
26:28
tax base, which means a lot of exceptions, deductions, special
26:32
rates. And then finally problem is that
26:36
this kind of systems which high rate and Nero base are very anti
26:43
business and very complicated, which are offering a lot of
26:49
possibilities for tax evasion and which are not let's say
26:54
creating incentives for activity, for doing business,
26:57
for investment and so on, so on. Which means what we need the one
27:00
of the most important principle in the for the creation of the
27:06
effective tax system is to have as broader as possible tax base
27:14
and as lower as possible tax rate.
27:18
Because then it is level playing field for everybody.
27:22
And then it is attractive for then this improving business
27:25
environment. There is pro investment, there
27:28
is proactivity. This is, this is reducing tax
27:32
evasion and so on, so on, which means this is the problem.
27:35
Because just for illustration, I know that this what I will
27:40
mention now, I remember from that time when we did reforms 22
27:44
years ago, at that time, we when we implemented 19% flat tax,
27:50
which means also 19% for corporate income tax, profit
27:53
tax. At that time, overall rate in
27:58
Germany was 38%, yeah, which means 2 times higher.
28:04
But as share of GDP, we collected much more, I don't
28:09
remember now how much, but much more as share of, of of GDP in
28:13
Slovakia from that tax as they collected in Germany with two
28:18
times higher rate. But one of the reasons there,
28:21
there have been two reasons. 1 is that tax base was very narrow
28:26
in in Germany and Slovakia tax base was very broad because we
28:31
cancelled almost every exception, deductions, special
28:35
rates and so on and so on. And then then another reason was
28:40
that if you have such a complicated system with Nero tax
28:43
base and high tax rate, it is very high motivation to escape
28:47
from tax paying and also a lot of possibilities how to through
28:52
using these deductions special regime, special rates escape
28:56
from the from the taxation, which means important is not
29:00
only speak about tax rate, but also speak about tax base and to
29:06
have system which is simple, neutral and non distortive as
29:10
much as possible. Mr. Miklos, you have led your
29:13
nation into the European Union 22 years ago and can you tell me
29:18
how is basically Slovakia has developed very well with such a
29:22
competitive tax system? Did you attract FDI and how is
29:27
Slovakian economy developing the last?
29:29
22 years, but there are two very different questions, because at
29:34
that time when we did the reforms, we have been one of the
29:37
most successful reformers and also one of the most dynamically
29:43
dynamic economies, growing economy economies.
29:48
Slovakia that time was labeled by World Bank as the most
29:52
reformed country in the world in 2004.
29:54
And then we had the highest economic growth in Europe.
29:58
In 2007 we have 8.5%, in 2006 eight point 4.5%, in 2007 even
30:07
11% economic growth. And at that time Slovakia did
30:11
the biggest convergence jump by this very high economic growth.
30:16
Which means part of the story is this big success Slovakia had at
30:21
that time this nickname Tata Tiger.
30:26
But unfortunately from then, from 2006 we had now we have 4th
30:34
government of Robert Fitzo simply politician and political
30:40
party which is incompetent, irresponsible, corrupted which
30:46
is doing no reforms. And so that case falling down
30:50
and behind more and more and more.
30:52
Which means as we have been one of the most successful economic
30:58
reformer and the economy at that time, now we are one of the
31:03
worst. I mean, lagging behind every
31:07
ranking and rating regarding business environment,
31:12
innovation, activity, productivity, GDP per capita,
31:18
economy growth, anything. What, what, what do what you are
31:22
looking at? Which means now, unfortunately,
31:25
we are, we see, we see the opposite, the opposite
31:30
development. And it is clear now that also
31:35
that that this government, you know, it is from that time, it
31:39
is now just exactly 20 years. During this 20 years, 15 years
31:45
have been in power governments of Robert Fitzel.
31:49
And now it is simply clear that, that they don't have any will,
31:56
but also also knowledge how to do and how to really manage the
32:02
country, how to do reform, because they never did it.
32:06
And now it is clear that necessary precondition for
32:12
change is political change, which means hopefully it will
32:16
political change will come at the latest in two years from now
32:21
where, when we will have elections.
32:24
And then also it is chance for change of economic policy and
32:28
also to to to solving all these accumulated problems.
