Exclusive Interview: Sulik Speaks About Eurozone Failings
Richard Sulik, head of the SaS party (Freedom and Solidarity), and outspoken opponent to the new bailout fund, the European Stability Mechanism (ESM), spoke to The Daily.sk about how he sees the euro and its bailout funds.
Sulik caught the attention of the world when Slovakia held the eurozone and world money markets to ransom, when his party stood staunchly against increasing the European Financial Stability Facility (EFSF), which led to the fall of the 1.5 yr old four-party government and caused early elections in March 2012, as PM Iveta Radicova combined the EFSF vote with a vote of confidence in the government.
The arguments put forward by Sulik regarding the bailout funds make sense, but with the broken coalition now acting merely as caretaker government, approval of the ESM was pushed through parliament earlier this month anyway, much to Sulik’s disgust, as he claims the government had no mandate to do it and the issue should have been dealt with after the elections.
In co-operation with Radio Sweden, we went earlier to speak with Mr Sulik about his views and arguments regarding the ESM and how the eurozone is dealing with the debt crisis. Interview in English/Slovak by Daniel Alling and John Boyd.
First of all, have you changed your mind in some way or do you have the same position?
No, now the situation is even more complicated than a few months ago, so we feel that our position has proven to be right.
What is that position?
It’s not a good solution to try to solve a debt crisis with more new debt, and this is our core argument.
What is your position to the new ESM mechanism?
The same, it is the same idea, solving a debt crisis with new debts. But now it is even worse, because in the EFSF Slovakia at least had a veto, which it has no longer.
First of all, Greece has to leave the eurozone. It should already have happened two years ago, but European politicians are saying we have to keep Greece inside the Eurozone, because, well I don’t really know why. If Greece had left the eurozone two years ago, then the situation would be much better at present.
The next step is that Italy has to start saving money, and until the steps that are being made become effective, they can sell their gold, for example, or some state enterprises. Italy is a very rich country, a really rich country, and there is no reason, for example, why the ECB should buy Italy’s bonds.
I’m convinced that it is a big mistake that the European Central Bank is buying Italian bonds. Italy has to solve its financial problems by itself, and stop the deficit, and until they stop the deficit they should sell off any assets they have. Gold, properties and state companies.
But how could that save the current situation?
For example, if Italy needs eight billion euro per month, one possibility is to issue new bonds and hope that someone buys them, but then Italy has to pay 7 or more percent on interest.
The second possibility is to sell off gold to this value and get EUR 8 billion to resolve this situation.
So basically use their reserves to save the situation? Yes, and at the same time to implement austerity programmes. There is just one problem, all countries have an economic deficit, they are producing debts, so this is a problem, and so if Italy produces debts in a normal way, then this is a solution to the problem.
But the Slovak Republic is also collecting debt just now?
Yes. Yes, that’s right. Our former coalition partners were not ready to search for some possibilities to decrease the deficit, so Slovakia will have 4.6% this year. This is also a problem, because within one or two years Slovakia will also have a problem with the 60% limit.
But would you not then expect help from the eurozone countries?
No, no, this is not a real solution, it is something that Slovakia has to sort out itself, we have to help ourselves.
But I have to ask, Angela Merkel is always talking about solidarity and that if the euro comes down, Europe comes down. If the euro fails, Europe fails. What do you think about that?
I don’t agree with this claim, but I am convinced that if we continue with what we are doing now, then the euro will come down.
But isn’t the very idea of the euro that you should take care of each other and you should show solidarity when it is needed?
No, no, we have Article 125, and this is the opposite of rescuing, helping and having solidarity between the countries, and the eurozone as a monetary union will not work with this solidarity. It is complete rubbish.
But what do you think will happen in Brussels?
Well, in Brussels they will continue with this wrong policy for saving the euro, so I am not very hopeful.
Should Slovakia join the euro pact, the ESM, the new budget rules, the new way of punishing countries that are …
Yes, yes, yes, this is ok, the new budgetary rules are okay, but a very important decision is the one on the ESM, the permanent bailout fund. I think Slovakia should not join this ESM, no, because, as I previously explained, we are paying most money.
So if you were to be in government, you would say once again that you are not joining?
