Why Slovakia’s presidential election is a vote on Robert Fico’s power

Good morning. A scary scoop to start: Russia has made “thousands” of attempts to sabotage Europe’s rail networks over the past two years, we report this morning, including attacks on signalling systems that keep trains from crashing into each other.

Today, our central Europe reporter previews this weekend’s pivotal Slovak presidential election, and our finance colleague reports on Brussels lobbying over boosting EU capital markets.

Have a great weekend.

Margin of error

Slovakia faces a knife-edge presidential election tomorrow, in what analysts say will determine whether Robert Fico’s government wins an unrestricted monopoly on state management, writes Barbara Erling.

Context: Fico returned as prime minister in October after winning parliamentary elections campaigning against sanctions on Russia and continued support to Ukraine. Saturday’s presidential poll pits Ivan Korčok, a seasoned diplomat and former foreign affairs minister against Peter Pellegrini, speaker of parliament and Fico ally.

“The victory of Peter Pellegrini is the victory of Robert Fico,” said Wojciech Przybylski, the editor-in-chief of the journal Visegrad Insight.

Korčok won in the first round with over 42 per cent of the vote, ahead of Pellegrini at 37 per cent.

Early head-to-head polls gave Pellegrini a strong lead, but final projections released this week suggest Korčok has closed the gap. According to the Ipsos survey conducted for Denník N daily, Korčok held a slim lead of 1.2 percentage points.

“Korčok is more confident than before the first round. He trusts himself more and is a more authentic leader. Pellegrini is clearly frustrated. He had to beg for the support of people who despise him and whom he despises,” said Peter Bárdy, chief editor of Slovak online publication Aktuality. 

Following last year’s parliamentary elections, Pellegrini and his Hlas party could have joined the country’s pro-democratic and pro-EU bloc. Instead, he chose to position Hlas as a junior coalition partner alongside Fico’s Smer and the far-right nationalist Slovak National party, paving the way for Fico to form his fourth government.

In return, Fico backed Pellegrini as president, seeing him as a head of state who would not obstruct his government. While Slovakia’s presidential office is largely ceremonial, the president can delay legislation by triggering constitutional court reviews.

Current president Zuzana Čaputová has delayed Fico’s attempts to pass a legal reform that weakens the judiciary’s ability to prosecute graft, accusing him of testing “the limits of democracy”.

According to Sili Tian, senior Europe consultant at the Economist Intelligence Unit, Korčok’s presidency would mean a “more antagonistic relationship with the government, delaying and jeopardising illiberal reforms while pushing for a pro-western policy orientation abroad”.

Chart du jour: House price divergence

European house prices fell for the first time in a decade last year, as declines in many northern EU states offset strong growth in some eastern and southern countries.

Capital Markets Disunion

Europeans’ money is sleeping in bank deposits, leaving EU companies short of access to capital, and often forcing them to look across the Atlantic when seeking funds to scale up, Brussels’ financial services head has warned its new competitiveness guru in a letter seen by Paola Tamma.

Context: The US capital market is nearly four times the size of the EU’s. That’s an issue as EU countries face strained budgets and huge investment needs, from defence to climate change. Repeated attempts to create an EU Capital Markets Union have so far failed.

“If EU capital markets remain as they are today — too small, too fragmented and too inefficient — they will not deliver the private financing that is needed,” financial services commissioner Mairead McGuinness wrote to former ECB president Mario Draghi, who’s been tasked with writing a report, due in late June, on how Europe can improve its competitiveness.

The capital markets issue has risen up the EU agenda. At a recent summit in Brussels, Germany’s Chancellor Olaf Scholz spoke of developing EU capital markets as a top priority.

But while leaders agree something must be done, they disagree on what.

France suggested that capital integration could progress on a voluntary basis, but this was rebuked by Germany, which fears it would add to fragmentation.

Paris wants to centralise supervision through Esma, the EU’s markets authority based in the French capital, but that’s controversial with others including Berlin. Another French idea, a pan-European investment product, was received coolly.

While accepting that concentrating supervision is “controversial”, McGuinness argues it’s “the minimum required”.

The next commission “should come with one initiative covering the key areas that would make a significant step forward”, for example an EU-wide framework for occupational pensions schemes, automatically enrolling employees, which “would create large pools of capital suitable for financing many of the EU’s strategic priorities”, she wrote.

What to watch today

1. European Commission president Ursula von der Leyen meets US Secretary of State Antony Blinken and Armenia’s Prime Minister Nikol Pashinyan, from 12.00pm.

2. EU-US Trade and Technology Council meeting continues.

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