32:34
One of the key supporters of Mr. Ficcio, who is really very
32:37
unpopular in Austria and everywhere in the free world for
32:39
his pro Russian stance. One of the key supporters is of
32:43
course Viktor Orban in Hungary, who hopefully will lose
32:46
elections now in April. And the hope is that there will
32:49
be no longer any Hungarian support for Mr. Fizzo and he
32:53
will be isolated and hopefully lose the elections.
32:56
What's your prediction on that scenario?
33:00
Yeah, polls are very, I mean, optimistic in this regard, but
33:04
we will see. We will see.
33:05
Because the problem of Hungary is that, yeah, maybe Urban will
33:09
lose power. But he had 16 years now, 16
33:15
years from 2010 constitutional majority in Hungary.
33:19
And he really used and misused sometimes this constitutional
33:26
majority for taking control over every possible institution which
33:31
has to be independent. Which means if there are media,
33:34
not not only public media, but even private media, judiciary
33:39
system, prosecution, everything. Yeah, which means in this regard
33:44
it will be question even if if even in case of political
33:49
change, new power will be able to return Hungary to the normal
33:55
track, let's say in this in this regard, which was it will be
33:58
surely it will be challenge, but we will see.
34:01
But yeah, the the the situation looks.
34:04
Hopeful you have been also key to prepare your country for the
34:08
Eurozone membership. I think it was in 2008.
34:11
And then Slovakia here as one of the few countries in Eastern
34:15
Europe, in Central Europe has joined the Eurozone.
34:17
And now we have also Bulgaria at the beginning of 2026.
34:21
But unfortunately Hungary, Czech Republic, Poland, Romania, they
34:25
are all still not in the in Eurozone.
34:28
How do you see that? Wouldn't it be much better if we
34:31
have faster accession to the Eurozone, more unity, more
34:34
convergent? And how was the Slovakian
34:37
experience in the Euro? Yeah, I think our, our case is
34:44
evidence of success and I think even among public majority of
34:49
people are supporting is supporting our Eurozone
34:54
membership. Yeah, we entered from January
34:56
1st, 2009 Eurozone. But all these preparation work
35:00
have been done or majority of the preparation work have been
35:04
done during seconds during that government when we have been in
35:08
the in the government. Why other countries are still
35:13
not there are different the reasons for this.
35:16
Surely it was also a Eurozone crisis, Greek crisis at the
35:21
time, which was the reason why some countries have been more
35:25
cautious in this regard. But for future, I think in
35:30
reality whole monetary Union and Europe project proved itself to
35:37
be successful, which means I think that I hope that also
35:42
other countries will enter, especially Poland will be very
35:45
important in this regard, because Poland is only one among
35:49
this EU 6 new informal coalition of of strongest countries which
35:56
is not in in in the euro zone. When it comes to Romania, they
36:02
really want to join, but they have some inflation issues and
36:05
some debt issue. Do you think we should make some
36:08
effort to speed up your Romanian Eurozone accession or should we
36:13
be very strict with the compliance to the criteria which
36:16
France, Italy, Belgium, Austria? I think only Germany is
36:20
fulfilling the criteria of the Eurozone Maastricht at the
36:24
moment and nobody else or very few countries.
36:26
Should we not make a political move towards, for example, allow
36:30
Romania into Eurozone, with a little bit of maybe not
36:33
fulfilling all criterias, but it would be extremely meaningful
36:37
for the unity of Europe? I don't think that it is
36:42
necessary to softening the conditions.
36:45
You know, Romania is successful economically.
36:48
Economic development in Romania is success story, which means
36:52
they have all precondition and ability to fulfill also criteria
36:57
in inflation and other criterias.
36:59
And membership of Romania is not so decisively important.
37:03
If it is there one or two years, sooner or later, it is not, I
37:08
mean decisive. What is decisis is of course
37:12
Ukraine and you worked many years for the Ukrainian
37:15
government. There's a lot of debate that
37:18
Ukraine is very corrupt country and will never work and is a big
37:21
burden. While at the moment now the
37:23
European Union seems to have decided that Ukraine shall be
37:27
fast accelerated into the European Union debate this
37:30
weekend as well in the media and worldwide is the total of
37:34
underline is planning to have a special status for Ukraine
37:37
inside the European Union already in 2026.
37:41
You have been working in the Ministry of Finance advising
37:44
stabilizing Ukraine for four or five years.
