A small Slovak party has said it will support the expansion of the eurozone’s temporary bail-out fund, but only if Slovakia refuses to take part in a permanent rescue mechanism that is due to be established by the bloc next year.
The Freedom and Solidarity (SaS) party had previously pledged to oppose changes to the European financial stability facility, threatening to derail its ratification in the Slovakian parliament.
All 17 eurozone members must approve the expansion of the EFSF, a vital part of the second Greek bail-out package, in order for the measures to come into effect.
Thursday’s proposal by the SaS party, which was confirmed by a party official and posted on the website of the SME newspaper, also calls for the creation of a committee in which every parliamentary party would have a veto on funds paid out under the temporary EFSF .
There was no immediate response from the government to the SaS offer, but the proposal is certain to be controversial, with Ivan Miklos, the finance minister, saying that the EFSF “is only a minimum to stabilise the situation in the eurozone” and that further steps, including the creation of a permanent fund, were still needed.
SaS and its leader, Richard Sulik, are blocking the EFSF expansion, saying it violates earlier promises not to expand the fund and make it permanent.
The idea of helping Athens is very unpopular in Slovakia, which is poorer and has a much better record of undertaking painful economic reforms than Greece. Slovakia has already shown it is prepared to buck the consensus on helping Greece, last year deciding against taking part in a €110bn bail-out package.
The EFSF issue has split the centre-right four-party governing coalition, as the measure cannot be passed without the votes of Mr Sulik's 21 MPs. The leftwing opposition has said it would support the EFSF bill, but only if the government dissolves itself.
Iveta Radicova, the prime minister, has been putting pressure on Mr Sulik, a doctrinaire economic liberal, to buckle but he is holding firm. The issue is due to be voted on in parliament on October 11.
In its proposal, SaS says that the refusal to participate in the creation of the permanent European stability mechanism, which is due to replace the EFSF next year, will not block the creation of the bail-out fund, which becomes active once endorsed by countries that account for 95 per cent of its €700bn capital. Slovakia, one of the newest and poorest members of the common currency, is responsible for less than 1 per cent of the ESM’s capital.
Even if the SaS proposal gives the government a clearer path to pass the EFSF, the refusal to accept the ESM is unlikely to find favour with European officials, who have put pressure on Slovakia to fall into line, fearing that if one country wavers others could follow.
Source: http://www.ft.com
The Freedom and Solidarity (SaS) party had previously pledged to oppose changes to the European financial stability facility, threatening to derail its ratification in the Slovakian parliament.
All 17 eurozone members must approve the expansion of the EFSF, a vital part of the second Greek bail-out package, in order for the measures to come into effect.
Thursday’s proposal by the SaS party, which was confirmed by a party official and posted on the website of the SME newspaper, also calls for the creation of a committee in which every parliamentary party would have a veto on funds paid out under the temporary EFSF .
There was no immediate response from the government to the SaS offer, but the proposal is certain to be controversial, with Ivan Miklos, the finance minister, saying that the EFSF “is only a minimum to stabilise the situation in the eurozone” and that further steps, including the creation of a permanent fund, were still needed.
SaS and its leader, Richard Sulik, are blocking the EFSF expansion, saying it violates earlier promises not to expand the fund and make it permanent.
The idea of helping Athens is very unpopular in Slovakia, which is poorer and has a much better record of undertaking painful economic reforms than Greece. Slovakia has already shown it is prepared to buck the consensus on helping Greece, last year deciding against taking part in a €110bn bail-out package.
The EFSF issue has split the centre-right four-party governing coalition, as the measure cannot be passed without the votes of Mr Sulik's 21 MPs. The leftwing opposition has said it would support the EFSF bill, but only if the government dissolves itself.
Iveta Radicova, the prime minister, has been putting pressure on Mr Sulik, a doctrinaire economic liberal, to buckle but he is holding firm. The issue is due to be voted on in parliament on October 11.
In its proposal, SaS says that the refusal to participate in the creation of the permanent European stability mechanism, which is due to replace the EFSF next year, will not block the creation of the bail-out fund, which becomes active once endorsed by countries that account for 95 per cent of its €700bn capital. Slovakia, one of the newest and poorest members of the common currency, is responsible for less than 1 per cent of the ESM’s capital.
Even if the SaS proposal gives the government a clearer path to pass the EFSF, the refusal to accept the ESM is unlikely to find favour with European officials, who have put pressure on Slovakia to fall into line, fearing that if one country wavers others could follow.
Source: http://www.ft.com
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