Friday

18th Oct 2019

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

  • The lead coalition party may have to depend on the opposition Social Democrats to push through the bail-out legislation (Photo: formulaphoto)

The eurozone’s plans to strengthen the area’s rescue fund are being threatened by an ideological row in Slovakia, with the governing coalition failing to resolve sharp disagreements over legislation endorsing the move.

While Prime Minister Iveta Radicova of the centre-right Slovak Christian and Democratic Union (SDKÚ-DS) and her finance minister are committed to passing the necessary legislation as soon as possible, the libertarian junior coalition party, Freedom and Solidarity (SaS), remains opposed to the deal on principle.

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Although eurozone premiers and presidents on 21 July announced an expansion to the financial resources of the European Financial Stability Fund, the move has to be approved by the governments of all the area’s states.

After 12 hours of talks between the SDKÚ-DS, the SaS and the Christian Democratic Movement (KDH) and Most-Híd parties, the Radicova emerged late on Monday to announced there was no agreement on the EFSF or backing for its post-2013 successor, the European Stability Mechanism

"In a situation where three coalition parties want to ratify the fund and one party doesn't, the agreement will be reachable only very narrowly, if ever," she told reporters.

The leader of the SaS, Richard Sulik, is also the speaker of the Slovak parliament and has insisted that a vote cannot take place before December at the earliest - a schedule far too ponderous given the galloping advance of the eurozone crisis, according to Brussels.

The party has also said it will vote against the legislation.

“This is of course a decision that has to be taken at the national level. It is a sovereign decision,” EU economy spokesman Amadeu Altafaj-Tardio told reporters in Brussels on Tuesday. “We do not interfere in that.”

“However, the importance of swift ratification and implementation of this decision in their integrality in order to safeguard the stability of the euro area as a whole and therefore Slovakia as well.”

“We need the agreement of the member states of the euro area, all of them.”

Speaking to EUobserver, Sulik - also the architect of his country’s flat-tax model - explained his reasons for refusing to relent over the matter.

“EFSF itself is the greatest threat to euro. The only real solution to the debt crisis is rigorous enforcement of the currency bloc’s regulations on budget deficits and public debt,” he said.

“It’s definitely not possible to solve a debt crisis by creating new debts.”

He said that passage of the measures would reward what he called “irresponsible countries”, a jab at the eurozone periphery.

“SaS is strongly against the idea of supporting the irresponsible countries by threatening the ratings of the responsible ones so we will not vote in favour,” he continued.

He said that it is not his party that is holding things up, but that Radicova and other party leaders had earlier agreed that Slovakia would be the last member state to vote on the EFSF bill. “[The legislative process] takes some time as well.”

He believes the legislation may still go through, however, if the SDKÚ-DS depends on the opposition Social Democrats (Smer) to push through the measures.

The Slovak Business Alliance has said that the disagreement between the parties was hurting the business environment and warned against the government falling.

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Slovakia, which joined the eurozone in 2009, should have a 'plan B' to return to its national currency, the country's parliamentary speaker, Richard Sulik, has said, amid frustration over the way the eurozone is handling the debt crisis.

Risk of eurozone break-up 'very real,' Slovakia says

The debt-ridden eurozone risks break-up unless it forces banks to eventually share the crisis bill with taxpayers, Slovakia, the euro area member who recently refused to participate in the Greek bail-out, has suggested.

Brussels rebukes Slovakia over Greek u-turn

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.

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

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The Slovak parliament is set to approve legislation backing a strengthening of the eurozone’s €440 billion rescue fund after the centre-left opposition said it would back a fresh version of the bill in return for early election

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