37:46
Can you give your take what's going on in Ukraine within the
37:50
real cards to reconstruction, also the war and of course the
37:55
future in the European Union? I'm, I'm very strong supporter
38:00
of Ukraine, not only because they have been really bravely
38:05
fighting against the, against the, the aggressor put in the
38:10
regime, but also what they achieved in economic area.
38:14
Because yeah, that's true that regarding corruption, for
38:16
instance, that's true that till 2014 Ukraine was really, really
38:22
very, very corrupted to the country in the all levels.
38:25
It was systemic corruption there.
38:26
But at the same time, it is true that from that time, which means
38:30
now we are speaking about 12 years from 2014, Ukraine did a
38:36
lot in the fighting against corruption and in the reducing
38:40
space for for corruption. And that's true, which means the
38:43
the most important areas, success areas in this regard
38:47
have been economic reforms. For instance, deregulation of
38:51
the of the price for an increasing price for gas,
38:56
because heavily regulated price for gas for households have been
39:01
one of the biggest source of corruption.
39:05
Another huge corruption source was banking system.
39:09
Ukraine really really restructured banking system. 100
39:15
banks have been closed, the biggest bank have been
39:17
nationalized and cleaned and now banking sector is no more source
39:24
of corruption. On the contrary, is working very
39:26
effectively and very professionally and another
39:29
another reasons tax system be the and other other other areas,
39:34
which means space for corruption in Ukraine was reduced
39:39
significantly. Of course, still corruption
39:41
exists to corruption exists in every country but and the last
39:45
time, but a very good example is also this last last scandal with
39:50
Mingich, who was a guy who was very closely connected with
39:54
President Zelensky. And but despite of this,
39:58
independent anti corruption investigation institutions and
40:04
enforcement institutions finally have been investigating him and
40:11
finally accused him and his allies.
40:14
And he he escaped from the country.
40:16
He left the country but all other people have been arrested
40:22
and catched, which means even those people who are closely
40:26
very close to to. Most influential person Zalenski
40:31
are not out of the responsibility if they are doing
40:35
something wrong, which we cannot say that it, it works in
40:39
Slovakia, for instance. Yeah.
40:41
And this paradox, if Fitzel is criticizing now Ukraine that
40:44
Ukraine is corrupted country. But in Ukraine law enforcement
40:49
institution and investigation institutions are independent.
40:52
They're fighting against against corruption, which means I think
40:57
in Ukraine regard also regarding corruption situation was
41:02
improved significantly. And in broader perspective,
41:08
Ukraine is able even in this very, very difficult
41:12
circumstances of the war economy is working very well.
41:18
Of course, also thanks to the support, Western support by
41:22
loans, by by grants, but is working, working relatively very
41:27
well despite of these attacks against energy infrastructure
41:30
and all war circumstances, which which is in Ukraine.
41:35
Which means finally, if it will be possible to have for Ukraine
41:40
some kind of speeding procedures to speeding up Ukrainian
41:46
membership in the European Union, it could be very, very
41:49
well and very welcomed. And I will surely, surely
41:52
support this because they need, you know, they in this very
41:56
difficult situation regarding war, it is very important for
42:01
them to have some kind of anchor and some kind of positive goal
42:07
which is achievable even now in for a sync future.
42:11
When it comes to the Ukrainian currency, the Rivna, it has
42:14
developed dramatically during the crisis of the last 15 years,
42:19
especially now during the war. Do you recommend, like, for
42:22
example, Moldova has now stabilized its currency towards
42:25
the euro and also most of the countries of the Balkans with
42:29
exemption of Albania, have a fixed exchange rate towards the
42:33
euro now. Do you recommend a similar
42:36
policy or what's your take on the Ukrainian Rivna's future?
42:41
But Ukraine doesn't have fixed system.
42:44
They have managed floating regarding currency, currency
42:49
system. And yeah, currency, you know,
42:53
currency stability and currency development is good indicator of
42:58
the responsible and reasonable economic policy.
43:01
And it is currency stability, relative stability, of course,
43:06
is good evidence that Ukraine is doing good responsible economic
43:14
policy and that National Bank is really independent and
43:18
professional. Let me ask you about the the net
43:25
benefit effect of Ukraine's EU membership.
43:29
Do you think it will be a plus or it will be a very expensive
43:32
membership for the European Union in terms of long term
43:35
value generation when giving Ukraine's immense resources and
43:40
the great capacity of its people?
