Saturday

31st Oct 2020

Slovak government collapses over euro-bailout fund

  • EU council chief Van Rompuy consoling Slovak PM Radicova (Photo: Council of European Union)

The Slovak parliament on Tuesday (11 October) brought down the government in a no-confidence vote linked to the eurozone bail-out fund, a move putting in doubt a second rescue package for Greece as agreed by EU leaders in July.

The vote count showed 55 MPs in favour of extending the powers of the European Financial Stability Facility (EFSF) and nine against out of a chamber of 150 members. The remainder, including coalition members, were absent or did not register a vote. A majority of all seats was required for the motion to pass.

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Prime Minister Iveta Radicova had made the issue into a vote of confidence in order to pass the EFSF bill, Slovakia being the last out of the 17 eurozone countries left to approve it.

The main opposition party, the centre-left Smer, signalled however it may back a recast of the vote if early elections are held. "Smer is ready to back the EFSF in exchange for a deal on snap elections," Smer lawmaker Jan Pociatek said, adding the repeat vote could take place this week.

Former Slovak premier Robert Fico - currently leader of Smer - also reassured fretting Europeans that his party wants to ratify the EFSF deal: "For Smer, the ratification of the EFSF is a priority. Slovakia has to ratify the EFSF, without the mechanism, the situation can get worse."

The Slovak conundrum complicates eurozone talks on a second Greek bail-out accompanied by debt restructuring ahead of a special EU summit, which was delayed to 23 October.

"Slovakia has to create political conditions which will allow a positive vote on the EFSF as soon as possible," European Council chief Herman Van Rompuy said.

Markets have already reacted negatively to the development in Bratislava, lowering the value of the euro and stocks on Asian, British and US indices. The FTSE index in the UK is expected to open 17 points down on Wednesday, a drop registered by the Dow Jones index in the US, and following a 8.7 fall of the Nikkei in Asia.

European Central Bank chief Jean-Claude Trichet had warned on Tuesday that "clear decisions" are needed to "cope with a systemic crisis of which we are at the epicentre."

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