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Deadlocked Slovakia heads for vote on eurozone rescue

10 October 2011, 19:32 CET
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(BRATISLAVA) - Slovakia's deadlocked four-party coalition was to meet Tuesday for crunch talks ahead of a key parliamentary vote on the European Union's EFSF rescue fund after failing to agree on the bailout mechanism.

"By the morning, I will take a responsible decision on further steps that I'll propose to the coalition partners," centre-right Prime Minister Iveta Radicova said as she left the inconclusive talks late Monday.

Radicova said the party heads would meet at 9 am (0700GMT) on Tuesday.

Earlier unconfirmed reports said Radicova had upped the pressure by threatening to resign if she failed to secure passage of the EFSF in Tuesday's vote.

A rebel junior partner in her coalition is threatening to torpedo the fund in parliament unless Slovakia is exempt from providing guarantees worth 7.7 billion euros ($10.2 billion) for the revamped 440 billion-euro ($589-billion) EFSF.

The liberal Freedom and Solidarity (SaS) party also wants an opt-out from the permanent bailout fund, the European Stabilisation Mechanism (ESM), designed to replace the EFSF in mid-2013, and for Slovakia to have veto power over future emergency loan disbursements from the EFSF.

"As regards the mechanisms we now have -- a temporary fund or, later, a permanent one -- there hasn't been an agreement among the coalition partners," Radicova said leaving the talks, adding the situation was "serious, dramatic."

The "deepening crisis in Europe and the world requires a very fast solution," she said.

"Without an international programme, there is only a tiny chance we (Slovakia) will handle this critical period with as little pain as possible."

The EFSF was set up in May 2010 after Greece was bailed out to save it from default and eurozone leaders agreed in July to boost its powers to stem the debt crisis threatening the whole euro project.

But its expansion requires the backing of all 17 eurozone member states. All have approved it except Malta, which was expected to do so later Monday, and Slovakia.

Radicova, who normally commands a majority 79 votes in the 150-member parliament, is dependent on the SaS's 22 seats -- or failing their support, the 62 seats of the opposition left Smer-SD.

But the leader of the opposition Smer-SD, ex-prime minister Robert Fico, says his party's backing is dependent on a power shift in the coalition government or a snap election.

Legal experts say that if parliament fails to ratify the EFSF on Tuesday the vote could be repeated immediately.

But SaS leader Richard Sulik, who is also the speaker of parliament, said Monday he was against a repeat vote.

"I don't expect the parliament to go on voting until the fund is approved. We have serious objections to a second vote," he said.

The debt crisis, which began in Greece, has snared Ireland and Portugal and now put Italy and Spain in the firing line too, threatening to sink the entire euro project as banks find it increasingly hard to raise funding.

The eurozone's second poorest country, which has itself implemented biting austerity measures, Slovakia was the only one to refuse to participate in last year's emergency loan for Greece.

EU president Herman van Rompuy said Monday the bloc was delaying a key summit on the eurozone rescue package by almost a week to October 23 to give leaders more time to finalise a response to the debt crisis.


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