43:44
You know, I'm strong supporter of integration and I'm deeply
43:48
convinced that integration is win, win situation.
43:51
That means, and we have this not every, we have a lot of
43:54
evidences, factual evidences that for instance enlargement
44:00
which happened already was beneficial not only for the new
44:04
member countries but also for the old member countries.
44:06
And you are from Austria, you have to know and you know that
44:10
how beneficial it was for Austria and for, for instance,
44:14
also regions in Austria, eastern regions in Austria which have
44:17
been before the, the which have been neighboring the Iron
44:23
Curtain, how have been developed these regions after Slovakia,
44:29
Czech Republic, Hungary entered European Union.
44:33
Which means I'm deeply convinced that in Ukraine, in the case it
44:37
will be the same, that it will be win, win beneficial for both
44:41
parts. And of course, it doesn't mean
44:43
that for everybody because of course, for part of, of, of
44:47
business and part of, of, of society, it could have also also
44:52
additional costs. But overall picture is surely
44:57
and will be surely win win. You're talking about Austria,
45:01
Austria of course, neighbor of Slovakia.
45:03
And we have immensely benefited from this integration and the
45:07
membership of Ukraine, the membership of Hungary, Slovakia,
45:11
Czech Republic and the European Union.
45:13
But still at the moment we are staying neutral in Austria.
45:16
We don't deliver any weapons, we don't bring, we have almost no
45:20
bilateral financial support for Ukraine and we are very anti
45:24
solidarity in terms of security and defence.
45:27
And we still, we depend on the Slovaks and Hungarians or the
45:30
Ukrainians to defend us in terms of military, because we are and
45:35
almost underspending not even 1% of our GDP for defence.
45:40
How fair do you think is Austrian neutrality?
45:43
And as a personality who's LED your own country into NATO, do
45:46
you think it's also time for Austria to join NATO?
45:49
Similar like Sweden or Finland have done courageously and now
45:54
supplying. In the case of Sweden, they're
45:56
supplying €7 billion of weapons. What's Ukraine?
46:01
While Austria is doing 0 for Ukraine.
46:06
I don't want to comment Austrian politics and Austrian situation,
46:11
but my personal view is that of course it could be finally much
46:16
better for everybody if Austria has clear position also in war
46:22
with Ukraine and also in connection with the that's the
46:28
ability to protect itself. You don't want to mention a
46:34
clear yes to Austria joining NATO, which I regret, but
46:37
nevertheless I respect Mr. Miklos.
46:39
Dear Ivan, Slovakia has not recognized the Republic of
46:43
Kosovo, despite a lot of efforts of Slovakia of Kosovo to make
46:48
friends and build two bridges towards the Slovak Republic.
46:52
Why exactly are you on? Is the Slovakian Republic
46:56
resisting this European policy? Because most of the European
47:00
countries have recognized the river public of Kosovo.
47:03
And Serbia to this day is still a very, very problematic country
47:07
when it comes to Ukraine. And also, Mr. Putin is the best
47:12
popular politician in Serbia, according to recent polls.
47:16
And they are not joining the EU sanctions.
47:19
And they're really very much far away from any kind of decent
47:23
European compliance towards our common policy.
47:26
So why is that in case of Slovakia that you have not
47:29
recognized the Republic of Kosovo?
47:32
You correctly said that not only Slovakia, there is group of
47:36
countries, I, I think Spain and maybe two more countries didn't
47:41
recognize Kosovo. And I agree with this decision
47:47
not to recognize Kosovo. And by the way, it was decision
47:52
of the during this government that we didn't recognize.
47:56
And Fitzo is just continuing in this mainly because it is matter
48:01
of principle, because if we are saying that it is unacceptable
48:07
to change borders by by by force, then Kosovo in principle
48:14
was the first case. Kosovo was part of Yugoslavia
48:19
and then, you know, and part of Serbia and Serbia part of of
48:24
Yugoslavia, which means in this regard.
48:26
And you are right that Serbia is problematic country regarding
48:32
support of Russia. They have long historical ties
48:35
with Russia and so on and so on. But it is the matter of
48:39
principle. And this matter of principles is
48:42
also very important because it creates precedent.
48:46
And if we are criticizing other countries, if they are doing
48:50
this like Russia in Ukraine, then we could be, we could, we
48:54
could be principal in this, in this regard.
