Uncertainty over the fund’s approval in this former Eastern Bloc nation that adopted the euro only in 2009 is laying bare the political crisis within the economic crisis that is rocking Europe and threatening global markets.
Though rooted in the fiscal woes of nations such as near-bankrupt Greece, Europe’s economic problems have ballooned largely because of indecision and infighting among the nations in the euro zone — a currency union that critics say was simply not built for crisis management.
What would have happened, for instance, if Washington needed the approval of all 50 states before proceeding with its plan to rescue ailing U.S. financial institutions in the wake of the collapse of Lehman Brothers in September 2008? But the euro zone is a confederation of member states lacking a powerful executive and legislative branch. The situation illustrates, critics say, the built-in flaws of the currency union.
European leaders, for instance, did not count on one Richard Sulik, a dapper 43-year-old who is the speaker of parliament in this quaint capital nestled in the foothills of the Carpathian Mountains. Sulik’s Freedom and Solidarity Party calls the plan an unfair bailout of profligate Greeks and fat-cat German and French bankers that poor Slovaks can’t afford. It is vowing to block the rescue fund in a vote next week or make its passage incumbent on a rule that could give this nation of 5.4 million veto power over the use of bailout funds — a move that could spark a showdown with its bigger neighbors.
If the measure is approved here — as its supporters pledge will happen — it seems likely to pass in a deal that could result in the fall of the government, ushering in a period of uncertainty that economists warn could see Slovakia slide into its own budget crunch. The other holdout thus far, even tinier Malta, has delayed a vote on the fund until next week, citing concerns over the size of its contributions.
“Our goal here is to prevent the passage of this rescue fund,” Sulik said. “This country should not have to pay for Greek pensions or French banks.”
Speaking from his office, amply stocked with a humidor and wet bar, he added that if he were an investor in troubled European debt right now, “I, too, would feel bad about what we are doing.”
Lack of consensus
In fact, experts note, the euro zone — anchored by mighty Germany, itself torn politically over how much it should commit to the rescue of its neighbors — has had the financial wherewithal to solve the crisis quickly from the beginning. But torn by domestic politics, rife with bureaucracy and ruled by consensus, the region has failed to find the political cohesion and leadership required to do it, instead buying time with half-measures that have served only to further rattle investors.