Slovakia approves expanded eurozone bailout fund

AP News
Posted: Oct 13, 2011 1:23 PM
Slovakia approves expanded eurozone bailout fund

Slovakian lawmakers on Thursday approved expanding the size and powers of the EU bailout fund, overcoming an earlier rejection and removing the last hurdle to the fund's use as the continent's main weapon against the debt crisis.

Slovakia is the last of the 17 eurozone nations to approve boosting the bailout euro440 billion ($600 billion) fund, called the European Financial Stability Facility. The fund will be able to lend quickly to governments before they are in a full-blown crisis and help them boost banks' health.

The country's parliament had rejected the changes to the bailout fund on Tuesday because a junior coalition partner, the Freedom and Solidarity party, was against it. In a desperate effort to force that party to vote in favor, Prime Minister Iveta Radicova had tied the vote on the bailout fund to a confidence vote in the government. When the vote failed, her 1-year-old government collapsed.

The main opposition party, Smer-Social Democracy, then agreed to help the outgoing coalition approve the expanded fund in a second vote in exchange for early elections.

Parliament voted Thursday in favor of holding early elections in March, with 143 in favor and 3 against. Just a half hour later, they approved boosting the bailout fund _ 114 were in favor. Only 76 votes were needed.

Radicova welcomed the result and thanked lawmakers for a "very responsible" decision.

"This is a step to stop a debt crisis in Europe," Radicova said. "We belong to Europe, to the eurozone, and we sealed that today."

However, "it's connected with a very high political price," she said. Radicova's center-right four-party coalition was formed after the June 2010 general elections.

Slovakia was under heavy pressure to repeat the vote quickly. Because big eurozone decisions require unanimous support, Slovakia's earlier rejection of the fund's new powers threatened to hold up the whole bloc's efforts to tame its two-year-old debt crisis.

"I'm satisfied that the fund has been approved," said Robert Fico, chairman of the leftist Smer-Social Democracy and former prime minister. "Slovakia is back on the map of Europe."

Lawmakers debated more than nine hours Tuesday before rejecting the fund's changes. On Thursday they needed just 30 minutes to endorse it. Freedom and Solidarity party argued that Slovakia, the second-poorest country in the eurozone, should not have to pay to help richer countries that had spent too much.

"Today is a black day for Slovak and European taxpayers," Freedom and Solidarity chairman Richard Sulik said after the vote. "I'm really sorry."

Slovakia, a country of 5.5 million people, will contribute euro7.7 billion ($10.6 billion) in guarantees to back up the bailout fund's lending capacities.

Sulik said his party is considering challenging the vote at the country's Constitutional Court. He said he still needs to consult constitutional experts because "the legal opinion is not unanimous."

While a vote on domestic legislation cannot be repeated, the government believes it was constitutionally legal to repeat the vote on the bailout fund as it is technically an international treaty with foreign countries.

Sulik had to pay for his rebellion. Parliament dismissed him from his parliamentary speaker post later Thursday in a 115-25 vote.

With the bailout fund vote out of the way, the country's focus will turn to the elections next spring. Smer-Social Democracy is by far the strongest political force in the country and stands a good chance to win the ballot set for March 10 by Parliament on Thursday.