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Eurozone bailout fund faces key Slovakian vote | Eurozone bailout fund faces key Slovakian vote |
(40 minutes later) | |
Slovakia will vote later on measures to bolster the powers of the eurozone bailout fund, seen as vital in combating the bloc's debt crisis. | Slovakia will vote later on measures to bolster the powers of the eurozone bailout fund, seen as vital in combating the bloc's debt crisis. |
After Malta approved the plans late on Monday, Slovakia is now the last of the 17 member states to vote. All other members have approved the measures. | After Malta approved the plans late on Monday, Slovakia is now the last of the 17 member states to vote. All other members have approved the measures. |
But with one coalition party insisting Slovakia is too poor to bail out others the outcome of the vote is in doubt. | But with one coalition party insisting Slovakia is too poor to bail out others the outcome of the vote is in doubt. |
The prime minister has said she will tie the vote to a confidence vote. | The prime minister has said she will tie the vote to a confidence vote. |
"I have to say that the coalition partners have failed to reach an agreement," Iveta Radicova said. | "I have to say that the coalition partners have failed to reach an agreement," Iveta Radicova said. |
The country's future in Europe was at stake, she said. | |
"It's unacceptable for a prime minister to allow the isolation of Slovakia." | |
While three of the four parties in the government coalition back the expansion, a fourth, the liberal Freedom and Solidarity (SaS), is holding out. | |
The SaS has balked at Slovakia - one of the poorest countries in the eurozone - being asked to guarantee 7.7bn euros of the 440bn EFSF. | |
It is demanding, as the price for its support: a binding agreement that Slovakia would refuse to take part in the European Stabilisation Mechanism, which is meant to replace the EFSF in 2013; and a veto over future bailout disbursements from the EFSF. | |
Unless the party falls into line at the last minute, the vote is likely to be lost, as the socialist opposition says it will abstain. | |
However, parliament can call for a repeat vote. The opposition has indicated it would then back the measures - though it may make its own stringent demands, including new elections. | |
'Not enough' | |
To expand the powers of the bailout fund - the European Financial Stability Facility - all member states must agree on the measures proposed in July. | To expand the powers of the bailout fund - the European Financial Stability Facility - all member states must agree on the measures proposed in July. |
These include expanding the size of the fund to an effective lending capacity of 440bn euros ($600bn; £383bn). | These include expanding the size of the fund to an effective lending capacity of 440bn euros ($600bn; £383bn). |
They also include giving it the power to buy eurozone government debt and offer credit lines to member states and to banks. | They also include giving it the power to buy eurozone government debt and offer credit lines to member states and to banks. |
The irony is that these plans, agreed in July, are now seen as inadequate, says the BBC's Matthew Price in Brussels. | The irony is that these plans, agreed in July, are now seen as inadequate, says the BBC's Matthew Price in Brussels. |
Market analysts suggest the fund needs to be nearer 2 trillion euros to be effective. | Market analysts suggest the fund needs to be nearer 2 trillion euros to be effective. |
Other plans agreed in July, to make private investors take a hit on any default by Greece on its debts, are also now seen as insufficient. Reports suggest leaders are contemplating a 50% cut rather than the 21% cut originally proposed. | Other plans agreed in July, to make private investors take a hit on any default by Greece on its debts, are also now seen as insufficient. Reports suggest leaders are contemplating a 50% cut rather than the 21% cut originally proposed. |
Fresh measures | Fresh measures |
French President Nicolas Sarkozy and German Chancellor Angela Merkel pledged on Sunday to do what it takes to protect European banks from the debt crisis. | French President Nicolas Sarkozy and German Chancellor Angela Merkel pledged on Sunday to do what it takes to protect European banks from the debt crisis. |
The leaders said they were close to a detailed package to ease the crisis and would give further details within weeks. | The leaders said they were close to a detailed package to ease the crisis and would give further details within weeks. |
The pledge helped boost stock markets on Monday, with Wall Street's Dow Jones index rising 3%, albeit on low volumes. | The pledge helped boost stock markets on Monday, with Wall Street's Dow Jones index rising 3%, albeit on low volumes. |
The markets are now expecting more comprehensive measures designed to tackle the crisis once and for all to be announced at a G20 meeting in Cannes at the beginning of November. | The markets are now expecting more comprehensive measures designed to tackle the crisis once and for all to be announced at a G20 meeting in Cannes at the beginning of November. |