Tuesday

24th May 2022

Austria spooks markets over EU bail-out fund

  • Just two of the 17 eurozone countries have ratified measures to strengthen the euro bail-out fund (Photo: Images_of_Money)

Three Austrian opposition parties - the far-right BZO and FPO parties and the Greens - caused a steep drop on Wall Street on Wednesday (14 September) after delaying ratification of the EU's new rescue fund.

The scare took place when the parties blocked the Austrian parliament's finance committee from scheduling a plenary vote on the fund at the next regular full session on 21 September.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The move followed publication of a readers' poll in the Krone tabloid newspaper saying that 92 percent of people want Greece to be evicted from the eurozone.

The Austrian finance ministry shortly afterward issued a clarification that the new-model European Financial Stability Fund (EFSF), can still be ratified during the next full sitting of the parliament, in mid-October, or more quickly if the parliament calls an extraordinary EFSF session on 30 September or 3 October.

Austrian ratification as such is not in doubt because the ruling coalition has enough seats to make the simple majority required to pass the measure. But the finance committee makes decisions on a two-thirds majority.

The hiccup caused a violent reaction in financial markets.

The Dow Jones Industrial Average in the US plunged 112 points in a matter of minutes after the finance committee made the news, but rallied almost as quickly when the full picture became clear.

Shares in French bank Societe Generale, which is heavily exposed in Greece, fell 10 percent. The FTSE 100 and the value of the euro also fell before going back up after Vienna clarified that the finance committee glitch will not kill the EFSF.

EU economic affairs commissioner Olli Rehn over the summer promised markets the second Greek bail-out and the expanded EFSF would be fully in place by the end of September.

But with two weeks left until the deadline, just two out of the 17 eurozone countries that need to ratify the deal - Belgium and France - have so far completed the process.

Slovakia, another problem country, sent mixed signals on Wednesday.

On the one hand, Prime Minister Iveta Radicova survived a no-confidence vote brought by opposition parties Smer and the Slovak National Party over alleged government corruption.

On the other hand, a survey by pollsters MVK said that while 47.6 percent of voters support the new EU rescue measures, a large minority - 32.9 percent - is against ratification. A full 51.2 percent of people who vote for the junior coalition party, the libertarian Freedom and Solidarity faction, are against the new bail-outs.

The results lend weight to Freedom and Solidarity's bid to put off ratification until at least December so that the full implications of Slovakia's participation can be understood.

"[The] EFSF itself is the greatest threat to the euro. The only real solution to the debt crisis is rigorous enforcement of the currency bloc's regulations on budget deficits and public debt", the party's leader, Richard Sulik, earlier told EUobserver.

"It's definitely not possible to solve a debt crisis by creating new debts".

Slovak refusenik: 'EU bailout fund is greatest threat to euro'

The eurozone's plans to strengthen its rescue fund are being threatened by an ideological row in Slovakia, with the governing coalition failing to resolve disagreement and one coalition partner telling EUobserver the bail-out scheme is "the greatest threat to the euro".

EU finance chiefs cool on Geithner plan for eurozone

A unprecedented visit by US treasury secretary Timothy Geithner to a meeting of European finance ministers in Poland was coolly received by the gathered European economy chiefs, while the meeting itself saw little advance made on how the eurozone can deal with its ever-deteriorating debt crisis.

EU Commission extends borrowing curbs in 2023

The European Commission on Monday proposed to extend suspension of fiscal borrowing rule in 2023 — but advised prudence amid already rising real interest rates.

Commission grilled on RePowerEU €210bn pricetag

EU leaders unveiled a €210bn strategy aiming to cut Russian gas out of the European energy equation before 2027 and by two-thirds before the end of the year — but questions remain on how it is to be financed.

MEPs raise ambition on EU carbon market reform

MEPs on the environment committee agreed on reform of the European carbon market — including expanding it to buildings and transport. They also want to extend the scope of the carbon border tax, and phase out free permits by 2030.

Commission grilled on RePowerEU €210bn pricetag

EU leaders unveiled a €210bn strategy aiming to cut Russian gas out of the European energy equation before 2027 and by two-thirds before the end of the year — but questions remain on how it is to be financed.

News in Brief

  1. France 'convinced' Ukraine will join EU
  2. Von der Leyen: Russia hoarding food as 'blackmail'
  3. Legal action launched against KLM over 'greenwashing'
  4. Orbán refuses to discuss Russia oil embargo at EU summit
  5. Turkey's Erdogan snubs Greek PM
  6. ECB: Crypto may pose a risk to financial stability
  7. UK PM Johnson faces renewed questions over Covid party
  8. Sweden gives 5th Covid shot to people over 65, pregnant women

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic delegation visits Nordic Bridges in Canada
  2. Nordic Council of MinistersClear to proceed - green shipping corridors in the Nordic Region
  3. Nordic Council of MinistersNordic ministers agree on international climate commitments
  4. UNESDA - SOFT DRINKS EUROPEEfficient waste collection schemes, closed-loop recycling and access to recycled content are crucial to transition to a circular economy in Europe
  5. UiPathNo digital future for the EU without Intelligent Automation? Online briefing Link

Latest News

  1. Orbán oil veto to deface EU summit on Ukraine
  2. France aims for EU minimum-tax deal in June
  3. 'No progress in years' in Libya, says UN migration body
  4. Toxic pesticide residue in EU fruit up 53% in a decade
  5. Orbán's overtures to Moscow are distasteful and detrimental
  6. The Polish-Lithuanian Commonwealth is back
  7. EU aims to seize Russian assets amid legal unclarity
  8. Close ties with autocrats means security risk, Nato chief warns

Join EUobserver

Support quality EU news

Join us