Slovakia gets tough over Ireland and the EFSF

PM Radicova (c) John Boyd

As Ireland is thrown a lifebelt to stop it sinking into the murky waters of economic ruin, this time Slovakia has agreed to chip in its 1% as part of the European Financial Stability Framework (EFSF), but it has four key suggestions for Ireland on how to deal with its situation.

Slovakia got tough in its rhetoric about the situation, warning that the debt-ridden eurozone  could be threatened with breaking up unless banks are also drawn in to the process of sharing the bill. Prime Minister Iveta Radicova announced that “if we continue in this fashion, we are close to becoming a pyramid scheme”, adding that it could all come crashing down like ‘a house of cards’.

Ireland should borrow around EUR 85 billion, but if countries like Spain and Portugal end up on the begging list as well, it could suck the whole zone down and the euro would crash.

The Slovak government feels that the loan to Greece, which it refused to participate in, was a mistake. Finance Minister Ivan Miklos said that the situation regarding Ireland’s economy is different from that of Greece, as it had been falsifying its data on public finances for years. “Ireland is in principle a competitive economy that has seen its property values collapse”, said Miklos.

Slovakia is therefore calling for changes to the Stability and Growth Pact as soon as possible, and that bailouts should be evaluated on a country to country basis. It also wants to see the private sector take its fair share of the rescue effort. The fourth suggestion put forward by Slovakia is for Ireland not to be so willing to hike up its taxes, as this would only impact the living standard in the country and so possibly lead to political instability.

Eurozone experts are already working on a new EU crisis instrument that would replace the current EUR 750 billion mechanism, which will be dissolved in mid-2013.

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