When the fate of the entire Eurozone (and of the world economy itself) hangs on the outcome of a vote of a minnow like Slovakia (which produces less than half of Singapore’s GDP), you just know that micro is so dead.
For those of you who are asking why Slovakia is being such a pain in the derriere, and why those grass-chewing retards from a half-nation just get their act together to save Greece and its lenders from a cocaine-induced gambling spree during the good old days, you might just want to read (further down in this post) Die Spiegel’s interview with Richard Sulik, head of minor Slovak party in the coalition government, on his take on the Greek tragedy. Then ask yourself: who’s the actual retard here? In fact, let’s go one step further: Richard Sulik for POTUS 2012.
From Today “Euro bailout fund foiled by Slovakia“
WARSAW – Europe’s efforts to stem the sovereign debt crisis suffered an embarrassing and potentially costly setback last night when the Slovak Parliament failed to approve the expansion of the euro rescue fund, a development that appeared likely to bring down the government but not to derail the measure.
In a vote of 55 for, nine against and 60 abstaining, the Slovak governing coalition failed to muster the necessary votes to pass the plan that would have required them to contribute roughly US$10 billion (S$12.8 billion) in debt guarantees.
But the country’s leading opposition party said it would be willing to discuss support for the fund after the government fell, pointing to eventual approval of the deal. Officials in Brussels were counting on a political solution, but weighing the possibility of some kind of messy workaround if Slovakia failed to pass the measure.
Prime Minister Iveta Radicova had made the issue into a vote of confidence to try to prevent one of her coalition partners, the liberal Freedom and Solidarity party, from opposing the bailout fund – known as the – European Financial Stability Facility (EFSF), but in vain.
If nothing else, the unwieldy process underscored how the entire US$590 billion euro stability fund, approved by the 16 other members of the euro currency zone, could be held hostage to the domestic politics of one tiny country. It also showed how a measure intended to increase confidence in the euro zone could instead emerge as a telling example of the shortcomings of a system that relies on an unwieldy group of nations to make and execute difficult decisions.
Politicians in capitals across Europe watched the developments in Bratislava closely. An agreement to expand the fund was reached in July by the leaders of the 17 countries that use the euro. Malta approved the plan on Monday, leaving Slovakia as the last to take up the accord for formal consideration.
The possibility that Slovakia, with a population of just 5.5 million, could scuttle an agreement endorsed and passed by European powers like Germany and France had seemed inconceivable.
One European official speaking on condition of anonymity because of the fluidity of the situation, said that, ultimately, it would probably be possible to go ahead with the bailout without Slovakia if necessary.
The rules of the EFSF were laid down in a “framework agreement”, rather than being written into the bloc’s governing treaty. As an inter-governmental agreement this benefits from “a certain flexibility”, said the official. “In these sorts of cases, where there’s a will, there’s a way.”
Still, most observers believe Slovakia – having made its point with yesterday’s hiccup – will eventually approve the EFSF. While few Slovaks want to foot the bill for other countries’ overspending, surveys show that the EU is popular in Slovakia, and people are very proud of having adopted the euro while neighbours like Poland and their former compatriots, the Czechs, have not.
“The image of Slovakia has already been damaged,” said Slovakia’s Finance Minister Ivan Miklos. “Slovakia shouldn’t be viewed as the unreliable member of the euro club.” THE NEW YORK TIMES
And to provide the “balanced” view, here’s the Richard Sulik interview in Die Spiegel:
Only two countries, Malta and Slovakia, have yet to ratify the expansion of the euro bailout fund. Its fate may be in the hands of a minor Slovak party headed by Richard Sulik. In an interview, the politician explains why he hopes the fund will fail and what he sees as the only way to save the euro.
SPIEGEL ONLINE: Mr. Sulik, do you want to go down in European Union history as the man who destroyed the euro?
Richard Sulik : No. Where did you get that idea?
SPIEGEL ONLINE: Slovakia has yet to approve the expansion of the euro backstop fund, the European Financial Stability Facility (EFSF), because your Freedom and Solidarity (SaS) party is blocking the reform. If a majority of Slovak parliamentarians don’t support the EFSF expansion, it could ultimately mean the end of the common currency.
Sulik: The opposite is actually the case. The greatest threat to the euro is the bailout fund itself.
SPIEGEL ONLINE: How so?
