As tiny Slovenia votes, larger eurozone watches with wary eye

The eurozone's unusually strong interest in next month's presidential runoff comes down to a key concern: Some fear Slovenia could be the next eurozone country to need a bailout. 

A populist campaign by former socialist Prime Minister Borut Pahor saw him surprise pundits by coming out top in a first-round poll for the presidency of economically troubled Slovenia.

Mr. Pahor, the Social Democratic candidate, won 40 percent of votes, beating out the current president, Danilo Turk, a left-leaning independent who garnered 35 percent of the vote. The candidate of the conservative ruling Democratic Party, Milan Zver, managed just 24 percent, his popularity dented by a painful austerity program. A recent poll said only 21 percent of voters supported the government.

Pahor and President Turk must now go head-to-head in a second round on Dec. 2. 

While Slovenia is a young member of the European Union, and a small player on the diplomatic stage, its election is garnering substantial attention, set as it is against the larger economic woes of the EU. The financial troubles of the country of just 2 million are of concern beyond its borders because it has adopted the euro currency, and some fear it may be the next country that will need a bailout, largely to rescue its banks. 

How much the presidency, which has a five-year term, can affect policy is uncertain. The position is largely ceremonial, but the president does have political sway. This could be particularly important as Slovenians weigh very different views on austerity measures, and consider holding a referendum on whether to recapitalize banks, whose excessive lending is considered to have contributed to the current financial woes of the once-prosperous country. (Read about how Slovenia ranks in per capita GDP among former Eastern European countries.)

Different visions

The first-round winner, Pahor, is fighting for his political life after his government collapsed in September last year. He then lost his party's chairmanship in June. His campaign has sought during this election to identify him with the daily struggles of the average Slovenian, and he has struck a conciliatory tone toward conservatives. 

Turk is more firmly opposed to what he calls "excessive" austerity measures in dealing with Slovenia's economic crisis, and has argued for the preservation of the social welfare state. He also wants to reduce income inequality and "social stratification."

But he has also indicated his doubt about immediately healing the bitter rifts between the left and the right, many of which date back to World War II. Many voters, particularly women, are tired of the poisonous name-calling between the left and right of Slovenian politics.

The Democratic party seems unlikely to officially back Pahor, but he presents the "least worst option" for many conservatives from the party. Around 32 percent of Democratic party voters favored Pahor over their own candidate, Mr. Zver. 

The economic angst swirling around this election is a relatively new thing in Slovenia, long considered a "model student" among former communist countries. Many liked to think of it as being well on the way to becoming a Balkan version of Switzerland. It is expected to be the only Eastern European country whose economy will shrink this year.

Nevertheless, Turk, a one-time chair of the UN Security Council, talks of Slovenia punching confidently above its tiny weight in international affairs. It needs to act with "more maturity and responsibility." By this he means extending its existing role in furthering the EU's expansion in the Balkans and helping to improve EU relations with Russia.

"We do not have excessive historic baggage, as many countries have," he explains. "We understand the sensitivities of other EU members which have a different history. And we can play a role. We can be a place where meetings are held." He says there is even room to maneuver on Kosovo, where Russia is a supporter of Serbia's opposition to recognition.

It is unclear if such plans for taking a larger role on the international stage would survive if electorate favors Pahor's more down-to-earth approach.

(Good higher education can help pull countries out of recession. Here's how Slovenia fits into the OECD's "Education at a Glance" rankings for 2012.)