Slovak Parliament Rejects EFSF Vote, Government Falls

12 Oct

Slovakia’s Parliament rejected an initial vote to ratify the extended EFSF, toppling the government which lost a confidence vote, and putting pressure on Eurozone leaders looking to avert a new financial crisis.

Prime Minister Iveka Radicova had put her government on the line, trying the EFSF ratification to a confidence vote on her cabinet, Reuters reported.  Radicova failed to win the vote, forcing the ruling party to reach to opposition parties to secure the needed votes.

A second vote is expected to come later this week, where Radicova will need to count with the support of leftist opposition party Smer, whose leaders said would be receptive to the vote given major concessions.

Regardless, Radicova said she was personally committed to passing the EFSF before a key meeting of Eurozone leaders originally scheduled for October 14, now delayed to October 23.

Slovakia has been pushed to the center of Euro politics and became a focal point for markets, still on edge as Europe struggles to find a solution to its sovereign debt woes.  In contention is an extended EFSF or European Financial Stability Facility.  The new EFSF is designed to reduce systemic risk by having both greater flexibility in its operations and a larger guarantees from which to operate.  These guarantees are provided by EU members, with Germany the main contributor.

German Chancellor Angela Merkel staked her reputation in the Euro rescue, getting the extended EFSF ratified by the Bundestag.  But given the nature of the EU, the EFSF must be ratified unanimously by all members.

Slovakia, one of the poorest members of the EU, is expected to ratify the EFSF.  Adding his voice to that of PM Radicova, Finance Minister Ivan Miklos said the EFSF would pass one way or another.  A failure to pass win the EFSF vote would rattle markets and force Euro leaders and the ECB to find alternative solutions.

 

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