Slovakia stumbles over EFSF vote
natalie hamill, 12 October 2011
Plans to expand the European Financial Stability Facility (EFSF) have taken a tumble at the last hurdle. Yesterday (11 October), a vote in the Slovak parliament – the 17thand final Eurozone member state needed to accept the reform measures – failed to gather the necessary support, leaving the expansion of the EFSF in disarray. The result of the vote is likely to cause further damage to international confidence in the EU’s ability to resolve the Eurozone crisis, as well as having a severe knock-on effect on the internal politics of Slovakia.
With just 55 MPs voting in favour of increasing the EFSF lending capability (9 voted against), the result was pretty much determined by the high number of those who were absent or declined to register to vote; some of whom were members of one of the parties involved in Slovakia’s coalition government. To succeed, the government needed at least 76 MPs (a majority) to vote in favour, something they were unlikely to achieve without the backing of the Freedom and Solidarity Party. However this particular party, which is one of the four that make up the coalition government, has consistently rallied against extending the EFSF and argues that a Greek default is the only way forward.
“It [the EFSF] does not solve the problems we have. When the problem is that countries are heavily indebted, you cannot solve it with other debts. The EFSF is only about additional debts,” argued Richard Sulík, the party leader, in an interview with EurActiv Slovakia in September.
Clearly disappointed at yesterday’s voting outcome, the prime minister has emerged promising to put things right; however, she may be regretting tying the result of the vote to the security of her government. Just hours before the vote took place, PM Iveta Radicova reiterated an earlier claim that failure to muster the needed support for extending the EFSF was akin to a vote of no confidence, a move that made the EFSF vote a pawn in a domestic power struggle.
While the government has descended into turmoil the opposition party, Smer-SD, has found its moment for triumph. Attempting to sooth international markets the leader, Robert Fico, announced his party (who didn’t attend the previous vote) are in favour of extending the EFSF capability and are prepared to accept the proposals in return for snap elections however, they will not vote for the package under the watch of the current government; cue a rush of support for hasty government negotiations and a quickly timetabled re-vote.
Looking outside Slovakia’s borders, its disastrous vote coincides with yet more disappointing news regarding Greece, where the situation is deteriorating by the day. The so-called Troika auditors (from the European Commission, the European Central Bank and the International Monetary Fund) have been back in Greece assessing its financial health in preparation for the next round of bailout injections. Their findings are in line with the more dismal of predictions; Greece will not make its fiscal targets for 2011 and their recession is deeper than expected. Slovakia’s untimely vote can only make their circumstances more precarious. Without the go-ahead on the Eurozone’s 17th member any large scale reform to the EFSF has been brought to a standstill and Greece’s tumultuous rescue plan becomes even more confused, with its November instalment looking increasingly unlikely.
The vote came just hours after a vital EU summit was postponed by European Council President Herman van Rompuy, mainly due to problems between Germany and France failing to see eye to eye over the management of the Eurozone crisis. The US is amongst those calling for decisive action to bring the crisis under control and to restore calm to nervous markets, yet Slovakia’s vote has helped to achieve the exact opposite. Perhaps the EFSF reforms can go ahead without the consent of Slovakia or else treaty revisions could be drafted… but whatever the outcome to this fiasco it seems confusion and dissent in the Eurozone ranks are still the order of the day.