Slovakia's parliamentarians failed to ratify the expansion of the €440bn (£385bn) European Financial Stability Facility (EFSF). Opposition politicians in Slovakia, which is the only member of the eurozone not to have ratified the changes, have said they will approve the EFSF - but not without the removal of prime minister Iveta Radicova and her government. Richard Sulik, the rebel leader of the coalition's minority member, the Freedom and Solidarity Party, abstained from the vote. He told the parliament: "I'd rather be a pariah in Brussels than have to feel ashamed before my children, who would be deeper in debt should I back raising the volume of funding in the EFSF bail-out mechanism." Separately, the troika auditors - officials from the European Union, the European Central Bank and the International Monetary Fund (IMF) - reported that Greece's fiscal targets for 2011 were "no longer within reach". After weeks of scrutiny, the officials said that the Greek "recession will be deeper than anticipated"; that there was "no evidence of improvement in investor sentiment"; and that the structural reforms, though taking place, were "uneven". It is not for the first time Slovakia has been against major eurozone policies since it adopted the currency in 2009. Last year, it rejected providing its 800 million euro share of the 110 billion EU bailout plan for Greece. That rescue went ahead without Slovakia, but another exemption for the country would cast doubt over the eurozone's credibility and ability to function as a bloc.
Nonetheless, many analysts are surprised at the power the small country wields. As Greg Anderson of Citigroup put it: "it seems somewhat unfathomable that a country that has not been a member of EMU for even three years could be the one leading to its unravelling."Slovakia prepares for a fresh vote on the eurozone bail-out fund and international lenders buy time for a broader response to the debt crisis with hints that Greece is likely to get a key loan next month."
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The troika concluded that Greece would be awarded the vital €8bn tranche of bail-out money "most likely in early November" - but subject to approval by Eurogroup and the IMF.
Experts said that it was now highly unlikely that international authorities will block the Greek bail-out.
Raoul Ruparel of Open Europe said: "The EU and IMF have now dropped all pretence that Greece can achieve its original deficit targets, but look set to pay out the next tranche of Greek bailout aid regardless. This may be necessary to avoid a disorderly default, but it is imperative that the EU takes these failures into account when deciding the future of the second Greek bailout."
Jean-Claude Trichet, the president of the ECB, warned that the financial crisis had reached "a systemic dimension" and that delays in government action were "only contributing to aggravating the situation". Mr Trichet, who was speaking to the European Parliament in his capacity as chairman of the newly-created European Systemic Risk Board, urged politicians to "rise to the challenge and act together swiftly".
European authorities are planning to set a higher than expected capital threshold for the region’s banks and give them six to nine months to achieve that level or face government recapitalisations under the auspices of the eurozone’s €440bn rescue fund, senior regulators said.
After eight hours of testy debate in parliament, the measure calling on Slovakia to support the revamp of the bailout fund failed to pass by 21 votes.
"Today we saved more than €300bn for the European taxpayers that would have been used to bail out banks," said parliament speaker Richard Sulik, who led parliament's opposition to the expansion of the European Financial Stability Facility (EFSF).
Each of the other 16 states using the common currency have already voted through plans to expand the powers of the EFSF, which requires unanimous support to go into effect. But Slovakia, with a population of just 5.5 million and a GDP representing a mere 0.5% of the European Union's whole, rejected the measure.
Only 55 of the parliament's 150 MPs supported the bill; nine voted against it and 60 failed to take part in the ballot, most of them in a deliberate boycott organised by Sulik's Freedom and Solidarity party (SaS), which until Tuesday night was part of the ruling coalition.
Though the vote is likely to pass on a second reading by the end of the week, the defeat temporarily sets back efforts to address Europe's debt jam, which has been the most important issue for financial markets for months. Investors worry that if Europe doesn't contain its debt crisis, a default by the Greek government could deliver a devastating blow to European banks and cause them to freeze up lending. As well as having more firepower at its disposal, the EFSF would be able to lend quickly to banks and governments and buy up the bonds of troubled countries in the markets. Slovakia is being asked to fork out €7.7bn – an amount equal to roughly 12% of its annual economic output.
Slovakia prepares for a fresh vote on the eurozone bail-out fund and international lenders buy time for a broader response to the debt crisis with hints that Greece is likely to get a key loan next month.....and they shall vote until it passes ...hahahahahaha!!!!!!!
The eurozone could launch its European Financial Stability Facility safety net for struggling members even if Slovakia fails to ratify a beefed-up EFSF, Austrian Foreign Minister Michael Spindelegger said in a radio interview on Wednesday.
But he said he assumed Slovakia would still approve the fund despite domestic political wrangling that brought down the government on Tuesday.
"If Slovakia does not approve then we have to reevaluate. That means we either we install the safety net nevertheless — we have to see if that is possible legally. I personally would favor this."
"Or we can take note of the fact that this doesn't work and set up a new treaty. This would be difficult and linked to a big delay. I would not see this as the right path. But let's not speculate on what might happen."
He said the parliament in Bratislava still had until Oct. 23 to approve the EFSF, adding: "I think there are good reasons to believe this will happen."
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EFSF ratification process in Slovakia must not be further delayed. Joseph Daul MEP, Chairman of the EPP Group"The EPP Group is concerned that the Slovak Parliament was unable to ratify the European Financial Stability Facility in a vote last night (10.10.11). We also regret the irresponsible behaviour of the Slovak Socialists and Liberals in this vote", said Joseph Daul MEP, Chairman of the EPP Group in the European Parliament.
"At the same time, I welcome the pro-European stance of our EPP sister parties in Slovakia."
"I call on the European leaderships of the Socialists and Liberals to ensure that their Slovak colleagues stop playing politics with this vital step for Europe and ratify the EFSF without further delay."
"Solidarity is a two-way process, we are all in the same boat, and it is in the interests of all Europeans to put an end to uncertainty and work towards stability and growth", Joseph Daul concluded.
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