The changes to the fund need to be approved in all 17 European Union countries that use the euro. Slovakia, a small, former-Communist country of 5.5 million, is the only holdout.
The fall of the coalition government was the price it paid for tying the fund changes to its own survival in a confidence vote in Parliament. Parties in the departing coalition reached an accord on Wednesday with Robert Fico’s opposition party, Smer, allowing the vote to pass through Parliament in exchange for early elections. “There is an agreement,” said a spokesman for Mr. Fico’s party, Erik Tomas. “Smer agrees to support the financial mechanism and the coalition agrees to elections on March 10.”
For some, the episode has illustrated the contrast between Europe’s slow, cumbersome decision making and the ruthless speed of the financial markets. Ultimately, the effort to stave off the debt crisis was almost hijacked by internal political maneuvering in one of the euro zone’s smallest economies.
Before the agreement was reached with Smer, the European Union’s most senior officials appealed to Slovak politicians to stop their squabbling.
“We call upon all parties in the Slovak Parliament to rise above the positioning of short-term politics, and seize the next occasion to ensure a swift adoption of the new agreement,” said a joint statement from José Manuel Barroso, president of the European Commission, and Herman Van Rompuy, the president of the European Council. Slovakia’s new vote to approve changes to the rescue fund known as the European Financial Stability Facility is expected Thursday or Friday.
“The agreement makes it possible that either tomorrow night or at the latest Friday morning the fund and the laws tied to it will be approved,” Mr. Fico said, Reuters reported. The changes to the bailout fund not only expand it but also give it new powers to help strengthen Europe’s vulnerable banks. “If we are held hostage to every parochial problem, then our efficiency is severely impaired,” said one European diplomat, who spoke on the condition of anonymity because of the delicacy of the issue.
The biggest winner is Mr. Fico, a leftist former prime minister, who already had the largest bloc in the Parliament and watched as the fragile four-party coalition keeping him out of power fell upon itself. Opinion surveys show him in the lead if new elections are held. The government crisis was doubly successful for Mr. Fico, breaking the coalition while allowing him to play the role of rescuer and power broker.
Now that it has the support of Mr. Fico’s party, the measure should pass easily.
While on the one hand many Slovaks found the prospect of bailing out richer fellow euro zone members inconceivable, others savored Slovakia’s seat in the inner circle of Europe, and were dismayed over the spectacle of holding up the bailout.
Stephen Castle reported from Brussels, and Nicholas Kulish from Berlin.
Article source: http://www.nytimes.com/2011/10/13/world/europe/slovak-deal-revives-hope-for-euro-rescue-fund.html?partner=rss&emc=rss
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