Slovakia rejects participating in loan deal for Greece

THE RECOMMENDATION by Iveta Radičová’s government to reject any share of the costs of the multi-billion rescue loan for Greece found sympathetic ears in Slovakia’s parliament. The deputies rejected any additional codicils to the original agreement signed by the previous government that were required if Slovakia was to contribute any cash to the Greek loan programme.

Olli Rehn, the EC Commissioner for Economic and Monetary Affairs. Olli Rehn, the EC Commissioner for Economic and Monetary Affairs. (Source: SITA)

THE RECOMMENDATION by Iveta Radičová’s government to reject any share of the costs of the multi-billion rescue loan for Greece found sympathetic ears in Slovakia’s parliament. The deputies rejected any additional codicils to the original agreement signed by the previous government that were required if Slovakia was to contribute any cash to the Greek loan programme.

Of the 79 MPs from the ruling coalition parties, only two deputies from the Christian Democratic Movement (KDH) voted in favour of the bilateral loan that may reach €816 million over the next three years. But after the ballot, Mária Sabolová of KDH said that she had made a mistake while voting and she intended to vote against approving the loan.

In the 150-member parliament, 69 deputies voted against the loan to Greece and 13 members of KDH abstained from voting. The MPs from the largest opposition party, Smer, did not attend the vote.

“One has to choose solidarity not greed,” said KDH’s Anton Marcinčin, as quoted by Sme, after he voted to approve the loan.

The Speaker of Parliament, Richard Sulík of the Freedom and Solidarity (SaS) party, said that if Slovakia manages its finances well enough it will not need solidarity from some other country.

“Sooner or later Greece will have to leave the euro zone and with different loans we are only prolonging this agony and preventing a solution which will be painful, but nevertheless would be quickly done,” Sulík said, as quoted by the SITA newswire.

The European Commission quickly responded that Slovakia, by refusing to approve the loan to Greece, violated the EU’s principle of solidarity.

“I can only regret this breach of solidarity within the euro zone,” said Olli Rehn, the EC Commissioner for Economic and Monetary Affairs.

Rehn expects the Eurogroup (finance ministers of the euro zone) and the ECOFIN (the council of economics and finance ministers) to return to this issue at their next meeting, according to the Reuters newswire. Rehn stated that he does not expect that Slovakia’s decision will threaten the functioning of the loan mechanism.

Representatives of the ruling coalition offered a different idea on the definition of solidarity.

“When solidarity of the poor with the rich, or the responsible with the irresponsible, or taxpayers with bank owners or managers is the question, I do not consider it solidarity,” said Slovakia’s Finance Minister Ivan Miklos shortly before the vote.

Representatives of the largest opposition party, Smer, declared that they do not oppose the loan to Greece if that country meets all its obligations in line with the recovery plan approved by the international community. Saying that this cannot be evaluated at the moment, Smer wanted to postpone the parliamentary discussion to September, the TASR newswire reported.

While rejecting the direct loan aid to Greece, parliament nevertheless approved Slovakia's participation in the European Financial Stability Facility (EFSF) based on the government’s recommendation to do so. Last month, the four parties of the ruling coalition, SDKÚ, SaS, KDH and Most-Híd, had signalled their approval for Slovakia’s participation in the €750-billion EU programme to ensure stability in the euro zone.

Of the 142 deputies present for the parliamentary vote, 140 lawmakers voted in favour of the EU safety net. The only ruling coalition deputy who voted against the proposal was Most-Hid’s Ondrej Dostál and Anna Belousovová, the first vice-chair of the opposition Slovak National Party (SNS), abstained, TASR reported.

The EFSF plan was developed in response to EU concerns about the financial stability of the euro zone, which has been shaken by Greece’s public debt woes and concerns about the financial condition of several other eurozone countries. In early May euro zone finance ministers, including Slovakia’s finance minister at the time, Ján Počiatek, agreed to a multi-billion rescue loan to Greece, with Slovakia expected to contribute €800 million.

Slovakia’s share of the costs in establishing the EFSF will be about €4.4 billion. Mikloš stated last month that Počiatek and the previous government had failed to negotiate a fair deal for Slovakia.

“If Slovakia is supposed to contribute 2.3 times more in terms of GDP-ratio than the wealthiest EU country, Luxembourg, then it’s evident that the conditions have been negotiated poorly,” Mikloš said, as quoted by TASR.

Radičová and Mikloš visited Brussels on July 13 to speak with EU officials, including European Council President Herman Van Rompuy, about the safety net programme and Slovakia’s participation in it. They had hoped to secure better conditions but were directly told that these were no longer negotiable.

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