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28th May 2022

Brussels rebukes Slovakia over Greek u-turn

  • People waving the Slovak flag outside the presidential palace in Bratislava (Photo: theodevil)

The European Commission has sharply rebuked Slovakia for backing out of its promise to loan Greece €816 million as part of a wider EU-IMF rescue package.

"The eurogroup's decision [to create the Greek bail-out fund] was a crucial act at a critical moment to safeguard financial stability of the euro area as a whole, including Slovakia. I can only regret this breach of solidarity within the euro area and I expect the eurogroup and the [economic and finance ministers'] Council to return to the matter in their next meeting," economic affairs commissioner Olli Rehn said in a statement on Wednesday [11 August].

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He stressed that Slovakia's decision does not jeopardise the whole €110 billion EU-IMF package: "This development does not put in danger the loan to and the reform programme of Greece, which is proceeding rigourously."

The Finnish politician's remarks come after Slovakia's new centre-right government in a parliamentary vote earlier the same day overturned the previous centre-left administration's Greek deal.

The vote crushed the Greek loan by 69 to two.

Speaking in parliament, Slovak finance minister Ivan Miklos criticised the unfairness of poorer countries being roped in to bail out richer ones and euro area policy makers' lack of accountability.

"I do not consider it solidarity if it is solidarity between the poor and the rich, of the responsible with the irresponsible, or of tax payers with bank owners and managers," he said. "It's true the top politicians in the eurozone are not excited by our position and that we have irritated them quite a lot. But this is only because they have been creating alibis for themselves and we have held up their behaviour to a mirror."

At the same time, Slovak deputies on Wednesday did back the country's participation in the eurozone's overarching €750 billion rainy day fund, the European Financial Stability Facility (EFSF), a commitment that puts them on the hook for €4.4 billion.

Mr Miklos said countries which consistently break EU stability rules should be allowed to go the wall under a "clear mechanism of a managed default," however.

Slovakia became the 16th eurozone member in 2009, being the first former Communist EU country to take the step. Estonia is to become the 17th member next year but has no obligations to join the Greek fund or the EFSF.

All countries joining the single currency have to meet the same fiscal criteria. But actual levels of wealth vary widely within the zone, with Luxemburgers by far the richest and with Slovaks 23 percent less well-off than Greeks on average.

A spokesman for Mr Rehn told EUobsever that Slovakia will not face any legal penalty for its Greek u-turn but should expect unspecified "political consequences."

He noted that eurozone countries will have to re-calculate the Greek package, which was based on 16 contributors and now has 15. "There is no sign that any other member state should follow the same direction [as Slovakia] ...I don't think it is legally possible, as they have all completed the formalities," he said.

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