Slovakia agrees to euro rescue fund

The new government of Slovakia has abandoned its fundamental opposition to the euro rescue fund, but still intends to keep many of its election promises on the issue.

Under pressure from other EU countries, Slovakia’s new government dropped its opposition to the euro rescue fund and agreed to take part. However, the Slovak government refused to join the emergency aid plan for Greece: At a cabinet meeting in Bratislava last Thursday, the government made clear that it was unwilling to compromise on this point and intended to keep the promises made before the election on June 12, 2010.
The euro rescue fund is intended to secure a European stabilisation mechanism that would enable the EU to save member states in financial distress from collapse. For the plan to take effect, Italy’s parliament must also approve it, in addition to the Slovak government. A decision by the Italian government is expected by the end of July 2010. The European institution that is to establish and manage the euro rescue fund must secure loan guarantees from all 16 euro-area member states, totalling 440 billion euros. Slovakia’s share, calculated according to the strength of its domestic economy, amounts to 4.4 billion euros. If Slovakia were to take part in emergency aid for Greece, its contribution would amount to one percent of the total 80 billion euros, or 816 million euros. The Slovak government has recommended to parliament that it refuse to provide assistance. The argument put forward by Prime Minister Iveta Radičová and her Christian Democratic party (SDKU), as well as the liberal party led by Richard Sulík, is that Greece brought the financial disaster upon itself and is nevertheless currently significantly more solvent than Slovakia.