Update: EFSF Rises Phoenix-Like From Slovakian Ashes
Just yesterday, we reported that the fate of the European Financial Stability Fund hung in the balance as the Slovakian Parliament voted not to ratify it. The coalition government had made passing EFSF a matter of a vote of confidence and, in the event, the measure fell 21 votes short of passing when a coalition partner and the main opposition party abstained.
If a week is a long time in UK politics, for the Slovakians it must be an eternity. A joint statement from European Commission President, Jose Barroso and European Council President, Herman Van Rompuy called for swift action: “We call upon all parties in the Slovak parliament to rise above the positioning of short-term politics and seize the next occasion to ensure a swift adoption of the new agreement”. It seems that the plea has been heeded.
A deal seems to have been done which will see a second vote on the EFSF ratification issue by the end of the week, in exchange for early elections, to be held in March 2012. Out-going Prime Minister, Iveta Radicova, has agreed with the opposition Social Democrat. Junior coalition partner Richard Sulik of the free-market Freedom and Solidarity party summed up the situation by saying: “We’re saying ‘no’ to a rightist government, but we’re saying ‘yes’ to the rescue fund.”
The Social Democrats are expected to do well in the forthcoming election because of the unpopular austerity measures that the current government has been forced to adopt because of the financial crisis.
The EFSF is intended to provide an extended emergency funding source for member states and banks and be empowered to buy Eurozone government debt. The expansion of the fund and its remit required the unanimous approval of all 17 Eurozone parliaments. Ironically, many analysts fear that the assets at the disposal of the fund may prove inadequate to the task of shoring up confidence in the EU financial sector and laying to rest the sovereign debt crisis.