* General election set for June 12, 2010
* PM Robert Fico seen a frontrunner
* Opposition leader, ex-PM Dzunda pulls out
* Ethnic issues, corruption, cronyism to dominate campaign
(Adds details, background, analyst quotes)
By Martin Santa
BRATISLAVA, Feb 1 (Reuters) - Slovak Prime Minister Robert
Fico's chances of winning a June 12 general election rose on
Monday when his main rival, centre-right ex-premier Mikulas
Dzurinda, pulled out over accusations of money laundering.
The dramatic withdrawal of the man who led Slovakia into the
European Union and enacted far-reaching market reforms between
2002-2006 was a boost for Fico's socialist Smer party, which has
ruled in coalition with nationalists and right-wing populists.
The euro zone's newest member since January 2009 is emerging
from a deep recession but analysts expect ethnic tensions and
accusations of corruption and cronyism rather than economic
policy to dominate the campaign.
Dzurinda's centre-right government introduced a 19 percent
flat tax on income and corporate profits which lured foreign
direct investment worth billions of euros, notably in the auto
industry. Fico advocates a strong state role in the economy but
has departed little from orthodox policies.
"The key reason for me (not to run) was a monstrous game by
Robert Fico," Dzurinda told journalists, denying the allegations
and challenging Fico to debate them on television.
"I feel very sorry for him (Fico) ... He has disgraced and
insulted his post," he added.
Fico, 45, already favourite to win re-election, has
repeatedly accused Dzurinda's SDKU party of money laundering and
using tainted funds to finance its political activities.
"I expect this to have a marked impact on SDKU. Part of the
party's electorate could desert to Freedom and Solidarity," said
political columnist Marian Lesko of leading daily Sme, referring
to a new opposition party which has similar policy aims to SDKU.
Slovaks enjoyed the fastest growth rate in the EU for years,
reaching a record 10.6 percent in 2007, but the global downturn
took a deep bite, axing jobs and raising the fiscal deficit.
HUNGARIAN CARD
Fico came to power in 2006 teaming up with former autocratic
Prime Minister Vladimir Meciar's nationalist HZDS party and the
right-wing populist Slovak National Party (SNS), led by the
firebreand Jan Slota.
Smer, which Fico has led since its foundation in 1999, is
hovering around 40 percent in opinion polls and holds a wide
lead over centre-right rivals. [].
Analysts say Fico has a strong chance of forming a two-party
government, either with one of his current partners or with an
opposition party. He has not ruled out either option.
Strained relations with neighbouring Hungary, where
conservative opposition Fidesz leader Viktor Orban is runaway
favourite to win an April general election, will be among the
top campaign issues in Slovakia, analysts say.
"Smer is using and will use the Hungarian card, it feeds
distrust toward Hungary ... this will be their evergreen," said
Grigorij Meseznikov, the head of the Institute for Public
Affairs, a think-tank.
Slovaks have a history of diplomatic rows and harsh rhetoric
with their southern neighbour. Almost half a million ethnic
Hungarians live in Slovakia, about 10 percent of the 5.4 million
population, mostly in southern regions.
Tension rose last year over a language law stipulating that
only the Slovak language may be used in most public offices and
institutions, seen by many ethnic Hungarians as the latest in a
series of moves by the nationalist-minded government to suppress
their culture.
Hungary's president cancelled a planned unofficial visit to
ethnic kin in Slovakia last August after the Bratislava
government called the trip a provocation.
(Reporting by Martin Santa, editing by Paul Taylor)
