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Slovenia Gets New Prime Minister in Snub to Anti-Refugee Forces

Slovene Centrists to Block Populist With Pick for Prime Minister

(Bloomberg) -- Slovenian lawmakers approved election runner-up Marjan Sarec as prime minister, denying power to the populist winner of a June ballot and breaking a two-month political deadlock in the euro-area country.

Sarec, a former comedian who shot to fame in an unsuccessful presidential bid last year, was backed by 55 of parliament’s 90 lawmakers in a vote on Friday, opening the way for him to form a minority government that will depend on the backing of the leftist Levica party. His confirmation prevents Janez Jansa, an ally of euroskeptic Hungarian Premier Viktor Orban, from returning to power, and Sarec vowed to keep the former Yugoslav republic at the core of the European Union.

"The EU is at a crossroads," Sarec told parliament before the vote. "Slovenia must strive to remain in the group of so-called core countries."

With the EU witnessing a wave of victories by anti-immigrant and euroskeptic parties from Italy to Poland, Sarec’s coalition marks a rare case where a fractured array of centrist forces beat back a populist challenger. His party will be joined by four others that rejected working with Jansa after he waged a staunchly anti-refugee campaign in the former Yugoslav republic of 2 million people.

The coalition includes the parties of former Prime Ministers Miro Cerar and Alenka Bratusek, as well as the Social Democrats and DeSUS, which represents pensioners. It will have two weeks to present a program and nominate ministers.

Fragile Government

Investors have largely ignored the political standoff, pushing the yield on Slovenia’s 10-year government bond to 0.875 percent on Friday, the lowest since it was issued in January.

One of the new cabinet’s first tasks will be the appointment of new central bank governor, who sits on the European Central Bank’s Governing Council, after its former chief, Bostjan Jazbec, left the post. The five parties in the coalition have also agreed to sell Slovenia’s largest bank, Nova Ljubljanska Banka, after the previous cabinet missed a deadline imposed as part of a 2013 financial-sector bailout.

Sarec, 40, has also pledged to sweep Slovenia’s elite out of state institutions, cut bureaucracy and make changes in the judicial and electoral systems. But his pre-election rhetoric may be reined in by a motley collection of parties with a disparate array of stances on policy issues.

What’s most likely is a fragile coalition without much room to pursue any major shifts, a situation that has prevented past governments in the Alpine country from selling state-owned assets and pursuing other reforms that have helped other ex-communist countries.

“This coalition will likely prove unstable, and complicated coalition politics will constrain any attempts at radical reforms,” Otilia Dhand from Teneo Intelligence wrote in a note. "Slovenian policy making will probably continue its characteristic pattern of slow shifts built on a broad consensus, especially in economic and fiscal policies.”

To contact the reporters on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net;Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net

To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Michael Winfrey, Peter Laca

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