Current Magazine

Slovakia Votes Against Expanding Eurozone Bailout Fund, Government Falls

Posted on the 12 October 2011 by Periscope @periscopepost
Slovakia votes against expanding eurozone bailout fund, government falls

Slovak Parliament building, Bratislava. Photo credit: riczribeiro,

Slovakia has voted against increasing the euro bailout fund. The decision brought down the Slovak coalition government, as Prime Minister Iveta Radicova had linked the bailout fund vote to a confidence vote in her leadership. Does the Slovak decision mean financial disaster for the eurozone?

Quite possibly. Writing for The Atlantic Wire, Eric Randall was unimpressed that the tiny country may have damaged plans to expand the European Financial Stability Facility (EFSF). The other 16 member countries had voted in favour of boosting the bailout fund in order to provide relief to countries such as Greece. Randall warned that the Slovak no-vote could end up “depressing confidence in Europe’s ability to tackle the debt crisis or even confidence in a functional Eurozone altogether”.

Just a delay. Lukas Fila was rather more optimistic on The Guardian‘s Comment Is Free, arguing that Slovakia will eventually approve the expansion of the EFSF once the ruling coalition has gathered enough support for a second vote. Fila pointed out that the Smer opposition party had abstained from the first vote “to prove the coalition wasn’t able to function properly and to gain concessions”, which means 62 votes are up for grabs.

Hostility. Leo Cendrowicz argued in Time that the no-vote demonstrates Slovakia’s growing hostility towards the EU and the country’s resentment at the prospect of bailing out other members: “Unlike Greece, Slovakia’s own response to the economic slump has been painful, self-imposed reforms.”

Slovakian vote doesn’t matter. Cendrowicz also suggested that the outcome of a second Slovak vote may well be irrelevant, as analysts suggest the EFSF is “outdated”: “The euro could bypass the bump in Bratislava, but other obstacles lie in wait,” he wrote.

EFSF issues. Indeed, a Washington Post editorial pointed out that there is little indication that France and Germany could agree on how to use an expanded EFSF to solve the eurozone debt crisis, despite the “Merkozy” plan: “France wants to tap the fund quickly, which would reduce its direct costs and thus help preserve its decreasingly plausible AAA credit rating. But Germany, which would have to pick up more of the tab under this scenario, is balking.”

Back to Featured Articles on Logo Paperblog

Paperblog Hot Topics