(BBG) Slovak Leader Begins Coalition Tussle After Losing Majority

(BBG) Slovakia’s president will ask Robert Fico Tuesday to try to form a government after inconclusive elections that cost the prime minister his majority in parliament, saw two nationalist parties win seats in the assembly, and may lead to a new vote.

Fico’s Smer party won 28.3 percent of the ballot, well below the 44 percent he scored in 2012. Voters elected seven other parties into the 150-seat parliament, giving a fifth of the mandates to nationalist groups that pledged, like Fico, to prevent refugees from entering the country of 5.4 million people. Informal coalition talks are under way and President Andrej Kiska told reporters on Monday he will give the 51-year-old premier the first chance to try to form a cabinet.

With several parties refusing to rule with him, Fico will struggle to create a majority coalition in the euro-area state. If he fails, the baton may then fall to the second-place SaS party, whose pro-business leader Richard Sulik fought against aid to Greece during that country’s debt crisis. Forming any government will be tricky as the parties range from economic liberals to nationalists who have been branded as political pariahs by other parties. Bickering among potential coalition partners broke out during a live television debate on Sunday.

“The voters’ decision has created a complicated situation,” Kiska said Monday in the capital Bratislava in his first reaction to the ballot. “There are several dividing lines between parties. Some can’t be overcome, and it even wouldn’t be right.”

The election result also serves as a warning to European Union leaders who risk stoking nationalist fervor as they rail against migrants and the ills of the bloc. Fico’s anti-refugee campaign, in which he’s joined neighbors Poland and Hungary in denouncing a EU plan to redistribute refugees in the bloc, ignored public discontent over underfunded public services while opening the door to more extreme versions of the message. Migrants, along with the U.K.’s potential “Brexit” and Greece’s economic woes, will dominate Slovakia’s stint at the EU’s rotating presidency that starts in July.

Nationalists Surge

“If any country in the EU believes it can put up walls and lock itself out from the huge instability around Europe, it’s deluding itself and its population,” said Judy Dempsey, a senior associate at Carnegie Europe in Berlin.

Despite having presided over booming growth, which accelerated to 4.2 percent in the fourth quarter from a year earlier, Fico’s support fell during his four years in power. While his main focus remained on migrants and increasing benefits, he faced strikes from teachers and health workers, who complained his administration had left them behind.

The election’s biggest surprise was the rise of the Slovak National Party and the far-right People’s Party, led by Marian Kotleba, a former high-school teacher who’s been indicted for inciting racial hatred. While the charges have been dropped, other parties have labeled him as an unacceptable coalition partner. Kotleba, like one of the Slovak National Party’s past leaders, has praised Jozef Tiso, president of the Slovak fascist satellite state during World War II, a regime that sent tens of thousands of Jews to Nazi concentration camps.

‘Complicated Situation’

The president omitted Kotleba in talks as he scheduled meetings on Monday and Tuesday with all of the other leaders of parties that made it to parliament.

Slovakia’s benchmark 2025 bond rose, pushing the yield down three basis points to 0.46 percent. The yield has declined by 1 percentage point from its June 2015 peak, as the European Central Bank’s asset-purchase program boosted demand for the debt at a time when the shrinking budget deficit is cutting its supply.

Any comfortable coalition hinges on whether the Most-Hid party, mainly representing Slovakia’s ethnic-Hungarian minority, will enter a pact with the Slovak National Party, Sulik said. Even as his SaS party has ruled out cooperation with the premier, Sulik said he could imagine a six-way coalition if former foes can overlook their differences.

Most-Hid leader Bela Bugar poured cold water on that vision Sunday, saying his party can’t work with the Slovak National Party, which has clashed with the country’s Hungarian minority in the past and whose time in power with Fico was tainted by corruption scandals. Early elections can’t be ruled out, Bugar said.

“No matter what coalition will be built, it will be highly unstable,” Dempsey said. “The good news is that Fico didn’t get the majority. The bad news is that it completely fractures Slovak politics.”

Along with the SaS, the Ordinary People and We Are Family parties also said they’ll refuse to work with Fico in government. If they stick to their vow, lacking a majority of their own, it would mean any new cabinet would have to include both Smer and the Slovak National Party. Nevertheless, Fico vowed to push on with his task of forming a coalition.

“There’s a winning party, and its sole responsibility is to attempt to try to form a government,” Fico said in a television debate on Sunday. “What would early elections solve in such a short time?”