Sulik: It’s an attempt to use fresh debt to solve the debt crisis. That will never work. But, for me, the main issue is protecting the money of Slovak taxpayers. We’re supposed to contribute the largest share of the bailout fund measured in terms of economic strength. That’s unacceptable.
SPIEGEL ONLINE: That sounds almost nationalist. But, at the same time, you’ve had what might be considered an ideal European career. When you were 12, you came to Germany and attended school and university here. After the Cold War ended, you returned home to help build up your homeland. Do you care nothing about European solidarity?
Sulik: If we now choose to follow our own path, the solidarity of the others will also crumble. And that would be for the best. Once that happens, we would finally stop with all this debt nonsense. Continuously taking on more debts hurts the euro. Every country has to help itself. That’s very easy; one just has to make it happen.
SPIEGEL ONLINE: Slovakia’s parliament is scheduled to vote on the bailout fund expansion on Oct. 11. How do you predict the vote will turn out?
Sulik: It’s still open. The ruling coalition is composed of four parties. My party will vote “no”; the other three coalition parties intend to say “yes.” What the opposition says is decisive.
SPIEGEL ONLINE: The Social Democrats have offered your coalition partners to support the reform in return for new elections. Do you think the coalition is in danger of collapse?
Sulik: I don’t see any reason why it would.
SPIEGEL ONLINE: What will you do should the EFSF reform pass despite your opposition?
Sulik: For Slovakia, it would be best not to join the bailout fund. Our membership in the euro zone, after all, was not conditional on us becoming members of strange associations like the EFSF, which damage the currency.
SPIEGEL ONLINE: If the euro only causes problems, why doesn’t Slovakia’s government just pull the country out of the euro zone?
Sulik: I don’t see the euro as the problem. It’s a good project. Everyone involved can benefit from it — but only if they stick to the ground rules. And that’s exactly what we’re demanding.
SPIEGEL ONLINE: Which ground rules should we be following?
Sulik: We have to observe three points: First, we have to strictly adhere to the existing rules, such as not being liable for others’ debts, just as it’s spelled out in Article 125 of the Lisbon Treaty. Second, we have to let Greece go bankrupt and have the banks involved in the debt-restructuring. The creditors will have to relinquish 50 to perhaps 70 percent of their claims. So far, the agreements on that have been a joke. Third, we have to be adamant about cost-cutting and manage budgets in a responsible way.
SPIEGEL ONLINE: Many experts fear that a conflagration would break out across Europe should Greece go bankrupt and that the crisis will spill over into other countries, including Portugal, Spain and Italy.
Sulik: Politicians can’t allow themselves to be pressured by the financial markets. Just because equity prices fall and the euro loses value against the dollar is no reason for giving in to panic.
SPIEGEL ONLINE: But do you really believe that politicians can calm the financial markets by stubbornly sticking to their principles?
Sulik: Let’s just ignore the markets. It’s ridiculous how politicians orient themselves based on whether stock prices rise or fall a few percentage points.
SPIEGEL ONLINE: You’re not afraid that a Greek insolvency could mark the beginning of the crisis instead of the end?
Sulik: No. There’s not going to be a domino effect along the lines of “first Greece, then Portugal and finally Italy.” Just because one country goes broke doesn’t mean the other ones automatically will.
SPIEGEL ONLINE: Nevertheless, banks could run into significant problems should they be forced to write down billions in sovereign bond holdings.
Sulik: So what? They took on too much risk. That one might go broke as a consequence of bad decisions is just part of the market economy. Of course, states have to protect the savings of their populations. But that’s much cheaper than bailing banks out. And that, in turn, is much cheaper than bailing entire states out.
SPIEGEL ONLINE: Does one of your reasons for not wanting to help Greece have to do with the fact that Slovakia itself is one of the poorest countries in the EU?
Sulík: A few years back, we survived an economic crisis. With great effort and tough reforms, we put it behind us. Today, Slovakia has the lowest average salaries in the euro zone. How am I supposed to explain to people that they are going to have to pay a higher value-added tax (VAT) so that Greeks can get pensions three times as high as the ones in Slovakia?
SPIEGEL ONLINE: What can the Greeks learn from the reforms carried out in Slovakia?
Sulik: They have to make cuts in the state apparatus. The Slovaks could also give them a few good ideas about the tax system. We have a flat tax when it comes to income taxes. Our tax system is simple and clear.
SPIEGEL ONLINE: One last time: Do you honestly believe the euro has any future at all?
Sulík: I believe the euro has a future. But only if the rules are followed.
