Sulik Defends Defiant Position to EFSF

Parliamentary chairman and head of government coalition party SaS, Richard Sulik, spoke out today against his coalition partner, finance minister Ivan Miklos and defended his party’s stance to the EFSF.

Richard Sulik (c) The Daily

Sulik posted a blog entry in daily SME in response to a comment made by Miklos that Sulik’s attitude to the European Financial Stability Mechanism (EFSF) could “bring down the economy”.

The arguments used by Miklos were questioned by Sulik, who retaliated by saying the “biggest threat to the eurozone was the bailout fund itself, because it tries to resolve a debt crisis with further debts” and that pumping up the fund only increased the risk that the eurozone would collapse.

Projecting his calculations on how the EFSF vote in parliament could work, Sulik cited a possible 35 votes against (18 SaS, 4 OKS, 9 SNS and possibly 4 from Obycajne Ludia), leaving a healthy 115 votes that could be in favour.

At a press conference on Tuesday, Sulik recommended the coalition partners to turn to the opposition Smer-SD party of Robert Fico for votes, as his SaS party was resolutely against backing the draft bill to raise contributions to the EFSF. This, he says, is precisely what increases the risk of the eurozone falling apart. Fico is playing hardball, though, trying to force the coalition to do it by itself in the hope that it will all fall apart.

The current bailout fund from August 2010 contains EUR 250 billion, of which only EUR 71 billion has been used, points out Sulik. The remaining EUR 179 billion would be enough to save four small countries (Cyprus, Malta,, Slovenia, Belgium) he writes, but not enough to save the likes of big countries like Italy and Spain, not even if increased to the EUR 440 billion proposed.

Sulik argues against raising funds in the EFSF by the fact that there is no urgent need for the additional EUR 190 billion. Rescuing banks from the EUR 200 billion hole they have dug is a national issue, but not under the new rules, which would allow banks to make use of the funds, even in countries that are not in crisis, like France and Germany. Irresponsible banks are the same as irresponsible countries, says Sulik, and should be left to go bankrupt.

The government manifesto is also more inclined to opposing an increase in the bailout funds, with this explicitly set out in many points, claims Sulik, quoting certain parts of it in his blog to back his claim.

 “For Slovakia it is extremely important to stop indebting future generations”, he cites, adding that if “our coalition partners want to support the moral hazard, that is up to them, but we don’t want to be dragged into it” Sulik writes. He then pointed to how combining the EFSF vote with a confidence vote in the government was not only against the government manifesto, but was an improper way to apply pressure on his party.

Yesterday the draft bill on the changed EFSF rules was submitted officially to parliament, where it will be debated and voted on in the first session starting 11 October to decide possibly not on the fate of the eurozone, but at least of the Slovak government and its future.

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