Europe Looks Nervously To Slovakia
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October 11, 2011 TheFreshOutlook  |
The eurozone faces another hurdle today as politicians in Slovakia vote on the country’s contribution to the European bailout fund.
The eurozone crisis could be set to deepen as political instability in Slovakia threatens to upset the enactment of the European Financial Stability Fund (EFSF). The Slovakian parliament is the last in the 17-member eurozone to vote on the fund, which seeks to provide security in the event of future sovereign debt crises.
However, the Freedom and Solidarity Party (SaS), one of four parties in the ruling coalition government, has protested that too much is being demanded from an already poor country. Under the EFSF proposals, Slovakia will have to contribute €7.7bn euro to the Pan-European fund.
In return, the SaS wants Slovakia to be given an “opt-out” clause from the European Stability Mechanism, which will succeed the EFSF in 2013. They also want Slovakia to be given a veto over future EFSF payments.
“I have to say that the coalition partners have failed to reach an agreement,” said the Slovakian prime minister Iveta Radicova. “It’s unacceptable for a prime minister to allow the isolation of Slovakia,” she added.
European markets have reacted nervously to the latest controversy, with the Dax, Ftse and Cac all opening lower this morning. Furthermore, a widespread sentiment that the EFSF’s €440bn provision is simply not enough to cope with potential problems is also starting to affect market confidence.
Meanwhile, protests have continued in Greece over plans to put 30,000 public service workers on temporary leave. Athens has made the cuts in a further attempt to secure the latest €8bn instalment of its 2010 EU-IMF bailout.
The gravity of the Greek debt crisis was highlighted last week by the bailout of the Dexia bank. Dexia is one of several European banks owed massive amounts by the southern European country.
The grave situation has put even more onus on the eurozone’s leaders to formulate a solution to the region’s deteriorating crisis. This past weekend, the French and German premiers said they had agreed on an overall solution and that details will be in place by the G20 summit on November 3.
By Dermot Tobin
[Image courtesy Of mammal]
