Slovaks set to dump centre-right after graft scandal

BRATISLAVA Wed Mar 7, 2012 3:43pm EST

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BRATISLAVA (Reuters) - Slovakia's centre-right coalition leaders face electoral humiliation on Saturday at the hands of voters angry at a major corruption scandal, returning to power a left-wing, pro-European party that promises to tax the rich.

If opinion polls for the parliamentary election are correct, the Slovak Democratic and Christian Union (SDKU) is within a whisker of failing to reach the 5 percent threshold needed to send MPs to parliament.

That would be a spectacular fall from grace for a party which has dominated Slovak politics for more than 9 years since the division of Czechoslovakia in 1993, and whose liberal policies helped transform the Eastern European economic laggard into a manufacturing dynamo.

Crucially for Slovakia's euro-zone partners, the party likely to benefit, Smer, is a firm supporter of the single currency and unlikely to complicate efforts to stabilize the euro, as the SDKU coalition threatened to last October.

The country of 5.4 million people was thrust into the glare of global financial markets at the time when a junior party in the ruling coalition decided not to support the strengthening of the euro zone's rescue fund, designed to avoid a messy Greek default. The move brought down the SDKU-led government and forced Prime Minister Iveta Radicova to form a caretaker cabinet.

"I don't think a government created after the election will make trouble when it comes to big and strategic decisions in the euro zone," said Marian Lesko, a columnist for economic magazine Trend.

"THE GORILLA FILE"

At the heart of the SDKU's likely electoral rout lies the leaking of a secret service file in December purporting to detail bugged conversations between top politicians and businessmen in which they allegedly discuss kickbacks in return for the sale of public companies in the mid-2000s.

Details of the file, code named "Gorilla," have drawn tens of thousands of outraged Slovakians onto the streets in the past month in a rare display of public anger.

Marek Lomnicky, a 26-year-old IT expert said he would cast a blank ballot on Saturday in protest at the SDKU.

"In 1998 they ... stood for the fight against corruption. They turned into the direct opposite - a discredited group of people unable to tie their own shoes without bribes."

Opinion polls show that Smer, led by former prime minister Robert Fico, will emerge as the main beneficiary, taking some 40 percent of the vote, with the outside chance it could win an outright majority.

Fico, a former Communist Party member, is despised by the Slovak right. His promise of a beefed-up welfare state and higher taxes for the rich has struck a chord with rural voters and the poor, but analysts say his pledges could test Slovakia's ability to stick to EU-agreed deficit targets.

A failure by the former Communist country to slash its budget deficit to 3 percent of GDP by next year could have implications for its credit rating (Moody's has it at "A2," Standard and Poor's at "A"). But strong exports, led by car production, could also make it the euro zone's fastest growing member this year, according to the European Commission.

NEW PARTIES SEIZE CHANCE

The big loser on Saturday looks certain to be SDKU leader and Foreign Minister Mikulas Dzurinda. His party colleague, the popular Radicova, is quitting the premiership to take up a teaching post at Oxford University once a new government is formed, further dimming the party's appeal.

Dzurinda says he and the SDKU are innocent of any wrongdoing and his party is not the only one whose members are mentioned in connection to the "Gorilla" scandal. However, it is Dzurinda, prime minister at the time of the alleged wrong doing, who has been worst hit.

Ironically, Radicova's SDKU administration has been praised for doing far more to fight corruption that Fico during his tenure as prime minister from 2006 to 2010. Transparency International ranked the country behind all its central European neighbors and 23rd out of the EU's 27 members.

Deserted by most of its liberal, middle-class supporters, the SDKU has seen its popularity plummet from around 15 percent in June 2010 to just 5.1 percent in a poll published on Tuesday.

"The Gorilla case is only the tip of the iceberg," said Interior Minister Daniel Lipsic, from coalition partners, the Christian Democrats. "The basic question is, who is really ruling Slovakia? Is it representatives of the people, or criminal or financial groups?"

New parties such as Common People and 99 Percent - an anti-capitalist grouping with few defined policies - hope to seize on widespread voter disillusion and have a real chance of winning seats in parliament, say analysts.

Turnout though is expected to be low. Only 22 percent of those asked in a poll last week said they would definitely vote, less than half the number who cast a ballot in 2010.

(Editing by Ben Harding)

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