Slovakia’s involvement in eurozone stabilisation plan remains uncertain

OUTGOING Prime Minister Robert Fico and his successor Iveta Radičová of the Slovak Democratic and Christian Union (SDKÚ) have been playing political football over Slovakia’s signature for the European Financial Stabilisation Facility (EFSF), the mammoth €750-billion European Union programme designed to stabilise eurozone finances.

OUTGOING Prime Minister Robert Fico and his successor Iveta Radičová of the Slovak Democratic and Christian Union (SDKÚ) have been playing political football over Slovakia’s signature for the European Financial Stabilisation Facility (EFSF), the mammoth €750-billion European Union programme designed to stabilise eurozone finances.

Fico says that all that is needed to clear the way for approval of the European mega-safety net is a public declaration by Radičová that her finance minister will eventually sign the document. Radičová insists that Slovakia’s participation is fully within the power of Prime Minister Fico. The rhetorical exercise over the signature, nervously awaited by the rest of the European Union, has been dominating economic news over the past two weeks. Slovakia was given a July 1 deadline to sign to the document.

Meanwhile, the SDKÚ has said that the previous government’s decision to support the eurozone safety mechanism seems irreversible and that the new government would not block its approval. If a situation were to arise in which the guarantees were put into practice, there would need to be additional negotiations about the details of the assistance, said the SDKÚ. The party insists that it is Fico that has been blocking approval of the agreement.

“He has again proven that his political declarations are deliberate and populist and that in reality he does not have political standpoints or a political programme,” the SDKÚ said in a release.

Fico responded by asking why – if, as the SDKÚ claims, the decision on the euro safety mechanism is irreversible – it promised to reject the plan.

“Calling now on Robert Fico to sign the European safety net means that Iveta Radičová and the SDKÚ want to mislead their voters and at the same time use the outgoing prime minister as a justification,” Fico’s spokeswoman Silvia Glendová told the SITA newswire.

Radičová and Fico had been expected to meet at the office of President Ivan Gašparovič to seek a way out of the deadlock, but Fico did not attend the meeting. The Sme daily reported that at the time of the meeting Fico did not have any other official engagements scheduled. Thus Radičová only restated that the future government wants to negotiate about the guarantees attached to the safety net as soon as she has the authority.

“I have no authority to offer any guarantees,” Radičová said, as quoted by Sme.

The quartet of parties – comprising the SDKÚ, the Christian Democratic Movement (KDH), Freedom and Solidarity (SaS) and Most-Híd – which has now been charged with forming the next government restated that the Fico government gave assurances to the EU about Slovakia’s participation in the facility before the election without consulting the then opposition.

The EFSF was set up following EU concerns about the stability of the eurozone, which has been shaken by Greece’s financial woes. In early May eurozone finance ministers, including Slovakia’s Ján Počiatek, agreed to a multi-billion rescue deal for Greece, with Slovakia expected to contribute €800 million to the bailout. But since Slovakia does not have such funds immediately available, the country would itself have to take on more debt – in effect, to help service Greece’s.

EU officials expressed impatience with the tussle over whether Slovakia should sign either the stability plan or the rescue deal for Greece.

“We expect all Euro area member states to respect their agreement from 9 May and to complete the proceedings to set up the European Financial Stabilisation Facility (EFSF, [worth] €440 billion) soon,” Amadeu Altafaj i Tardio, an EC spokesperson speaking on behalf of Commissioner for Economic and Monetary Affairs Olli Rehn, told The Slovak Spectator. “This is a matter of fundamental solidarity in the Euro area, and all its member states should respect their commitments without delay.”

The EFSF is composed of two separate instruments: aside from the larger amount, an EC reserve of €60 billion is ready and available if needed, according to Altafaj i Tardio.
The International Monetary Fund would contribute €250 billion to the EFSF, while member countries are expected to supply €440 billion. Slovakia’s overall share would be €4.5 billion.

Observers have described Fico’s claim that he cannot seal the deal without the mandate of the next government as somewhat hypocritical.

“The conditions of Slovakia’s participation in the EFSF were negotiated by the government of Fico without consulting on the issue with representatives of other parliamentary parties, despite the fact that the European Union agreed on this package one month before the parliamentary elections,” Ivan Kuhn of the Conservative Institute think tank told The Slovak Spectator.

According to Kuhn, Fico knew full well that there was a possibility that after the elections power could change hands and that Slovakia might get a new government made up of different parties with alternative views on the package.

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