By Martin Santa
BRATISLAVA, April 4 (Reuters) - The Slovak ruling
coalition's majority shrank in February after a junior
government party ousted one of its deputies for voting with the
opposition.
The euro zone country has experienced a series of coalition
clashes since the four-party government led by Iveta Radicova
took power last summer on promises to fight political cronyism
and worsening trends in public finances.
The ouster of Igor Matovic from the liberal Freedom and
Solidarity (SaS) party reduced the coalition's ranks to just 77
in the 150-seat parliament, denting its power to push through
reforms plans in the central European country.
Three of Matovic's colleagues, the 'Common People' faction,
have said they would eventually also quit SaS after forming a
new independent political party, but not in the coming weeks or
next few months.
The coalition already lost one deputy in January.
Below are key political risks to watch:
SMALL MAJORITY, COALITION SQUABBLES
The coalition, which took power in July, has had several
internal clashes over policy, including tax hikes proposed by
the SaS and a row over the election of a new state prosecutor,
sparking political distrust.
The prosecutor's row triggered the most serious rift, with
Radicova threatening to quit in a warning to a backbench revolt
in the parliament and members of the coalition accusing each
other of violating joint agreements.
The government has agreed to make the secret vote on the
prosecutor public and the parliament was expected to hold a
renewed vote in April.
What to watch:
-- Rising tension in the coalition. The coalition is
vulnerable to rebellions and the strongest opposition party SMER
of ex-Prime Minister Robert Fico remains the most popular party.
-- The ousted SaS legislator Matovic has announced plans to
establish a new independent political party, which may lure away
more government deputies. Matovic has however vowed not to try
bring down the cabinet.
UNHAPPY UNIONS
The government is facing union resistance to cuts in public
spending, tax hikes and planned changes to the labour code.
Thousands of union workers protested against the austerity
package, but the cabinet is highly unlikely to go back on
measures already passed.
Government, business and unions are negotiating a revision
to the labour code. The government proposed to roll back the
extra powers given to the unions by the last government and
increase labour market flexibility, hoping to reduce
unemployment of over 13 percent and attract new foreign direct
investment. It is unclear when a bill could come to parliament.
What to watch:
-- a debate on an amended labour code could trigger more
clashes between employers and unions. Unions have said they are
ready to stage new protests.
-- The government presented its first working version of the
code on Jan. 31. The unions said they needed time to study the
document. The final version is due in April.
SLOVAK-HUNGARIAN RELATIONS
The two neighbours have a history of discord, with Hungary
accusing Slovaks of oppressing its ethnic kin, and Bratislava
bristling at its former imperial master's efforts to promote
Hungarian culture in Slovakia.
Radicova's coalition includes the Most-Hid party,
representing mostly ethnic Hungarians, which has acted as a
moderating influence on the fractious relationship.
Bratislava and Budapest want to ease tensions over
dual-citizenship laws and will start talks on doing so next
month.
The coalition struggles to agree a joint stance whether to
scrap or only soften a law stripping people of their Slovak
citizenship if they take the citizenship of another country.
Radicova said she wanted a bilateral treaty on the issue.
Hungarian Prime Minister Viktor Orban said it was a possibility.
What to watch:
-- Further actions by both Bratislava and Budapest on the
law, timeframe, nature of the new code and reaction from the
Hungarian minority in Slovakia.
-- Slovaks have submitted a draft law to Budapest in
February. Hungary has to study the proposal.
CORRUPTION, BUSINESS CLIMATE
The government says it wants to improve the business
climate, crack down on corruption and boost law enforcement --
major concerns for investors under the previous leftist
government.
Transparency International's latest corruption perception
index showed Slovakia ranked in joint 59th place in the world
2010, lower than its Central European neighbours Poland, Hungary
and the Czech Republic.
What to watch:
-- The parliament approved a law on judges, the first step
in a judicial reform designed to increase the transparency of a
system long criticised by the public and investors.
-- The government has pledged to increase the transparency
of public procurement projects, publish government tenders
online and enhance the functioning of the courts to reduce
delays.
-- The government also plans to ease labour market
regulation and boost flexibility.
For political risks to watch in other countries, please
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(Editing by Sonya Hepinstall)
