Election 2014: Slovenia's early parliamentary poll likely to result in left-leaning coalition, raising uncertainty over reforms

Slovenia is holding an early parliamentary election on 13 July. The poll was brought forward following an unsuccessful bid by Prime Minister Alenka Bratušek to win the ruling Positive Slovenia's (Pozitivna Slovenija: PS) leadership contest. Bratušek lost to PS founder Zoran Jankovic and took this as a sign of a lack of trust in her leadership qualities. Bratušek has subsequently left the party, while her coalition partners – the Democratic Pensioners' Party of Slovenia (Demokraticna Stranka Upokojencev Slovenije: DeSUS), the Social Democrats (Socialni Demokrati: SD), and Civic List (Državljanska Lista: DL) – refused formal co-operation with Jankovic, who remains under investigation over alleged income irregularities, although he denies any wrongdoing. The political partners agreed to hold an early poll to resolve the stalemate.

Main contenders

The following parties are most likely to enter parliament:

Party of Miro Cerar (Stranka Mira Cerarja: SMC): The SMC is a new political party that leads the public opinion polls with around 30%. The party does not have any clear programme or political orientation, but based on its statements it leans to the left. The SMC favours anti-corruption efforts, partial labour tax cuts, a reduction in red tape, and a continuation of downgraded socio-economic reforms. The SMC still expects fiscal deficit reductions and the consolidation of public finances to be generally achieved on the income side, and not by cost-cutting measures. The party does support a restructuring of the banking system, and is in favour of state intervention in the economy through the Slovenian Investment Bank (SID Banka). The SMC also supports further privatisations, but not of infrastructure projects or "strategically important" companies. The SMC's position on which companies it deems to be "strategic" is vague, increasing the risk that the privatisation process initiated under the previous centre-right government in 2012 will be delayed. Although the SMC is generally in favour of reforms, its attractiveness to disgruntled left-wing voters, who oppose austerity measures, could undermine its reformist intentions.

Slovenian Democratic Party (Slovenska Demokratska Stranka: SDS): The SDS is currently the biggest opposition party, attracting around 25% of public support according to Metapoll on 20 April. The SDS finished second in the 2011 parliamentary election, but as the victorious PS was unable to form a government, the SDS formed a centre-right coalition, which it led until its collapse in early 2013. The party currently advocates a continuation of the privatisation process, cuts in personal and corporate income tax rates, reducing reduction in business red tape, and a streamlining of the public sector. However, the party is currently led by former prime minister Janez Janša, who was imprisoned for two years for corruption in April 2014 (see Slovenia: 29 April 2014: Prison sentence for leader of Slovenia's main opposition party likely to harm its chances in early election).

Social Democrats (Socialni Demokrati: SD): Third in the public opinion polls (on 10%), the SD is a centre-left party that has been joined by the far-left Solidarity (Solidarnost) for the coming parliamentary election. The SD was in Bratušek's government, where it opposed cost-cutting measures, privatisation, and other socio-economic reforms. The SD's support is falling, intensified by the resignation of its leader Igor Lukšic after weak European Parliament election results.

Democratic Pensioners' Party of Slovenia (Demokraticna Stranka Upokojencev Slovenije: DeSUS): Currently polling at around 9%, DeSUS made a pre-election agreement with the SD to propose a candidate for prime minister after the election. Both the SD's and DeSUS's programmes are very similar. DeSUS frequently participates in centre-left/centre-right coalitions, but in the past has proven a steadfast partner on pensioners' issues, which would put the pension system overhaul at high risk.

New Slovenia–Christian Democrats (Nova Slovenija–Kršcanski Demokrati: NSI): The NSI participated in the previous centre-right government and strongly supported socio-economic measures. It supports improving the business environment and advocates lower personal and corporate taxes, reductions in red tape, limiting the public sector, and continuing with the privatisation process. However, the NSI obtains around just 8% of voters' support in opinion polls.

Six other parties also have a chance of entering parliament provided they surpass the 4% threshold. These include the centre-right Slovenian People's Party (Slovenska Ljudska Stranka: SLS); the centre-left Alliance of Alenka Bratušek (Zavezništvo Alenke Bratušek: ZAB), Jankovic's PS, and I Believe (Verjamem); the far-left United Left (Združena levica); and the liberal DL.

Need for socio-economic reformist drive meets with public resistance

The new government will face a difficult task. The global economic downturn has exposed Slovenia's socio-economic shortcomings, including its fiscal deficit, public debt, uncompetitive economy, rigid and bloated public sector, high unemployment rate, inflexible labour market, as well as its unsustainable pension, social, and healthcare systems. Janša's centre-right government started to address these problems, but its reforms proved unpopular, putting the coalition under heavy pressure from the political opposition and trade unions. The pressure on Janša intensified when the country's anti-corruption agency accused him of income irregularities (alongside Jankovic, who denied any wrongdoing but stepped down from his PS leadership post and was replaced by Bratušek) – allegations that Janša denied. The allegations prompted Janša's government's fall, with an early election being avoided with the formation of a new administration under Bratušek.

Amid the ongoing macroeconomic challenges and market concerns that Slovenia was the next likely Eurozone country to request an international bailout, Bratušek continued to implement socio-economic measures, albeit at a slower pace. The need for an international bailout was ultimately avoided, but concerns were raised over the Bratušek government's unity as a result of the coalition parties' divergent views on most socio-economic issues, such as privatisation (opposed by the SD), pension system reform (opposed by DeSUS), cost-cutting measures in public sectors (opposed by the SD), and state intervention in the economy (opposed by the DL). Winning public support also proved problematic as the public believed the majority of austerity measures could be avoided, as had been promised by the opposition parties during the time of the previous centre-right government. The inability of the government to pass the reforms on the one hand and to satisfy the public and trade unions on the other raised political risks considerably, culminating with Bratušek's failed PS leadership bid and her subsequent resignation.

Outlook and implications

There are three possible scenarios following the election:

Scenario 1 (55%): The most likely scenario is a majority centre-left government, led by the SMC. The SD (with Solidarnost) and DeSUS would be the most likely coalition partners, as well as the ZAB and PS, provided they are able to enter parliament. This scenario would see slow progress on socio-economic reforms, a downgraded privatisation drive, and fewer improvements to the quality of the business environment. The discrepancy between the need for the implementation of socio-economic reforms and the expectations of left-leaning voters would seriously harm such a government's popularity, raising questions over its longevity.

Scenario 2 (35%): Under this scenario the SDS would form a coalition government, most likely with the NSI and SLS. This government would continue with socio-economic reforms and privatisations. The business environment would be improved as the centre-right parties would agree to lower the tax burden, streamline the public sector, cut red tape, and make the labour market more flexible. The implementation of reforms would most likely lead to criticism from opposition parties and trade unions, so the possibility of public unrest cannot be excluded under this scenario. Given a strong parliamentary majority, the government would be stable and would probably see out its term.

Scenario 3 (10%): The least likely scenario depends on which of the minor parties manage to enter parliament. This scenario would pave the way for an alternative government without the SDS and extreme left parties. In this case the SMC would probably lead the government with the NSI, SLS, and DL, if they enter parliament. Such a government would be in favour of slightly modified or downgraded socio-economic reforms and the privatisation drive. This scenario is only likely if the election results prove inconclusive and no clear centre-left or centre-right majority government can be formed.