Slovakia's economic glass is only half full - but getting fuller

Expanding incomes. Record output. Booming investment. These were the headlines for Slovakia in 2003.

Salaries here grew faster than in any other European nation, foreign investment poured in, and a new Kia car factory meant that this small central European country would produce more automobiles per capita than any other country in the world by 2006.

But that, as it turns out, is only half of the story - representing only half of the country. Economically, Slovakia is cut neatly in two. The western half, with its modern highway system, is getting richer as each new investment contract is signed. The eastern half, with its impoverished Roma population, is falling further behind. When Slovakia joined the European Union on May 1, two of the country's eastern regions were instantly among Europe's poorest.

Slovakia's economic east-west divide is the story of the newly expanded EU writ small. New member states from the Baltic to the Balkans are still struggling to improve their economies and infrastructure; incomes in these countries remain a quarter of the EU's in 2002. Their success will have an important effect on European unification as a whole, say experts.

"There is a real feeling of us versus them," says Bill Baker, an American social worker based in the eastern town of Kosice. "People here tend to ... look to the west and think, 'They are connected to the highway network, they don't have a Roma problem,' and everyone in the east feels left out and forgotten."

Within Slovakia, nowhere is the disparity more evident than in Kosice, a racially mixed city of Slovaks, Hungarians, and Roma. A regional capital in the 16th century, the town is now an economic backwater with only one major employer, a US Steel factory.

"We have the impression that we have been forgotten about," says Adriana Slovjakova, spokeswoman for Kosice's mayor.

In Bratislava, Slovakia's capital, the unemployment rate is a modest 4.2 percent and hovers close to 10 percent in other western provinces. In and around Kosice, joblessness exceeds 23 percent.

Inadequate transportation connecting eastern Slovakia with European markets has also driven away foreign investment. While many of the roadways in the west have been rebuilt to handle increased truck traffic, the east is still largely cut off. According to Kia, the car manufacturer which just signed an $826 million contract to build a factory in northwestern Slovakia, eastern Slovakia wasn't even considered. "Infrastructure was the main factor in our choice of location," says Kia spokesman Miroslav Chlemar. "Kosice has an airport and the river isn't too far away, but there are no good roadways. This was a big and an important part of locating in the west."

Even more intractable are the conditions facing the region's Roma, or Gypsy, population of an estimated 400,000 - one of the largest in Europe. According to social workers in Kosice, 70 percent of Slovakia's long-term unemployed are Roma - a group that makes up only 10 percent of the population. Roma riots across eastern Slovakia in late February, sparked by across-the-board cuts in unemployment benefits to just under $36 per month per person, highlighted the issue.

"If you took the Roma population out of eastern Slovakia, you would see an unemployment rate similar to that of western Slovakia," says Mr. Baker. "I don't see how you are going to cut unemployment if you don't solve the Roma issue. They are not trained for any sort of skilled job and are condemned to menial labor."

While the country is beginning to address the problem - in part because of EU pressure - many see the lack of political will stemming from a high level of racism in Slovakian society. "Even well educated people in Slovakia say that it is the Gypsies' own fault that they are destitute," says Ludomir Slahor, professor of economics at the University of Bratislava.