Slovakian MPs last night rejected the expansion of the euro currency zone’s bailout fund.
After 10 hours of debate in Parliament, the measure failed to pass by 21 votes. Slovakia remains the only country in the 17-member eurozone that has not approved expanding the bailout fund, which would require unanimous support to go into effect. Malta passed the Bill on Monday, currently the last state to have done so.
Slovakia’s one-year-old coalition government also fell with the vote because it included a no-confidence measure. Prime Minister Iveta Radicova had urged the MPs to back the Bill, arguing that the country was losing its credibility.
“It is the entire eurozone system which is under threat at the moment, not just a few small countries anymore,” Ms Radicova said in the debate. “Our euro is under threat. The changing situation needs a quick and immediate reaction.”
Earlier, Ms Radicova had admitted that a coalition partner was not convinced. Slovakia’s leftist opposition Smer-SD said it was ready to team up with the outgoing government to vote in favour of the eurozone EFSF rescue fund in exchange for a snap election.
“Smer is ready to back the EFSF in exchange for a deal on snap election,” Smer lawmaker Jan Pociatek said shortly after the centre-right coalition failed to push the EFSF through parliament, adding a repeat vote could take place this week.
The coalition crumbled as Prime Minister Iveta Radicova tied the vote on a revamp of the 440-billion-euro ($600 billion) bailout fund to a confidence motion in her government but failed to secure key backing from a junior coalition partner.
Smer chairman and former Prime Minister Robert Fico said his party, which did not take part in the voting to help to sink the government, was ready for talks.
“For Smer-SD, the ratification of the EFSF is a priority. Slovakia has to ratify the EFSF, without the mechanism the situation can get worse,” he said. Slovakia was the last eurozone country to vote on the revamp after the remaining 16 euro states ratified it.
In the parliamentary debate prior to the vote, Finance Minister Ivan Miklos also said he expected “the EFSF to be approved this week”.
Eurozone leaders agreed in July to boost the EFSF’s powers in the hope of stemming the fallout from the eurozone’s deepening sovereign debt crisis which now threatens the euro project, the bloc’s banking system and the economy.
The changes are key for going ahead with a second bailout for Greece and the emergency recapitalisation of banks.
The EFSF was set up after Greece was first bailed out to save it from default in May 2010.
EU officials still may be able to find a way of getting around the Slovakian rejection of the bill to boost the powers and size of the euro bailout fund, which is designed to contain debt market turmoil, but doing so, would carry costs to European unity.