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Slovakia schedules euro re-vote for Friday; "yes" almost certain
10/12/2011 12:30 pm EST
Less than 24 hours after Slovakia’s parliament rejected a measure that would have made the country the 17th and last member of the EuroZone to approve new powers for the European Financial Stability Facility, the country’s political parties have reached an agreement that would schedule a second vote on Friday, October 14.
The result this time is almost certainly “yes.”
The negative vote yesterday had more to do with Slovak politics than with the euro. Members of the opposition Smer party, who supported the legislation, abstained in order to bring down the four-party coalition government of Prime Minister Iveta Radicova.
Smer’s support of the measure to expand the powers of the European Financial Stability Facility was conditioned on the government linking the vote to a confidence vote in the government and then agreeing to hold early elections when parliament produced a no confidence result yesterday. Elections are now set, all the country’s parties have agreed, for March 10.
This isn’t to say there isn’t strong public opposition to any Greek bailout in Slovakia. The country is the second poorest in the EuroZone and its promised contribution to the European Financial Stability Facility, already at nearly 9% of GDP in the original plan, would rise to nearly 13% of GDP in the expanded facility. That’s a bigger per capita hit than is being asked of either Italy or Spain. The German’s may be aghast at bailing out a Greece that they regard as corrupt and lazy; Slovaks are angry at bailing out a Greece that is wealthier than their country.
If there was an alternative to the European Financial Stability Facility, or if the whole edifice wasn’t likely to go down in flames in the Slovak parliament voted “no,” then I think the vote might be in doubt. (Under EuroZone rules the measure needs a “yes” vote by all 17 members to pass.)
In this crisis nothing is certain until the fat lady sings (and maybe not then) but I think a “yes” vote from Slovakia is almost certain. The markets are pricing that decision in.
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