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Fico appointed Slovak PM amid criticism

Written by: Staff

BRATISLAVA, July 4 (Reuters) Slovak leftist leader Robert Fico was appointed prime minister today amid a wave of harsh criticism from economic analysts and politicians who disapprove of two fringe parties in the cabinet.

The 41-year-old Fico, whose Smer party won an election on June 17, has formed a coalition with the centre-left party of former Prime Minister Vladimir Meciar and the far-right Slovak National Party.

A former human rights lawyer, Fico replaces reformist Mikulas Dzurinda, who stepped down after eight years in office.

The rest of the cabinet was appointed by President Ivan Gasparovic after Fico was named.

Investors and analysts are concerned that the coalition, which has 85 seats in the 150-seat parliament, would loosen the fiscal reins, reverse several of Dzurinda's widely praised economic reforms and delay the adoption of the euro, planned for 2009.

''I am taking responsibility for the highest executive position at a time of huge regional differences and social injustice, when only a few benefited from strong economic growth,'' Fico said at a swearing-in ceremony.

''I consider removing these differences as the main priority of the government that is now being created.'' After remaining silent since the government line-up was announced last week, incoming Finance Minister Jan Pociatek appeared to tone down Smer's campaign rhetoric.

EURO ENTRY He too said measures were needed to bridge the gap between rich and poor, but added that fulfilment of the criteria required for euro entry -- a fiscal deficit under 3 percent of GDP -- ''takes precedence''.

Those words come on the heels of central bank intervention last week to prop up the crown after investors showed their concerns about the government by pushing the currency down.

''I did have Slovakia in (the euro) at 2009. That might turn out to be too optimistic now under the new government, but we will have to see what they will put forward and they made some commitment to 2009, but only if it is in the national interest,'' S&P analyst Kai Stukenbrock said in London.

Pociatek said Smer's campaign pledges, such as a dividend tax and scrapping the flat tax system that was a cornerstone of the previous government's reforms, would not be implemented.

Lowering value added tax for energy and some basic food items to reduce the burden on poorer Slovaks, however, would be adopted, but only as far as the economy allows.

Fico's problems, however, do not stop on the economic front.

Meciar and nationalist leader Jan Slota ruled together in the 1990s, when accusations by the West of undemocratic rule and cronyism drove Slovakia into isolation before Dzurinda brought it back into the European mainstream.

Neither Meciar nor Slota will be in the new government, but the Party of European Socialists, of which Smer is a member, said today it had expressed its ''gravest concerns'' over the coalition, which warned of possible consequences.

The nationalists are known for their harsh rhetoric towards the country's sizeable Hungarian population.

Fico said Slovakia would respect all obligations related to EU and NATO memberships, and that it would follow rules set in the EU's Growth and Stability Pact.

Reuters DH VP0125

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