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Slovakia turns "no" vote to "yes" on expanded powers to attack euro debt crisis--now on to the tough stuff
10/13/2011 12:48 pm EST
Today Slovakia’s parliament voted 114 to 30 to approve expanded powers for the European Financial Stability Facility. The vote means that all 17 members of the EuroZone have now approved the measure and the changes can go into effect as soon as EuroZone bureaucrats finish writing the new rules.
Under the measure approved by Slovakia today the $600 billion European Financial Stability Facility will be able to buy the debt of troubled EuroZone countries, offer credit lines to governments, and extend financing to stressed banks.
The Slovak parliament initially rejected the legislation on October 11 as part of complex maneuvering that saw the opposition Smer party willing to trade its votes in exchange for a no confidence vote that would bring down the four-party coalition government and lead to new elections in March.
Approval of the new powers for the European Financial Stability Facility was necessary to end the euro debt crisis, but it isn’t sufficient. A “no” vote by Slovakia that would have doomed the measure, since all 17 EuroZone members had to vote “yes,” would have throw financial markets into chaos. It would have been just one more sign of the disunity in the EuroZone that has made addressing the crisis so difficult.
But everyone agrees that the $600 billion facility is too small to do all that’s necessary to prevent the crisis from taking down Italy or Spain. That will require another set of measures that at a meeting on October 9 German Chancellor Angela Merkel and French President Nicolas Sarkozy promised to have ready by October 23 in time for agreement before the early November meeting of the G20 countries.
Delivering on that promise is going to be a lot harder than getting the European Financial Stability Facility through Slovakia’s parliament.
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