48:57
Because then of course all critics are are using this and
49:00
misusing it. That are saying it is, it is
49:02
double standard if you are accepting something against
49:07
Serbia, but they are not accepting if it is regarding,
49:11
regarding Ukraine, which means I, I think it was mistake.
49:15
I of course know all this argumentation because of
49:18
celebrity Nitzer, because of, of war crimes and so on and so on,
49:23
but still, it is, it is, it is, it isn't very dangerous
49:28
precedent. There was recently the case of
49:31
the Slovak Security Council advisor, Mr. Leichak, who had to
49:35
resign because he was implicated in the Epstein affair.
49:39
So do you welcome this kind of resignation?
49:43
Do you think there will be more revelation in terms of Slovakia
49:47
in the Epstein papers or what's your take on that one?
49:52
Of course that it was correct step to to, to design, of course
49:58
that it is scandal. But even if there will be
50:02
something more in Slovakia, I don't think it's because Fitzo
50:06
is saying that it was nothing. And if you look at what
50:10
happened, what is, what are now, for instance, political
50:13
consequences against Starmer, who he was not directly involved
50:18
in this, in this scandal, just because he appointed Mendelssohn
50:22
to to, to ambassador in, in US who was involved in the, in the
50:29
scandal. You can see that in normally
50:33
functioning countries, these political consequences not
50:37
against Leichek, Leichek is not important figure there, but
50:42
against the Fitzo, it's himself. Because Leichek among other
50:47
things connected with the girls was communicating with Epstein
50:54
about arranging meeting with in between Pitzer and Bannon.
51:01
And they explicitly have been discussing that Bannon is
51:04
creating some kind of group of politicians which won't
51:08
undermine your unity of the European Union and and the
51:13
European values system. Which means this is politically
51:18
something which is connected not only with light check, but also
51:23
with Fitzo and despite of Fitzo's, so let's say closer and
51:29
bigger involvement in this as Starmer, you can see difference
51:34
how it is, how it is, how are political consequences in
51:40
Slovakia and in the UK. Alone, this scandal would be
51:44
enough for Mr. Fitzer to resign and to call for early elections
51:49
and clean up the mess. It's not the design in any, you
51:55
know, I cannot imagine what kind of scandal it could happen for
51:59
Fitzer's resignation. Unfortunately, it's still
52:03
political culture in Slovakia. It's not such that it could
52:08
happen. I wish that Slovakia will return
52:11
to the reform and to the pro European and pro Ukrainian camp
52:15
and that it will be the reform motor of Central Europe, which
52:20
it has been under your leadership.
52:24
Thank you. I want to give you the
52:27
opportunity, one last sentence maybe for the European leaders
52:30
assemble it now in Brussels and they have all the same difficult
52:35
decisions ahead of them on the agenda on Thursday and Friday.
52:40
And you have been in that position of power.
52:43
What you advise them when they tackle that?
52:47
What kind of message you want to leave them?
52:51
Just do it. Just do it.
52:53
Just do everything what is necessary to do despite of,
52:59
let's say, political risk connected with this.
53:02
Thanks a lot. It was my podcast with Ivan
53:05
Miklos, the father of the flat tax, the man who has transformed
53:08
Slovakia and his reforms. Your reforms have led to this
53:12
tremendous success in Romania, in Poland, in many of the
53:17
Central and Eastern European countries where your economic
53:20
leadership was copied later with the flat tax, in Romania,
53:24
Bulgaria, in Albania, in Macedonia, Kosovo.
53:28
And you're really a hero for the tax reform movement.
53:32
Thanks a lot that you you took time.
53:33
Thanks for leading your country into UN now to enter Euro.
53:37
This is really the role model. I don't agree with your Kosovo
53:41
policy, but some disagreements make the podcast interesting.
53:45
And please be nice to my friends in Kosovo.
53:49
And nevertheless, I want to thank you for your tremendous
53:51
effort for Ukraine and for your clear yes, for Ukraine joining
53:56
the European Union and hopefully NATO and the euro as well later
54:00
built on the Slovak reform model.
54:02
This is the way we have to reform countries.
54:04
Mr. Ivan Miklos, I want to thank you very much for your time and
54:07
for this podcast, and all the best in the future for Slovakia
54:11
hopefully returning on the reform path.
54:15
Thank you, Thank you and all the best.
54:17
Bye. I will stop.