Monitoring

Nov. 10 (Bloomberg) The 100 or so Roma squeezed into a village community center in eastern Slovakia to watch folk dancers flounce their colorful skirts to the rhythms of the violin and contrabass.

The theme of the hour-long concert? Not just a cultural celebration but also a pitch for the euro, which will become the national currency on Jan. 1. Using traditional gypsy songs and skits interlaced with explanations of monetary policy, actors and musicians urged the audience to accept the koruna's demise.

I guess we will have to get used to it, sighed Viera Tokanova, a 36-year-old gypsy and resident of the village of Vojcice. We'll have to manage, though I will still miss the koruna.

Less than two months before Slovakia joins the euro zone and with more than three-quarters of its citizens afraid of price increases, the authorities are relying on a 195 million-koruna ($8 million) campaign to soothe frayed nerves and persuade Slovaks that adoption will mark the final step in the former communist country's transformation to a free-market economy.

The government and central bank have employed Olympic gold medalists, local actors and musicians to tour the country and erected the country's biggest banner on the central bank's 33- floor headquarters in Bratislava, viewable from Austria several kilometers away. They've also run television spots, set up a Web site, dispatched a Euro-mobile to rural areas and handed out free currency calculators.

Euro Product

With traditional ad campaigns, you have to try to persuade people to buy a product, said Igor Barat, the Finance Ministry official running the ad effort. With our campaign, the product is bought. But we have to get people to accept it. And that is a serious obligation.

Katarina Lamosova and Kristina Pagubkova, two social science students at Bratislava's Comenius University, sat on the bank of the Danube River between classes, eating a McDonald's lunch and pondering how much more the fries will cost next year.

Everything is going to be more expensive because of the coming of the euro, said 19-year-old Lamosova. Her friend nodded. We have to learn the value of the euro.

Opposition to the euro at this late date will not stop adoption and Prime Minister Robert Fico may be able to ride out any criticism if prices rise by blaming the global financial crisis, analysts say.

Skilled Politician

Fico as a skilled politician now gets an argument that he can use as reason for the problems, said Grigorij Meseznikov, president of IVO, a Bratislava-based think tank.

What's more, scuttling the plan now would hurt companies already adapting their business plans and make investors more leery at a time of shaky confidence in emerging-market economies.

Slovakia, which was created after the split of the now- defunct Czechoslovakia in 1993, will be the next ex-communist nation to join the euro zone after Slovenia, once part of Yugoslavia, dropped its tolar, in 2007.

The government says price concerns are a myth that it is trying to counter -- with little noticeable effect. A Sept. 18-24 survey, the most recent commissioned by the government, showed 87 percent of respondents were somewhat worried about higher prices, with 25 percent saying they were extremely concerned.

In another question, 41 percent said adoption will somewhat or significantly worsen their household budgets. The government didn't release a margin of error for the survey.

A third said they suspect retailers, restaurants and hotels will exploit the switchover to artificially raise prices, adding to inflation. A third also complained that there will be too many coins to deal with, making transactions more confusing and leading many to pay too much in the first few months after the new currency is introduced.

More Than Happy

That's a challenge for Michael Ruttkay, the chief executive officer of Creo/Young & Rubicam, the Bratislava-based public relations agency that was hired to run the ad campaign.

The debate over the currency switch is refreshing, he said, considering the country was largely isolated and criticized by the U.S. and EU for most of the 1990s for its lack of democracy and free-market principles.

I'm proud we are among the first of the eastern European countries to join the euro region, he said. I am more than happy to be part of it all.

To contact the reporters on this story: James M. Gomez at jagomez@bloomberg.net Andrea Dudikova at adudikova@bloomberg.net

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