Slovakia and Slovenia Threaten Eurozone Bailout

Slovenia’s government collapsed September 20, making it harder for the nation to approve the new changes to the euro’s bailout mechanism. Meanwhile, disagreements over the changes threaten to topple Slovakia’s government.

Slovenian Prime Minister Borut Pahor lost a confidence vote 51-36 after months of coalition infighting, cabinet resignations and accusations of corruption and economic mismanagement.

President Danilo Turk now has a week to nominate a new prime minister. If he fails to put together a government within 30 days the nation will have to hold new elections, probably in December.

The Finance Ministry insists that the change to the European Financial Stability Facility (efsf) will be approved despite the turmoil, but the lack of a government will certainly complicate things.

Barbara Raflak, foreign policy adviser to Prime Minister Pahor, warned that getting a “yes” vote from parliament “could be a problem.”

“It’s very hard for MPs and ordinary people to understand why we have to make cuts in our own budget and on the other hand we are giving a second bailout to Greece,” she said. “And we keep reading in the papers that they don’t conform to [austerity] programs.”

A possible winner of snap elections, Janez Jansa, has previously said that bailing out Greece “isn’t fair” because the average Greek earns more than the average Slovene.

Slovenia isn’t the only nation that feels this way. “An eventual delay in Slovenia would slow the whole ratification process, since Slovakia, where one of the ruling parties opposes a more powerful efsf, has already made it clear that it wants to be the last eurozone member to vote on the issue,” said an economist for bnp Paribas, Michal Dybula.

Slovakia is the second-poorest nation in the eurozone, and one of the main coalition parties is adamant that it shouldn’t have to bail out Greece. Slovakia has already taken painful austerity measures. It is very unlikely that Slovakia’s parliament will approve the changes to the efsf.

Richard Sulik, parliamentary speaker and leader of the Freedom and Solidarity (SaS) party—a member of the coalition—warned that agreeing to the bailouts would put the country “on a direct path towards socialism.” Instead, “we have to let Greece go bankrupt,” he said.

To try and pressure the SaS party to back the bailout, Slovak Prime Minister Iveta Radicova said she would link the bailout vote to a confidence motion. So the government would fall if the bailout wasn’t approved, Slovakia’s finance minister claimed.

Until the changes to the efsf are ratified, the European Central Bank (ecb) is the only organization buying up European bonds and keeping Spain and Italy afloat. The ecb cannot keep this role up forever. Will the efsf changes be approved before it’s too late? The eurozone’s economic problems continue to build toward a crisis that will revolutionize Europe.