Slovak Prime Minister Threatened to Resign if EFSF Failed to Pass; It Failed to Pass, What's Next?

Iveta Radicova, prime minister of Slovak said she was prepared to step down if her coalition failed to approve the EFSF. The vote failed. OK prime minister, how about that resignation?

The Financial Times reports Slovak PM in quit threat over eurozone vote.

Slovakia's prime minister on Monday threatened to resign in a last-ditch attempt to persuade a junior coalition partner to back additional powers for the eurozone's €440bn bailout fund.

Iveta Radicova said she was willing to tie approval of enhancements to the European financial stability facility to a confidence motion ahead of a crucial vote in the Slovak parliament on Tuesday. Officials told the Slovak news agency that she was also prepared to step down if her coalition failed to approve the EFSF.

Talks aimed at breaking the political deadlock in Bratislava over the bailout fund broke down on Monday evening. Parliamentary approval is being blocked by the libertarian Freedom and Solidarity party. Its leader led by Richard Sulik, who has made clear his distaste for a bailout he feels will be costly to Slovakia, the second-poorest member of the eurozone, and end up helping wealthier Greece, a country he says is simply bankrupt and unable to repay any aid.

Speaking before Monday's meeting of the four-party coalition, Mr Sulik said that his party had not shifted its long-standing opposition to the EFSF, and that he would not feel responsible if the government fell over the issue. Without his 21 MPs, the coalition does not have enough votes in the 150-seat parliament to vote through the EFSF extension.

"A responsible decision is now needed on how to proceed next," Ms Radicova, leader of the centre-right coalition, told reporters. If Ms Radicova fails to secure Mr Sulik's support, the government could turn for help to Robert Fico, the leader of the left-wing opposition SMER party, who has said he would support EFSF, but at the price of the government dissolving itself.

Slovakia Votes Down EFSF Expansion Plans

The BBC reports Slovakia votes down eurozone bailout expansion plans

Slovakia's parliament has voted against measures to bolster the powers of the eurozone bailout fund, seen as vital in combating the bloc's debt crisis.

The governing coalition had linked the vote to a confidence motion and as a result has effectively been toppled.

The measure failed to pass by 21 votes, but that result had been anticipated after a junior party in the centre-right coalition said it would abstain.

The Freedom and Solidarity (SaS) party said it was opposed to Slovakia's taxpayers being asked to cover the debts of richer countries.

Many Slovaks feel their country - the second poorest in the eurozone - should not have to bail out countries like Greece.

Government officials said they would try to pass the EFSF expansion package in a second vote with support from the opposition, but no date has been fixed for that vote.

The socialist opposition Smer party - which also abstained - is expected to support the move but may make stringent demands including fresh elections.

Following the vote, Smer said it was up to the four parties in the toppled coalition to approach it with offers.

"We're saying 'no' to a rightist government, but we're saying 'yes' to the rescue fund," Smer leader Robert Fico said during the debate.

Rob Cameron at BBC news offers this opinion:

As one by one the rest of the eurozone ratified the proposals and the debt crisis deepened, most of the coalition came around. Except Richard Sulik, leader of the neo-liberal Freedom and Solidarity party, and his 21 MPs.

Some placed their hopes in Robert Fico, former prime minister and leader of the leftist opposition. But Mr Fico sensed an opportunity to wound and perhaps bring down the government, hastening early elections he is likely to win.

What will happen next? A second vote will probably be held within days. With Mr Ficos's support that vote is likely to succeed.

Finland caved in on collateral demands. Slovak will likely cave in as well. It would be fitting if Slovak stands in the way, but I doubt it does. However, I suspect this is the end of the line for Eurozone bailout increases, at least bailouts that require a vote. There is simply too much opposition everywhere to do any more.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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