June 13, 2006

Slovak leftist hints at alliance with center-right

By Matt Reynolds

BRATISLAVA (Reuters) - Slovak opposition leader Robert
Fico, whose leftist Smer party is poised to win this weekend's
election, said on Tuesday he will likely form a government with
at least one of the ruling center-right parties.

Polls show Fico's Smer will win the most votes in
Saturday's election, but he is in a neck-and neck race with
three center-right parties allied with Prime Minister Mikulas

Eight parties have a chance to enter parliament, which
suggests difficult coalition talks and raises a specter of a
similar stalemate that has plagued neighboring Czech Republic
since its June 2-3 election.

All parties have been vague on possible alliances, leaving
markets jittery and analysts say the make-up of any future
cabinet will be defined by how far either Fico or Dzurinda are
prepared to go to reach a compromise with possible partners.

"It's hard to say what the next government will be like,
but the most likely scenario is that it will include both
opposition and ruling parties," Fico told the daily Sme on

Fico, who says government reforms have hurt Slovakia's poor
and must be reversed, is expected to seek talks with the
center-right Christian Democrats and Ethnic Hungarians.

The two are closer to Dzurinda's SDKU party, which is their
stated first choice as a coalition partner.

But Dzurinda, whose reforms have made Slovakia an economic
leader in central Europe, has come under sharp criticism from
his partners for his strong-arm tactics.


Both parties have left open the option of working with
Smer, but say Fico must abandon a plan to scrap the 19 percent
tax before they could consider a partnership with him.

"The flat tax is good, and it does not make any sense to
scrap it," SMK leader Bela Bugar told journalists on Tuesday.
"None of the ruling coalition parties would want to do that."

Fico's other option is to team up with center-left HZDS
party headed by former autocratic prime minister Vladimir
Meciar, but may need one more partner to form a government.

Polls show the far-right National Party may provide the
necessary votes to secure a majority, but analysts see such a
coalition, dreaded by financial markets, as an outside

Meciar's ruling alliance with the nationalists, who mix
calls for more state intervention in the economy with attacks
on Slovakia's ethnic minorities, led the country into
international isolation in the 1990s.

"Smer will have to make some compromises but, in the end, I
think Fico wants to head a government that will allow Slovakia
to continue down a standard, non-extreme path," said political
analyst Martin Slosiarik.

Analysts say center-right parties may choose to join Smer
in order to protect the core of Dzurinda's reforms. But they
are skeptical whether any cabinet led by Fico will be
determined enough to bring Slovakia into the euro zone in 2009
as planned.

"We estimate the 2009 euro adoption probability at a mere
55 percent," said Jan Toth, chief economist at the Slovak unit
of the ING Bank. "For the first time in eight years, we do not
have a bullish view ahead of elections. We advise investors to
stay on the sidelines."

(Additional reporting by Peter Laca)