Is the euro Titanic heading for an iceberg?
Echoes are starting to reverberate back to Slovakia following the statement this week by parliamentary speaker and SaS party chairman Richard Sulik that Slovakia should brace itself and have a plan B in case the euro doesn’t hold out.
Before his comments were made, the fear was that one of the ‘big boys’ would get fed up and back out of the eurozone, but this maybe overlooked the fact that smaller countries like Slovakia would be in a better position, and more willing, to grab onto a lifebelt should the euro Titanic start to sink. Most experts agree that if anyone starts to abandon ship it could lead to a panic situation and be very disruptive for the currency and the future of the zone, although the departure of countries like Slovakia would probably not make such a big dent in the hull.
Sulik’s comments were made almost flippantly, but it sent a small shock wave through the Union in advance of the EU summit scheduled for tomorrow and Friday this week. Nobody is threatening to leave the eurozone and Sulik probably just wanted to point out that it is better to have your lifebelt on your back than wait till the ship starts sinking and all hell breaks loose.
Smaller countries would find it easier to depart from the strict currency rules of the zone and might do very well out of it, but then again, such a move could end in complete disaster if not handled properly as it could be followed immediately by all kinds of complications.
Sulik has been criticised for dampening investor confidence in the euro, as they would head straight for the lifeboats at the mere sight of any iceberg, no matter what the size, but as various countries in Europe are starting to stretch out their hands for a bailout, Sulik’s courage and timing have to be admired. It was Slovakia that rocked the boat earlier by refusing to help out Greece, and this move was later commended also by German chancellor Angela Merkel.
Now Ireland is in the EFSF ‘soup line’, with Portugal pushing to get to the front, while either Spain or Italy could prove to be the big iceberg that finally sinks this ship. A ship with insufficient lifeboats, meaning many would perish in the post-euro frozen waters.
The other alternative instead of members leaving the eurozone voluntarily, is to throw out those members that are not pulling their weight and playing the game by the rules. Angela Merkel also hinted at this option, but neither path seems particularly likely.
Slovak Prime Minister Iveta Radicova made her position clear, saying: ”I consider such comments highly risky – more than risky, in fact”. She added that the government is not open to such an alternative and that she regarded the very idea as extremely dangerous for Slovakia.
Richard Sulik’s comments may have met with opposition, but at least they caused a big enough wave for members to even start considering the possibility that even the ‘unsinkable Titanic’ is maybe not so invincible.