Yes, and we will do it if we are perhaps part of the government after 10 March, and we would say it also then.
So depending on what happens after the elections, do you think Slovakia can change or reverse its decision there after a new government is formed? If you are in that new government?
Slovakia will decide after the early elections in March and not before. The EFSF is already history, and now we are facing the ESM and this is a new decision and Slovakia, Slovak politicians, should have the courage here to say no. This is a very bad contract.
So you can be in that position again where the whole world is looking at you, thinking what is Mr. Sulik saying this time?
Ha! ha! I don’t think so, because now it is possible that we will get a coalition of social democrats plus some right-wing parties, but together they will form a coalition of Brussels conformists.
So you don’t expect to be in the next coalition?
It depends on the results, but I think the biggest possibility is that we will have a coalition of pro-Brussels parties, regardless of the losses or damage to Slovakia.
But can you stop it in the parliament then?
Yes, but when we have 150 MPs, if 76 decide on something, we cannot stop it. We should have 76 MPs and then we can stop something, anything.
So now that the election campaign is up and running, will you raise the euro topic and the ESM topic in the election? Will you campaign on it hard or what is your tactic?
Yes, sure we will start also with this topic. We already wanted to start a while back but because we now have the Gorilla corruption scandal here, that is all we are hearing about.
But if this scandal goes away, you will go to the campaign on this topic?
We will explain to people the difference between us and other parties and we will explain to them how much damage will be caused to Slovakia by joining the ESM.
But do you want to live with that responsibility, because if Slovakia doesn’t say yes, the whole system will break down?
No, it is not true. With the ESM it is necessary to have 95% of the capital and Slovakia has just 0.7%, so we are a small country and nothing will break down. It’s not true, but it was like that in the EFSF because that is how the contract was written. Every country had to join, but that is not the case now, a 95% majority is enough. To create the EFSF, 90% of the capital was required, and that was in August 2010. Then to prolong and increase the EFSF capacity, 100% of all EFSF members had to agree. The ESM is a new contract and in the beginning it was 95% and then was changed to 90% of the capital.
So do you think you will have a lot of success with this anti-ESM message?
We will see on 10 March.
What are you hoping for, percentage-wise?
It would be a great success for us to get the same result as in 2010, because at that time we were a new party and now we are already a little known. Some people are disappointed with us, some happy with us, so to get the same result would be a good success for us.
What would it take for you to be in a government coalition again? Could you accept governing with the social democrats, for instance?
No, no, we would only form a coalition with right-wing parties. Otherwise, we will go to the opposition.
I’ve been talking to a lot of people on the street and a lot of them are still saying ok, now that we are in, we have to help, because maybe next time we will need help. What do you say about that point?
This will not work, because the eurozone is not a very rich club with just one or two members having some problems. The real situation is that all countries with the exception of Estonia have a lot of debts and we are connected together and if, for example, Germany or other countries will help Greece and Italy, then all countries will be dragged down to the bottom together. The only solution is to separate Greece from the eurozone, and as I already said, we need to stop generating a deficit, and stop pretending great solidarity. The people who founded the eurozone had thought out the rules very carefully. Article 125 is not there by chance, and neither are other rules, like how the European Central Bank cannot buy bonds and so on. Nothing is there by chance. These people made an undertaking regarding these rules when they formed the eurozone 20 years ago. These rules were not put there accidentally. Now all the talk of solidarity is to cover up the fact that the original rules are being broken. We have to stop the violation of these rules, putting it into a nice wrapper doesn’t help, and so the whole eurozone will sink.
Could the Slovak Republic live without the euro?
The euro has a lot of advantages for Slovakia, so I think it is good that Slovakia has the euro, but the euro together with the original rules.
What has been the biggest benefit of the euro for the Slovak Republic, what is the most important thing it has given?
Slovakia is a very open economy, with more than 90% of the GDP resting on export and import, so it is good to have a common currency as we don’t produce exchange rate losses. No FX risks, it’s easier, it’s fine. Not just in terms of the euro, but also the Schengen zone, infrastructure and so on, but this does not change the fact that the rules have to be respected or otherwise it will all fall apart.
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