Mikulas Dzurinda

Prime Minister, Slovak Republic

Slovakian prime minister Mikulas Dzurinda is showing the rest of Europe that economic reform is not only politically possible -- it also pays off. By cutting taxes, reining in government spending, and loosening the labor market, Dzurinda has made his country of 5.4 million a magnet for foreign investment. U.S. Steel (X ), Volkswagen, and, most recently, Korea's Hyundai Motor are among the blue-chip multinationals gambling on Slovakia, fueling growth estimated to reach 4.3% this year.

Dzurinda's achievements have made him the subject of glowing articles in the foreign press. Unfortunately, his popularity is less solid among Slovakia's hard-pressed people. Polls show they support reform in general but chafe at some of the specifics, such as higher health-care costs and reduced job security. Dzurinda, 49, a runner who has competed in the New York Marathon, will need plenty of stamina to keep reforms on course in the face of populist critics.

The betting, however, is that he can pull it off. "We're not really concerned that the government will have trouble serving out its term," says Kai Stukenbrock, who follows Slovakia for Standard & Poor's in London. New elections have to take place by September, 2006. In March, S&P upgraded Slovakia's foreign-currency rating in recognition of the economic stability Dzurinda has brought.

Dzurinda is pretty good at politics, too. He skillfully welded together the disparate group of pro-democracy parties that ousted authoritarian Premier Vladimir Meciar in 1998 and put Dzurinda in the Prime Minister's office. But his challenge is to convince Slovakians that reform benefits them in the long term even if it carries short-term pain. "It's not easy. I give the government a lot of credit," says Christopher Navetta, president of U.S. Steel Kosice, the nation's largest private employer.

In the battle for public opinion, Dzurinda can draw on rhetorical skills as well as his economics background. After graduation from the College of Transport & Communications in Zilina in 1979, he worked as an economic analyst at a Slovakian think tank that focused on transportation and later was a manager for the state railroad. He won a parliamentary seat in 1992 and in 1994 served briefly as Transportation, Post & Public Works Minister. In spare moments he dabbles in poetry.

Dzurinda still has a long to-do list. He must streamline the bureaucracy, reduce corruption, and complete reform of the state pension system. He also needs to reduce Slovakia's dependence on the auto industry, which accounts for most foreign investment. But if he succeeds, one of Europe's newest members could serve as an example to the old.

    Before it's here, it's on the Bloomberg Terminal.